UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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FORM 8-K

_________________

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report February 15, 2013

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MVB FINANCIAL CORP

(Exact name of registrant as specified in its charter)

_______________________________

 

WV 000-50567 20-0034461
(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)

301 Virginia Avenue, Fairmont, WV 26554-2777
(Address of Principal Executive Offices) (Zip Code)

304-363-4800
(Registrant’s telephone number, including area code)

N/A
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 

Item 9.01    Financial Statements and Exhibits.

 

These are the pro forma financial statements referred to in Section 9.01 of the report on Form 8-K filed by MVB Financial Corp. on December 20, 2012.

 

SELECTED UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL DATA

 

The following unaudited pro forma condensed combined balance sheet as of September 30, 2012 and the unaudited pro forma condensed combined statements of operations for the nine months ended September 30, 2012 and for the year ended December 31, 2011 are based on the historical financial statements of MVB Financial Corp. and Potomac Mortgage Group, LLC after giving to effect the acquisition in which MVB will acquire Potomac Mortgage Group, LLC., as adjusted to reflect the subsequent issuance of up to 833,333 shares of MVB Financial Corp. at $24 per share. The acquisition will be accounted for using the acquisition method of accounting in accordance with Financial Accounting Standards Board (“FASB”) ASC 805, “Business Combinations” (“ASC 805”).

 

The unaudited pro forma condensed combined statements of operations for the nine months ended September 30, 2012 and for the year end December 31, 2011 give effect to the acquisition as of the beginning of all periods presented. The unaudited pro forma condensed combined balance sheet as of September 30, 2012 assumed that the acquisition took place on September 30, 2012.

 

The unaudited condensed combined balance sheet and statement of operations as of and for the nine months ended September 30, 2012 were derived from MVB’s unaudited condensed financial statements, and Potomac Mortgage Group, LLC’s unaudited condensed financial statements and as of and for the nine months ended September 30, 2012, as adjusted for the subsequent issuance of up to 833,333 shares of MVB Financial Corp. at $24 per share. The unaudited condensed statement of operations for the year ended December 31, 2011 was derived from MVB and Potomac Mortgage Group, LLC’s audited statements of income for the year ended December 31, 2011.

 

The pro forma condensed combined financial statements reflect management’s best estimate of the fair value of the tangible and intangible assets acquired and liabilities assumed. As final valuations are performed, increases or decreases in the fair value of assets acquired and liabilities assumed will result in adjustments, which may be material, to the balance sheet and/or statement of operations.

 

As required, the unaudited pro forma condensed combined financial data includes adjustments which give effect to the events that are directly attributable to the acquisition, expected to have a continuing impact and are factually supportable.

 

The unaudited pro forma condensed combined financial statements are provided for informational purposes only and are subject to a number of uncertainties and assumptions and do not purport to represent what the companies’ actual performance or financial position would have been had the acquisition occurred on the dates indicated and does not purport to indicate the financial position or results of operations as of any date or for any future period. Please refer to the following information in conjunction with the accompanying notes to these pro forma financial statements and the historical financial statements.

 

 

 
 

MVB Financial

Unaudited Pro Forma Condensed Combined Balance Sheet

As of September 30, 2012

 

   Historical   Pro Forma       Pro Forma         
           Capital       Acquisition       Combined 
   MVB   PMG   Issuance       Adjustments       Pro Forma 
Assets                                   
Cash and due from banks  $11,132   $3,166   $20,000    A   $(22,075)   B   $12,223 
Interest bearing balances   3,774                          3,774 
Certificates of deposits with other banks   9,427                          9,427 
Investment securities:                                   
Securities held-to-maturity, at amortized cost   32,816                          32,816 
Securities available-for-sale, at approximate fair value   84,326                          84,326 
                                    
Loans:   446,215                          446,215 
Less: Allowance for loan losses   (3,692)                         (3,692)
Net loans   442,523                          442,523 
Loans held for sale, net   4,883    62,350             250    C    67,483 
Bank premises, furniture and equipment, net   8,848    412                      9,260 
Goodwill   897                 15,399    E    16,296 
Bank owned life insurance   8,307                          8,307 
Accrued interest receivable and other assets   6,698    3,174                      9,872 
Total assets  $613,631   $69,102   $20,000        $(6,426)       $696,307 
                                    
Liabilities                                   
Deposits                                   
Non-interest bearing  $49,818   $   $        $        $49,818 
Interest bearing   421,413                          421,413 
Total deposits   471,231                          471,231 
                                    
Accrued interest, taxes and other liabilities   3,043    2,077             (50)   D    5,070 
Repurchase agreements   69,264                          69,264 
Warehouse line of credit        58,649                      58,649 
Federal Home Loan Bank and other borrowings   15,147                          15,147 
Long-term debt   4,124                          4,124 
Total liabilities   562,809    60,726             (50)        623,485 
                                    
Stockholders’ equity                                   
Preferred stock, $1,000 par value, 8,500 shares authorized and issued   8,500                          8,500 
Common stock, $1 par value, 4,000,000 authorized   2,247        833    A    83    B    3,163 
                                    
Additional paid-in capital   32,976        19,167    A    1,917    B    54,060 
Treasury stock, 51,077 shares   (1,084)                         (1,084)
Members' Equity       8,376             (8,376)   B     
Retained earnings   8,678                          8,678 
Accumulated other comprehensive (loss)   (495)                         (495)
Total stockholders’ equity   50,822    8,376    20,000         (6,376)        72,822 
Total liabilities and stockholders’ equity  $613,631   $69,102   $20,000        $(6,426)       $696,307 

 

See accompanying notes to the unaudited pro forma condensed combined financial statements.

 

 
 

MVB Financial

Unaudited Pro Forma Condensed Combined Statement of Operations

For the Nine Months Ended September 30, 2012

 

   Historical   Pro Forma         
           Acquisition       Combined 
   MVB   PMG   Adjustments       Pro Forma 
                     
Interest income  $16,408   $1,222            $17,630 
Interest expense   3,669    1,008        E    4,677 
Net interest income   12,739    214             12,953 
Provision for loan losses   2,125                 2,125 
Net interest income after provision for loan losses   10,614    214             10,828 
                          
Noninterest Income   3,990    8,160             12,150 
Noninterest Expense   10,865    3,913             14,778 
Income before income taxes   3,739    4,461             8,200 
Income tax expense   1,013        1,428    F    2,441 
Net income  $2,726   $4,461   $(1,428)       $5,759 
                          
Preferred stock dividends   115                 115 
Net Income available to common shareholders  $2,611   $4,461   $(1,428)       $5,644 
                          
Basic earnings per common share  $1.19    n/a             $1.82 
Diluted earnings per common share  $1.17    n/a             $1.79 
Basic weighted average shares Outstanding   2,188,580    n/a    916,000         3,104,580 
Diluted weighted average shares Outstanding   2,238,637    n/a    916,000         3,154,637 

 

See accompanying notes to the unaudited pro forma condensed combined financial statements.

 

 

 
 

 

MVB Financial

Unaudited Pro Forma Condensed Combined Statement of Operations

For the Year Ended December 31, 2011

 

   Historical   Pro Forma         
           Acquisition       Combined 
   MVB   PMG   Adjustments       Pro Forma 
                     
Interest Income  $19,008   $1,026   $        $20,034 
Interest Expense   4,900    738        E    5,638 
                          
Net Interest Income   14,108    288             14,396 
Provision for loan losses   1,723    110             1,833 
Net interest income after provision for loan losses   12,385    178             12,563 
Noninterest Income   3,688    5,788             9,476 
Noninterest Expense   12,359    3,301             15,660 
Income before income taxes   3,714    2,665             6,379 
Income tax expense   1,012        973    F    1,985 
Net Income  $2,702   $2,665   $(973)       $4,394 
                          
Preferred stock dividends   44                 44 
Net Income available to common shareholders  $2,658   $2,665   $(973)       $4,350 
                          
Basic earnings per common share  $1.24    n/a             $1.43 
Diluted earnings per common share  $1.21    n/a             $1.41 
Basic weighted average shares Outstanding   2,147,890    n/a    916,000         3,063,890 
Diluted weighted average shares Outstanding   2,194,410    n/a    916,000         3,110,410 

 

See accompanying notes to the unaudited pro forma condensed combined financial statements.

 

 

 
 

Notes to Unaudited Condensed Combined Pro Forma Financial Statements

 

1)Description of the Acquisition and Basis of Preparation

 

The Acquisitions

 

Potomac Mortgage Group, LLC will be operated as a wholly owned subsidiary of MVB Bank. The aggregate purchase price for all of the issued and outstanding Interests (the “Purchase Price”) was $17 million in cash and 83,333 shares of MVB Financial Corp. Common Stock, with the purchase price paid to each Member consisting of either cash and MVB Financial Corp. Common Stock or cash only. MVB Financial Corp. is in the process of issuing approximately 833,000 shares associated with raising $20 million in common equity, and will use a portion of the proceeds to finance the acquisition. The pro forma financials were prepared assuming that all shares will be sold at $24 per share.

 

Additional transaction costs to be incurred in the acquisition are assumed to be $585,000 for MVB which are paid out as of the merger date and expensed to retained earnings. These costs are associated with legal, accounting, and due diligence fees directly related to the acquisition and are not expected to have a continuing impact on operations and therefore have not been included in the Unaudited Condensed Combined Pro Forma Statement of Operations.

 

Basis of Presentation

 

The unaudited pro forma condensed combined financial statements have been prepared based on MVB Financial and Potomac Mortgage Group, LLC’s historical financial information. Certain disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States have been condensed or omitted as permitted by SEC rules and regulations.

 

These unaudited pro forma condensed combined financial statements are not necessarily indicative of the results of operations that would have been achieved had the acquisition actually taken place at the dates indicated and do not purport to be indicative of future financial condition or operating results.

 

2)Acquisition Method

 

The pro forma condensed combined financial statements reflect the accounting for the transaction under the acquisition method, where the purchase price is allocated to the assets acquired and liabilities assumed based on their estimated fair values, with any excess of the purchase price over the estimated fair value of the identifiable net assets acquired recorded as goodwill. Goodwill of $15 million arising from the acquisition consisted largely of synergies and the cost savings resulting from the combining of the operations of the companies and is deductible for tax purposes.

 

The purchase price allocation for Potomac Mortgage Group, LLC is summarized as follows (in thousands):

 

Consideration    
Cash  $17,000 
Equity Instruments   2,000 
      
Fair Value of Total Consideration Transferred  $19,000 
      
Recognized amounts of identifiable assets acquired and liabilities assumed     
      
Cash and cash equivalents  $ 
Loans held for sale   62,600 
Premises and equipment   412 
Other assets   3,174 
Total assets acquired  $66,186 
      
Warehouse line of credit   58,649 
Other borrowings    
Liability to seller   1,909 
Other liabilities   2,027 
Total liabilities assumed  $62,585 
      
Total identifiable net assets   3,601 
      
Goodwill   15,399 
      
   $19,000 
 
 

 

 

 

3)Pro Forma Adjustments and Assumptions

 

A.Reflects a capital raise of $20 million at $24 per share subsequent to closing. See Note 1.
B.Reflects the one-time pre-closing dividend of $5.075 million to PMG members and elimination of PMG’s remaining historical net equity of approximately $3.3 million as a result of the acquisition. Additional consideration transferred to PMG members of $17 million in cash and $2 million in common stock with certain restrictions.
C.Reflects a purchase accounting adjustment associated with PMG's loans held for sale. Loans held for sale are to be reflected at fair value.
D.Reflects the removal of a deferred rent accrual.
E.MVB anticipates eliminating the PMG warehouse facilities and financing originations through current unused lines with the FHLB. As noted in the December 31, 2011 financial statements, the remaining maximum borrowing capacity with the FHLB at December 31, 2011 was approximately $174,439 and the Bank had borrowed $9,767. At September 30, 2012 the Bank had the maximum borrowing capacity at the FHLB of $205 million and had borrowed $15.1 million.
F.Reflects the tax impact of converting from a pass-through entity as a limited liability corporation to a C-Corp. Marginal tax rate of 36.5% was utilized.

 

 
 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

 

  MVB Financial Corp
  By /s/ Eric L. Tichenor
   

Eric L. Tichenor

Senior Vice President/ CFO

 

Date:  February 15, 2013