Mvb Financial Corp. · NASDAQ:MVBF
Mvb Financial — Investor Presentation (April 2020)
49 slides from Mvb Financial's investor presentation, Apr 30, 2020
Slide 1: April 2020
April 2020
Slide 2: Forward Looking Statements
Forward Looking Statements MVB Financial Corp. (the “Company") has made forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21£ of the Securities Exchange Act of 1934, as amended, in this Presentation. These forward-looking statements
Slide 3: The MVB Financial Franchise
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Slide 4: Our Purpose & Values
Our Purpose & Values “Trusted Partners on the Financial Frontier — Committed to Your Success!” oO ISL VY TRUST COMMITMENT RESPECT, LOVE, & lam reliable and act | take ownership of my CARING with integrity. | can be responsibilities in lam respectful, counted on and count support of MVB considerate a
Slide 5: MVB Today
MVB Today The Financial Frontier MVB is an innovative financial holding company that provides banking services to individuals and corporate clients in the Mid-Atlantic region, as well as Payment and Fintech Deposit clients throughout the United States. = NASDAQ: MVBF = Consistent Growth = Market Cap
Slide 6: MVB Portfolio
MVB Portfolio Complementary Business Lines — Regional Lending with National Fintech Deposits © = Client presence CoRe Mortgage Treasury & Deposit Services = 1Obanking centers in West Virginia and 3 in Northern = Headquarteredin Fairfax, VA = Sales team basedin Salt Lake City Virginia = 17 Loan produ
Slide 7: Fintech Strategy Execution
Fintech Strategy Execution Keep Up Get Ahead 1. Offer Solutions to Strengthen Client Relationships 3. Make Investments in Fintech Companies GOAL Increa Positive Exposure to Fintech trend drivers Common in Most Banks Less Commonin Banks 4. Become Trusted Banking Partner for Fintech Companies 2. Utili
Slide 8: MVB Fintech Thesis
MVB Fintech Thesis Fintech Bank 1. Identify a niche 1. Access to payment rails 2. Build a solution to meet the needs of 2. FDIC insured deposits users in niche 3. All Fintech companies need a banking 3. Generate revenue with a highly relationship profitable business model 4. Scale quickly Technology
Slide 9: Fintech Investment Portfolio Performance
Fintech Investment Portfolio Performance $20,000 : som QYSILLGO” ALLIED $16,000. = —__________________ ‘YC PAYMENT NETWORK i, P*FinClusive 2 $10,000 2 E s8000 es) A Stronghold $6,000 £% interchecks Mlk Commerce AIR Ventures’ $4,000 sm GRAND 2016 2017 2018 2019 Q1 2020 Cash Investment =Fair Value
Slide 10: Executive management team
+30 years of experience in the bankingindustry, including ‘community banks and BB&T ‘*Member of the WV Board of Bankingand Financial Institutions ‘Served on the Board of Directors for PDC Energy ‘Serves on the Board of Directors for BillGO Big 4 experience Co-owner of Football Talk, LLC Donald T. Ro
Slide 11: Experienced Board of Directors
Experienced Board of Directors 2 David B. Alvarez (c] din Gay A letonne (1) Our Directors’ Skills & Expertise Year Appointed: 2013 Executive in Residence at the John Chambers Aeon ase Fh Chatman the Boo College of Business & Economics at WVU | President, Energy Transportation Committees: Audit/ERM,
Slide 12: Strategic & Opportunistic Talent Acquisition
Strategic & Opportunistic Talent Acquisition An Independent Bank Mindset that Embraces a, “Yes, if” Culture BB&qT Branches 15 Chartwell Compliance Acquisitions 2 Recent NoVa M&A. Lift Outs Wells Fargo Insurance Disruption 2013 2 BB&T 23 Team Members 12 Team Members 2005 12 Team Members Sold in 2016
Slide 13: Analyst Commentary on MVB Story
Analyst Commentary on MVB Story (so 7, 2020 ~ Aside from the meaningful EPS accretion, the most apparent N-T benefit of the transaction will be the boost to TBV from the recorded gain...ore importantly, all of this is occurring at a time when there is greater importance being placed on TBV resilienc
Slide 14: First Quarter 2020 Highlights and Financials
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Slide 15: Highlights from Q1 2020 vs. Q4 2019
Highlights from Q1 2020 vs. Q4 2019 Deposits’ increased 22.9%, or Commercial loans’ increased 2.4%, $333M, to a balance of $1.8B or $26M, to a balance of $1.1B Noninterest-bearing deposits — increased 37.5%, or $112M, toa balance of $410M Net interest margin increased 8 basis points
Slide 16: Deposit Growth with NIB Focus
Deposit Growth with NIB Focus NIB CAGR of 27% Over Five Years Average Deposit Balances ‘Average Balance in thousands $1,600,000 $1,400,000 $1,200,000 $1,000,000 $800,000 $600,000 NIB/Total Deposits $400,000 $200,000 $ $729,707 8% 2015 mmm interest-bearing deposits Noninterest-bearing deposits NIB de
Slide 17: Fintech Differentiators “Distinct, Not Extinct”
Fintech Differentiators “Distinct, Not Extinct” Future Growth Coming from Mix of NIB & Reasonably Priced IB Deposits Current Portfolio M Pipeline Mix Future Portfolio Mix Specialty Escrow Payments Payments 39% Processing Processing 74% ix Cryptocurren a Cryptocurrency 1% Payments Processing 19% Dist
Slide 18: NIM Expansion - Outpacing Peers
NIM Expansion - Outpacing Peers Active Focus on NIM & Upward Trend 4.20% 4.00% ~. a 3.94% es: 3.85% 3.86% 3.87% woe ee eee ee em mt LL 8.8% 3.80% a a 3.72% 3.60% 3.40% 3.20% 3.00% 2014 2015 2016 2017 2018 2019 12020 ——MVBF = @Regional Peers ‘Source: SEC figs and SNL Fnancal, Regional peers defined a
Slide 19: Mortgage Operations
Mortgage Operations $2,000 $1,816 Mortgage Net Income = $(1.1)M $1,541 ; $1,447 Mortgage Net Income (w/o derivative loss?) = $2.4M 1,500 : $2,000 se Volatility in the mortgage market created from the COVID-19 $500 $279 pandemic and related Fed stimulus in the MBS and MSR markets caused significant d
Slide 20: Mortgage Combination
Mortgage Combination = Agreement to combine with Intercoastal Mortgage Company = MVB will recognize ownership in the new company as a fair value equity investment and will no longer consolidate Mortgage’s financial results = Allows MVB to benefit from mortgage profits, while simplifying financials t
Slide 21: Subsequent Announcements
Subsequent Announcements Sale of 4 Eastern Panhandle WV FDIC-Assisted Deal for The First State Bank, Barboursville, WV Approximate bargain purchase gain of $6M Branches Approximate gain of $10M Comple Completed April 3, 2020 Paladin Group Acquisition to further expand the Fintech Rated by Kroll Bond
Slide 22: Eastern Panhandle Branch Sale
Eastern Panhandle Branch Sale = Sale of 4 branches in the Eastern panhandle of WV for an 8% premium = Focuses our CoRe strategy on key growth markets = Reallocates resources to Fintech vertical = Deposits of these branches totaled $188.1M and Loans of these branches totaled $36.8M as of closing = Tr
Slide 23: The First State Bank Acquisition
The First State Bank Acquisition = FDIC-assisted deal = Acquired $83M in gross loans, $22M in OREO, and $139M in deposits = 53% mark on OREO and a 22% mark on loans = Acquired 3 branches and 2 drive-thru locations in the Barboursville, WV area = Transaction closed April 3, 2020 = Asa result of this
Slide 24: Strategic Transactions
Strategic Transactions MVBas of = The piacere Branch Sale MvI isted Cash and cash equivalents 88,874 65,880) $ 154,754 Investment securities (including equity securities) Z 242,127 z 10,777 ‘ - $252,904 Loans S$ 1,385,416 $ 63,729”) $ 36,759 $ 1,412,386 Other assets S$ 383,263 $14,497?) § 2,953 $ 39
Slide 25: Introducing the Paladin Group
Introducing the Paladin Group paladingroup Founded by a group of insider industry experts who knew what fraud prevention can and should be, Paladin Group offers an extensive and customizable suite of services for both merchants and vendors. We strategize for the long game, helping clients and partne
Slide 26: COVID-19 Update
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Slide 27: COVID-19 Executive Summary
COVID-19 Executive Summary Proudly supporting our Trusted Partners Managing disruption from a position of strength and soundness Being “Defensively Offensive” Selected COVID-19 impacts
Slide 28: Loan Modifications
Loan Modifications : Bpproved aniyfee booked Modifications as a % of Resolution Modifications Total Commercial loans as of April 15, 2020 Interest-Only Payments $ 50,329,142 4.6% Payment Deferral then Interest-Only Payments $ 54,016,792 49% Payment Deferral $ 39,593,654 3.6% Total $ 143,939,588 13.2
Slide 29: Paycheck Protection Program Participation
Paycheck Protection Program Participation U.S. Small Busi SBA iéministration As of April 29, 2020 # of Loans Balance Average Balance Tranche #1 $71.2M $303K $2.2M ‘Tranche #2 z $18.9M $102k _ $747K Total 421 $90.1M $214k $2.9M Source: Company documents
Slide 30: Loan Portfolio & Asset Quality
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Slide 31: Diversified Loan Portfolio
Diversified Loan Portfolio Growth & Active Management of Concentration Limits Net Loans (includi ans of branches held for sale) an Portfolio Composition Acquisition & $1,600 450% Development ~ 3 HVCRE Residential $1,400 400% 3 Acquisition & 1% 19% 3 Development ¥% ™% $1,200 | wee Home Equity 3S 3% L
Slide 32: Commercial Real Estate Portfolio
Commercial Real Estate Portfolio Diversification within CRE Concentration CRE Loans D&C Loans Apartments- Market Storage Units Apartments- P 11% 1% Low Income 5% 1-4 Family Residential Owner Occupied 51% Commercial Development 3% Retail Nursing Homes 15% 32% office 5% Personal Lot Loans 2% Residenti
Slide 33: CRE Concentration
CRE Concentration Balance as of 03/31/2020 ICRE Total Amount % of Capital Hotels $ 42,055,620 21% Office $ 95,705,296 48% Retail $ 60,408,722 30% ‘Apartments= Low Income $19,597,281 10% ‘Apartments— Market $ 44,239,216 22% ‘Storage Units $5,377,071 3% Nursing Homes $ 129,658,244 65% Other $7,815,557
Slide 34: Nursing Homes
Nursing Homes = Geographic diversity among 11 states in the US = $129M in loan balances among 13 borrowers = 83.09% occupancy = Weighted Average = Risk Grade of 3.99 = LTV of 68.67% = DSCR of 1.56:1 = Star Rating of 2.89 = No delinquency = 1 COVID-19 Modification request of $9M Source: Company dec
Slide 35: Hotels
Hotels = Assets located in OH, WV, MD, and VA = $42M in loan balances among 11 borrowers, and 8 different brands who are experienced operators = Weighted Average = Risk Grade of 4.25 = LTV of 61.36% = DSCR of 1.84:1 = No delinquency = Moratorium on Hotel Lending has been implemented since 2017, prio
Slide 36: Office
Office S96M in loan balances = $64M of exposure attributed to WV & PA markets = $31M of exposure attributed to NoVA markets = Diversified tenant mix with assets located in MVB’s operating geographic footprints = Weighted Average = Risk Grade of 4.17 = LTV of 65.65% = DSCR of 1.66:1 = No delinquency
Slide 37: AD&C Concentration
AD&C Concentration = $119M in loan balances (67% in VA and 33% in WV) = 1-4 Family/ADC - $61M or 50% of total AD&C = §56M in loan balances in NoVA 1.3 average months of supply amongst 8 counties in NoVA market which lagged US figure of 5.7 months at 12/31/19 = Weighted Average = Risk Grade of 4.39 =
Slide 38: AD&C Concentration - Mortgage Construction
AD&C Concentration - Mortgage Construction = §122M in loan balances with 387 borrowers = Geographically-distributed among 9 states: 51% in NC, 16% in SC, 16% in VA, and 9% MD = Weighted Average = LTV of 82.34% = DTlof 27.31% = FICO of 740 = Average time on books of 10.9 months = Standard Note Term o
Slide 39: Consistent, Top Tier Asset Quality Through Cycles
Consistent, Top Tier Asset Quality Through Cycles Non-Performi g Loans / Total Loans 3.90% 3.21% 3.43% 3.26% 2.90% 2.47%. 2.29% 1.68% 1.65% 1.90% 1.46% nes bata 206%. 0.87% 0.93% 0.80% 0.18% esas 0.78% OE 0.77% ee ee) 0.88% 0.10% 0.54% 059% 054% 037% 042% 2008 2008 2010 2011 2012 2013 2014 2015 2016
Slide 40: Capital
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Slide 41: Bank capital ratios
Bank lee 10.00% 8.00% 6.00% 4.00% 2.00% 0.00% 5.79% 2015 7.86% 2016 8.13% 2017 8.66% 2018 2019 8.71% 1.2020 11.00% 10.50% 10.00% 9.50% 9.00% 8.50% 10.88% 10.68% 10.24% 9.94% ag aaey 9.50% r | 2015 2016 2017 2018 2019 12020 Tier 1 Risk-Based Capital Ratio (%) Total Risk-Based Capital Ratio (%) 14.00%
Slide 42: Insider Stock Purchases
Insider Stock Purchases We Believe in MVB! Between March 5‘ and March 20**, 2020, during the Open Window: Larry Mazza, President & CEO 30,135 4 Directors 233073 “While we had previously thought highly of the company’s insider ownership (the company’s latest DEF 14A filed in April 2019 indicated mana
Slide 43: Risk Management and Response
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Slide 44: COVID-19 Pandemic Response
COVID-19 Pandemic Response Approach and Actions Taken = Crisis Management Team (Pandemic Team) assembled; Senior Leadership Team and cross-functional team fully engaged = Business Line Leaders: Core Banking, Fintech, Mortgage & Chartwell = Functional Groups Business Continuity, IT, HR/Marketing, Leg
Slide 45: Addressing Risk Management
Addressing Risk Management Cost of Investing in the Future & Scalability Risk = Diversified geographic portfolio. = Overhead management = High quality loans = Purchased loan focus Mortgage Volatility + History of strongasset quality CRE Concentration = Managementand monitoring of concentration level
Slide 46: Contact Us
Contact Us _> 301 Virginia Avenue MVB Financial Corp. Fairmont, WV 26554 (304) 363-4800 Investor Relations Lisa McCormick MVB Financial Corp. (304) 367-8697
Slide 47: Appendix
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Slide 48: Appendix: Financial Comparisons
Appendix: Financial Comparisons $ in thousands, except per share Qi2020 © qi2019 FY 2019 Fy 2018 Balance Sheet Total Assets $2,099,680 $1,789,908 $1,944,114 $1,750,969 Gross Loans HFI!! $1,396,577 $1,341,218 $1,374,541 $1,304,366 Total Deposits! $1,598,238 $1,430,659 $1,265,042 $1,309,154 Bank Capit
Slide 49: Appendix: Non-GAAP Reconciliations
Appendix: Non-GAAP Reconciliations NONINTEREST INCOME / OPERATING REVENUE For the year ended, For the quarter ended, 12/31/2018 _12/31/2019 03/31/2019 _ 03/31/2020 Total Noninterest Income $ 38640 $ 64604 $ 8765 $ 10,849 Less: Realized Gain on Securities (327) (173) 118 276 Operating Noninterest Inc