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| 8-K - FORM 8-K - Q3 2017 INVESTOR PRESENTATION - MVB FINANCIAL CORP | form8kq3investorpresentati.htm |
Larry F. Mazza, CEO & President
Donald T. Robinson, Executive Vice President & CFO
Sandler O'Neill - 2017 East Coast Financial Services Conference
November 16, 2017
Exhibit 99.1
2
DISCLAIMERS
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 Presentation. 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 Presentation, 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 Presentation. 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, 2016, 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.
Non-GAAP Financial Measures
The Company uses certain non-GAAP financial measures, such as tangible common equity to tangible assets, to provide information useful to investors in understanding
the Company’s operating performance and trends, and facilitate comparisons with the performance of the Company’s peers. The non-GAAP financial measures used
may differ from the non-GAAP financial measures other financial institutions use to measure their results of operations. Non-GAAP financial measures should be
viewed in addition to, and not as an alternative for, the Company’s reported results prepared in accordance with U.S. GAAP. Reconciliations of these non-GAAP financial
measures to the most directly comparable U.S. GAAP financial measures are provided in the Appendix to this Presentation.
Exhibit 99.1
3
The MVB Team's goal today is to...
• Share the MVB growth story – Past, Present, Future
• Provide our vision of profitable community banking
• Explain why we believe we are an "up-and-comer" in
our industry
Exhibit 99.1
4
MVB Overview
• MVB Financial Corp.
◦ Total Assets: $1.5 billion
◦ 15 branches, 18 mortgage offices, and a central operations
center
◦ Two operating companies (MVB Bank and MVB Mortgage)
◦ Divested MVB Insurance as of June 30, 2016
◦ Strong fee income streams
▪ Mortgage: $28.6 million
◦ 21% loan and 24% deposit CAGRs (2008–Q3'17)
• Well-positioned in our markets
◦ #4 community bank in West Virginia(1)
◦ Recent branch expansion into fast-growing DC Metro area
• Historical banking growth has been almost 100% organic
• Strong credit quality
• BauerFinancial, Inc., recognized MVB Bank as a 5-star
Superior bank(2) for 26 consecutive quarters
(1) SNL Financial. Ranking by deposits as of June 30, 2017.
(2) Star rating based on June 30, 2017 data.
Exhibit 99.1
5
Value of Growth
$750M - $1.5B
34 public banks / 38 total banks
P / TBV: 1.43x
P / EPS: 15.8x
Sca
rcity
Valu
e Target vision and
valuation
Source: SNL Financial. Market data as of 8/9/2017.
Note: Peer groups include publicly traded banks headquartered in PA, VA, WV, and MD. Multiples represent median.
$1.5B - $3B
13 public banks / 13 total banks
P / TBV: 1.80x
P / EPS: 15.4x
$3B - $5B
P / TBV: 2.04x
P / EPS: 16.3x
$5B - $10B
$10B - $25B
Exhibit 99.1
6
Our Growth Strategies
Organic Growth
Opportunistic
Growth
Fee Income
Streams
• Increase the productivity of existing relationships
• Enhance existing geographic footprint
• Measure expansion into new geographies
• Enhance profitability through improved core funding
• Explore potential acquisitions of branches, fee income
businesses, and whole banks
• Focus on deposit-heavy banking targets
• Acquire team lift-outs
• Increase profitability in low interest rate environment
• Develop other fee channels, i.e. FinTech
• Enhance mortgage profitability
Exhibit 99.1
7
Demographics Accretive to MVB Franchise
Est. Household Income Growth ('18-'23)
Source: SNL Financial, United States Bureau of Labor Statistics, West Virginia Chamber of Commerce.
MVBF current franchise deposits weighted by county.
(1) Washington Business Journal, 7/17/17
(2) PR Newswire, 11/9/17
8.0%
6.0%
4.0%
2.0%
MVBF West Virginia Wash. DC MSA
4.5% 4.3%
6.1%
West Virginia is within 500 miles of
two-thirds of the U.S. population
• Eight of the 25 most affluent places in America are
communities within the Washington DC region(1)
• China Energy Investment Corporation Limited
announced plans to invest $83.7 billion in shale
gas development and chemical manufacturing
projects in West Virginia(2)
Exhibit 99.1
8
Targeting Attractive Markets
East Region:
Washington D.C.
Metropolitan Area
Central WV Region:
Morgantown, Fairmont,
Bridgeport, & Clarksburg
South Region:
Charleston, WV
• 6.2 million people, high-growth, median HHI >$99,400,
and 3.7% unemployment(1)
• Leverages MVB Mortgage in Northern Virginia
• Recently opened Leesburg, VA branch
• West Virginia University, health care, growing private
sector, and U.S. government facilities
• Morgantown is the #1 MSA by population growth and
per capita income metrics(2); opportunity to expand
current 5% market share
• 2nd largest deposit base(3) in WV ($5.6B); provides
MVB with significant opportunity to expand on 2%
market share
• WV State Capital and large health care center
Expansion Markets:
SW Pennsylvania, Central
Virginia, & Carolinas
• Focus on attractive, growth markets in the Mid-
Atlantic and contiguous Southeastern region
• MVB Mortgage presence provides brand recognition
for expansion
Source: SNL Financial, United States Bureau of Labor Statistics
(1) Unemployment data per United States Bureau of Labor Statistics as of August 2017.
(2) Based upon MSAs primarily in West Virginia, Excludes the Washington D.C. MSA.
(3) Measured by MSA deposits.
Exhibit 99.1
9
Acquisition of Talent
2009
2018
2020
BB&T L/O
(2005)-12
HNB L/O
(2009)-4
(2011)-7
Wells Fargo
Insurance L/O
(2013)-23
VA Commerce L/O
(2013)-5
Middleburg L/O
(2017)-4
PMG
(2012)
Acacia
(2013)
BB&T
(2015)
MVB Insurance
Divestiture
(2016)
Acquisition
Exhibit 99.1
10
• CEO – MVB Mortgage
• 25 years of mortgage
experience
• Co-founded Potomac
Mortgage Group, Inc.
(PMG) in 2009
• Chief Lending Officer
• 30+ years of
experience
• Chair of Management
Loan Committee
Experienced Management Team
Larry Mazza, Chief Executive Officer Don Robinson, Chief Financial Officer
Ed Dean John Schirripa David Jones
• 30+ years of banking sector management –
including service in a Big 8 accounting firm
• Named CEO of MVB Financial Corp. in 2009
• Served as Retail Banking Manager for BB&T's
North Region (which included $2 billion in
assets)
• Delivers public company corporate
governance experience
• Chief Risk Officer
• 33 years of
experience
• Background in bank
auditing from Big 8
firm
• 20 years of banking, financial institution, and
Big 8 accounting experience
• Named Chief Operating Officer of MVB
Financial Corp. in 2012, CFO in 2016
• Served as Market President and Commercial
Regional head with HBAN
• Served as EVP and Chief Accounting Officer of
Linn Energy (NASDAQ: LINE)
• Grew George Mason Mortgage from $1 billion
to $4 billion prior to acquisition by UBSI
• Served as Senior Vice President/Community
President of Huntington National Bank
• Served as Vice President and Relationship
Manager with Chase
• Has held management positions with
Huntington National Bank and BB&T
• Former MVB Chief Credit Officer
Exhibit 99.1
11
Strong Record of Organic Growth
Total Assets ($M)Net Loans HFI ($M)
Net Income to Common ($M)Total Deposits ($M)
$1,500
$1,200
$900
$600
$300
$0
2008 2009 2010 2011 2012 2013 2014 2015 2016 Q3
2017
$201 $231
$292 $371
$442
$617
$792
$1,024 $1,044 $1,085
$1,875
$1,500
$1,125
$750
$375
$0
2008 2009 2010 2011 2012 2013 2014 2015 2016 Q3
2017
$259 $353
$414
$533
$727
$987
$1,110
$1,384 $1,419 $1,472
$14.0
$12.0
$10.0
$8.0
$6.0
$4.0
$2.0
$0.0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2016
YTD
2017
YTD
$0.8 $1.4
$2.2 $2.7
$4 $3.9
$1.7
$6.2
$11.8
$9.8
$5.8
$1,500
$1,200
$900
$600
$300
$0
2008 2009 2010 2011 2012 2013 2014 2015 2016 Q3
2017
$173
$265 $300
$391
$487
$696
$823
$1,012
$1,107 $1,165
Growth has been organic outside
of $93M in acquired loans (1)
(2)
(3)
Source: SEC filings.
Note: YTD = Year to date as of September 30th.
(1) Based on $18.2 million in loans acquired through the acquisition of two Susquehanna branches and $74.3 million in loans acquired 12/3/2013.
(2) 2014 included $1.0 million in non-recurring costs and expenses related to bank and mortgage build-out.
(3) 2016 included $3.9 million of income from discontinued operations related to the sale of the insurance business.
CAGR: 21%
CAGR: 29%
CAGR: 24%
CAGR: 21%
(3)
Exhibit 99.1
12
Selective and Strategic M&A Growth
M&A Assessment Model
Asset
Quality
Drives
Shareholder
Value
Additional
Growth
Potential
Deposits
Attractive
Geographic
Markets
Talent &
New
Expertise
Cultural Fit
• Conducting Disciplined Deal-making:
M&A deals will be rooted in a reasonable
transaction price – based upon asset quality
and deposits – and must demonstrate a true
value for MVB shareholders
• Focusing on the Right Targets:
Strategic opportunities in West Virginia and
contiguous geographies (Maryland, Virginia,
North Carolina, and Pennsylvania) targeting
attractive markets with growth opportunities
• Growing and Cultivating a Strong Team:
M&A must ensure perpetuation of MVB's
culture, while also infusing complementary
talent to the existing MVB team. Ideally target
management will deliver new expertise and
enhance growth opportunities
Exhibit 99.1
13
Recent MVB Bank Notable Events
• Applied to list common stock on the
Nasdaq Capital Market
• Opened two new, technology-focused
branch locations, with automated
interactive systems
◦ Morgantown, WV
◦ Leesburg, VA
• Core conversion to Jack Henry &
Associates completed in April 2017
Leesburg, VA
AIT Branch
Exhibit 99.1
14
Third Quarter Financial Highlights
2017 YTD Financial Highlights
• Gross loans HFI increased 4% from year
end, while reducing commercial real
estate concentration levels from 373% at
9/30/16 to 311% at 9/30/17
• Deposits increased 3% YoY
• Nearly 15% of YoY deposit growth from
noninterest bearing deposits
• Nonperforming assets declined 23.9% as
of 9/30/17 compared to 9/30/16
• 2017 YTD net charge-offs of 0.10% of
average loans
• 2016 YTD net income includes after-tax
income of $3.9 million in discontinued
operations
• Well-positioned with respect to the
current interest rate environment
$ in thousands, except per share FY 2015 FY 2016 2016 YTD 2017 YTD
Balance Sheet
Total Assets $ 1,384,476 $ 1,418,804 $ 1,468,595 $ 1,471,590
Gross Loans HFI 1,032,170 1,052,865 1,076,073 1,094,467
Total Deposits 1,012,314 1,107,017 1,126,790 1,165,199
Consolidated Capital (%)
Tier 1 Risk-Based Ratio 9.47% 11.92% 9.51% 11.79%
CET 1 Ratio 7.59 10.11 7.78 10.76
Risk-Based Capital Ratio 12.91 15.36 12.76 15.18
Asset Quality (%)
NPAs / Assets (1) 0.76% 0.47% 0.69% 0.54%
NCOs / Loans 0.08 0.24 0.23 0.10
Reserves / Gross Loans HFI 0.78 0.86 0.85 0.86
Profitability
Net Income to Common $ 6,241 $ 11,784 $ 9,791 $ 5,778
ROAA (2) 0.56% 0.91% 0.99% 0.57%
ROAE (2) 6.08 10.50 11.78 5.73
Noninterest Inc. / Operating Rev. (3) 50.0 49.5 50.7 48.4
Net Interest Margin 3.07 3.22 3.22 3.29
Diluted EPS $ 0.77 $ 1.31 $ 1.08 $ 0.56
Source: SEC filings and company documents.
Note: Reserves / Loans excludes loans held for sale. YTD = Year to date as of September 30.
(1) NPAs include non-accruing loans, 90+ days still accruing, and OREO.
(2) FY & YTD 2016 includes $3.9 million of net income from discontinued operations. Excluding this income, ROAA and ROAE would have been 0.63% and 7.30% for
FY 2016 and 0.62% and 7.41% for YTD 2016.
(3) Non-GAAP financial measure. Please see "Non-GAAP Reconciliations" in this presentation for details.
Exhibit 99.1
15
Current Loan Portfolio
CRE LoansLoan Portfolio Composition
Commercial Business:
33.4%
Commercial Real Estate:
27.2% Acquisition & Development:
8.6%
Acquisition &
Development -
HVCRE: 2.4%
Residential: 21.4%
Home Equity: 5.9%
Consumer: 1.2%
($ in thousands) As of 9/30/2017
Amount
Commercial Business(1) $ 365,710
Commercial Real Estate 297,603
Acquisition & Development 93,811
Acquisition & Development - HVCRE 25,739
Residential(1) 234,236
Home Equity 64,273
Consumer 13,095
Total Loans $ 1,094,467
Source: SEC filings.
Note: Data includes loans held for investment.
(1) Commercial business includes owner occupied CRE and residential includes 1-4 family construction loans.
Hotels: 15.9%
Office: 24.4%
Retail: 18.3%
Storage Units:
2.2%
Nursing homes:
17.2%
Other: 2.7%
Apartments low
income: 2.6%
Apartments
market: 16.6%
Exhibit 99.1
16
Strong Asset Quality
Nonperforming Assets ($000)
NPAs / Assets
Nonaccrual OREO 90+ Days Past Due
$16,000
$12,000
$8,000
$4,000
$0
2011 2012 2013 2014 2015 2016 Q3 2017
$6,643 $7,946
$3,452 $3,661
$1,224
$9,830 $10,492
MVBF Regional Peers
2.5%
2.0%
1.5%
1.0%
0.5%
0.0%
2011 2012 2013 2014 2015 2016 Q3 2017
0.65% 0.50%
0.12% 0.89% 0.76%
0.47%
0.54%
2.21%
1.91%
1.70%
1.19% 1.01% 1.19% 1.00%
Note: Nonperforming assets include nonaccruals, OREO, and 90+ days past due.
Source: SEC filings and SNL Financial. Regional peers defined as public institutions headquartered in West Virginia, Maryland, Virginia, and the Washington D.C. MSA
with assets between $750 million and $2.0 billion.
Exhibit 99.1
17
Current Deposit Portfolio
Non-Time Deposits ($M)Deposit Composition(1) ($M)
Source: SEC filings.
(1) Based on Q3 2017 average balances.
Interest bearing demand:
39.3%
Noninterest bearing
demand: 10.4%
Savings and money
markets: 26.4%
Time deposits including
CDs and IRAs: 24.0%
Q3 2017 Cost of Deposits = 0.74%
Non-Time Deposit Balance Cost of Deposits
$1,000.0
$875.0
$750.0
$625.0
$500.0
$375.0
$250.0
$125.0
$0.0
Non-Tim
e
Deposit
s($M
)
2.50%
2.00%
1.50%
1.00%
0.50%
0.00%
Co
st
of
Deposit
s(%
)
2009 2010 2011 2012 2013 2014 2015 2016 Q3
2017
$153.0
$206.9
$297.5
$328.8
$454.7
$586.7
$682.5
$831.4
$911.0
Exhibit 99.1
18
MVB Mortgage Volume Analysis
2017 YTD Dollar Volume by State(1)Historical Volume Comparison(1) ($M)
2017 YTD Volume by Transaction Type(2)
Source: Company documents.
YTD totals as of September 30.
(1) Volume displayed by dollars closed.
(2) Volume displayed by number of loans closed.
2013 2014 2015 2016 2016 YTD 2017 YTD
$1,012
$838
$1,339
$1,643
$1,206
$1,168
NC/SC: 25.3%
Other: 2.1%
DC: 6.1%
MD: 7.5%
VA: 51.1%
WV: 8.0%
Purchase: 60.4%
Construction
Origination: 15.3%
Construction
Refinance: 9.2%
Refinance: 15.1%
Exhibit 99.1
19
• Strong community engagement with
those we serve
• Community Reinvestment Act (CRA)
focus – sponsorship and outreach
• Annual Team MVB Cares Week in all
markets accents MVB's year-round
commitment
Investing in Our Communities
Habitat for Humanity in
Monongalia County, WV
'Sledgehammer Ceremony' for the
M.O.R.E revitalization project in
Clarksburg, WV
Team MVB Marion sorted clothes and
served meals at Sobrania Soup Opera in
Fairmont, WV
Exhibit 99.1
20
Investment Thesis
Value of s
cale and s
ca
rcit
y
Opportunity for immediate
performance improvement
Excellent team in excellent markets
Proven track record of capitalizing on market disruption
Exhibit 99.1
21
Thank You
IR.MVBbanking.com
844-MVB-BANK
Question and Answer Session
Exhibit 99.1
22
Non-GAAP Reconciliation
NONINTEREST INCOME / OPERATING REVENUE
At or for the year ended, At or for the 9 months ended,
(Dollars in Thousands) 12/31/2015 12/31/2016 9/30/2016 9/30/2017
Total Noninterest Income 34,955 43,205 33,139 30,549
Less: Realized Gain on Securities (130) (1,082) (1,082) (455)
Less: Gain on Sale of Subsidiary — — — —
Operating Noninterest Income 34,825 42,123 33,139 30,549
Net Interest Income 34,875 42,991 32,166 32,614
Plus: Operating Noninterest Income 34,825 42,123 33,139 30,549
Operating Revenue 69,700 85,114 65,305 63,163
Operating Noninterest Income 34,825 42,123 33,139 30,549
÷ Operating Revenue 69,700 85,114 65,305 63,163
Noninterest Income / Operating Revenue (%) 50.0 49.5 50.7 48.4
Source: SEC filings and Company documents.
Exhibit 99.1