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What changed in MVB FINANCIAL CORP's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of MVB FINANCIAL CORP's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+392 added−349 removedSource: 10-K (2025-03-13) vs 10-K (2024-03-13)

Top changes in MVB FINANCIAL CORP's 2024 10-K

392 paragraphs added · 349 removed · 295 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

76 edited+15 added−7 removed165 unchanged
Biggest changePaladin Fraud provides an extensive and customizable suite of fraud prevention services for merchants, credit agencies, Fintech companies and other vendors to help clients and partners defend against threats. Trabian The Bank owns an 80.8% interest in Trabian. Trabian builds digital products and web and mobile applications for forward-thinking community banks, credit unions, digital banks and Fintech companies.
Biggest changeVictor’s payment solution provides a real-time sub-ledger that communicates with the client’s core banking system. 3 Professional Services Paladin Fraud Paladin Fraud, a wholly-owned subsidiary of the Bank, provides an extensive and customizable suite of fraud prevention services for merchants, credit agencies, Fintech companies and other vendors to help clients and partners defend against threats.
The EGRRCPA amended provisions of the Dodd-Frank Act and and eased regulations on all but the largest banks.
The EGRRCPA amended provisions of the Dodd-Frank Act and eased regulations on all but the largest banks.
Covered transactions are defined by the Federal Reserve Act to include a loan or extension of credit, as well as a purchase of securities issued by an affiliate, a purchase of assets (unless otherwise exempted by the Federal Reserve Board) from the affiliate, certain derivative transactions that create a credit exposure by a bank to an affiliate, the acceptance of securities issued by the affiliate as collateral for a loan and the issuance of a guarantee, acceptance or letter of credit on behalf or for the benefit of an affiliate.
Covered transactions are defined by the Federal Reserve Act to include a loan or extension of credit to an affiliate, as well as a purchase of securities issued by an affiliate, a purchase of assets (unless otherwise exempted by the Federal Reserve Board) from the affiliate, certain derivative transactions that create a credit exposure by a bank to an affiliate, the acceptance of securities issued by the affiliate as collateral for a loan and the issuance of a guarantee, acceptance or letter of credit on behalf or for the benefit of an affiliate.
In general, any such transaction by the Bank or its subsidiaries must be limited to certain thresholds on an individual and aggregate basis and, for credit transactions with any affiliate, must be secured by designated amounts of specified collateral.
In general, any such transaction by the Bank or its subsidiaries with an affiliate must be limited to certain thresholds on an individual and aggregate basis and, for credit transactions with any affiliate, must be secured by designated amounts of specified collateral.
Under the CBLR, if a qualifying depository institution elects to use such measure, such institution (i) will be considered well capitalized if its ratio of Tier 1 capital to average total consolidated assets (i.e., leverage ratio) exceeds a 9% threshold, subject to a limited two quarter grace period, during which period the leverage ratio cannot go 100 basis points below the then applicable threshold and (ii) will not be required to calculate and report risk-based capital ratios.
Under the CBLR, if a qualifying depository institution elects to use such measure, such institution (i) will be considered well capitalized if its ratio of Tier 1 capital to average total consolidated assets (i.e., leverage ratio) exceeds a 9% threshold, subject to a limited two quarter grace period, during which period the leverage ratio cannot go 100 basis points below the then applicable threshold (i.e., 9%) and (ii) will not be required to calculate and report risk-based capital ratios.
These modifications, among other changes, include: (i) exempting banks with less than $10 billion in assets from the ability-to-repay requirements for certain qualified residential mortgage loans held in portfolio; (ii) eliminating the requirement for appraisals for certain real estate transactions valued at less than $400,000 in rural areas; (iii) exempting banks that originate fewer than 500 open-end and 500 closed-end mortgages from the Home Mortgage Disclosure Act’s expanded data disclosures; (iv) clarifying that, subject to various conditions, reciprocal deposits of another depository institution obtained using a deposit broker through a deposit placement network for purposes of obtaining maximum deposit insurance would not be considered brokered deposits subject to the FDIC’s brokered deposit regulations; (v) raising eligibility for the 18-month exam cycle from $1 billion to banks with $3 billion in assets; and (vi) simplifying capital calculations by requiring regulators to establish for institutions under $10 billion in assets a community bank leverage ratio (tangible equity to average consolidated assets) at a percentage not less than 8% and not greater than 10% that upon the election of a bank would replace the risk-based capital requirements.
These modifications, among other changes, include: (i) exempting banks with less than $10 billion in assets from the ability-to-repay requirements for certain qualified residential mortgage loans held in portfolio; (ii) eliminating the requirement for appraisals for 7 certain real estate transactions valued at less than $400,000 in rural areas; (iii) exempting banks that originate fewer than 500 open-end and 500 closed-end mortgages from the Home Mortgage Disclosure Act’s expanded data disclosures; (iv) clarifying that, subject to various conditions, reciprocal deposits of another depository institution obtained using a deposit broker through a deposit placement network for purposes of obtaining maximum deposit insurance would not be considered brokered deposits subject to the FDIC’s brokered deposit regulations; (v) raising eligibility for the 18-month exam cycle from $1 billion to banks with $3 billion in assets; and (vi) simplifying capital calculations by requiring regulators to establish for institutions under $10 billion in assets a community bank leverage ratio (tangible equity to average consolidated assets) at a percentage not less than 8% and not greater than 10% that upon the election of a bank would replace the risk-based capital requirements.
A bank will be (i) “well capitalized” if the institution has a total risk-based capital ratio of 10.0% or greater, a CET1 capital ratio of 6.5% or greater, a Tier 1 risk-based capital ratio of 8.0% or greater and a leverage ratio of 5.0% or greater, and is not subject to any order or written directive by any such regulatory authority to meet and maintain a specific capital level for any capital measure; (ii) “adequately capitalized” if the institution has a total risk-based capital ratio of 8.0% or greater, a CET1 capital ratio of 4.5% or greater, a Tier 1 risk-based capital ratio of 6.0% or greater and a leverage ratio of 4.0% or greater and is not “well capitalized”; (iii) “undercapitalized” if the institution has a total risk-based capital ratio that is less than 8.0%, a CET1 capital ratio less than 4.5%, a Tier 1 risk-based capital ratio of less than 6.0% or a leverage ratio of less than 4.0%; (iv) “significantly undercapitalized” if the institution has a total risk-based capital ratio of less than 6.0%, a CET1 capital ratio less than 3.0%, a Tier 1 risk-based capital ratio of less than 4.0% or a leverage ratio of less than 3.0%; and (v) “critically undercapitalized” if the institution’s tangible equity is equal to or less than 2.0% of average quarterly tangible assets.
A bank will be (i) “well capitalized” if the institution has a total risk-based capital ratio of 10.0% or greater, a CET1 capital ratio 13 of 6.5% or greater, a Tier 1 risk-based capital ratio of 8.0% or greater and a leverage ratio of 5.0% or greater, and is not subject to any order or written directive by any such regulatory authority to meet and maintain a specific capital level for any capital measure; (ii) “adequately capitalized” if the institution has a total risk-based capital ratio of 8.0% or greater, a CET1 capital ratio of 4.5% or greater, a Tier 1 risk-based capital ratio of 6.0% or greater and a leverage ratio of 4.0% or greater and is not “well capitalized”; (iii) “undercapitalized” if the institution has a total risk-based capital ratio that is less than 8.0%, a CET1 capital ratio less than 4.5%, a Tier 1 risk-based capital ratio of less than 6.0% or a leverage ratio of less than 4.0%; (iv) “significantly undercapitalized” if the institution has a total risk-based capital ratio of less than 6.0%, a CET1 capital ratio less than 3.0%, a Tier 1 risk-based capital ratio of less than 4.0% or a leverage ratio of less than 3.0%; and (v) “critically undercapitalized” if the institution’s tangible equity is equal to or less than 2.0% of average quarterly tangible assets.
In reviewing applications seeking approval of merger and acquisition transactions, the bank regulatory authorities will consider, among other things, the competitive effect and public benefits of the transactions, the capital position and managerial strength of the combined organization, the risks to the stability of the United States banking or financial system, the applicant’s performance record under the Community Reinvestment Act (please refer to the section captioned Community Reinvestment Act included elsewhere in this item) and its compliance with consumer protection laws and the effectiveness of the subject organizations in combating money laundering activities and other financial crimes.
In reviewing applications seeking approval of merger and acquisition transactions, the bank regulatory authorities will consider, among other things, the competitive effect and public benefits of the transactions, the capital position and managerial strength of the combined organization, the risks to the stability of the United States banking or financial system, the applicant’s performance record under the Community Reinvestment Act (refer to the section captioned Community Reinvestment Act included elsewhere in this item) and its compliance with consumer protection laws and the effectiveness of the subject organizations in combating money laundering activities and other financial crimes.
The Volcker Rule The Volcker Rule implements section 619 of the Dodd-Frank Act and prohibits insured depository institutions and affiliated companies and foreign banks which engage in the banking business in the United States (together, “banking entities”) from engaging in proprietary trading of certain securities, derivatives and commodity futures and options on these instruments, for their own account and prohibits banking entities from investing in or sponsoring certain types of funds (“covered funds”) unless otherwise permitted by the Volcker Rule.
The Volcker Rule The Volcker Rule implements section 619 of the Dodd-Frank Act and prohibits insured depository institutions and affiliated 11 companies and foreign banks which engage in the banking business in the United States (together, “banking entities”) from engaging in proprietary trading of certain securities, derivatives and commodity futures and options on these instruments, for their own account and prohibits banking entities from investing in or sponsoring certain types of funds (“covered funds”) unless otherwise permitted by the Volcker Rule.
In addition, bank holding companies that qualify and elect to be financial holding companies may engage in any activity, or acquire and retain the shares of a company engaged in any activity, that is either (i) financial in nature or incidental to such financial activity (as determined by the Federal Reserve Board in consultation with the Secretary of the Treasury) or (ii) complementary to a financial activity and does not pose a substantial risk to the safety and soundness of depository institutions or the financial system generally (as solely determined by the Federal Reserve Board).
In addition, bank holding companies that qualify and elect to be financial holding companies may engage in any activity, or acquire and retain the shares of a company engaged in any activity, that is either (i) financial in nature or incidental to such financial activity (as determined by the Federal Reserve Board in consultation with the Secretary of the Treasury) or (ii) complementary to 8 a financial activity and does not pose a substantial risk to the safety and soundness of depository institutions or the financial system generally (as solely determined by the Federal Reserve Board).
The Federal Reserve Act, made applicable to the Bank by section 8(j) of the Federal Deposit Insurance Act (the “FDIA”), imposes quantitative and qualitative requirements and collateral requirements on “covered transactions” by the Bank with, or for the benefit of, its affiliates and generally requires those transactions to be on arm's length terms at least as favorable to the Bank as if the transaction were conducted with an unaffiliated third-party.
The Federal Reserve Act, made applicable to the Bank by section 8(j) of the Federal Deposit Insurance Act (the “FDIA”), imposes quantitative and qualitative requirements and collateral requirements on “covered transactions” by the Bank with, or for the benefit of, certain of its affiliates and generally requires those transactions to be on arm's length terms at least as favorable to the Bank as if the transaction were conducted by the Bank with an unaffiliated third-party.
New rules promulgated by the SEC in the summer of 2023 will require us, as an Exchange Act reporting company, (i) to report to the SEC on an accelerated basis (i.e., within four business days) any "cybersecurity incident" which is deemed material, unless certain exceptions apply, and (ii) to disclose our process for assessing, identifying and maintaining material cybersecurity risks and threats.
New rules promulgated by the SEC in the summer of 2023 require us, as an Exchange Act reporting company, (i) to report to the SEC on an accelerated basis (i.e., within four business days) any "cybersecurity incident" which is deemed material, unless certain exceptions apply, and (ii) to disclose our process for assessing, identifying and maintaining material cybersecurity risks and threats.
In addition, the Board of Governors of the Federal Reserve System (“Federal Reserve Board”) was required to raise the asset threshold under 8 its Small Bank Holding Company Policy Statement from $1 billion to $3 billion for bank holding companies that are exempt from consolidated capital requirements, provided that such companies meet certain other conditions such as not engaging in significant non-banking activities.
In addition, the Board of Governors of the Federal Reserve System (“Federal Reserve Board”) was required to raise the asset threshold under its Small Bank Holding Company Policy Statement from $1 billion to $3 billion for bank holding companies that are exempt from consolidated capital requirements, provided that such companies meet certain other conditions, such as not engaging in significant non-banking activities.
These laws include the Equal Credit Opportunity Act, the Fair Credit Reporting Act, the Truth in Lending Act, the Truth in Savings Act, the Electronic Fund Transfer Act, the Expedited Funds Availability Act, the Home Mortgage Disclosure Act (“HMDA”), the Fair Housing Act, the Real Estate Settlement Procedures Act, the Fair Debt Collection Practices Act, the Service Members Civil Relief Act and these federal laws’ respective state-law counterparts, as well as state usury laws and state and federal laws regarding unfair and deceptive acts and practices.
These laws include the Equal Credit Opportunity Act, the Fair Credit Reporting Act, the Truth in Lending Act, the Truth in Savings Act, the Electronic Fund Transfer Act, the Expedited Funds Availability Act, the Home Mortgage Disclosure Act (“HMDA”), the Fair Housing Act, the Real Estate Settlement Procedures Act, the Fair Debt Collection Practices Act, the Service Members Civil Relief Act and these federal laws’ respective state-law counterparts, as well 15 as state usury laws and state and federal laws regarding unfair and deceptive acts and practices.
If, after 15 being so notified, an institution fails to submit an acceptable compliance plan or fails in any material respect to implement an acceptable compliance plan, the agency must issue an order directing action to correct the deficiency and may issue an order directing other actions of the types to which an undercapitalized institution is subject under the “prompt corrective action” provisions of the FDIA.
If, after being so notified, an institution fails to submit an acceptable compliance plan or fails in any material respect to implement an acceptable compliance plan, the agency must issue an order directing action to correct the deficiency and may issue an order directing other actions of the types to which an undercapitalized institution is subject under the “prompt corrective action” provisions of the FDIA.
For further discussion of risks related to cybersecurity, please refer to Item 1C - Cybersecurity included elsewhere in this report. Monetary Policy and Economic Conditions The business of financial institutions is affected not only by general economic conditions, but also by the policies of various governmental regulatory agencies, including the Federal Reserve Board.
For further discussion of risks related to cybersecurity, refer to Item 1C - Cybersecurity included elsewhere in this report. Monetary Policy and Economic Conditions The business of financial institutions is affected not only by general economic conditions, but also by the policies of various governmental regulatory agencies, including the Federal Reserve Board.
We thoroughly analyze each industry in which our customers operate, as well as any new products or services provided, from both an operational and regulatory perspective. Edge Ventures Edge Ventures, a wholly-owned subsidiary of the Bank, acts as a holding company for Victor and MVB Technology. Victor Victor is a wholly-owned subsidiary of Edge Ventures.
We thoroughly analyze each industry in which our customers operate, as well as any new products or services provided, from both an operational and regulatory perspective. Edge Ventures Edge Ventures, a wholly-owned subsidiary of the Bank, acts as a holding company for Victor and MVB Technology.
“Significantly undercapitalized” depository institutions may be subject to a number of requirements and restrictions, including orders to sell sufficient voting stock to become “adequately capitalized,” requirements to reduce total assets and cessation of receipt of deposits from correspondent banks. “Critically undercapitalized” institutions are subject to the appointment of a receiver or conservator.
“Significantly undercapitalized” depository institutions may be subject to a number of requirements and restrictions, including orders to sell sufficient voting stock to become “adequately capitalized,” requirements to reduce total assets and cessation of receipt of deposits from correspondent banks. “Critically undercapitalized” institutions may be subject to the appointment of a receiver or conservator.
Guidelines adopted by the federal bank regulatory agencies establish general standards relating to risk management, legal and regulatory compliance, internal controls and information systems, internal audit systems, loan documentation, credit underwriting, interest rate exposure, asset growth and compensation, fees and benefits, among other subjects.
Guidelines adopted by the federal bank 14 regulatory agencies establish general standards relating to risk management, legal and regulatory compliance, internal controls and information systems, internal audit systems, loan documentation, credit underwriting, interest rate exposure, asset growth and compensation, fees and benefits, among other subjects.
These provisions could limit our ability to pay dividends on our outstanding common shares. In addition, we and the Bank are subject to other regulatory policies and requirements relating to the payment of dividends, including requirements to maintain adequate capital above regulatory minimums (please refer to the Capital Requirements section below).
These provisions could limit our ability to pay dividends on our outstanding common shares. In addition, we and the Bank are subject to other regulatory policies and requirements relating to the payment of dividends, including requirements to maintain adequate capital above regulatory minimums (refer to the Capital Requirements section below).
An institution may be downgraded 14 to, or deemed to be within, a capital category that is lower than indicated by its capital ratios if it is determined to be in an unsafe or unsound condition or if it receives an unsatisfactory examination rating with respect to certain matters.
An institution may be downgraded to, or deemed to be within, a capital category that is lower than indicated by its capital ratios if it is determined to be in an unsafe or unsound condition or if it receives an unsatisfactory examination rating with respect to certain matters.
Please refer to the Prompt Corrective Action section above. If an institution fails to comply with such an order, the agency may seek to enforce such order in judicial proceedings and to impose civil money penalties, cease and desist orders and other similar enforcement measures.
Refer to the Prompt Corrective Action section above. If an institution fails to comply with such an order, the agency may seek to enforce such order in judicial proceedings and to impose civil money penalties, cease and desist orders and other similar enforcement measures.
The Patriot Act includes the International Money Laundering Abatement and Financial Anti-Terrorism Act of 2001, which grants the Secretary of the United States Treasury broad authority to establish regulations and to impose requirements and restrictions on financial institutions’ operations.
The Patriot Act includes the International Money Laundering Abatement and Financial Anti-Terrorism Act of 2001, which grants the Secretary of the United States Treasury broad authority to establish regulations and to impose requirements and restrictions on financial institutions’ 10 operations.
The CFPB has broad rulemaking 16 authority for a wide range of consumer financial laws that apply to all banks, including, among other things, the authority to prohibit “unfair, deceptive or abusive” acts and practices.
The CFPB has broad rulemaking authority for a wide range of consumer financial laws that apply to all banks, including, among other things, the authority to prohibit “unfair, deceptive or abusive” acts and practices.
The Bank remains subject to regulatory capital requirements administered by the federal banking agencies. Federal Securities Regulation We are subject to the information, proxy solicitation, insider trading and other restrictions and requirements of the SEC under the Exchange Act.
The Bank remains subject to regulatory capital requirements administered by the federal banking agencies. 9 Federal Securities Regulation We are subject to the information, proxy solicitation, insider trading and other restrictions and requirements of the SEC under the Exchange Act.
A 9 depository institution subsidiary is considered to be “well capitalized” if it satisfies the requirements for this status discussed in the sections captioned Capital Requirements and Prompt Corrective Action included in this item.
A depository institution subsidiary is considered to be “well capitalized” if it satisfies the requirements for this status discussed in the sections captioned Capital Requirements and Prompt Corrective Action included in this item.
As noted above, the EGRRCPA eliminated these risk-based capital requirements for banks with less than $10.0 billion in assets who elect to follow the CBLR.
As noted above, the EGRRCPA eliminated these risk-based capital requirements for banks with less than $10 billion in assets who elect to follow the CBLR.
Fintech companies also compete with us directly and in partnership with other banks and financial services providers in lending, deposits, contactless payment cards, digital wallets and mobile payments solutions, installment or other buy now pay later methods, real-time payment systems, peer-to-peer payments, card readers and other point of sale technologies, tools that simplify 6 merchant payments and other markets.
Fintech companies also compete with us directly and in partnership with other banks and financial services providers in lending, deposits, contactless payment cards, digital wallets and mobile payments solutions, installment or other buy now pay later 5 methods, real-time payment systems, peer-to-peer payments, card readers and other point of sale technologies, tools that simplify merchant payments and other markets.
Fintech Banking We provide innovative strategies to independent banking and corporate clients throughout the United States. Our dedicated Fintech team specializes in providing banking services to corporate Fintech clients, primarily focusing on operational risk management and compliance. Managing banking relationships with clients in the payments, digital assets, banking-as-a-service and gaming industries is complex, from both an operational and regulatory perspective.
Fintech Banking We provide innovative strategies to independent banking and corporate clients throughout the United States. Our dedicated Fintech team specializes in providing banking services to corporate Fintech clients, primarily focusing on operational risk management and compliance. Managing banking relationships with clients in the payments, banking-as-a-service and gaming industries is complex, from both an operational and regulatory perspective.
The Capital Rules include a “Common Equity Tier 1” (“CET1”) measure, specify that Tier 1 capital consists of CET1 and “Additional Tier 1 capital” instruments meeting certain revised requirements, define CET1 narrowly by requiring that most 13 deductions/adjustments to regulatory capital measures be made to CET1 and not to the other components of capital, and expand the scope of the deductions/adjustments to capital as compared to existing regulations.
The Capital Rules include a “Common Equity Tier 1” (“CET1”) measure, specify that Tier 1 capital consists of CET1 and “Additional Tier 1 capital” instruments meeting certain requirements, define CET1 narrowly by requiring that most deductions/adjustments to regulatory capital measures be made to CET1 and not to the other components of capital, and expand the scope of the deductions/adjustments to capital as compared to existing regulations.
The information on our website is not incorporated by reference into this Annual Report on Form 10-K or in any other report or document we file with the SEC. The SEC maintains an Internet site (http://www.sec.gov) that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC. 20
The information on our website is not incorporated by reference into this Annual Report on Form 10-K or in any other report or document we file with the SEC. The SEC maintains an Internet site (http://www.sec.gov) that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC. 18
One statement indicates that financial institutions should design multiple layers of security controls to establish lines of defense and to ensure that their risk management processes also address the risk posed by compromised customer credentials, including security measures to reliably authenticate customers accessing internet-based services of the financial institution.
One statement indicated that financial institutions should design multiple layers of security controls to establish lines of defense and to ensure that their risk management processes also address the risk posed by compromised customer credentials, including security measures to reliably authenticate customers accessing internet-based services of the financial institution.
The Bank also engages a third-party for an external loan review, which targets 40% to 45% of the commercial loan portfolio on an annual basis, also using a risk-based approach for loan selection. If deterioration in creditworthiness has occurred, the Bank takes prompt action designed to ensure repayment of the loan.
The Bank also engages a third-party for an external loan review, which targets 35% to 40% of the commercial loan portfolio on an annual basis, also using a risk-based approach for loan selection. If deterioration in creditworthiness has occurred, the Bank takes prompt action designed to ensure repayment of the loan.
Regulatory authorities have imposed cease and desist orders and civil money penalties against 11 institutions found to be violating these obligations.
Regulatory authorities have imposed cease and desist orders and civil money penalties against institutions found to be violating these obligations.
In addition, the ability of a borrower to make payments on commercial loans typically depends on adequate cash flow of a business and thus may be subject 5 to adverse conditions in the general economy or a specific industry to a greater extent than consumer loans.
In addition, the ability of a 4 borrower to make payments on commercial loans typically depends on adequate cash flow of a business and thus may be subject to adverse conditions in the general economy or a specific industry to a greater extent than consumer loans.
The other statement indicates that a financial institution’s management is expected to maintain sufficient business continuity planning processes to ensure the rapid recovery, resumption and maintenance of the institution’s operations after a cyberattack involving destructive malware.
The other statement indicated that a financial institution’s management is expected to maintain sufficient business continuity planning processes to ensure the rapid recovery, resumption and maintenance of the institution’s operations after a cyberattack involving destructive malware.
For further information regarding the capital ratios and leverage ratio of us and the Bank, please refer to the discussion under the section captioned Capital and Stockholders’ Equity included in Item 7 – Management's Discussion and Analysis of Financial Condition and Results of Operations and Note 16 – Regulatory Capital Requirements accompanying the consolidated financial statements included elsewhere in this report.
For further information regarding the capital ratios and leverage ratio of us and the Bank, refer to the discussion under the section captioned Capital and Stockholders’ Equity included in Item 7 – Management's Discussion and Analysis of Financial Condition and Results of Operations and Note 15 – Regulatory Capital Requirements accompanying the consolidated financial statements included elsewhere in this report.
Please refer to the section captioned Community Reinvestment Act included elsewhere in this item.
Refer to the section captioned Community Reinvestment Act included elsewhere in this item.
As of July 22, 2019, the effective date for the rulemaking implementing the EGRRCPA exemption, and December 31, 2023, we and the Bank are below these thresholds and thus exempt from the Volcker Rule. 12 Limit on Dividends We are a legal entity separate and distinct from the Bank and the Bank’s wholly-owned subsidiaries.
As of July 22, 2019, the effective date for the rulemaking implementing the EGRRCPA exemption, and December 31, 2024, we and the Bank are below these thresholds and thus exempt from the Volcker Rule. Limit on Dividends We are a legal entity separate and distinct from the Bank and the Bank’s wholly-owned subsidiaries.
The Bank obtains full appraisals from licensed appraisers for the majority of loans secured by real estate. In addition, the Bank purchases residential real estate loans from ICM. Lenders generally consider residential construction financing to involve a higher risk of loss than long-term financing on improved, occupied real estate.
The Bank obtains full appraisals from licensed appraisers for the majority of loans secured by real estate. In addition, the Bank purchases residential real estate loans from ICM and Warp Speed. Lenders generally consider residential construction financing to involve a higher risk of loss than long-term financing on improved, occupied real estate.
Human Capital Resources As of December 31, 2023, we employed 445 team members. We seek to attract, retain and develop the most talented team members possible, regardless of location, by promoting a strong, positive culture, offering competitive compensation, maintaining a safe and healthy workplace, investing in training and education and emphasizing open communication with management.
Human Capital Resources As of December 31, 2024, we employed 453 team members. We seek to attract, retain and develop the most talented team members possible, regardless of location, by promoting a strong, positive culture, offering competitive compensation, maintaining a safe and healthy workplace, investing in training and education and emphasizing open communication with management.
We believe that the current economic climate in our primary market areas reflect economic climates that are consistent with the general national economic climate. Unemployment in the United States was 3.5%, 3.3% and 3.7% for December 2023, 2022 and 2021, respectively. Segment Reporting We have identified three reportable segments: CoRe Banking, Mortgage Banking and Financial Holding Company.
We believe that the current economic climate in our primary market areas reflect economic climates that are consistent with the general national economic climate. Unemployment in the United States was 3.8%, 3.5% and 3.3% for December 2024, 2023 and 2022, respectively. Segment Reporting We have identified three reportable segments: CoRe Banking, Mortgage Banking and Financial Holding Company.
Overall, 32.5% of the Bank's lending activity across all loan types occurs to borrowers outside of this region, mostly in loans to healthcare facilities secured by commercial real estate and for working capital lines of credit, as well as loans through SBA lending programs to borrowers across numerous industries.
Overall, 22.4% of the Bank's lending activity across all loan types occurs to borrowers outside of this region, mostly in loans to healthcare facilities secured by commercial real estate and for working capital lines of credit, as well as loans through SBA lending programs to borrowers across numerous industries.
The bank elected to begin using the CBLR framework for the first quarter of 2022 and intends to use this measure for the foreseeable future.
The bank elected to begin using the CBLR framework for the first quarter of 2021 and intends to use this measure for the foreseeable future.
The MAV is determined by taking line item values for various investment and loan classes and applying an FHLB haircut to each item. At December 31, 2023, the Bank held capital stock of FHLB in the amount of $2.1 million.
The MAV is determined by taking line item values for various investment and loan classes and applying an FHLB haircut to each item. At December 31, 2024, the Bank held capital stock of FHLB in the amount of $2.0 million.
Primary Market Areas and Customers Our primary market area for CoRe banking services encompasses North Central West Virginia and Northern Virginia, where we currently operate eight full-service branches, comprising of six in West Virginia and two in Virginia.
Primary Market Areas and Customers Our primary market area for CoRe banking services encompasses North Central West Virginia and Northern Virginia, where we currently operate seven full-service branches, comprising of six in West Virginia and one in Virginia.
Also, note that, with respect to construction loans, the Bank generally makes loans to the homeowner, rather than to the builder. At December 31, 2023, residential mortgage construction loans to individuals totaled $53.3 million with an average remaining life of five months. These loans are generally refinanced to a permanent loan upon completion of the construction.
Also, note that, with respect to construction loans, the Bank generally makes loans to the homeowner, rather than to the builder. At December 31, 2024, residential mortgage construction loans to individuals totaled $79.8 million with an average remaining life of five months. These loans are generally refinanced to a permanent loan upon completion of the construction.
These loans represented 69.2% of the total aggregate loan portfolio as of that date. Commercial lending entails significant additional risks compared to residential and consumer lending.
These loans represented 67.5% of the total aggregate loan portfolio as of that date. Commercial lending entails significant additional risks compared to residential and consumer lending.
For more information about each of our reportable segments, please refer to Note 23 – Segment Reporting accompanying the consolidated financial statements included elsewhere in this report. Commercial Loans At December 31, 2023, the Bank had $1.60 billion outstanding in commercial loans, including commercial and industrial, commercial real estate and construction loans.
For more information about each of our reportable segments, refer to Note 22 – Segment Reporting accompanying the consolidated financial statements included elsewhere in this report. Commercial Loans At December 31, 2024, the Bank had $1.42 billion outstanding in commercial loans, including commercial and industrial, commercial real estate and construction loans.
We are subject to the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), which imposes numerous reporting, accounting, corporate governance and business practices on companies, as well as financial and other professionals who have involvement with the United States public markets.
We are subject to the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), which imposes numerous reporting, accounting, corporate governance and business practices on companies, as well as financial and other professionals who have involvement with the United States public markets. We are generally subject to these requirements and applicable SEC rules and regulations.
Regulation of banks, bank holding companies, financial holding companies and their affiliates is intended primarily for the protection of depositors, the insurance fund of the Federal Deposit Insurance Corporation (“FDIC”) and the stability of the financial system, rather than for the protection of our shareholders and creditors.
Regulation of banks, bank holding companies, financial holding companies and their affiliates is intended primarily for the protection of depositors, the insurance fund of the FDIC and the stability of the financial system, rather than for the protection of our shareholders and creditors.
We have policies and procedures in place to establish internal capital levels and to monitor and stress-test such levels on a regular basis to ensure we remain above regulatory capital limits. The Bank's CBLR at December 31, 2023 was 10.5%.
We have policies and procedures in place to establish internal capital levels and to monitor and stress-test such levels on a regular basis to ensure we remain above regulatory capital requirements. The Bank's CBLR at December 31, 2024 was 11.2%.
The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”) significantly restructured the financial regulatory regime in the United States and has had a broad impact on the financial services industry as a result of the significant regulatory and compliance changes required under the act.
The Dodd-Frank Act significantly restructured the financial regulatory regime in the United States and has had a broad impact on the financial services industry as a result of the significant regulatory and compliance changes required under the act.
Furthermore, banking regulators take into account CRA ratings when considering a request for an approval of a proposed transaction to consolidate with or acquire the assets or assume the liabilities of an insured depository institution, or to open or relocate a branch office.
Furthermore, banking regulators take into account CRA ratings when considering a request for an approval of a proposed transaction to consolidate with or acquire the assets or assume the liabilities of an insured depository institution, or to open or relocate a branch office. Cybersecurity In March 2015, federal regulators issued two related statements regarding cybersecurity.
We also support team members’ financial planning for the future by offering 401(k) plan matching, immediate vesting and access to retirement advisors. Team Members Learning and Development We remain committed to education and development for our team members. The remote work environment has created additional opportunities for virtual and online learning.
We also support team members’ financial planning for the future by offering 401(k) plan matching, immediate vesting and access to retirement advisors. Team Members Learning and Development We remain committed to education and development for our team members.
Consumer Loans At December 31, 2023, the Bank had $27.4 million of consumer loans, including installment loans and personal lines of credit, representing 1.2% of total loans outstanding. Consumer loans include installment loans used by clients to purchase automobiles, boats and recreational vehicles.
Consumer Loans At December 31, 2024, the Bank had $18.6 million of consumer loans, including installment loans and personal lines of credit, representing 0.9% of total loans outstanding. Consumer loans include installment loans used by clients to purchase automobiles, boats and recreational vehicles.
Residential Mortgage Loans At December 31, 2023, the Bank had $687.1 million of residential real estate loans, home equity lines of credit and construction mortgages outstanding, representing 29.7% of total loans outstanding.
Residential Mortgage Loans At December 31, 2024, the Bank had $663.6 million of residential real estate loans, home equity lines of credit and construction mortgages outstanding, representing 31.6% of total loans outstanding.
MVB Financial's consolidated subsidiaries also includes SPE PR, LLC ("MVB PR"). Through our professional services entities, which include Paladin Fraud and Trabian, we provide consulting solutions to assist Fintech and corporate clients in building digital products and meeting their fraud defense needs. In February 2023, we completed the sale of the Bank’s wholly-owned subsidiary, ProCo Global, Inc.
MVB Financial's consolidated subsidiaries also includes SPE PR, LLC. Through our professional services entities, which include Paladin Fraud and Trabian, we provide consulting solutions to assist Fintech and corporate clients in building digital products and meeting their fraud defense needs.
A financial institution is also expected to develop appropriate processes to enable recovery of data and business operations and address rebuilding network capabilities and restoring data if the institution or its critical service providers fall victim to this type of cyberattack. If we fail to observe the regulatory guidance, we could be subject to various regulatory sanctions, including financial penalties.
A financial institution is also expected to develop appropriate processes to enable recovery of data and business operations and address rebuilding network capabilities and restoring data if the institution or its critical service providers fall victim to this type of cyberattack.
We are generally subject to these requirements and applicable SEC rules and regulations. 10 Acquisitions The BHCA, the Bank Merger Act, the Change in Bank Control Act (the “CIBCA”), West Virginia banking law, and other federal and state statutes regulate investments in and acquisitions of commercial banks and their parent holding companies.
Acquisitions The BHCA, the Bank Merger Act, the Change in Bank Control Act (the “CIBCA”), West Virginia banking law, and other federal and state statutes regulate investments in and acquisitions of commercial banks and their parent holding companies.
Capital Requirements Federal regulations require FDIC-insured depository institutions, such as the Bank, to comply with applicable federal capital adequacy standards (the “Capital Rules”). State chartered banks, such as the Bank, are subject to similar capital requirements adopted by their state regulators, which, in our case, is the West Virginia Division of Financial Institutions.
State chartered banks, such as the Bank, are subject to similar capital requirements adopted by their state regulators, which, in our case, is the West Virginia Division of Financial Institutions.
In 2023 we assigned team members position-specific curricula designed to support ongoing compliance requirements and development within their individual positions. Team members experience on-the-job training, as well as other company organized opportunities.
In 2024, we assigned team members position-specific curricula designed to support ongoing compliance requirements and development within their individual positions. This training also included 13 custom training videos, which were assigned a combined total 887 times. Team members experience on-the-job training, as well as other company-organized opportunities.
Consistent with the Bank's mission to pursue technology to accelerate community finance, Trabian has created technology platforms that have been instrumental to the success of many of today’s leading Fintech companies.
Trabian Trabian builds digital products and web and mobile applications for forward-thinking community banks, credit unions, digital banks and Fintech companies. Consistent with the Bank's mission to pursue technology to accelerate community finance, Trabian has created technology platforms that have been instrumental to the success of many of today’s leading Fintech companies.
Tracking these requests allows us to have visibility into the interests of team members. The tuition reimbursement program provides support to team members who wish to further their education with accredited institutions. Communication, Recognition and Engagement We believe it is important to provide our team members with open communication with management.
The tuition reimbursement program provides support to team members who wish to further their education with accredited institutions. In 2024, 24 team members participated in education assistance, while four team members were approved for the tuition reimbursement program. Communication, Recognition and Engagement We believe it is important to provide our team members with open communication with management.
The rules also increase the overall amount of data required to be collected and submitted, including additional data points about the loans and borrowers. 17 Financial Privacy Federal law currently contains extensive customer privacy protection provisions, including substantial customer privacy protections provided under the Financial Services Modernization Act of 1999 (commonly known as the Gramm-Leach-Bliley Act).
Financial Privacy Federal law currently contains extensive customer privacy protection provisions, including substantial customer privacy protections provided under the Financial Services Modernization Act of 1999 (commonly known as the Gramm-Leach-Bliley Act).
It is unclear whether the anticipated stress described above will actually occur or the effort that it might have on us or the Bank, if any. Regulatory Agencies We are a legal entity separate and distinct from the Bank and the Bank’s wholly-owned subsidiaries.
It is unclear whether the anticipated stress described above will actually occur or the effort that it might have on us or the Bank, if any.
Also, the terms of such extensions of credit may not involve more than the normal risk of non-repayment or present other unfavorable features and may not exceed certain limitations on the amount of credit extended to such persons individually and in the aggregate.
Also, the terms of such extensions of credit may not involve more than the normal risk of non-repayment or present other unfavorable features, may not exceed certain limitations on the amount of credit extended to such persons individually and in the aggregate and, in certain instances, may require the approval of the Bank's Board of Directors. 12 Capital Requirements Federal regulations require FDIC-insured depository institutions, such as the Bank, to comply with applicable federal capital adequacy standards (the “Capital Rules”).
The monetary policies of the Federal Reserve Board have had a significant effect on the operating results of financial institutions in the past and are expected to continue to have significant effects in the future.
These policies and regulations significantly affect the overall growth and distribution of loans, investments and deposits and the interest rates charged on loans, as well as the interest rates paid on deposit accounts. 17 The monetary policies of the Federal Reserve Board have had a significant effect on the operating results of financial institutions in the past and are expected to continue to have significant effects in the future.
The rules expand the range of transactions subject to these requirements to include most securitized residential mortgage loans and credit lines.
The rules expand the range of transactions subject to these requirements to include most securitized residential mortgage loans and credit lines. The rules also increase the overall amount of data required to be collected and submitted, including additional data points about the loans and borrowers.
Financial institutions must also impose daily limits on overdraft charges, review and modify check-clearing procedures, prominently distinguish account balances from available overdraft coverage amounts and ensure board and management oversight regarding overdraft payment programs.
Financial institutions must also impose daily limits on overdraft charges, review and modify check-clearing procedures, prominently distinguish account balances from available overdraft coverage amounts and ensure board and management oversight regarding overdraft payment programs. 16 Community Reinvestment Act The Community Reinvestment Act of 1977 (“CRA”) requires depository institutions to assist in meeting the credit needs of their market areas consistent with safe and sound banking practice.
The recent focus on environmental, sustainable and governance and climate change considerations in the business community and among our and the Bank's other constituents may over time affect our and the Bank's approach to evaluating and addressing environmental risk and may increase the costs associated with monitoring and mitigating those risks. 19 Other Regulatory Matters We are subject to examinations and investigations by federal and state banking regulators, as well as the SEC, various taxing authorities and various state regulators.
The recent focus on environmental, sustainable and governance and climate change considerations in the business community and among our and the Bank's other constituents may over time affect our and the Bank's approach to evaluating and addressing environmental risk and may increase the costs associated with monitoring and mitigating those risks, although it is not clear if this recent focus will continue in the coming years.
This also includes additional courses/content team members experience outside of our Learning Management System. 7 We also offer team member education assistance and tuition reimbursement programs. The education assistance program provides support to team members wanting to acquire training outside of MVB in support of their position and/or annual certification requirements.
We also offer team member education assistance and tuition reimbursement programs. The program provides support to team members wanting to acquire training outside of company-provided support of their position and/or annual certification requirements. Tracking these requests allows us to have visibility into the interests of team members.
In view of the changing conditions in the economy and the money markets, the activities of monetary and fiscal authorities and in spite of the recent reports of a significant lessening in inflationary pressures, we cannot predict future changes in interest rates, credit availability or deposit levels.
In view of the changing conditions in the economy and the money markets, we cannot predict future changes in interest rates, credit availability or deposit levels. Effect of Environmental Regulation Our primary exposure to environmental risk is through our lending activities.
Changes in leadership at various federal banking agencies, including the Federal Reserve Board, can also change the policy direction of these agencies. Certain of these recent proposals and changes are described below.
Changes in leadership at various federal banking agencies, including the Federal Reserve Board, can also change the policy direction of these agencies. There have been several significant changes in the leadership at the federal bank regulatory agencies since President Trump took office in January 2025, and more significant changes are expected in the near and medium term.
The team at Victor develops technology to make it faster and easier to launch and scale a broad spectrum of Fintech solutions for the gaming, payments, banking-as-a-service and digital asset sectors. 4 Within weeks, Fintech developers can build solutions to manage and move money with developer-friendly application programming interfaces.
Victor Victor, a wholly-owned subsidiary of Edge Ventures, was formed to develop technology to make it faster, easier and cost effective to launch and scale a broad spectrum of solutions for the gaming, payments and banking-as-a-service sectors.
In 2023, we held 105 internal learning events that provided 173 total hours, or an average of 3.32 hours per week, of learning opportunities facilitated by our Learning & Development team. We have a 40-hour annual education requirement for each team member as part of our annual performance evaluation process.
We held 67 internal learning events in 2024 that provided 123 total hours, or an average of 2.4 hours per week, of learning opportunities facilitated by our Learning & Development team. Additionally, we have built an up-to- 6 date archive of On Demand learning content where team members utilized 1,022 hours of learning resources.
Removed
(“Chartwell,” which does business under the registered trade name Chartwell Compliance). In May 2023, we entered into an agreement with Flexia Payments, LLC ("Flexia"), in which Edge Ventures owned a controlling interest, to facilitate the divestiture of our interests in the ongoing business of Flexia.
Added
Victor integrates directly with legacy bank core systems allowing developers to build solutions for clients to store, manage and move money securely with application programming interfaces.
Removed
Banks can onboard and manage more programs with Victor’s tailored due diligence, risk assessment and oversight workflow tools. Recognizing the complexity of the Fintech ecosystem, Victor also supports seamless integration with a proven network of value-added technology and service providers. Professional Services Paladin Fraud Paladin Fraud is a wholly-owned subsidiary of the Bank.
Added
As of December 31, 2024, the Bank owned an 80.8% interest in Trabian and consolidated 100% of Trabian within the consolidated financial statements.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeWe may not be able to effectively implement new technology-driven products and services or be successful in marketing these products and services to our customers. Failure to successfully keep pace with technological change affecting the financial services industry could have a material adverse effect on our business, financial condition and results of operations.
Biggest changeFailure to successfully keep pace with technological change affecting the financial services industry could have a material adverse effect on our business, financial condition and results of operations. Consumers may decide not to use banks to complete their financial transactions, or deposit funds electronically with banks that have no branches within our market area, which could affect net income.
ITEM 1A. RISK FACTORS Please carefully consider the risks described below, together with all other information included or incorporated by reference in this Annual Report on Form 10-K. If any of the following risks actually occur, our business, financial condition, results of operations and cash flows could be materially adversely affected.
ITEM 1A. RISK FACTORS Carefully consider the risks described below, together with all other information included or incorporated by reference in this Annual Report on Form 10-K. If any of the following risks actually occur, our business, financial condition, results of operations and cash flows could be materially adversely affected.
Additionally, the Bank is engaged in relationships with clients in the payments, digital savings, digital assets, crowdfunding, lottery and gaming industries and any change in regulations could impact us from both an operational and regulatory perspective. Investing in these newer industries presents some risks. For example, earnings from our Fintech investments can be volatile and difficult to predict.
Additionally, the Bank is engaged in relationships with clients in the payments, digital savings, crowdfunding, lottery and gaming industries and any change in regulations could impact us from both an operational and regulatory perspective. Investing in these newer industries presents some risks. For example, earnings from our Fintech investments can be volatile and difficult to predict.
Furthermore, failure to realize the expected revenue increases, cost savings, increases in geographic or product presence and/or other projected benefits from an acquisition could have a material adverse effect on our business, financial condition and results of operations. We are subject to liquidity risk, which could disrupt the ability to meet our financial obligations.
Furthermore, failure to realize the expected revenue increases, cost savings, increases in geographic or product presence and/or other projected benefits from an acquisition or disposition could have a material adverse effect on our business, financial condition and results of operations. We are subject to liquidity risk, which could disrupt our ability to meet our financial obligations.
Liquidity refers to the ability of us to ensure sufficient levels of cash to fund operations, such as meeting deposit withdrawals, funding loan commitments, paying expenses and meeting periodic payment obligations under certain subordinated debentures issued by us in connection with the issuance of floating rate redeemable trust preferred securities.
Liquidity refers to our ability to ensure sufficient levels of cash to fund operations, such as meeting deposit withdrawals, funding loan commitments, paying expenses and meeting periodic payment obligations under certain subordinated debentures issued by us in connection with the issuance of floating rate redeemable trust preferred securities.
A significant portion of our loan portfolio is secured by real property. During the ordinary course of business, we may foreclose 27 on and take title to properties securing certain loans. In doing so, there is a risk that hazardous or toxic substances could be found on these properties.
A significant portion of our loan portfolio is secured by real property. During the ordinary course of business, we may foreclose on and take title to properties securing certain loans. In doing so, there is a risk that hazardous or toxic substances could be found on these properties.
If our clients move money out of bank deposits into investments or to other financial institutions, we could lose a relatively low-cost source of funds. Limited availability of borrowings and liquidity from the FHLB system and other sources could negatively impact earnings. The Bank is currently a member bank of the FHLB of Pittsburgh.
If our clients move money out of bank deposits into investments or to other financial institutions, we could lose a relatively low-cost source of funds. Limited availability of borrowings and liquidity from the FHLB system and other sources could negatively impact earnings. 24 The Bank is currently a member bank of the FHLB of Pittsburgh.
Cyberattacks on third-party retailers or other business establishments that widely accept debit card or check payments could compromise sensitive Bank customer information, such as debit card and account numbers. Such an attack could result in significant costs to the Bank, such as costs to reimburse customers, reissue debit cards and open new customer accounts.
Cyberattacks on third-party retailers or other business establishments that widely accept debit card or check payments could compromise sensitive Bank customer information, such as debit card and account numbers. Such an attack could result in significant costs to the Bank, such as the cost to reimburse customers, reissue debit cards and open new customer accounts.
In addition, 28 such negative effects on customers could result in defaults on the loans and decrease the value of mortgage-backed securities in which we have invested. We are subject to extensive government regulation and supervision and possible enforcement and other legal actions that could detrimentally affect our business.
In addition, such negative effects on customers could result in defaults on the loans and decrease the value of mortgage-backed securities in which we have invested. We are subject to extensive government regulation and supervision and possible enforcement and other legal actions that could detrimentally affect our business.
We cannot predict with 22 certainty the amount of losses or guarantee that the allowance for credit losses is adequate to absorb future losses in the loan portfolio. Excessive credit losses could have a material adverse effect on our financial condition and results of operations.
We cannot predict with certainty the amount of losses or guarantee that the allowance for credit losses is adequate to absorb future losses in the loan portfolio. Excessive credit losses could have a material adverse effect on our financial condition and results of operations.
Any failure, interruption, intrusion or breach in security of these systems could result in failures or disruptions in the customer relationship, management, general ledger, deposit, loan and other systems. 26 There have been several cyberattacks on websites of large financial services companies.
Any failure, interruption, intrusion or breach in security of these systems could result in failures or disruptions in the customer relationship, management, general ledger, deposit, loan and other systems. There have been several cyberattacks on websites of large financial services companies.
Also, many of our non-residential real estate borrowers have more than one loan outstanding. Consequently, an adverse development with respect to one loan or one credit relationship can expose us to a significantly greater risk of loss compared to an adverse development with respect to a residential mortgage loan.
Also, many of our non-residential real estate borrowers have more than one loan outstanding. Consequently, an adverse development with respect to one loan or one credit relationship can expose us to a significantly greater risk of loss compared to an adverse development with respect to a 20 residential mortgage loan.
We may also face criticism in response to changes in overall strategic direction, the addition of new lines of business, the exit of current lines of business or with openings or closures of certain banking centers. Changes in card network rules or standards could adversely affect our business.
We may also face criticism in response to changes in overall strategic direction, the addition of new lines of business, the exit of current lines of business or the openings or closures of certain banking centers. Changes in card network rules or standards could adversely affect our business.
Please refer to the section captioned Allowance for Credit Losses in Item 7 – Management's Discussion and Analysis of Financial Condition and Results of Operations included elsewhere in this report for further discussion related to our process for determining the appropriate level of the allowance for credit losses.
Refer to the section captioned Allowance for Credit Losses in Item 7 – Management's Discussion and Analysis of Financial Condition and Results of Operations included elsewhere in this report for further discussion related to our process for determining the appropriate level of the allowance for credit losses.
We are at risk for an adverse impact on business due to damage to our reputation. Our ability to compete effectively, to attract and retain customers and employees, and to grow our business is dependent on maintaining our reputation and having the trust of our customers and employees.
We are at risk of having an adverse impact on business due to damage to our reputation. Our ability to compete effectively, to attract and retain customers and employees and to grow our business is dependent on maintaining our reputation and having the trust of our customers and employees.
External factors, such as compliance with regulations, competitive alternatives and shifting market preferences, may also impact the successful implementation of a new line of business or a new product or service.
External factors, such as compliance with regulations, 23 competitive alternatives and shifting market preferences, may also impact the successful implementation of a new line of business or a new product or service.
As a result, however we respond to such criticism, we expose ourselves to the risks that current or potential customers decline to do business with us or current or potential employees refuse to work for us.
As a result, however we respond to 26 such criticism, we expose ourselves to the risks that current or potential customers decline to do business with us or current or potential employees refuse to work for us.
Continued elevated levels of inflation could also cause increased volatility and uncertainty in the business environment, which could adversely affect loan demand and our clients’ ability to repay indebtedness.
Elevated levels of inflation could also cause increased volatility and uncertainty in the business environment, which could adversely affect loan demand and our clients’ ability to repay indebtedness.
If we were to conclude that a future write-down of goodwill and other intangible assets is necessary, we would record the appropriate charge, which could have a material adverse effect on our business, financial condition and results of operations. As of December 31, 2023 our equity method investment ICM also had $15.3 million of goodwill.
If we were to conclude that a future write-down of goodwill and other intangible assets is necessary, we would record the appropriate charge, which could have a material adverse effect on our business, financial condition and results of operations. As of December 31, 2024 our equity method investment ICM also had $15.3 million of goodwill.
A future write-down of goodwill at ICM could have an adverse effect on our results of operations based on our proportionate share of equity method investment income. New lines of business or new products and services, including Fintech investments and digital assets, may subject us to additional risks.
A future write-down of goodwill at ICM could have an adverse effect on our results of operations based on our proportionate share of equity method investment income. New lines of business or new products and services, including Fintech investments, may subject us to additional risks.
Current and future earnings shortfalls and minimum capital requirements of the FHLB may impact the collateral necessary to secure borrowings and limit the borrowings extended to their member banks, as well as require additional capital contributions by member banks. Should this occur, the Bank's short-term liquidity needs could be negatively impacted.
Current and future earnings shortfalls and minimum capital requirements of the FHLB may impact the collateral necessary to secure borrowings, limit the borrowings extended to their member banks and require additional capital contributions by member banks. Should this occur, the Bank's short-term liquidity needs could be negatively impacted.
The processes we use to estimate our inherent credit losses and to measure the fair value of financial instruments, as well as the processes used to estimate the effects of changing interest rates and other market measures on our financial condition and results of operations, depends upon the use of analytical and forecasting models.
The processes we use to estimate our inherent credit losses and to measure the fair value of financial instruments, as well as the processes used to estimate the effects of changing interest rates and other market measures on our financial condition and results of operations, depend upon the use of analytical and forecasting models.
These models reflect assumptions that may not be 31 accurate, particularly in times of market stress or other unforeseen circumstances. Even if these assumptions are adequate, the models may prove to be inadequate or inaccurate because of other flaws in their design or their implementation.
These models reflect assumptions that may not be accurate, particularly in times of market stress or other unforeseen circumstances. Even if these assumptions are adequate, the models may prove to be inadequate or inaccurate because of other design or implementation flaws.
In addition, there have been efforts on the part of third parties to breach data security at financial institutions, including through the use of social engineering schemes such as “phishing.” The ability of customers to bank remotely, including online and through mobile devices, requires secure transmission of confidential information and increases the risk of data security breaches.
In addition, there have been efforts by third parties to breach data security at financial institutions, including through the use of social engineering schemes such as “phishing.” The ability of customers to bank remotely, including online and through mobile devices, requires secure transmission of confidential information and increases the risk of data security breaches.
GAAP and International Financial Reporting Standards may result in changes to U.S. GAAP. These changes can be hard to predict and can materially impact how we record and reports our financial condition and results of operations.
GAAP and International Financial Reporting Standards may result in changes to U.S. GAAP. These changes can be hard to predict and can materially impact how we record and report our financial condition and results of operations.
It is also possible that governmental responses to the current inflation environment could adversely affect our business, such as changes to monetary and fiscal policy that are too strict, or the imposition or threatened imposition of price controls. The duration and severity of the current inflationary period cannot be estimated with precision.
It is also possible that governmental responses to the current inflation environment could adversely affect our business, such as changes to monetary and fiscal policy that are too strict, or the imposition or threatened imposition of price controls. The duration and severity of elevated inflationary periods cannot be estimated with precision.
Criticism can come in many forms, including for providing banking services to companies engaged in, for example, the gaming industry or digital assets. Many of these issues are divisive without broad agreement as to the appropriate steps a company should take and often with strong feelings on both sides.
Criticism can come in many forms, including for providing banking services to companies engaged in, for example, the gaming industry. Many of these issues are divisive without broad agreement as to the appropriate steps a company should take and often with strong feelings on both sides.
Please refer to the sections captioned Supervision and Regulation – Capital Requirements included in Item 1 – Business and Note 16 – Regulatory Capital Requirements accompanying the consolidated financial statements included elsewhere in this report, for detailed capital guidelines for bank holding companies and banks. We are a financial holding company and our sources of funds are limited.
Refer to the sections captioned Supervision and Regulation – Capital Requirements included in Item 1 – Business and Note 15 – Regulatory Capital Requirements accompanying the consolidated financial statements included elsewhere in this report, for detailed capital guidelines for bank holding companies and banks. We are a financial holding company and our sources of funds are limited.
In these circumstances, the market price of our common stock could decline significantly. Other factors that could affect our financial condition and operations are discussed in the Forward-Looking Statements at the beginning of this report. Risks Related to Economic and Market Conditions Continued elevated levels of inflation could adversely impact our business and results of operations.
In these circumstances, the market price of our common stock could decline significantly. Other factors that could affect our financial condition and operations are discussed in the Forward-Looking Statements at the beginning of this report. Risks Related to Economic and Market Conditions Elevated levels of inflation and fluctuations in interest rates could adversely impact our business and results of operations.
Moreover, 27.2% of the securities in our municipal securities portfolio were issued by political subdivisions or agencies within West Virginia and Virginia.
Moreover, 24.2% of the securities in our municipal securities portfolio were issued by political subdivisions or agencies within West Virginia and Virginia.
The source of the funds for our debt obligations is dependent on the Bank. Any significant restriction or disruption of our ability to obtain funding from these or other sources could have a negative effect on our ability to satisfy our current and future financial obligations, which could materially affect our financial condition.
The source of the funds for our debt obligations is dependent on the Bank. Any significant restriction or disruption of our ability to obtain funding from these or other sources could negatively effect our ability to satisfy our current and future financial obligations, which could materially affect our financial condition.
Please refer to the sections captioned Supervision and Regulation – Limit on Dividends included in Item 1 – Business and Note 16 – Regulatory Capital Requirements accompanying the consolidated financial statements included elsewhere in this report.
Refer to the sections captioned Supervision and Regulation – Limit on Dividends included in Item 1 – Business and Note 15 – Regulatory Capital Requirements accompanying the consolidated financial statements included elsewhere in this report.
A significant decline in general economic conditions in West Virginia or Virginia, whether caused by recession, inflation, unemployment, changes in crude oil prices, changes in securities markets, acts of terrorism, outbreaks of any epidemics or pandemics, outbreak of hostilities or other international or domestic occurrences or other factors could impact these local economic conditions and, in turn, have a material adverse effect on our business, financial condition and results of operations.
A significant decline in general economic conditions in West Virginia or Virginia, whether caused by recession, inflation, unemployment, the imposition of tariffs or other trade policies, changes in crude oil prices, changes in securities markets, acts of terrorism, outbreaks of any epidemics or pandemics, outbreak of hostilities or other international or domestic occurrences or other factors could impact these local 19 economic conditions and, in turn, have a material adverse effect on our business, financial condition and results of operations.
Although the Federal Reserve acted with the goal of avoiding abrupt or unpredictable changes in economic or financial conditions which would disrupt the financial systems, also known as “shocks,” the continuing impact of these changes cannot be certain.
Although by changing interest rates, the Federal Reserve acted with the goal of avoiding abrupt or unpredictable changes in economic or financial conditions which would disrupt the financial systems, also known as “shocks,” the continuing impact of these changes cannot be certain.
Additionally, 72.4% of our total loans are real estate interests (residential and non-residential, including both owner-occupied and investment real estate and construction and land development) mainly concentrated in the West Virginia, Virginia, North Carolina and South Carolina markets.
Additionally, 75.8% of our total loans are real estate interests (residential and non-residential, including both owner-occupied and investment real estate and construction and land development) mainly concentrated in the West Virginia, Virginia, North Carolina and South Carolina markets.
For further detail, please refer to the sections captioned Supervision and Regulation included in Item 1 – Business and Note 16 – Regulatory Capital Requirements accompanying the consolidated financial statements included elsewhere in this report.
For further detail, refer to the sections captioned Supervision and Regulation included in Item 1 – Business and Note 15 – 27 Regulatory Capital Requirements accompanying the consolidated financial statements included elsewhere in this report.
Acquiring other banks, businesses or branches involves various risks commonly associated with acquisitions, including, among other things: l Potential exposure to unknown or contingent liabilities of the target company; l Exposure to potential asset quality issues of the target company; l Potential disruption to our business; l Potential diversion of management’s time and attention; l Possible loss of key employees and customers of the target company; l Difficulty in estimating the value of the target company; and l Potential changes in banking or tax laws or regulations that may affect the target company.
Acquiring other banks, businesses or branches or disposing of certain assets or businesses involves various risks commonly associated with acquisitions and dispositions, including, among other things: l Potential exposure to unknown or contingent liabilities of the target company; l Exposure to potential asset quality issues of the target company; l Potential disruption to our business; l Potential diversion of management’s time and attention; l Possible loss of key employees and customers of the target company or disposed business; l Difficulty in estimating the value of the target company or disposed business; l Potential difficulty in accurately and fairly reflecting the transactions and dispositions of our assets; and l Potential changes in banking or tax laws or regulations that may affect the target company.
Interruption to our information systems or breaches in security, including as a result of cyberattacks or other cyber incidents, could adversely affect our operations or otherwise harm our business. We rely on information systems and communications for operating and monitoring all major aspects of business, as well as internal management functions.
Interruption to our information systems or breaches in security, including as a result of cyberattacks or other cyber incidents, could adversely affect our operations or otherwise harm our business. We rely on information systems and communications to operate and monitor all major aspects of business and internal management functions.
Our stock price can fluctuate significantly in response to a variety of factors including, among other things: l actual or anticipated variations in quarterly results of operations; l recommendations by securities analysts; l operating and stock price performance of other companies that investors deem comparable to us; l news reports relating to trends, concerns and other issues in the financial services industry; l perceptions in the marketplace regarding us and/or our competitors; l new technology used, or services offered, by competitors; l significant acquisitions or business combinations, strategic partnerships, joint ventures or capital commitments by or involving us or our competitors; l failure to integrate acquisitions or realize anticipated benefits from acquisitions; l changes in government regulations; and l geopolitical conditions such as acts or threats of terrorism or military conflicts.
Our stock price can fluctuate significantly in response to a variety of factors including, among other things: l actual or anticipated variations in quarterly results of operations; l sustainable core earnings; l recommendations by securities analysts; 28 l operating and stock price performance of other companies that investors deem comparable to us; l news reports relating to trends, concerns and other issues in the financial services industry, including uncertainty in the financial markets as a result of the new U.S. presidential administration; l perceptions in the marketplace regarding us and/or our competitors; l new technology used, or services offered, by competitors; l significant acquisitions or business combinations, strategic partnerships, joint ventures or capital commitments by or involving us or our competitors; l failure to integrate acquisitions or realize anticipated benefits from acquisitions; l changes in government regulations; and l geopolitical conditions, such as acts or threats of terrorism or military conflicts, including geopolitical tensions or conflict that may arise of the new U.S. presidential administration.
Risks Related to Our Business Our non-residential real estate loans expose us to greater risks of non-payment and loss than residential mortgage loans, which may cause us to increase our allowance for credit losses, which would reduce net income. At December 31, 2023, $1.63 billion, or 70.3%, of our loan portfolio consisted of non-residential real estate and other non-residential loans.
Risks Related to Our Business Our non-residential real estate loans expose us to greater risks of non-payment and loss than residential mortgage loans, which may cause us to increase our allowance for credit losses, which would reduce net income. At December 31, 2024, $1.44 billion, or 68.4%, of our loan portfolio consisted of non-residential real estate and other non-residential loans.
Our success also depends on our ability to invest in cybersecurity protection systems that will adequately protect our customers as technology continues to evolve. Many of our competitors have substantially greater resources to invest in technological improvements.
Our success also depends on our ability to invest in cybersecurity protection systems, implement advanced features and establish controls that will adequately protect our customers as technology continues to evolve. Many of our competitors have substantially greater resources to invest in technological improvements.
To an increasing extent, financial services companies, including us, may face criticism for engaging in business with specific customers or with customers in particular industries, where the customers’ activities, even if legal, are perceived as having harmful impacts on matters such as environment, consumer health and safety or society at large.
To an increasing extent, financial services companies, including us, may face criticism for engaging in business with specific customers or with customers in particular industries or originating in certain foreign countries where the U.S. faces heightened geopolitical tensions, where the customers’ activities, even if legal, are perceived as having harmful impacts on matters such as environment, consumer health and safety or society at large.
ICM and Warp Speed’s ability to readily sell mortgage loans is dependent upon the availability of an active secondary market for single-family mortgage loans, which in turn depends in part upon the continuation of programs currently offered by Fannie Mae, Freddie Mac and other institutional and non-institutional investors.
Volatile interest rate environments could increase this risk initially. ICM and Warp Speed’s ability to readily sell mortgage loans is dependent upon the availability of an active secondary market for single-family mortgage loans, which in turn depends in part upon the continuation of programs currently offered by Fannie Mae, Freddie Mac and other institutional and non-institutional investors.
General market fluctuations, including real or anticipated changes in the strength of the economies we serve; industry factors and general economic and political conditions and events, such as economic slowdowns or recessions; interest rate changes, crude oil price volatility or credit loss trends could also cause our stock price to decrease, regardless of operating results.
General market fluctuations, including real or anticipated changes in the strength of the economies we serve; industry factors and general economic and political conditions and events, such as economic slowdowns or recessions and uncertainty in market conditions or boarder economic changes because of the change in administration as a result of the 2024 U.S. presidential election; interest rate changes, crude oil price volatility or credit loss trends could also cause our stock price to decrease, regardless of operating results.
Failure to perform in any of these areas could significantly weaken our competitive position, which could adversely affect our growth and profitability, which, in turn, could have a material adverse effect on our business, financial condition and results of operations.
Failure to perform in any of these areas could significantly weaken our competitive position, which could adversely affect our growth and profitability, which, in turn, could have a material adverse effect on our business, financial condition and results of operations. The value of our goodwill and other intangible assets may decline in the future.
This process could result in the loss of fee income, as well as the loss of client deposits and the income generated from those deposits, in addition to increasing funding costs. Our operations rely on certain external vendors who may not perform in a satisfactory manner.
This process could result in the loss of fee income, client deposits and the income generated from those deposits, in addition to increasing funding costs. Our operations rely on certain external vendors who may not perform in a satisfactory manner. We rely upon certain external vendors to provide products and services necessary to maintain our day-to-day operations.
Moreover, the loans included in our interest-earning assets are primarily comprised of variable and adjustable rate loans. Net interest income is subject to interest rate risk in the following ways: l In general, for a given change in interest rates, the amount of change in value (positive or negative) is larger for assets and liabilities with longer remaining maturities.
Net interest income is subject to interest rate risk in the following ways: l In general, for a given change in interest rates, the amount of change in value (positive or negative) is larger for assets and liabilities with longer remaining maturities.
Failure to successfully manage these risks in the development and implementation of new lines of business or new products or services could have a material adverse effect on our business, results of operations and financial condition.
Failure to successfully manage these risks in the development and implementation of new lines of business or new products or services could have a material adverse effect on our business, results of operations and financial condition. Potential acquisitions or dispositions of assets or businesses may disrupt our business and dilute stockholder value.
Initial timetables for the introduction and development of new lines of business and/or new products or services may not be achieved, and price and profitability targets may not prove feasible.
In developing and marketing new lines of business and/or new products and services, we may invest significant time and resources. Initial timetables for the introduction and development of new lines of business and/or new products or services may not be achieved, and price and profitability targets may not prove feasible.
Additionally, our reputation and ability to maintain client relationships and attract and retain employees may depend on the sufficiency of our policies and practices related to climate change, including our direct or indirect involvement in certain industries.
While we may no longer face the stringent reporting requirements under SEC rules, our reputation and ability to maintain client relationships and attract and retain employees may depend on the sufficiency of our policies and practices related to climate change, including our direct or indirect involvement in certain industries.
In addition, since we are a legal entity separate and distinct from the Bank, our right to participate in the distribution of assets of the Bank upon the Bank’s liquidation, reorganization or otherwise will be subject to the prior claims of the Bank’s creditors, which will generally take priority over the Bank’s shareholders. 29 Risks Related to Our Common Stock The trading volume in our common stock is less than that of other larger financial services companies.
In addition, since we are a legal entity separate and distinct from the Bank, our right to participate in the distribution of assets of the Bank upon the Bank’s liquidation, reorganization or otherwise will be subject to the prior claims of the Bank’s creditors, which will generally take priority over the Bank’s shareholders.
Any future changes in laws that significantly affect the activity of these government-sponsored enterprises and other institutional and non-institutional investors or any impairment of their ability to participate in such programs could, in turn, adversely affect our results of operations. Our largest source of revenue (net interest income) is subject to interest rate risk.
Any future changes in laws that significantly affect the activity of these government-sponsored enterprises and other institutional and non-institutional investors or any impairment of their ability to participate in such programs could, in turn, adversely affect the value of our investments, financial condition and results of operations.
Potential acquisitions may disrupt our business and dilute stockholder value. 25 We generally seek merger or acquisition partners that are culturally similar, have experienced management and possess either significant market presence or have potential for improved profitability through financial management, economies of scale or expanded services.
We generally seek merger or acquisition partners that are culturally similar, have experienced management and possess either significant market presence or have potential for improved profitability through financial management, economies of scale or expanded services. Additionally, we may from time to time dispose of certain of our assets or businesses.
Other changes to statutes, regulations or regulatory policies or supervisory guidance, including changes in interpretation or implementation of statutes, regulations, policies or supervisory guidance, could affect us in substantial and unpredictable ways.
Other changes to statutes, regulations or regulatory policies or supervisory guidance, including changes in interpretation or implementation of statutes, regulations, policies or supervisory guidance, and including regulatory and policy changes as a result of the new U.S. presidential administration, could affect us in substantial and unpredictable ways.
The Bank’s financial condition and results of operations are significantly affected by changes in interest rates. The Bank’s earnings depend primarily upon its net interest income, which is the difference between its interest income earned on its interest-earning assets, such as loans and investment securities, and its interest expense paid on its interest-bearing liabilities, consisting of deposits and borrowings.
The Bank’s earnings depend primarily upon its net interest income, which is the difference between its interest income earned on its interest-earning assets, such as loans and investment securities, and its interest expense paid on its interest-bearing liabilities, consisting of deposits and borrowings. Moreover, the loans included in our interest-earning assets are primarily comprised of variable and adjustable rate loans.
We are reliant upon certain external vendors to provide products and services necessary to maintain our day-to-day operations. Accordingly, our operations are exposed to risk that these vendors will not perform in accordance with applicable contractual arrangements or service level agreements.
Accordingly, our operations are exposed to risk that these vendors will not perform in accordance with applicable contractual arrangements or service level agreements.
There may be significant costs to acquire and/or develop such technologies and there is no certainty as to the timing for these investments to become profitable, if at all. In developing and marketing new lines of business and/or new products and services, we may invest significant time and resources.
In addition to new lines of business, we have strategies to acquire and internally develop technologies in order to scale and diversify our banking capabilities. There may be significant costs to acquire and/or develop such technologies and there is no certainty as to the timing for these investments to become profitable, if at all.
Consumers can also shop for higher deposit interest rates at banks across the country, which may offer higher rates because they have few or no physical branches and open deposit accounts electronically.
Technology and other changes allow parties to complete financial transactions without banks. For example, consumers can pay bills and transfer funds directly without banks. Consumers can also shop for higher deposit interest rates at banks across the country, which may offer higher rates because they have few or no physical branches and open deposit accounts electronically.
Our management makes judgments and assumptions in selecting and adopting various accounting policies and in applying estimates so that such policies and estimates comply with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
Our management makes judgments and assumptions in selecting and adopting various accounting policies and in applying estimates so that such policies and estimates comply with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Management has identified certain accounting policies as critical because they require management’s judgment to ascertain the valuations of assets, liabilities, commitments and contingencies.
Shares of our common stock are traded on the Nasdaq Capital Market under the symbol “MVBF”. There has been limited trading in our shares over the last 12 months. If limited trading in our common stock continues, it may be difficult for investors to sell such shares in the public market at any given time at prevailing prices.
If limited trading in our common stock continues, it may be difficult for investors to sell such shares in the public market at any given time at prevailing prices.
Interest rate risk is more fully described in Item 7A – Quantitative and Qualitative Disclosures About Market Risk included elsewhere in this report.
Interest rate risk is more fully described in Item 7A – Quantitative and Qualitative Disclosures About Market Risk included elsewhere in this report. Our gaming initiative has contributed significantly to our deposits and creates concentration risk in our deposit base.
Continued levels of inflation could have complex effects on our business and results of operations, some of which could be materially adverse. For example, as interest rates rise in response to, or as a result of, elevated levels of inflation, the value of our securities portfolio becomes negatively impacted.
For example, as interest rates rise in response to, or as a result of, elevated levels of inflation, the value of our securities portfolio becomes negatively impacted.
Recently, there have been market indicators of a pronounced rise in inflation and the Federal Reserve Board has raised certain benchmark interest rates in an effort to combat inflation. Continued increases in market interest rates could have an adverse effect on our net interest income and profitability.
In recent years, there have been market indicators of a pronounced rise in inflation and the Federal Reserve Board raised certain benchmark interest rates in an effort to combat inflation in both 2022 and 2023.
Further, even if we are otherwise able to grow and maintain our gaming deposit base, our deposit balances may still decrease if our gaming customers are offered more attractive returns from our competitors.
There may be competitive pressures to pay higher interest rates on deposits to our gaming customers, which could increase funding costs and compress net interest margins. Further, even if we are otherwise able to grow and maintain our gaming deposit base, our deposit balances may still decrease if our gaming customers are offered more attractive returns from our competitors.
While the Federal Reserve did not increase benchmark interest rates at the June 2023 or September 2023 meeting, it indicated it may continue to raise benchmark interest rates in 2024 in an effort to curb the upward inflationary pressure on the cost of goods and services across the United States.
While the Federal Reserve reduced benchmark interest rates in 2024, it may decide to raise benchmark interest rates in 2025, as it did multiple times in 2022 and 2023, in an effort to curb the upward inflationary pressure on the cost of goods and services across the U.S.
As a result, declining real estate values in these markets could negatively impact the value of the real 21 estate collateral securing such loans. If we are required to liquidate a significant amount of collateral during a period of reduced real estate values in satisfaction of any non-performing or defaulted loans, our earnings and capital could be adversely affected.
If we are required to liquidate a significant amount of collateral during a period of reduced real estate values in satisfaction of any nonperforming or defaulted loans, our earnings and capital could be adversely affected. Severe weather (including climate change) and natural disasters could have significant effects on our business.
Our evolving business and product diversification, these new initiatives may subject us to, among other risks, increased business, reputational and operational risk, as well as more complex legal, regulatory and compliance costs and risks.
As Fintech technologies become more widely available, we expect the services and products associated with them to evolve. Our evolving business and product diversification initiatives implemented to effectively compete and stay current with the industry may subject us to, among other risks, increased business, reputational and operational risk, as well as more complex legal, regulatory and compliance costs and risks.
The earnings from our investments in ICM and Warp Speed will be significantly reduced if ICM and Warp Speed are not able to sell mortgages. The profitability of ICM and Warp Speed depend in large part upon their ability to originate a high volume of loans and to sell them in the secondary market.
The profitability of ICM and Warp Speed depend in large part upon their ability to originate a high volume of loans and to sell them in the secondary market. Thus, they are dependent upon (i) the existence of an active secondary market and (ii) their ability to sell loans into that market.
Our gaming initiative has contributed significantly to an increase in our deposits and creates concentration risk in our deposit base. 23 Our gaming initiative has contributed significantly to an increase in our deposits, and has allowed us to generate attractive returns on lower risk assets through increased investments in securities and loan growth.
Our gaming initiative has contributed significantly to our deposits and has allowed us to generate attractive returns on lower risk assets through increased investments in securities and loan growth. On-balance sheet gaming deposits totaled $227.6 million as of December 31, 2024, compared to $354.1 million as of December 31, 2023.
The value of our goodwill and other intangible assets may decline in the future. 24 As of December 31, 2023, we had $3.2 million of goodwill and other intangible assets.
As of December 31, 2024, we had $3.1 million of goodwill and other intangible assets.
For further information, please refer to the section captioned Supervision and Regulation – Limit on Dividends in Item 1 – Business included elsewhere in this report. General Risk Factors 30 We are exposed to risks relating to evaluations of controls required by Section 404 of the Sarbanes-Oxley Act of 2002.
For further information, refer to the section captioned Supervision and Regulation – Limit on Dividends in Item 1 – Business included elsewhere in this report. General Risk Factors The value of the securities in our investment securities portfolio may be negatively affected by disruptions in securities markets.
In the aftermath, there has been substantial market disruption and indications that deposit concerns could spread within the banking industry, leading to deposit outflows and other destabilizing results. These market events could materially adversely affect our business.
In the aftermath, there has been substantial market disruption and indications that deposit concerns could spread within the banking industry, leading to deposit outflows and other destabilizing results. Following the 2023 bank failures, the FDIC published new rules regarding uninsured deposits and has increased regulatory scrutiny in the financial industry. Bank failures have led the U.S.
Any increase in its allowance for credit losses or loan charge-offs could have a material adverse effect on our financial condition and results of operations. In addition, we cannot guarantee that we will not be required to adjust accounting policies or restate prior financial statements.
For example, because of the inherent uncertainty of estimates, the Bank could need to significantly increase its allowance for credit losses if actual losses are more than the amount reserved. Any increase in its allowance for credit losses or loan charge-offs could have a material adverse effect on our financial condition and results of operations.
Management has identified certain accounting policies as being critical because they require management’s judgment to ascertain the valuations of assets, liabilities, commitments and contingencies. A variety of factors could affect the ultimate value that is obtained either when earning income, recognizing an expense, recovering an asset, valuing an asset or liability or reducing a liability.
A variety of factors could affect the ultimate value that is 29 obtained either when earning income, recognizing an expense, recovering an asset, valuing an asset or liability or reducing a liability. Because of the uncertainty surrounding management's judgments and the estimates pertaining to these matters, actual outcomes may be materially different from amounts previously estimated.
On-balance sheet gaming deposits totaled $354.1 million as of December 31, 2023, compared to $652.1 million as of December 31, 2022. Off-balance sheet gaming deposits totaled $277.1 million as of December 31, 2023, compared to $141.2 million as of December 31, 2022. Of the gaming deposits, $292.7 million is with our three largest clients at December 31, 2023.
Off-balance sheet gaming deposits totaled $221.0 million as of December 31, 2024, compared to $277.1 million as of December 31, 2023. Of the gaming deposits, $206.8 million is with our three largest clients at December 31, 2024. Our future growth may be adversely impacted if we are unable to retain and grow this strong, low-cost deposit base.
Removed
General inflation in the United States has risen to levels not experienced in decades and the Federal Reserve Board has raised certain benchmark interest rates in an effort to combat inflation in 2023. Specifically, the Federal Reserve increased benchmark interest rates multiple times in 2022 and 2023.
Added
The Federal Reserve utilizes benchmark interest rates to manage inflationary pressures within the economy. Elevated levels of inflation could have complex effects on our business and results of operations, some of which could be materially adverse.
Removed
Severe weather (including climate change) and natural disasters could have significant effects on our business.
Added
Treasury Secretary, the FDIC and the Federal Reserve to invoke the systemic risk exception to the least-cost resolution requirement under the FDIA to guarantee uninsured deposits of the failed banks. The systemic bank exception can only be invoked for financial market risks that pose a threat to financial stability.
Removed
Thus, they are dependent upon (i) the existence of an active secondary market and (ii) their ability to sell loans into that market. Volatile interest rate environments could increase this risk initially. However, past performance supports our ability to fund the increase in ICM's production.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

7 edited+0 added−0 removed4 unchanged
Biggest changeApart from the measures implemented to decrease the possibility of a material cyberattack being successful, we have created clear incident response protocols to deal with any cyber events that may arise. Our program provides for the coordination of different corporate functions and serves as a framework for the execution of responsibilities across businesses and operational roles.
Biggest changeOur program provides for the coordination of different corporate functions and serves as a framework for the execution of responsibilities across businesses and operational roles. Our incident response plan includes processes to triage, assess severity for, escalate, contain, investigate and remediate any incidents.
The Risk & Compliance Committee receives regular updates on cybersecurity risks and incidents and the cybersecurity risk management program through direct interaction with the Chief Information Officer and provides periodic updates regarding cybersecurity risks and the cybersecurity risk management program to the full Board of Directors.
The Risk & Compliance Committee receives regular updates on cybersecurity risks and incidents and the cybersecurity risk management program through direct interaction with the Chief Information Security Officer and provides periodic updates regarding cybersecurity risks and the cybersecurity risk management program to the full Board of Directors.
Our Chief Information Officer has significant experience in various roles involving managing information security, developing cybersecurity strategy, implementing effective information and cybersecurity programs and managing compliance environments. 32
Our Chief Information Security Officer has significant experience in various roles involving managing information security, developing cybersecurity strategy, implementing effective information and cybersecurity programs and managing compliance environments.
Our incident response plan includes processes to triage, assess severity for, escalate, contain, investigate, and remediate any incidents. Testing, training and exercising of our incident response capabilities are carried out routinely and After Actions Reports are prepared to continuously improve these practices. We also have processes to evaluate potential disclosure, comply with applicable legal obligations, and mitigate reputational damage.
Testing, training and exercising of our incident response capabilities are carried out routinely and After Actions Reports are prepared to continuously improve these practices. We also have processes to evaluate potential disclosure, comply with applicable legal obligations, and mitigate reputational damage.
We perform rigorous due diligence before onboarding and engage in ongoing monitoring of all third parties with access to our information assets to ensure such parties maintain adequate security controls.
As part of our strategy, we also leverage reputable third-party service providers to implement and maintain processes and controls to manage identified risks. We perform rigorous due diligence before onboarding and engage in ongoing monitoring of all third parties with access to our information assets to ensure such parties maintain adequate security controls.
Our risk management team oversees the program and regularly collaborates with our information security function, led by our Chief Security Officer, to gather insights for identifying, assessing and managing cybersecurity threat risks, their severity, and potential mitigations. As part of our strategy, we also leverage reputable third-party service providers to implement and maintain processes and controls to manage identified risks.
Our risk management team oversees the program and regularly collaborates with our information security function, led by our Chief Information Security Officer, to gather insights for identifying, assessing and managing cybersecurity threat risks, their severity and potential mitigations.
Furthermore, we are consistently broadening our scope of training and awareness practices to alleviate potential risks associated with human error, including mandatory computer-based training, internal communications, and frequent phishing awareness campaigns.
Furthermore, we are consistently broadening our scope of training and awareness practices to alleviate potential risks associated with human error, including mandatory computer-based training, internal communications and frequent phishing awareness campaigns. 30 Apart from the measures implemented to decrease the possibility of a material cyberattack being successful, we have created clear incident response protocols to deal with any cyber events that may arise.

Item 2. Properties

Properties — owned and leased real estate

2 edited+1 added−1 removed0 unchanged
Biggest changeAs of December 31, 2023, we operated eight full-service banking branches for our CoRe banking reportable segment in the locations further described in Item 1 – Business included elsewhere in this report. Four of the eight full-service banking branches are owned and the remaining four are leased. No one facility is material to us.
Biggest changeAs of December 31, 2024, we operated seven full-service banking branches for our CoRe banking reportable segment in the locations further described in Item 1 – Business included elsewhere in this report, all of which are leased following the sale-leaseback of certain branch locations in 2024.
ITEM 2. PROPERTIES We, through the Bank, own our main office located at 301 Virginia Avenue in Fairmont, WV. Our subsidiaries own or lease various other offices in the counties and cities in which they operate.
ITEM 2. PROPERTIES We lease our main office located at 301 Virginia Avenue in Fairmont, WV. Our subsidiaries lease various other offices in the counties and cities in which they operate.
Removed
Management believes that the facilities are generally in good condition and suitable for the operations for which they are used.
Added
For more information regarding the sale-leaseback transaction, refer to Note 4 – Premises and Equipment accompanying the consolidated financial statements included elsewhere in this report. No one facility is material to us. We believe that the facilities are generally in good condition and suitable for the operations for which they are used.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed2 unchanged
Biggest changeMINE SAFETY DISCLOSURES Not applicable. 33 PART II
Biggest changeMINE SAFETY DISCLOSURES Not applicable. 31 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

5 edited+0 added−0 removed0 unchanged
Biggest changeIndex 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 MVB Financial Corp. $ 100.00 $ 139.17 $ 128.75 $ 235.95 $ 131.69 $ 138.45 KBW Bank Index 100.00 132.14 114.13 154.12 117.55 111.92 Russell 2000 100.00 123.72 146.44 166.49 130.60 150.31 Equity Compensation Plan Information Information about our equity compensation plan is disclosed below under Item 12, Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matte rs, in Part III of this Annual Report on Form 10-K. 34 Recent Sales of Unregistered Securities None.
Biggest changeIndex 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 MVB Financial Corp. $ 100.00 $ 92.39 $ 169.99 $ 94.52 $ 99.42 $ 94.69 KBW Bank Index 100.00 86.37 116.64 88.97 84.71 112.46 Russell 2000 100.00 118.36 134.57 105.56 121.49 133.66 Equity Compensation Plan Information Information about our equity compensation plan is disclosed below under Item 12, Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matte rs, in Part III of this Annual Report on Form 10-K. 32 Recent Sales of Unregistered Securities None.
In 2023, 2022 and 2021, we paid dividends totaling $0.68, $0.68 and $0.51, respectively, per share and currently expect that comparable dividends will continue to be paid in the future. The following five-year performance graph compares the cumulative total shareholder return (assuming reinvestment of dividends) on our common stock to the KBW Bank Index and the Russell 2000 Index.
In 2024, 2023 and 2022, we paid dividends totaling $0.68, $0.68 and $0.68, respectively, per share and currently expect that comparable dividends will continue to be paid in the future. The following five-year performance graph compares the cumulative total shareholder return (assuming reinvestment of dividends) on our common stock to the KBW Bank Index and the Russell 2000 Index.
The stock performance graph assumes $100 was invested on December 31, 2018 and the cumulative return is measured as of each subsequent fiscal year end.
The stock performance graph assumes $100 was invested on December 31, 2019 and the cumulative return is measured as of each subsequent fiscal year end.
Purchases of Equity Securities by Issuer and Affiliated Purchasers There were no repurchases of common stock during the three months ended December 31, 2023. ITEM 6. [RESERVED] 35
Purchases of Equity Securities by Issuer and Affiliated Purchasers There were no repurchases of common stock during the three months ended December 31, 2024. ITEM 6. [RESERVED] 33
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is traded on the Nasdaq Capital Market under the symbol “MVBF.” As of March 11, 2024, we had 821 stockholders of record.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is traded on the Nasdaq Capital Market under the symbol “MVBF.” As of March 10, 2025, we had 785 stockholders of record.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

113 edited+58 added−29 removed33 unchanged
Biggest changeThe average balances presented are derived from daily average balances. 36 Average Balances and Analysis of Net Interest Income 2023 2022 2021 (Dollars in thousands) Average Balance Interest Income/Expense Yield/Cost Average Balance Interest Income/Expense Yield/Cost Average Balance Interest Income/Expense Yield/Cost Assets Interest-bearing deposits in banks $ 414,466 $ 21,043 5.08 % $ 232,935 $ 1,613 0.69 % $ 249,801 $ 305 0.12 % CDs with banks — — — 1,033 24 2.32 10,406 201 1.93 Investment securities: Taxable 221,395 5,576 2.52 $ 236,344 3,496 1.48 231,450 2,405 1.04 Tax-exempt 2 116,680 4,347 3.73 139,353 5,166 3.71 201,532 6,328 3.14 Loans and loans held-for-sale: 1 3 Commercial 1,621,299 124,078 7.65 1,594,069 87,845 5.51 $ 1,387,273 63,551 4.58 Tax-exempt 2 3,732 163 4.37 4,661 203 4.36 $ 6,646 300 4.51 Real estate 591,157 24,764 4.19 487,044 15,721 3.23 $ 307,829 9,662 3.14 Consumer 108,988 10,793 9.90 103,345 13,017 12.60 15,890 2,069 13.02 Total loans 2,325,176 159,798 6.87 2,189,119 116,786 5.33 1,717,638 75,582 4.40 Total earning assets 3,077,717 190,764 6.20 2,798,784 127,085 4.54 2,410,827 84,821 3.52 Allowance for credit losses (29,746) (22,248) (25,682) Cash and due from banks 6,659 5,670 13,874 Other assets 302,036 244,861 201,904 Total assets $ 3,356,666 $ 3,027,067 $ 2,600,923 Liabilities Deposits: NOW $ 697,266 $ 19,851 2.85 % $ 707,282 $ 4,724 0.67 % $ 673,547 $ 1,612 0.24 % Money market checking 504,730 10,352 2.05 330,208 1,449 0.44 469,010 883 0.19 Savings 76,908 1,871 2.43 56,697 418 0.74 42,800 5 0.01 IRAs 6,662 194 2.91 6,216 71 1.14 9,674 121 1.25 CDs 576,726 29,392 5.10 170,648 3,814 2.24 134,250 1,355 1.01 Repurchase agreements 5,662 1 0.02 10,987 6 0.05 10,821 13 0.12 FHLB and other borrowings 17,542 889 5.07 15,494 437 2.82 25,275 93 0.37 Senior term loan 9,007 766 8.50 2,328 163 7.00 — — — Subordinated debt 73,415 3,219 4.38 73,159 3,072 4.20 51,149 2,188 4.28 Total interest-bearing liabilities 1,967,918 66,535 3.38 1,373,019 14,154 1.03 1,416,526 6,270 0.44 Noninterest-bearing demand deposits 1,074,292 1,357,426 895,024 Other liabilities 40,435 41,098 38,100 Total liabilities 3,082,645 2,771,543 2,349,650 Stockholders’ equity Preferred stock — — 730 Common stock 13,541 13,320 12,614 Additional paid-in capital 159,523 147,728 140,610 Treasury stock (16,741) (16,741) (16,741) Retained earnings 154,041 137,498 112,842 Accumulated other comprehensive income (loss) (36,419) (26,918) 534 Total stockholders' equity attributable to parent 273,945 254,887 250,589 Noncontrolling interest 76 637 683 Total stockholders' equity 274,021 255,524 251,272 Total liabilities and stockholders’ equity $ 3,356,666 $ 3,027,067 $ 2,600,922 Net interest spread (tax-equivalent) 2.82 3.51 3.08 Net interest income and margin (tax-equivalent) 2 $ 124,229 4.04 % $ 112,931 4.04 % $ 78,551 3.26 % Less: Tax-equivalent adjustments (946) (1,128) (1,392) Net interest spread 2.79 3.47 3.02 Net interest income and margin $ 123,283 4.01 % $ 111,803 3.99 % $ 77,159 3.20 % 1 Non-accrual loans are included in total loan balances, lowering the effective yield for the portfolio in the aggregate. 2 In order to make pre-tax income and resultant yields on tax-exempt loans and investment securities comparable to those on taxable loans and investment 37 securities, a tax-equivalent adjustment has been computed using a Federal tax rate of 21% for the twelve months ended December 31, 2023, 2022 and 2021, which is a non-U.S.
Biggest changeThe average balances presented are derived from daily average balances. 34 Average Balances and Analysis of Net Interest Income 2024 2023 2022 (Dollars in thousands) Average Balance Interest Income/Expense Yield/Cost Average Balance Interest Income/Expense Yield/Cost Average Balance Interest Income/Expense Yield/Cost Assets Interest-bearing deposits in banks $ 422,165 $ 21,814 5.17 % $ 414,466 $ 21,043 5.08 % $ 232,935 $ 1,613 0.69 % CDs with banks — — — — — — 1,033 24 2.32 Investment securities: Taxable 261,986 7,693 2.94 $ 221,395 5,576 2.52 236,344 3,496 1.48 Tax-exempt 1 104,765 3,287 3.14 116,680 4,347 3.73 139,353 5,166 3.71 Loans and loans held-for-sale: 2 Commercial 1,570,284 122,839 7.82 1,621,299 124,078 7.65 1,594,069 87,845 5.51 Tax-exempt 1 3,175 139 4.38 3,732 163 4.37 4,661 203 4.36 Real estate 564,633 25,474 4.51 591,157 24,764 4.19 487,044 15,721 3.23 Consumer 70,943 5,314 7.49 108,988 10,793 9.90 103,345 13,017 12.60 Total loans 2,209,035 153,766 6.96 2,325,176 159,798 6.87 2,189,119 116,786 5.33 Total earning assets 2,997,951 186,560 6.22 3,077,717 190,764 6.20 2,798,784 127,085 4.54 Allowance for credit losses (22,108) (29,746) (22,248) Cash and due from banks 5,246 6,659 5,670 Other assets 302,304 302,036 244,861 Total assets $ 3,283,393 $ 3,356,666 $ 3,027,067 Liabilities Deposits: NOW $ 521,337 $ 17,587 3.37 % $ 697,266 $ 19,851 2.85 % $ 707,282 $ 4,724 0.67 % Money market checking 396,881 12,770 3.22 504,730 10,352 2.05 330,208 1,449 0.44 Savings 115,270 3,756 3.26 76,908 1,871 2.43 56,697 418 0.74 IRAs 7,990 338 4.23 6,662 194 2.91 6,216 71 1.14 CDs 760,714 38,654 5.08 576,726 29,392 5.10 170,648 3,814 2.24 Repurchase agreements 3,477 44 1.27 5,662 1 0.02 10,987 6 0.05 FHLB and other borrowings 25 2 6.46 17,542 889 5.07 15,494 437 2.82 Senior term loan 3 2,355 264 11.21 9,007 766 8.50 2,328 163 7.00 Subordinated debt 73,667 3,229 4.38 73,415 3,219 4.38 73,159 3,072 4.20 Total interest-bearing liabilities 1,881,716 76,644 4.07 1,967,918 66,535 3.38 1,373,019 14,154 1.03 Noninterest-bearing demand deposits 1,071,900 1,074,292 1,357,426 Other liabilities 37,683 40,435 41,098 Total liabilities 2,991,299 3,082,645 2,771,543 Stockholders’ equity Common stock 13,738 13,541 13,320 Additional paid-in capital 162,811 159,523 147,728 Treasury stock (16,741) (16,741) (16,741) Retained earnings 161,181 154,041 137,498 Accumulated other comprehensive loss (28,821) (36,419) (26,918) Total stockholders' equity attributable to parent 292,168 273,945 254,887 Noncontrolling interest (74) 76 637 Total stockholders' equity 292,094 274,021 255,524 Total liabilities and stockholders’ equity $ 3,283,393 $ 3,356,666 $ 3,027,067 Net interest spread (tax-equivalent) 2.15 2.82 3.51 Net interest income and margin (tax-equivalent) 1 $ 109,916 3.67 % $ 124,229 4.04 % $ 112,931 4.04 % Less: Tax-equivalent adjustments (718) (946) (1,128) Net interest spread 2.13 2.79 3.47 Net interest income and margin $ 109,198 3.64 % $ 123,283 4.01 % $ 111,803 3.99 % 1 In order to make pre-tax income and resultant yields on tax-exempt loans and investment securities comparable to those on taxable loans and investment securities, a tax-equivalent adjustment has been computed using a Federal tax rate of 21% for the years ended December 31, 2024, 2023 and 2022, which is a non-U.S.
The guidance prescribes the following guidelines for bank examiners to help identify institutions that are potentially exposed to significant CRE risk and may warrant greater supervisory scrutiny: l Total reported loans for construction, land development, and other land represent 100 percent or more of the institution’s total capital; or l Total CRE loans as defined in the CRE guidance represent 300 percent or more of the institution’s total capital, and the outstanding balance of the institution’s CRE loan portfolio has increased by 50 percent or more during the prior 36 months.
The guidance prescribes the following guidelines for bank examiners to help identify institutions that are potentially exposed to significant CRE loan risk and may warrant greater supervisory scrutiny: l Total reported loans for construction, land development and other land represent 100 percent or more of the institution’s total capital; or l Total CRE loans as defined in the CRE guidance represent 300 percent or more of the institution’s total capital and the outstanding balance of the institution’s CRE loan portfolio has increased by 50 percent or more during the prior 36 months.
Critical Accounting Policies and Estimates The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with U.S. GAAP. Our significant accounting policies are described in Note 1 – Summary of Significant Accounting Policies accompanying the consolidated financial statements included elsewhere in this report.
Critical Accounting Estimates The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with U.S. GAAP. Our significant accounting policies are described in Note 1 – Summary of Significant Accounting Policies accompanying the consolidated financial statements included elsewhere in this report.
Through active balance sheet management and analysis of the investment securities portfolio, sufficient liquidity is maintained to satisfy depositor requirements and the various credit needs of our customers. Management believes the risk characteristics inherent in the investment portfolio are acceptable based on these parameters. Management continually evaluates hedging strategies that are available to manage interest rate risk.
Through active balance sheet management and analysis of the investment securities portfolio, sufficient liquidity is maintained to satisfy depositor requirements and the various credit needs of our customers. Management believes the risk 40 characteristics inherent in the investment portfolio are acceptable based on these parameters. Management continually evaluates hedging strategies that are available to manage interest rate risk.
Along with deposits, the Bank has access to both short-term borrowings from FHLB and overnight repurchase agreements to fund its operations and investments. For details on our borrowings, please refer to Note 7 – Borrowed Funds accompanying the consolidated financial statements included elsewhere in this report.
Along with deposits, the Bank has access to both short-term borrowings from FHLB and overnight repurchase agreements to fund its operations and investments. For details on our borrowings, refer to Note 7 – Borrowed Funds accompanying the consolidated financial statements included elsewhere in this report.
Allowance for Credit Losses Since the implementation of CECL in January 2023, the ACL represents management’s current estimate of credit losses for the 50 remaining estimated life of financial instruments, primarily to loans and unfunded loan commitments on our balance sheet.
Allowance for Credit Losses Since the implementation of CECL in January 2023, the ACL represents management’s current estimate of credit losses for the remaining estimated life of financial instruments, primarily to loans and unfunded loan commitments on our balance sheet.
While we seek to preserve flexibility with respect to cash requirements, there can be no assurance that market conditions would permit us to sell securities on acceptable terms, or at all.
While we seek to preserve flexibility with respect to cash requirements, there can be no assurance that market conditions would permit us to 48 sell securities on acceptable terms, or at all.
Noninterest Income Payment card and service charge income, consulting compliance income, equity method investment income or loss and gains on sale of loans generally account for the majority of our noninterest income. From time to time, we also recognize gains or losses on 40 acquisition and divestiture activity, sales of assets or our investment portfolio.
Noninterest Income Payment card and service charge income, consulting compliance income, equity method investment income or loss and gains or losses on sale of loans account for the majority of our noninterest income. From time to time, we also recognize gains or losses on acquisition and divestiture activity, sales of assets or our investment portfolio.
After the third-party analyzed both historical peer loan data and various economic factors over the same look-back period, two economic variables, national GDP and national unemployment rate, were identified as showing the most correlation to the performance of the loans within each of the pooled segments.
After both historical peer loan data and various economic factors over the same look-back period were analyzed, two economic variables, national GDP and national unemployment rate, were identified as showing the most correlation to the performance of the loans within each of the pooled segments.
Each environmental factor has also been weighted to reflect how it relates to the different portfolio segments (i.e., various Commercial, Residential, Consumer, and HELOC). Individual risk grade factors are then calculated by applying the individual weightings to the individual risk grades.
Each environmental factor has also been weighted to reflect how it relates to the different portfolio segments (i.e., various Commercial, Residential, Consumer and HELOC). Individual risk grade factors are then calculated by applying the individual weightings to the individual risk modifiers.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis provides information that management believes is necessary to understand our financial condition, results of operations and cash flows for the year ended December 31, 2023 as compared to 2022.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis provides information that management believes is necessary to understand our financial condition, results of operations and cash flows for the year ended December 31, 2024 as compared to 2023.
Each of these environmental factors has been analyzed by management and each has been assigned a risk modifier on a 4-point scale (No Change, Minor, Moderate, and Major) as a measure of the risk that factor creates to the Bank’s loan portfolio.
Each of these environmental factors has been analyzed by management and each has been assigned a risk modifier on a four-point scale (No Change, Minor, Moderate and Major) as a measure of the risk that factor creates to the Bank’s loan portfolio.
Further, we encourage you to revisit the Forward-Looking Statements at the beginning of this report. Executive Summary We continue to adapt our business model due to challenging market conditions, primarily brought on by an environment of increasing interest rates, a slowing economy and multiple high-profile bank failures that occurred during the first half of 2023.
Further, we encourage you to revisit the Forward-Looking Statements at the beginning of this report. Executive Summary We continue to adapt our business model due to challenging market conditions, primarily brought on by an environment of sustained higher interest rates, a slowing economy and multiple high-profile bank failures that occurred during the first half of 2023.
GAAP financial measure. Please refer to the reconciliation of this non-U.S. GAAP financial measure to its most directly comparable U.S.
GAAP financial measure. Refer to the reconciliation of this non-U.S. GAAP financial measure to its most directly comparable U.S.
The total of those factors provides an overall risk grade for each portfolio segment, which is then applied to a basis point scale to calculate an actual loss rate adjustment. This process is applied to each of the Bank’s portfolio segments.
The total of these factors provides an overall risk grade for each portfolio segment, which is then applied to a basis point scale to calculate an actual loss rate adjustment. This process is applied to each of the Bank’s portfolio segments.
Detailed information concerning our risk-based capital ratios can be found in Supervision and Regulation in Item 1 – Business and Note 16 – Regulatory Capital Requirements accompanying the consolidated financial statements included elsewhere in this report.
Detailed information concerning our risk-based capital ratios can be found in Supervision and Regulation in Item 1 – Business and Note 15 – Regulatory Capital Requirements accompanying the consolidated financial statements included elsewhere in this report.
Recent Accounting Pronouncements and Developments Recent accounting pronouncements and developments applicable to us are described further in Note 1 – Summary of Significant Accounting Policies accompanying the consolidated financial statements included elsewhere in this report. 51
Recent Accounting Pronouncements and Developments Recent accounting pronouncements and developments applicable to us are described further in Note 1 – Summary of Significant Accounting Policies accompanying the consolidated financial statements included elsewhere in this report. 50
We have identified the following estimate as critical to the understanding of our financial position and results of operations and which require the application of significant judgment by management.
We have identified the following estimates as critical to the understanding of our financial position and results of operations and which require the application of significant judgment by management.
In addition, there are 42 loans to various unrelated borrowers totaling $19.6 million in commercial, home equity line of credit ("HELOC"), installment and mortgage loans. These are loans for which information about the borrowers’ possible credit problems causes management to have doubts as to the borrowers’ ability to comply with the loan repayment terms in the future.
In addition, there are 45 loans to various unrelated borrowers totaling $19.1 million in commercial, home equity line of credit ("HELOC"), installment and mortgage loans. These are loans for which information about the borrowers’ possible credit problems causes management to have doubts as to the borrowers’ ability to comply with the loan repayment terms in the future.
A discussion of changes in our results of operations from 2021 to 2022 may be found in Item 7 – Management's Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on March 16, 2023.
A discussion of changes in our results of operations from 2022 to 2023 may be found in Item 7 – Management's Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on March 13, 2024.
Commercial and non-residential real estate loans totaled $1.60 billion at December 31, 2023, compared to $1.61 billion at December 31, 2022. Management expects to continue to focus on the enhancement and growth of the commercial loan portfolio while maintaining appropriate underwriting standards and risk/price balance.
Commercial and non-residential real estate loans totaled $1.42 billion at December 31, 2024, compared to $1.60 billion at December 31, 2023. Management expects to continue to focus on the enhancement and growth of the commercial loan portfolio while maintaining appropriate underwriting standards and risk/price balance.
The result of the evaluation of the adequacy at each period presented herein indicated that the ACL was considered by management to be adequate to absorb forecasted losses over the remaining life of the loan portfolio. 45 At December 31, 2023 and 2022, individually analyzed loans totaled $11.8 million and $18.2 million, respectively.
The result of the evaluation of the adequacy at each period presented herein indicated that the ACL was considered by management to be adequate to absorb forecasted losses over the remaining life of the loan portfolio. At December 31, 2024 and 2023, individually analyzed loans totaled $43.2 million and $11.8 million, respectively.
Increasing the risk rating by one for all segments would have resulted in an additional allowance of $2.1 million at December 31, 2023 and decreasing the risk grade by one would have resulted in a reduction to the allowance of $1.9 million.
Increasing the risk rating by one for all segments would have resulted in an additional allowance of $1.9 million at December 31, 2024 and decreasing the risk grade by one would have resulted in a reduction to the allowance of $1.8 million.
Through a loss driver analysis performed by a third-party vendor, a forecasting model that correlates specific economic factors with credit quality of each loan segment was developed. Peer bank data was identified and used in this process, as we did not have adequate quarterly loan data to analyze over the look-back period to 2007.
Through a loss driver analysis, a forecasting model that correlates specific economic factors with credit quality of each loan segments was developed. Peer bank data was identified and used in this process, as we did not have adequate quarterly loan data to analyze over the look-back period to 2007.
The Bank's CBLR at December 31, 2023 was 10.5%, which is above the well-capitalized standard of 9%. Management currently believes that capital continues to provide a strong base for profitable growth. Liquidity Maintenance of a sufficient level of liquidity is a primary objective of the ALCO.
The Bank's CBLR at December 31, 2024 was 11.2%, which is above the well-capitalized standard of 9%. Management currently believes that capital continues to provide a strong base for profitable growth. Liquidity Maintenance of a sufficient level of liquidity is a primary objective of the ALCO.
We believe liquidity needs are satisfied by the current balance of cash and cash equivalents, readily available access to traditional and non-traditional funding sources and the portions of the investment and loan portfolios that mature within one year. Our liquid assets totaled $504.3 million and $354.4 million of December 31, 2023 and 2022, respectively.
We believe liquidity needs are satisfied by the current balance of cash and cash equivalents, readily available access to traditional and non-traditional funding sources and the portions of the investment and loan portfolios that mature within one year. Our liquid assets totaled $379.7 million and $504.3 million as of December 31, 2024 and 2023, respectively.
Healthcare loans are a significant component of commercial and non-residential real estate loans and comprise 23.4% of total loans receivable at December 31, 2023. A large portion of commercial loans are secured by real estate and they are diverse with respect to geographical location and industry.
Healthcare loans are a significant component of commercial and non-residential real estate loans and comprise 22.7% of total loans receivable at December 31, 2024. A large portion of commercial loans are secured by real estate and they are diverse with respect to geographical location and industry.
We remain committed to our key Fintech industries of gaming and payments. We continue to expand the Bank's treasury services function to support the banking needs of financial and emerging technology companies, which we believe will further enhance core deposits, notably through the expansion of deposit acquisition and fee income strategies through the Fintech division.
We continue to expand the Bank's treasury services function to support the banking needs of financial and emerging technology companies, which we believe will further enhance core deposits, notably through the expansion of deposit acquisition and fee income strategies through the Fintech division.
Interest income on loans would have increased by $0.8 million, $0.5 million and $0.4 million for 2023, 2022 and 2021, respectively, if loans had performed in accordance with their terms.
Interest income on loans would have increased by $1.6 million, $0.8 million and $0.5 million for 2024, 2023 and 2022, respectively, if loans had performed in accordance with their terms.
Eligibility criteria to utilize the CBLR includes the following: ● Total assets of less than $10 billion; ● Total trading assets plus liabilities of 5% or less of consolidated assets; ● Total off-balance sheet exposures of 25% or less of consolidated assets; ● Cannot be an advanced approaches banking organization; and ● Leverage ratio greater than 9% or temporarily prescribed threshold established in response to COVID-19.
Eligibility criteria to utilize the CBLR includes the following: ● Total assets of less than $10 billion; ● Total trading assets plus liabilities of 5% or less of consolidated assets; ● Total off-balance sheet exposures of 25% or less of consolidated assets; ● Cannot be an advanced approaches banking organization; and ● Leverage ratio greater than 9%.
When, in management’s judgment, the borrower’s ability to make periodic interest and principal payments resumes and collectability is no longer in doubt, which is evident by the receipt of six consecutive months of regular, on-time payments, the loan is eligible to be returned to accrual status.
When interest accruals are suspended, accrued interest income is reversed and charged to earnings. When, in management’s judgment, the borrower’s ability to make periodic interest and principal payments resumes and collectability is no longer in doubt, which is evident by the receipt of six consecutive months of regular, on-time payments, the loan is eligible to be returned to accrual status.
Borrowings, consisting of subordinated debt, senior term loan and FHLB and other borrowings represented 2.7% of funding sources at December 31, 2023, versus 6.7% at December 31, 2022. Repurchase agreements, which are available to large corporate customers, represented 0.2% and 0.4% of funding sources at December 31, 2023 and 2022, respectively.
Borrowings, consisting of subordinated debt, senior term loan and other borrowings represented 2.7% of funding sources at December 31, 2024 and December 31, 2023. Repurchase agreements, which are available to large corporate customers, represented 0.1% and 0.2% of funding sources at December 31, 2024 and 2023, respectively.
The 2023 earnings equated to a return on average assets of 0.9% and a return on average equity of 11.4%, compared to 2022 results of 0.5% and 5.9%, respectively. Basic and diluted earnings per share were $2.46 and $2.40, respectively, in 2023 compared to $1.23 and $1.17, respectively, in 2022.
The 2024 earnings equated to a return on average assets of 0.6% and a return on average equity of 6.9%, compared to 2023 results of 0.9% and 11.4%, respectively. Basic and diluted earnings per share were $1.56 and $1.53, respectively, in 2024 compared to $2.46 and $2.40, respectively, in 2023.
The $2.4 million of charged off loans were concentrated in one commercial relationship representing $0.9 million, or 38%, of the charge offs. This note was secured by a government lease that was not renewed. The subprime auto segment also saw a net change of $1.0 million, which has been attributed to charge offs.
The $0.9 million of charged off loans were concentrated in one commercial relationship representing $0.6 million, or 67%, of the charge offs. This note was a government guaranteed note that was secured by business assets. The subprime auto segment also saw a net change of $0.1 million, which has been attributed to charge offs.
As of December 31, 2023, the "economic and business conditions" factor was generally the highest weighted qualitative factor, with a weighting of 10% to 20%, and given a risk rating of “Minor” for eight of the fourteen portfolio segments.
As of December 31, 2024, the "economic and business conditions" factor was generally the highest weighted qualitative factor, with a weighting of 10% to 20%, and given a risk rating of “Minor” for fifteen and "Moderate" for five of the 21 portfolio segments.
Interest-bearing deposits totaled $1.70 billion at December 31, 2023, compared to $1.34 billion at December 31, 2022, or 58.7% and 52.1%, respectively, of total deposits.
Interest-bearing deposits totaled $1.75 billion at December 31, 2024, compared to $1.70 billion at December 31, 2023, or 65.1% and 58.7%, respectively, of total deposits.
This change is the net effect of multiple factors, primarily the reclassification of $2.0 million of previously reported individually analyzed loans to performing loans, the 46 identification of $4.8 million of recently individually analyzed loans, principal curtailments/payoffs of $3.8 million, normal loan amortization of $3.0 million and $2.4 million in charge offs.
This change is the net effect of multiple factors, primarily the identification of $40.0 million of recently individually analyzed loans, offset by normal loan amortization of $6.4 million, $0.9 million in charge offs, the reclassification of $0.7 million of previously reported individually analyzed loans to performing loans and principal curtailments/payoffs of $0.6 million.
Deposits continue to be the most significant source of funds, totaling $2.90 billion, or 97.1% of funding sources, at December 31, 2023, versus $2.57 billion, or 92.9% of such funding sources, at December 31, 2022. Of these amounts, gaming deposits totaled $354.1 million and $652.1 million at December 31, 2023 and 2022, respectively.
Deposits continue to be the most significant source of funds, totaling $2.69 billion, or 97.2% of funding sources, at December 31, 2024, versus $2.90 billion, or 97.1% of such funding sources, at December 31, 46 2023 . Of these amounts, gaming deposits totaled $227.6 million and $354.1 million at December 31, 2024 and 2023, respectively.
Average noninterest bearing deposits totaled $1.07 billion during 2023 compared to $1.36 billion during 2022. 48 We utilize a custodial deposit transference structure for certain deposit programs whereby we, acting as custodian of account holder funds, place a portion of such account holder funds that are not needed to support near term settlement at one or more third-party banks insured by the FDIC (each, a program bank).
We utilize a custodial deposit transference structure for certain deposit programs whereby we, acting as custodian of account holder funds, place a portion of such account holder funds that are not needed to support near term settlement at one or more third-party banks insured by the FDIC (each, a program bank).
The third-party vendor uses these variables to produce an estimated probability of default for each quarter period and, through a proprietary model, also calculates a loss given default factor to estimate overall losses. The vendor also prepares benchmark studies for prepayment and curtailment rate estimates for each loan segment, as well as recovery lag estimates.
We use these variables to produce an estimated probability of default for each quarter period and, through a proprietary model, also calculate a loss given default factor to estimate overall losses. Benchmark studies are also prepared for prepayment and curtailment rate estimates for each loan segment, as well as recovery lag estimates.
December 31, 2023 2022 Loans past due more than 30 days to gross loans 0.6 % 0.7 % Loans past due more than 90 days to gross loans 0.2 % 0.1 % For tables reflecting the allocation of the ACL, please refer to Note 3 – Loans and Allowance for Credit Losses accompanying the consolidated financial statements included elsewhere in this report.
Loans past due more than 30 days were $45.5 million and $14.0 million, respectively, at December 31, 2024 and 2023. 44 December 31, 2024 2023 Loans past due more than 30 days to gross loans 2.2 % 0.6 % Loans past due more than 90 days to gross loans 1.8 % 0.2 % For tables reflecting the allocation of the ACL, refer to Note 3 – Loans and Allowance for Credit Losses accompanying the consolidated financial statements included elsewhere in this report.
Net interest margin on a tax-equivalent basis was consistent at 4.04% in 2023 and 2022. In 2023, the Federal Reserve raised its key interest rate from a range of 4.25% to 4.50% to a range of 5.25% to 5.50% as of 39 December 31, 2023.
Net interest margin on a tax-equivalent basis was 3.67% and 4.04% in 2024 and 2023, respectively. In 2024, the Federal Reserve lowered its key interest rate from a range of 5.25% to 5.50% to a range of 4.25% to 4.50% as of December 31, 2024.
At December 31, 2023, the amortized cost of available-for-sale investment securities totaled $377.8 million, resulting in a net unrealized loss in the investment portfolio of $32.5 million. Management has the intent and ability to hold the investments to maturity and they are all high quality investments with no credit impairment.
At December 31, 2024, the amortized cost of available-for-sale investment securities totaled $445.5 million, resulting in a net unrealized loss in the investment portfolio of $33.9 million. Management has the intent and ability to hold the investments to maturity and they are all high quality investments.
Management continues to emphasize the development of additional noninterest-bearing deposits as a core funding source for us. At December 31, 2023, noninterest-bearing balances totaled $1.20 billion, compared to $1.23 billion at December 31, 2022, or 41.3% and 47.9%, respectively, of total deposits.
Management continues to emphasize the development of noninterest-bearing deposits as a core funding source. At December 31, 2024, noninterest-bearing balances totaled $941.0 million, compared to $1.20 billion at December 31, 2023, or 34.9% and 41.3%, respectively, of total deposits.
Management believes the available-for-sale classification provides flexibility in terms of managing the portfolio for liquidity, yield enhancement and interest rate risk management opportunities. The decrease in investment securities balances during 2023 was primarily driven by sales and maturities of available-for-sale securities.
Management believes the available-for-sale classification provides flexibility in terms of managing the portfolio for liquidity, yield enhancement and interest rate risk management opportunities. The increase in investment securities balances during 2024 was driven by purchases of available-for-sale mortgage-backed securities.
We enter into interest rate swap contracts designated as hedging instruments to manage the interest rate risk associated with certain fixed rate loans. In 2023 we entered into four portfolio layer method interest rate swaps designated as hedging instruments over a closed portfolio of fixed-rate mortgage loans.
We enter into interest rate swap contracts designated as hedging instruments to manage the interest rate risk associated with certain fixed rate available for sale securities. In 2023 we entered into a portfolio layer method interest rate swap designated as a hedging instrument over a closed portfolio of municipal securities.
As of December 31, 2023, the Bank's concentration of loans for construction, land development, and other land as a percentage of capital totaled 36.0% and the Bank's CRE concentration, excluding owner-occupied loans, as a percentage of capital totaled 234.1%.
As of December 31, 2024, the Bank's concentration of loans for construction, land development and other land as a percentage of capital totaled 31.3% and the Bank's CRE loan concentration, excluding owner-occupied loans, as a percentage of capital totaled 222.0%.
Program banks undergo robust due diligence prior to becoming a program bank and are also subject to continuous monitoring. These off-balance sheet deposits totaled $1.1 billion at December 31, 2023 and $724.0 million at December 31, 2022 and represent gaming, banking-as-a-service and digital asset clients.
Program banks undergo robust due diligence prior to becoming a program bank and are also subject to continuous monitoring. These off-balance sheet deposits totaled $1.42 billion at December 31, 2024 and $1.09 billion at December 31, 2023, and substantially all represent banking-as-a-service clients.
Net Interest Income Net interest income is the amount by which interest income on earning assets exceeds interest expense incurred on interest-bearing liabilities. Interest-earning assets include loans, investment securities and interest-bearing balances with banks. Interest-bearing liabilities include interest-bearing deposits and borrowed funds such as sweep accounts, repurchase agreements, subordinated debt and the senior term loan.
Interest-earning assets include loans, investment securities and interest-bearing balances with banks. Interest-bearing liabilities include interest-bearing deposits and borrowed funds such as sweep accounts, repurchase agreements, subordinated debt and the senior term loan.
GAAP basis Net interest income $ 123,283 $ 111,803 $ 77,159 Average interest-earning assets 3,077,717 2,798,784 2,410,827 Net interest margin 4.01 % 3.99 % 3.20 % Net interest margin - non-U.S.
GAAP basis Net interest income $ 109,198 $ 123,283 $ 111,803 Average interest-earning assets 2,997,951 3,077,717 2,798,784 Net interest margin 3.64 % 4.01 % 3.99 % Net interest margin - non-U.S.
The following table sets forth the balance of each of the deposit categories for the years ended December 31, 2023 and 2022: (Dollars in thousands) 2023 2022 Demand deposits of individuals, partnerships and corporations Noninterest-bearing demand $ 1,197,272 $ 1,231,544 NOW 538,444 720,062 Savings and money markets 571,299 284,459 Time deposits, including CDs and IRAs 594,461 334,417 Total deposits $ 2,901,476 $ 2,570,482 Time deposits that meet or exceed the FDIC insurance limit $ 3,150 $ 4,386 Average interest-bearing deposits totaled $1.86 billion during 2023 compared to $1.27 billion during 2022.
The following table sets forth the balance of each of the deposit categories for the years ended December 31, 2024 and 2023: (Dollars in thousands) 2024 2023 Demand deposits of individuals, partnerships and corporations Noninterest-bearing demand $ 940,994 $ 1,197,272 NOW 473,225 538,444 Savings and money markets 437,145 571,299 Time deposits, including CDs and IRAs 842,251 594,461 Total deposits $ 2,693,615 $ 2,901,476 Time deposits that meet or exceed the FDIC insurance limit $ 2,962 $ 3,150 Average interest-bearing deposits totaled $1.80 billion during 2024 compared to $1.86 billion during 2023.
We paid dividends to common shareholders of $8.6 million in 2023 and $8.4 million in 2022, compared to earnings of $31.2 million in 2023 versus $15.0 million in 2022, resulting in an decrease in the dividend payout ratio to 27.7% in 2023 from 55.5% in 2022.
We paid dividends to common shareholders of $8.8 million in 2024 and $8.6 million in 2023, compared to earnings of $20.1 million in 2024 versus $31.2 million in 2023, resulting in an increase in the dividend payout ratio to 43.7% in 2024 from 27.7% in 2023.
These charge offs were to various individual loans secured by automobiles and comprised 42% of the total charge offs. Loans classified as Special Mention totaled $83.8 million and $31.3 million as of December 31, 2023 and December 31, 2022, respectively. The increase of $52.5 million, or 167.7%, was concentrated in the commercial loan portfolio.
These charge offs were to various individual loans secured by automobiles and comprised 11% of the total charge offs. Loans classified as Special Mention totaled $50.4 million and $83.8 million as of December 31, 2024 and December 31, 2023, respectively. The decrease of $33.4 million, or 39.9%, was concentrated in the commercial loan portfolio.
Of these uninsured deposits, $236.2 million represents collateralized public fund deposits. Further, at December 31, 2023, we had available liquidity of $398.2 million of cash and cash equivalents on hand and $699.8 million remaining borrowing capacity with the FHLB.
Of these uninsured deposits, $258.5 million represents collateralized public fund deposits. Further, at December 31, 2024, we had available liquidity of $317.9 million of cash and cash equivalents on hand and $648.6 million remaining borrowing capacity with the FHLB.
Capital Resources During the year ended December 31, 2023, stockholders’ equity increased $28.0 million to $289.3 million from $261.4 million.
Capital Resources During the year ended December 31, 2024, stockholders’ equity increased $16.4 million to $305.8 million from $289.3 million.
The decrease of $0.1 million, or 2.1%, was concentrated in the commercial loan portfolio and is the result of the implementation of the workout of these loans resulting in principal reduction from paydowns, loan sales and foreclosures of various loans to unrelated borrowers, both MVB legacy and those obtained as part of the First State acquisition, as well as two charge offs of commercial loans totaling $1.0 million secured by a government lease and accounts receivable.
The decrease of $1.2 million, or 26.1%, was concentrated in the commercial loan portfolio and is the result of the implementation of the workout of these loans resulting in principal reduction from paydowns, loan sales and foreclosures of various loans to unrelated borrowers, as well as two charge offs of commercial loans totaling $0.5 million secured by heavy equipment and vehicles.
With stockholders’ equity increasing as noted above and with the growth in assets of $245.0 million, the equity to assets ratio increased from 8.5% at December 31, 2022 to 8.7% at December 31, 2023 .
With stockholders’ equity increasing as noted above and with the decline in assets of $185.2 million, the equity to assets ratio 47 increased from 8.7% at December 31, 2023 to 9.8% at December 31, 2024.
Major classification of loans held for investment at December 31, are as follows: (Dollars in thousands) 2023 2022 Business $ 797,100 $ 851,072 Real estate 670,584 632,839 Acquisition, development and construction 134,004 126,999 Commercial $ 1,601,688 $ 1,610,910 Residential 672,547 609,452 Home equity lines of credit 14,531 18,734 Consumer 27,408 131,566 Total loans $ 2,316,174 $ 2,370,662 Deferred loan origination fees and costs, net 1,420 1,983 Loans receivable $ 2,317,594 $ 2,372,645 At December 31, 2023, commercial and non-residential real estate loans represented the largest portion of the portfolio at 69.2%.
Major classification of loans held for investment at December 31, are as follows: (Dollars in thousands) 2024 2023 Business $ 668,458 $ 797,100 Real estate 632,898 670,584 Acquisition, development and construction 115,500 134,004 Commercial $ 1,416,856 $ 1,601,688 Residential 650,708 672,547 Home equity lines of credit 12,933 14,531 Consumer 18,620 27,408 Total loans $ 2,099,117 $ 2,316,174 Deferred loan origination fees and costs, net 1,014 1,420 Loans receivable $ 2,100,131 $ 2,317,594 At December 31, 2024, commercial and non-residential real estate loans represented the largest portion of the portfolio at 67.5%.
There were 34 additional loans that management identified as Substandard loans, totaling $34.0 million as of December 31, 2023. These loans include $18.4 million in three loans to finance hospitality properties to three related borrowers, a $3.8 million loan to finance a multifamily real estate property and two loans totaling $3.1 million loan secured by leases.
There were 54 additional loans that management identified as Substandard loans, totaling $76.8 million as of December 31, 2024. These loans include a $18.0 million loan to a skilled nursing facility, $17.7 million in three loans to finance hospitality properties to three related borrowers and a $13.5 million loan to finance a multifamily real estate property.
Personnel costs are a significant part of our noninterest expense as such costs are critical to services organizations.
Approximately, 56% and 54% of noninterest expense for 2024 and 2023, respectively, related to personnel costs. Personnel costs are a significant part of our noninterest expense as such costs are critical to services organizations.
Lastly, the provision for credit losses was impacted by a $0.1 million increase in the specific credit loss allocations in 2023, relative to a $1.3 million increase in provision for such loan losses in 2022.
Net charge-offs in 2024 totaled $4.4 million, in comparison to net charge-offs of $9.3 million in 2023. Lastly, the provision for credit losses was impacted by a $0.6 million decrease in the specific credit loss allocations in 2024, relative to a $0.1 million decrease in provision for such loan losses in 2023.
Our yield on earning assets (tax-equivalent) in 2023 was 6.20% compared to 4.54% in 2022. Total loans decreased by $77.6 million to $2.32 billion as of December 31, 2023 from $2.40 billion as of December 31, 2022. Our overall cost of interest-bearing liabilities was 3.38% in 2023 compared to 1.03% in 2022.
Total loans decreased by $218.1 million to $2.10 billion as of December 31, 2024 from $2.32 billion as of December 31, 2023. Our overall cost of interest-bearing liabilities was 4.07% in 2024 compared to 3.38% in 2023.
December 31, (Dollars in thousands) 2023 2022 Available-for-sale securities: United States government agency securities $ 38,408 $ 44,814 United States sponsored mortgage-backed securities 82,382 56,571 United States treasury securities 100,356 120,909 Municipal securities 106,907 138,636 Corporate debt securities 8,942 10,560 Other debt securities 7,500 7,500 Other securities 780 824 Total investment securities available-for-sale $ 345,275 $ 379,814 Equity securities $ 41,086 $ 38,744 At December 31, 2023, all investment securities are available-for-sale or equity securities.
December 31, (Dollars in thousands) 2024 2023 Available-for-sale securities: United States government agency securities $ 39,846 $ 38,408 United States sponsored mortgage-backed securities 147,580 82,382 United States treasury securities 103,975 100,356 Municipal securities 102,140 106,907 Corporate debt securities 9,918 8,942 Other debt securities 7,500 7,500 Other securities 681 780 Total investment securities available-for-sale $ 411,640 $ 345,275 Equity securities $ 42,583 $ 41,086 At December 31, 2024, all investment securities are available-for-sale or equity securities.
During the year ended December 31, 2023, cash flows from operating, investing and financing activities totaled $58.2 million, $88.2 million and $211.5 million, respectively. Cash flows from operating, investing and financing activities during the year ended December 31, 2022 totaled $7.4 million, ($571.1) million and $296.6 million, respectively.
During the year ended December 31, 2024, cash flows from investing activities totaled $144.5 million, while cash used in operating and financing activities totaled $0.3 million and $224.5 million, respectively. Cash flows from operating, investing and financing activities during the year ended December 31, 2023 totaled $58.2 million, $88.2 million and $211.5 million, respectively.
Non-performing assets and past due loans as of December 31, are as follows: (Dollars in thousands) 2023 2022 Non-accrual loans Commercial $ 7,680 $ 7,528 Real estate and home equity 243 2,286 Consumer and other 344 1,351 Total non-accrual loans 8,267 11,165 Accruing loan past due 90 days or more — — Total non-performing loans 8,267 11,165 Other real estate, net 825 1,194 Total non-performing assets $ 9,092 $ 12,359 Allowance for credit losses $ 22,124 $ 23,837 Non-performing loans to gross loans 0.4 % 0.5 % Allowance for credit losses to total loans 0.95 % 1.00 % Allowance for credit losses to non-performing loans 267.6 % 213.5 % Non-performing assets to total assets 0.3 % 0.4 % Individually analyzed loans have decreased by $6.4 million, or 35.2%, during 2023.
Nonperforming assets and past due loans as of December 31, are as follows: (Dollars in thousands) 2024 2023 Non-accrual loans Commercial $ 20,109 $ 7,680 Real estate and home equity 4,278 243 Consumer and other 220 344 Total nonperforming loans 24,607 8,267 Other real estate, net 2,827 825 Total nonperforming assets $ 27,434 $ 9,092 Allowance for credit losses $ 19,663 $ 22,124 Nonperforming loans to gross loans 1.2 % 0.4 % Allowance for credit losses to total loans 0.94 % 0.95 % Allowance for credit losses to nonperforming loans 79.9 % 267.6 % Nonperforming assets to total assets 0.9 % 0.3 % Individually analyzed loans have increased by $31.4 million, or 266.1%, during 2024.
Significant changes in cash flows during the year ended December 31, 2023 include inflows from the net increase in deposits of $331.0 million, net maturities/paydowns of available-for-sale investment securities of $76.6 million and sales of available-for-sale investment securities of $54.5 million, partially offset by cash outflows of $102.3 million to pay down FHLB and other borrowings and $89.5 million to purchase available-for-sale investment securities.
Significant changes in cash flows during the year ended December 31, 2024 include inflows from the net change in loans of $199.6 million, sales of available-for-sale investment securities of $24.3 million and net maturities/paydowns of available-for-sale investment securities of $17.4 million, partially offset by cash outflows of $207.9 million from the net change in deposits and $111.8 million to purchase available-for-sale investment securities.
Maturities of time deposits that met or exceeded the FDIC insurance limit as of December 31, 2023: (Dollars in thousands) 2023 Under three months $ 283 Over three to 12 months 1,075 Over one to three years 1,520 Over three years 272 Total $ 3,150 Total uninsured deposits were $1.2 billion, or 42.5% of total deposits, as of December 31, 2023.
Maturities of time deposits that met or exceeded the FDIC insurance limit as of December 31, 2024: (Dollars in thousands) 2024 Under three months $ 1,604 Over three to 12 months 1,358 Total $ 2,962 Total uninsured deposits were $966.0 million, or 35.9% of total deposits, as of December 31, 2024.
The increased return in 2023 is a result of a $16.2 million, or 108.0%, increase in earnings, which was offset by an increase in average total assets of $329.6 million, or 10.9%, as compared to 2022.
Return on Assets and Equity Assets Our return on average assets was 0.6% in 2024, compared to 0.9% in 2023. The decline in 2024 is a result of an $11.1 million, or 35.6%, decline in earnings, which is partially offset by a $73.3 million, or 2.2%, decline in average total assets as compared to 2023.
To the extent actual outcomes differ from our estimates, we may need additional provisions for credit losses. Any such additional provisions for credit losses will be a direct charge to our earnings.
To the extent actual outcomes differ from our estimates, we may need additional provisions for credit losses. Any such additional provisions for credit losses will be a direct charge to our earnings. 49 Fair Value of Level III Financial Instruments Available-for-sale investment securities are recorded at fair value based upon quoted prices, if available.
This increase consists of net income for the year of $31.0 million, other comprehensive income of $8.9 million, stock-based compensation of $2.7 million and common stock options exercised totaling $0.6 million partially offset by cash dividends paid of $8.6 million, the impact to retained earnings of adopting ASC 326, Measurement of Credit Losses on Financial Instruments ("ASC 326") of $6.6 million and minimum tax withholding on restricted stock units issued of $0.8 million.
This increase primarily consists of net income for the year of $20.1 million, stock-based compensation of $2.9 million, common stock options exercised totaling $1.5 million and other comprehensive income of $0.6 million, partially offset by cash dividends paid of $8.8 million.
Investments in our top four equity securities represented $34.1 million, or 93.7%, of our total Fintech investment portfolio at December 31, 2023.
At December 31, 2024, equity securities primarily consist of our Fintech investment portfolio and are comprised of investments in nine companies with a carrying value of $36.5 million. Investments in our top four equity securities represented $34.1 million, or 93.4%, of our total Fintech investment portfolio at December 31, 2024.
At December 31, 2023 the interest rate swaps had a notional amount of $390.3 million, which includes a $9.7 million amortization adjustment related to one of the swaps which is amortizing, and swap liability fair value of $4.5 million.
The notional amount of the interest rate swap portfolio was $126.0 million and $390.3 million as of December 31, 2024 and December 31, 2023, respectively, including amortization adjustments of $24.0 million and $9.7 million related to one of the swaps which is amortizing.
The Fintech equity securities do not have readily determinable fair values and are recorded at cost and adjusted for observable price changes for underlying transactions for identical or similar investments. 42 The following table shows the maturities for the available-for-sale investment securities portfolio at December 31, 2023: Within one year After one year, but within five After five years, but within ten After ten years Total investment securities (Dollars in thousands) Amortized Cost Weighted-Avg.
The following table shows the maturities for the available-for-sale investment securities portfolio at December 31, 2024: Within one year After one year, but within five After five years, but within ten After ten years Total investment securities (Dollars in thousands) Amortized Cost Weighted-Avg. Yield Amortized Cost Weighted-Avg. Yield Amortized Cost Weighted-Avg. Yield Amortized Cost Weighted-Avg.
In addition, we entered into a contract with the purchaser for Chartwell to continue to provide services and support for three years following the sale. Income Taxes We incurred income tax expense of $8.1 million, $4.1 million and $9.9 million in 2023, 2022 and 2021, respectively.
In addition, we entered into a contract with the purchaser for Chartwell to continue to provide services and support for three years following the sale. We paid $3.9 million and $2.5 million in fees related to this contract during the years ended December 31, 2024 and December 31, 2023, respectively.
The increase in earning assets yield was partially offset by the increase in the cost of interest-bearing liabilities, which resulted in our net interest margin (tax-equivalent) remaining at 4.04% in 2023 and 2022. Net income in 2023 totaled $31.2 million, compared to $15.0 million in 2022, an increase of $16.2 million.
The increase in the cost of interest-bearing liabilities outpaced the increase in the earning assets yield, which resulted in our tax-equivalent net interest margin decreasing to 3.67% at December 31, 2024 from 4.04% at December 31, 2023. Net income available to common shareholders in 2024 totaled $20.1 million, compared to $31.2 million in 2023, a decrease of $11.1 million.
The balance is comprised of 53 loans, which include seven loans totaling $26.1 million to a single borrower for retail commercial real estate projects, $18.9 million to finance two multifamily housing construction projects to two related borrowers, a $8.0 million commercial real estate loan to a senior care facility and a $11.2 million commercial real estate loan to finance an office building.
The balance is comprised of 52 loans, which include four loans totaling $12.1 million to a single borrower for retail commercial real estate projects, an $8.9 million line of credit secured by a borrowing base, a $7.7 million commercial real estate loan to a senior care facility and a $2.5 million commercial term loan to finance a business acquisition.
We continue to analyze methods to deploy assets into an earning asset mix to result in a stronger net interest margin. Management’s estimate of the impact of future changes in market interest rates is shown in the section captioned Interest Rate Risk, in Item 7A – Quantitative and Qualitative Disclosures About Market Risk included elsewhere in this report.
Management’s estimate of the impact of future changes in market interest rates is shown in the section captioned Interest Rate Risk, in Item 7A – Quantitative and Qualitative Disclosures About Market Risk included elsewhere in this report. 37 Net interest spread is calculated by taking the difference between interest earned on earning assets and interest paid on interest-bearing liabilities in an effort to maximize net interest, while maintaining an appropriate level of interest rate risk.
The decrease is primarily due the risk grade upgrade of three loans to separate commercial loan relationships totaling $1.9 million, the payoff of 13 mortgage loans totaling $0.9 million and the continued curtailment of the loans that remained within the portfolio.
The increase is primarily due the risk grade downgrade of 14 loans to separate commercial loan relationships totaling $50.0 million, the downgrade of 11 residential and HELOC notes totaling $4.7 million, the payoff of six commercial and mortgage loans totaling $3.3 million, the charge off of a $0.6 million commercial note and the continued curtailment of the loans that remained within the portfolio.
GAAP metric Tangible book value ("TBV") per common share was $22.43 and $20.25 as of December 31, 2023 and 2022, respectively. TBV per common share is a non-U.S. GAAP measure that we believe is helpful to interpreting financial results. A reconciliation of TBV per common share is included below.
GAAP measure that we believe is helpful to interpreting financial results. A reconciliation of TBV per common share is included below.
The decrease in the provision for credit losses is primarily the result of the changes to the outstanding balances of the loan portfolios, including a decrease in our consumer loan segment, forecasted loss rates, as well as the level of recognized charge-offs within the portfolio.
The change from release of allowance to provision for credit losses is primarily the result of the level of recognized charge-offs within the loan portfolio, which was partially offset by changes to the outstanding balances of the loan portfolios, including decreases in the commercial, residential and consumer loan segments.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

16 edited+3 added−4 removed20 unchanged
Biggest changeNet interest income at risk exceeded policy limits in the -100 bp, -200 bp, -300 bp and -400 bp parallel instantaneous interest rate shock scenarios. The policy violations in these scenarios are driven largely by the general level or market interest rates described above, as well as our cost of funding.
Biggest changeIn the past, policy violations in these scenarios were driven largely by the general level or market interest rates described in the preceding paragraph as well as our cost of funding. Our deposit costs are low and have little room to reprice to a lower interest rate in a falling rate environment.
We believe that accepting some level of interest rate risk is necessary in order to achieve realistic profit goals. Management and our Board of Directors have chosen an interest rate risk profile that is consistent with our strategic business plan.
We believe that accepting some level of interest rate risk is necessary in order to achieve realistic profit goals. Management and the Board of Directors have chosen an interest rate risk profile that is consistent with our strategic business plan.
Average interest rates are shocked by +/- 100, 200, 300 and 400 basis points (“bp”). The goal is to structure the balance sheet so 52 that net interest-earnings at risk over 12-month and 24-month periods and the economic value of equity at risk do not exceed policy guidelines at the various interest rate shock levels and scenarios.
Average interest rates are shocked by +/- 100, 200, 300 and 400 basis points (“bp”). The goal is to structure the balance sheet so 51 that net interest-earnings at risk over 12-month and 24-month periods and the economic value of equity at risk do not exceed policy guidelines at the various interest rate shock levels and scenarios.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Market risk refers to potential losses arising from, amongst other items, changes in interest rates, foreign exchange rates, equity prices and commodity prices. Our market risk is composed primarily of interest rate risk.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Market risk refers to potential losses arising from, among other items, changes in interest rates, foreign exchange rates, equity prices and commodity prices. Our market risk is composed primarily of interest rate risk.
We monitor the financial condition of these third parties on an annual basis and we do not currently expect these third parties to fail to meet their obligations. 54
We monitor the financial condition of these third parties on an annual basis and we do not currently expect these third parties to fail to meet their obligations. 53
The discussion above assumes net interest income at risk in various shock scenarios; scenarios in which interest rates immediately move by a large margin. Our net interest income profile exhibits declining net interest income when rates fall gradually; however, the impact is not as extreme as is suggested in a shock scenario.
The paragraph above discusses net interest income at risk in various shock scenarios; scenarios in which interest rates immediately move by a large margin. Our net interest income profile exhibits declining net interest income when rates fall gradually, but the impact is not as extreme as is suggested in a shock scenario.
Theoretically, an asset sensitive position is more favorable in a rising rate environment, since more assets than liabilities will reprice in a given time frame as interest rates rise. Similarly, a liability sensitive position is theoretically favorable in a declining interest rate environment, since more liabilities than assets will reprice in a given time frame as interest rates decline.
Theoretically, an asset sensitive position is more favorable in a rising rate environment, since more assets than liabilities will be repriced in a given time frame as interest rates rise.
A gradual interest rate decline scenario smooths the impact of falling rates over a 12 or 24 month period. Our expectation is that over any given one to two year period, interest rates will likely move at a gradual pace. As interest rates fall, mortgage companies experience a higher volume of loan originations and refinance activity.
Essentially, a gradual interest rate decline scenario smooths the impact of falling rates over a 12 or 24 month period. Our expectation is that over any given one to two year period, interest rates will likely move at a gradual pace.
The Fed Funds Rate increased significantly during 2022, and the effect of this rate movement was not fully realized in the deposit portfolio until 2023. Interest-bearing deposits were repriced throughout 2023 in the rising rate environment leading to increased cost of funds.
The Fed Funds Rate increased significantly during 2022. The full effect of this rate movement was not fully realized in the deposit portfolio until 2023. Throughout 2023, in the rising rate environment, interest-bearing deposits were repriced, leading to increased cost of funds. The significant change in rates also drove previously non-interest-bearing deposits into new interest-bearing account types.
At December 31, 2023, we are shown in an asset sensitive position for the first year after rate shocks. Management continuously strives to reduce higher costing fixed rate funding instruments, while increasing assets that are more fluid in their repricing.
As of December 31, 2024, the Bank is shown in an asset sensitive position in down rate environments after rate shocks. Management continuously strives to reduce higher costing fixed rate funding instruments, while increasing assets that are more fluid in their repricing.
Estimated Changes in EVE Change in interest rates +400 bp +300 bp +200 bp +100 bp -100 bp -200 bp -300 bp -400 bp Policy Limit (35.0) % (25.0) % (17.0) % (12.0) % (12.0) % (17.0) % (25.0) % (35.0) % December 31, 2023 (2.3) % (1.9) % (1.3) % (0.6) % 0.7 % (0.7) % (3.5) % (6.0) % December 31, 2022 14.7 % 11.4 % 8.0 % 3.9 % (4.6) % (11.4) % (19.9) % (29.3) % The EVE is much more stable across rate changing scenarios for 2023.
Estimated Changes in EVE Change in interest rates +400 bp +300 bp +200 bp +100 bp -100 bp -200 bp -300 bp -400 bp Policy Limit (35.0) % (25.0) % (17.0) % (12.0) % (12.0) % (17.0) % (25.0) % (35.0) % December 31, 2024 (18.9) % (16.1) % (9.2) % (3.2) % (0.6) % (6.7) % (12.2) % (15.8) % December 31, 2023 (2.3) % (1.9) % (1.3) % (0.6) % 0.7 % (0.7) % (3.5) % (6.0) % The Economic Value of Equity ("EVE") was stable across rate changing scenarios for 2023.
This benefit is not reflected in measures of net interest income at risk, as origination and refinance activity are classified as income from an equity method investment. This increase in equity method investment income represents a benefit to net income that offsets the losses to net interest income experienced in a falling rate environment.
The impact of this increase in loan volume is reflected in income from equity method investments and represents a benefit to net income that partially offsets the losses to net interest income experienced in a falling rate environment.
Estimated Changes in Net Interest Income Change in interest rates +400 bp +300 bp +200 bp +100 bp -100 bp -200 bp -300 bp -400 bp Policy Limit (25.0) % (20.0) % (15.0) % (10.0) % (10.0) % (15.0) % (20.0) % (25.0) % December 31, 2023 51.8 % 39.7 % 27.6 % 16.1 % (7.6) % (20.2) % (33.4) % (44.8) % December 31, 2022 30.0 % 21.3 % 12.5 % 4.1 % (13.3) % (22.7) % (31.7) % (38.7) % Net interest income is first compared to the Global Insight Rate Forecast that we received from a third-party banking solution.
Estimated Changes in Net Interest Income Change in interest rates +400 bp +300 bp +200 bp +100 bp -100 bp -200 bp -300 bp -400 bp Policy Limit (25.0) % (20.0) % (15.0) % (10.0) % (10.0) % (20.0) % (27.5) % (35.0) % December 31, 2024 31.7 % 23.7 % 15.7 % 7.7 % (6.5) % (12.8) % (18.6) % (24.2) % December 31, 2023 51.8 % 39.7 % 27.6 % 16.1 % (7.6) % (20.2) % (33.4) % (44.8) % Net interest income sensitivity is tested by shocking a forward rate curve.
Management works to maintain a consistent spread between yields on assets and costs of deposits and borrowings, regardless of the direction of interest rates.
Similarly, a liability sensitive position is theoretically favorable in a declining interest rate environment, since more liabilities than assets will be repriced in a given time frame as interest rates decline. Management works to maintain a consistent spread between yields on assets and costs of deposits and borrowings, regardless of the direction of interest rates.
Our deposit costs are low and have little room to reprice to a lower interest rate in a falling rate environment. However, our floating rate assets are exposed to the full effect of repricing to a lower interest rate in a falling rate environment.
Conversely, our floating rate assets are exposed to the full effect of repricing to a lower interest rate in a falling rate environment. Additionally, mortgage companies experience a higher volume of loan originations and refinance activity as interest rates fall.
The significant change in rates also 53 drove previously non-interest-bearing deposits into new interest-bearing account types, which impacted the cost of interest-bearing liabilities. This impact drove the cost of interest-bearing liabilities up, allowing the cost to behave similar to the discount rate applied to cash flows.
This migration of noninterest-bearing deposits to interest-bearing impacted the cost of interest-bearing liabilities. This impact drove the 52 cost of interest-bearing liabilities up, allowing the cost to behave similar to the discount rate applied to cash flows. These changes in rates took place in 2023. Any further deposit repricing would also be a major driver in the EVE calculation differences.
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This establishes an expectation of interest rate movement over the next two years. Then, the shocks are applied based on the rate expectation. In comparing the expectations as of each of December 31, 2022 and December 31, 2023, at December 31, 2022 the expectation was that rates would see little movement in 2023.
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The change in income is then examined in scenarios where the rate curve is shocked up or down in a parallel shock. Deposit repricing during the last year lagged the movement of the Fed Funds Rate. As these increases have been realized, interest expense is higher in a flat rate scenario.
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As such, the projected impact at year-end 2022 is smaller than the current report. That is also why the shock is less in the down-rate environment, which would be closer to a flat rate environment, rather than a true down-rate environment.
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However, the betas for deposit repricing allow interest expense to increase more in up rates and decrease more in down rates in 2024 than during 2023. At December 31, 2024, the expectation is for rates to begin a steady decline over the next one to two years, through small drops, with another stabilization moving forward.
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At December 31, 2023, the expectation is for rates to drop throughout the next year, then hit a steady point in year two, and moving forward. There is impact in a down-rate environment as the bank deals heavily in variable rate loans and deposits.
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There is impact in a downrate environment as the bank deals heavily in variable rate loans and deposits. Net interest income at risk does not currently exceed policy limits in parallel instantaneous interest rate shock scenarios.
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These changes in rates took place in 2023, despite only being projected at year-end 2022. The EVE impact in changing rate environments has stabilized due to our understanding of the impact of previous rate changes to the portfolio and the small rate changes projected in 2023.

Other MVBF 10-K year-over-year comparisons