MVB Financial Corp. Reports First Quarter 2019 Earnings, Continues Strong Organic Growth in Loans and Deposits

MVB Financial Corp. (the “Company”) (NASDAQ: MVBF) reported net income of $3.2 million, or $0.26 basic and diluted earnings per share for the three months ended March 31, 2019, an increase of 6.4% compared to $3.0 million, or $0.25 basic and $0.24 diluted earnings per share for the three months ended December 31, 2018, and an increase of 23.1% compared to $2.6 million, or $0.24 basic and $0.23 diluted earnings per share, for the three months ended March 31, 2018.

Noninterest-bearing deposits increased $22.5 million, or 10.5%, from December 31, 2018, and increased $93.3 million, or 65.3%, from March 31, 2018, to a balance of $236.1 million as of March 31, 2019. The growth in noninterest-bearing deposits was primarily driven by MVB’s strategy to focus on Fintech and specialty deposits. As of March 31, 2019, noninterest-bearing deposits were 16.5% of total deposits, compared to 16.3% as of December 31, 2018, and 12.4% as of March 31, 2018.

For the three months ended March 31, 2019, loans increased $36.9 million, or 2.8%, to $1.3 billion, from December 31, 2018, which represents an annualized increase of 11.3%. The increase in loans has been driven by strong growth in MVB’s West Virginia markets and expansion in Northern Virginia. In addition to the increase in loan volume during the quarter, loan yields increased 2 basis points.

MANAGEMENT OVERVIEW

“We are very pleased with First Quarter 2019 performance results, which continued strong organic growth in loans and deposits, especially noninterest-bearing deposits. MVB has focused on our true financial north star, which is earnings per share (EPS) driven by three major factors: net interest margin (NIM), noninterest income (NII) and noninterest expense (NIE),” said Larry F. Mazza, CEO and President, MVB Financial. “Although it is said that ‘culture eats strategy for breakfast,’ we believe that both are necessary ingredients for success. MVB’s corporate culture and our MVB 3.0 strategy provide a strong foundation for the future and enable us to help our trusted partners, including our shareholders, customers, team members and communities, succeed.”

FIRST QUARTER 2019 HIGHLIGHTS

• Loans of $1.3 billion as of March 31, 2019, increased $36.9 million, or 2.8%, from December 31, 2018, and increased $184.0 million, or 15.9%, from March 31, 2018.
• Assets of $1.8 billion as of March 31, 2019, increased $38.9 million, or 2.2%, from December 31, 2018, and increased $208.4 million, or 13.2%, from March 31, 2018.
• Deposits of $1.4 billion as of March 31, 2019, increased $121.5 million, or 9.3%, from December 31, 2018, and increased $276.8 million, or 24.0% from March 31, 2018. Noninterest-bearing deposits of $236.1 million as of March 31, 2019, increased $22.5 million, or 10.5%, from December 31, 2018, and increased $93.3 million, or 65.3%, from March 31, 2018.
• Net interest income of $14.0 million for the quarter ended March 31, 2019, decreased $438 thousand, or 3.0%, from the quarter ended December 31, 2018, and increased $2.5 million, or 21.9% from the quarter ended March 31, 2018. Net interest margin of 3.45% for the quarter ended March 31, 2019, decreased 9 basis points versus the quarter ended December 31, 2018, and increased 16 basis points versus the quarter ended March 31, 2018.
• Noninterest income of $8.8 million for the quarter ended March 31, 2019, increased $470 thousand, or 5.7%, from the quarter ended December 31, 2018, and decreased $274 thousand, or 3.0%, from the quarter ended March 31, 2018.
• Noninterest expense of $18.4 million for the quarter ended March 31, 2019, decreased $25 thousand, or 0.1%, from the quarter ended December 31, 2018, and increased $1.7 million, or 10.2%, from the quarter ended March 31, 2018.

LOANS

Loans totaled $1.3 billion as of March 31, 2019, an increase of $36.9 million, or 2.8%, from December 31, 2018, and an increase of $184.0 million, or 15.9%, from March 31, 2018. The growth in loans is attributable to organic growth and the addition of commercial lenders within the Company’s primary lending areas. The yield on loans was 5.20% as of the quarter ended March 31, 2019, an increase of 2 basis points from the quarter ended December 31, 2018, and an increase of 52 basis points from the quarter ended March 31, 2018. The increase in yields is driven both by Fed rate increases and a focus on commercial loans to increase loan yields.

DEPOSITS

Deposits totaled $1.4 billion as of March 31, 2019, and increased $121.5 million, or 9.3%, from December 31, 2018, while increasing $276.8 million, or 24.0%, from March 31, 2018. Noninterest-bearing deposits totaled $236.1 million as of March 31, 2019, or 16.5%, of the total deposit base, an increase of $22.5 million, or 10.5%, from December 31, 2018, and an increase of $93.3 million, or 65.3%, from March 31, 2018. Noninterest-bearing deposits remain a core funding source for the Company. Of the $236.1 million in noninterest-bearing deposits, balances of $62.9 million are related to Fintech opportunities and balances of $33.4 million are related to Title business opportunities. Total Fintech deposits are $75.7 million and total Title business deposits are $49.6 million as of March 31, 2019.

NET INTEREST INCOME

Net interest income for the quarter ended March 31, 2019, was $14.0 million, a decrease of $438 thousand, or 3.0%, from the quarter ended December 31, 2018, and an increase of $2.5 million, or 21.9%, from the quarter ended March 31, 2018. Net interest margin for the quarter ended March 31, 2019 was 3.45%, a decrease of 9 basis points versus the quarter ended December 31, 2018, and an increase of 16 basis points versus the quarter ended March 31, 2018. A decrease of $279 thousand in loan fees for the quarter ended March 31, 2019 versus the quarter ended December 31, 2018 caused an approximate 8 basis point decrease in loan yield and 7 basis point decrease in net interest margin. The remaining difference is due to the higher cost of deposits driven by the timing of acquiring and onboarding Fintech deposits.

Interest income increased 0.2% during the quarter ended March 31, 2019, compared to the quarter ended December 31, 2018, due to an increase of 4 basis points in the yield on earning assets, and increased 30.4% compared to the quarter ended March 31, 2018, due to an increase of 53 basis points in the yield on earning assets. The increase in the yield on earning assets compared to the quarter ended December 31, 2018, was the result of a 6-basis point increase in real estate loans and a 5-basis point increase in taxable investment securities. The increase in the yield on earning assets compared to the quarter ended March 31, 2018, was the result of a 69-basis point increase in commercial loans.

Interest expense increased 9.2% during the quarter ended March 31, 2019, compared to the quarter ended December 31, 2018, due to an increase of 15 basis points in the cost of interest-bearing liabilities, and increased 57.5% compared to the quarter ended March 31, 2018, due to an increase of 52 basis points in the cost of interest-bearing liabilities. The increase in the cost of interest-bearing liabilities compared to the quarter ended December 31, 2018, was the result of a 13-basis point increase in money market checking, a 19-basis point increase in CDs and a 20-basis point increase in FHLB and other borrowings. The increase in the cost of interest-bearing liabilities compared to the quarter ended March 31, 2018, was the result of a 68-basis point increase in money market checking, a 63-basis point increase in CDs and a 103-basis point increase in FHLB and other borrowings.

ASSET QUALITY

Provision for loan losses was $300 thousand for the quarter ended March 31, 2019. This was an $8 thousand, or 2.7%, increase from the quarter ended December 31, 2018, due to a 2.8% increase in loans. Provision decreased $174 thousand from the quarter ended March 31, 2018, with a 15.9% increase in loans. The decrease in loan loss provision is attributable to a $14.9 million decrease in loan volume during the quarter ended March 31, 2019 compared to during the quarter ended March 31, 2018, as well as decreased net charge-offs for the quarter ended March 31, 2019, compared to the quarter ended March 31, 2018. Nonperforming loans decreased $2.0 million, to 0.53%, of total loans as of March 31, 2019, compared to 0.54% of total loans as of December 31, 2018, and compared to 0.79% of total loans as of March 31, 2018. In addition, net charge-offs for the quarter ended March 31, 2019, decreased $795 thousand compared to the quarter ended December 31, 2018, and decreased $288 thousand compared to the quarter ended March 31, 2018. These decreases resulted in an annualized net loan charge-offs to total loans ratio of 0.00% as of March 31, 2019, compared to 0.24% as of December 31, 2018, and compared to 0.10% as of March 31, 2018.

NONINTEREST INCOME

Noninterest income totaled $8.8 million for the quarter ended March 31, 2019, an increase of $470 thousand, or 5.7%, from the quarter ended December 31, 2018, and a decrease of $274 thousand, or 3.0%, from the quarter ended March 31, 2018.

The $470 thousand increase in noninterest income from the quarter ended December 31, 2018, was due to an increase in the gain on derivatives of $1.2 million, an increase in income on bank-owned life insurance of $301 thousand and an increase in the holding gain on equity securities of $173 thousand. These increases were partially offset by a decrease in mortgage fee income of $1.0 million and a decrease in the gain on sale of securities of $118 thousand. The increase in gain on derivatives of $1.2 million was largely the result of an increase of 42.7% in the locked mortgage pipeline during the three months ended March 31, 2019, compared to a 27.8% decrease in the locked mortgage pipeline during the three months ended December 31, 2018. The decrease in mortgage fee income of $1.0 million was the result of a decrease of $66.5 million, or 20.9%, in the volume of mortgage loans sold.

The $274 thousand decrease in noninterest income from the quarter ended March 31, 2018, was primarily due to a decrease in the gain on sale of securities of $444 thousand, a decrease in commercial swap fee income of $333 thousand, a decrease in gain on the sale of portfolio loans of $157 thousand and a decrease in gain on derivatives of $134 thousand. These decreases were partially offset by an increase of $307 thousand in income on bank-owned life insurance and an increase of $210 thousand in the holding gain on equity securities. The decrease in gain on derivatives of $134 thousand was largely the result of an increase of 42.7% in the locked mortgage pipeline during the three months ended March 31, 2019, compared to an increase of 67.6% in the locked mortgage pipeline during the three months ended March 31, 2018.

NONINTEREST EXPENSE

Noninterest expense totaled $18.4 million for the quarter ended March 31, 2019, a decrease of $25 thousand, or 0.1%, from the quarter ended December 31, 2018, and an increase of $1.7 million, or 10.2%, from the quarter ended March 31, 2018.

The $1.7 million increase in noninterest expense from the quarter ended March 31, 2018, was primarily due to an increase in salaries and employee benefits expense of $1.3 million, an increase in data processing and communication expense of $153 thousand, an increase in occupancy and equipment expense of $206 thousand and an increase in insurance, tax and assessment expense of $115 thousand. These increases were partially offset by a decrease in marketing, contributions and sponsorships expense of $133 thousand.

SUBSEQUENT EVENT

As previously announced on April 29, 2019, the Company continues to carve a niche in the fintech industry by making strategic investments in fintech companies. To date, MVB has invested a total of $3.1 million in various fintech companies. After a recent valuation of MVB’s fintech investment portfolio, MVB intends to recognize a pre-tax gain on its equity investment of $13.5 million that will be recognized in the Second Quarter of 2019.

DIVIDEND

As previously announced on February 19, 2019, the Company declared a quarterly cash dividend of $0.035 per share to shareholders of record at the close of business on March 1, 2019, payable March 15, 2019. This was the first quarterly dividend for 2019 and includes a one-half cent, or 16.7% increase per share, compared to the previous quarter dividend of $0.03 per share.

About MVB Financial Corp.

MVB Financial Corp. (“MVB Financial” or “MVB”), the holding company of MVB Bank, is publicly traded on The Nasdaq Capital Market under the ticker “MVBF.”

MVB is a financial holding company headquartered in Fairmont, W.Va. Through its subsidiary, MVB Bank, Inc., and the bank’s subsidiaries, MVB Mortgage and MVB Community Development Corporation, the company provides financial services to individuals and corporate clients in the Mid-Atlantic region.

Nasdaq is a leading global provider of trading, clearing, exchange technology, listing, information and public company services.

For more information about MVB, please visit ir.mvbbanking.com.

Forward-looking Statements

MVB Financial Corp. has made forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, in this Earnings Release. These forward-looking statements are based on current expectations about the future and subject to risks and uncertainties. Forward-looking statements include information concerning possible or assumed future results of operations of the Company and its subsidiaries. When words such as “believes,” “expects,” “anticipates,” “may,” or similar expressions occur in this Earnings Release, the Company is making forward-looking statements. Note that many factors could affect the future financial results of the Company and its subsidiaries, both individually and collectively, and could cause those results to differ materially from those expressed in the forward-looking statements contained in this Earnings Release. Those factors include, but are not limited to: credit risk, changes in market interest rates, inability to achieve merger-related synergies, competition, economic downturn or recession and government regulation and supervision. Additional factors that may cause our actual results to differ materially from those described in our forward-looking statements can be found in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, as well as its other filings with the SEC, which are available on the SEC website at www.sec.gov. Except as required by law, the Company undertakes no obligation to update or revise any forward-looking statements.

Accounting standards require the consideration of subsequent events occurring after the balance sheet date for matters that require adjustment to, or disclosure in, the consolidated financial statements. The review period for subsequent events extends up to and including the filing date of a public company’s financial statements when filed with the Securities and Exchange Commission. Accordingly, the consolidated financial information in this announcement is subject to change.

Questions or comments concerning this Earnings Release should be directed to:

MVB Financial Corp.
Donald T. Robinson, Executive Vice President and CFO
[phone]
[e-mail]

MVB Financial Corp. Financial Highlights   Condensed Consolidated Statements of Income (Unaudited) (Dollars in thousands, except per share data)
		Quarterly
		2019			2018			2018			2018			2018
		First Quarter			Fourth Quarter			Third Quarter			Second Quarter			First Quarter
Interest income		$	19,623		$	19,586		$	18,176		$	16,944		$	15,054
Interest expense		5,651			5,176			4,652			4,289			3,589
Net interest income		13,972			14,410			13,524			12,655			11,465
Provision for loan losses		300			292			1,069			605			474
Noninterest income		8,765			8,295			10,511			10,795			9,039
Noninterest expense		18,448			18,473			18,417			19,249			16,739
Income before income taxes		3,989			3,940			4,549			3,596			3,291
Income tax expense		797			941			970			765			697
Net income		$	3,192		$	2,999		$	3,579		$	2,831		$	2,594
Preferred dividends		121			123			123			122			121
Net income available to common shareholders		$	3,071		$	2,876		$	3,456		$	2,709		$	2,473
Earnings per share - basic		$	0.26		$	0.25		$	0.30		$	0.25		$	0.24
Earnings per share - diluted		$	0.26		$	0.24		$	0.29		$	0.25		$	0.23

Condensed Consolidated Balance Sheets (Unaudited) (Dollars in thousands)
		March 31, 2019			December 31, 2018			March 31, 2018
Cash and cash equivalents		$	17,958		$	22,221		$	23,630
Certificates of deposit with other banks		14,778			14,778			14,778
Investment securities		234,582			231,213			233,483
Loans held for sale		65,955			75,807			51,280
Loans		1,341,218			1,304,366			1,157,173
Allowance for loan losses		(11,242)			(10,939)			(10,067)
Net loans		1,329,976			1,293,427			1,147,106
Premises and equipment		25,922			26,545			26,477
Goodwill		18,480			18,480			18,480
Other assets		82,257			68,498			66,284
Total assets		$	1,789,908		$	1,750,969		$	1,581,518
Deposits		$	1,430,659		$	1,309,154		$	1,153,907
Borrowed funds		114,884			214,887			207,370
Other liabilities		63,493			50,155			69,820
Shareholders' equity		180,872			176,773			150,421
Total liabilities and shareholders' equity		$	1,789,908		$	1,750,969		$	1,581,518

Reportable Segments (Unaudited)
Three Months Ended March 31, 2019		Commercial & Retail Banking			Mortgage Banking			Financial Holding Company				Intercompany Eliminations				Consolidated
(Dollars in thousands)
Interest income		$	18,327		$	1,538		$	1			$	(243	)		$	19,623
Interest expense		4,754			993			285				(381		)		5,651
Net interest income		13,573			545			(284		)		138				13,972
Provision for loan losses		247			53			—				—				300
Net interest income after provision for loan losses		13,326			492			(284		)		138				13,672
Noninterest Income:
Mortgage fee income		109			6,697			—				(136		)		6,670
Other income		1,566			476			1,779				(1,726		)		2,095
Total noninterest income		1,675			7,173			1,779				(1,862		)		8,765
Noninterest Expenses:
Salaries and employee benefits		4,395			5,159			2,180				—				11,734
Other expense		5,352			2,025			1,061				(1,724		)		6,714
Total noninterest expenses		9,747			7,184			3,241				(1,724		)		18,448
Income (loss) before income taxes		5,254			481			(1,746		)		—				3,989
Income tax expense (benefit)		1,054			146			(403		)		—				797
Net income (loss)		$	4,200		$	335		$	(1,343	)		$	—			$	3,192
Preferred stock dividends		—			—			121				—				121
Net income (loss) available to common shareholders		$	4,200		$	335		$	(1,464	)		$	—			$	3,071

Three Months Ended December 31, 2018		Commercial & Retail Banking			Mortgage Banking				Financial Holding Company				Intercompany Eliminations				Consolidated
(Dollars in thousands)
Interest income		$	17,990		$	1,797			$	2			$	(203	)		$	19,586
Interest expense		4,164			1,140				323				(451		)		5,176
Net interest income		13,826			657				(321		)		248				14,410
Provision for loan losses		319			(27		)		—				—				292
Net interest income after provision for loan losses		13,507			684				(321		)		248				14,118
Noninterest income:
Mortgage fee income		141			7,809				—				(247		)		7,703
Other income		1,427			(728		)		1,663				(1,770		)		592
Total noninterest income		1,568			7,081				1,663				(2,017		)		8,295
Noninterest Expense:
Salaries and employee benefits		3,978			5,638				2,121				—				11,737
Other expense		5,278			2,042				1,185				(1,769		)		6,736
Total noninterest expenses		9,256			7,680				3,306				(1,769		)		18,473
Income (loss) before income taxes		5,819			85				(1,964		)		—				3,940
Income tax expense (benefit)		1,333			23				(415		)						941
Net income (loss)		$	4,486		$	62			$	(1,549	)		$	—			$	2,999
Preferred stock dividends		—			—				123				—				123
Net income (loss) available to common shareholders		$	4,486		$	62			$	(1,672	)		$	—			$	2,876

Three Months Ended March 31, 2018		Commercial & Retail Banking			Mortgage Banking			Financial Holding Company				Intercompany Eliminations				Consolidated
(Dollars in thousands)
Interest income		$	13,838		$	1,335		$	1			$	(120	)		$	15,054
Interest expense		2,674			727			558				(370		)		3,589
Net interest income		11,164			608			(557		)		250				11,465
Provision for loan losses		417			57			—				—				474
Net interest income after provision for loan losses		10,747			551			(557		)		250				10,991
Noninterest income:
Mortgage fee income		140			6,673			—				(250		)		6,563
Other income		1,780			517			1,553				(1,374		)		2,476
Total noninterest income		1,920			7,190			1,553				(1,624		)		9,039
Noninterest Expense:
Salaries and employee benefits		3,569			5,416			1,488				—				10,473
Other expense		4,559			2,122			959				(1,374		)		6,266
Total noninterest expenses		8,128			7,538			2,447				(1,374		)		16,739
Income (loss) before income taxes		4,539			203			(1,451		)		—				3,291
Income tax expense (benefit)		978			53			(334		)		—				697
Net income (loss)		$	3,561		$	150		$	(1,117	)		$	—			$	2,594
Preferred stock dividends		—			—			121				—				121
Net income (loss) available to common shareholders		$	3,561		$	150		$	(1,238	)		$	—			$	2,473

Average Balances and Interest Rates (Unaudited) (Dollars in thousands)
		Three Months Ended March 31, 2019										Three Months Ended December 31, 2018										Three Months Ended March 31, 2018
		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		$	7,546			$	49		2.63	%		$	8,123			$	45		2.17	%		$	3,883			$	18		1.83	%
CDs with other banks		14,778				73			2.00			14,778				74			1.99			14,778				72			1.97
Investment securities:
Taxable		139,692				879			2.55			146,488				924			2.50			154,430				895			2.35
Tax-exempt		92,417				837			3.67			79,906				723			3.59			75,556				655			3.51
Loans and loans held for sale: 1
Commercial		951,836				12,594			5.37			924,547				12,518			5.37			775,764				8,943			4.68
Tax exempt		14,251				123			3.50			14,454				128			3.51			14,464				123			3.46
Real estate		411,639				4,941			4.87			415,502				5,039			4.81			360,744				4,190			4.71
Consumer		9,654				127			5.34			10,215				135			5.24			12,517				158			5.11
Total loans		1,387,380				17,785			5.20			1,364,718				17,820			5.18			1,163,489				13,414			4.68
Total earning assets		1,641,813				19,623			4.85			1,614,013				19,586			4.81			1,412,136				15,054			4.32
Less: Allowance for loan losses		(11,071		)								(11,268		)								(9,987		)
Cash and due from banks		16,088										16,515										15,966
Other assets		112,301										109,146										102,645
Total assets		$	1,759,131									$	1,728,406									$	1,520,760
Liabilities
Deposits:
NOW		$	357,005			$	729		0.83			$	414,997			$	865		0.83			$	443,784			$	762		0.70
Money market checking		297,607				1044			1.42			261,928				852			1.29			241,472				443			0.74
Savings		40,235				1			0.01			40,494				1			0.01			46,544				20			0.17
IRAs		17,826				79			1.80			17,937				78			1.73			17,691				62			1.43
CDs		428,610				2,270			2.15			384,540				1,902			1.96			269,286				1,011			1.52
Repurchase agreements and federal funds sold		14,206				14			0.40			15,573				6			0.15			20,605				19			0.37
FHLB and other borrowings		175,222				1,229			2.84			173,110				1,150			2.64			160,205				714			1.81
Subordinated debt		17,524				285			6.60			17,861				322			7.15			33,524				558			6.75
Total interest-bearing liabilities		1,348,235				5,651			1.70			1,326,440				5,176			1.55			1,233,111				3,589			1.18
Noninterest bearing demand deposits		214,541										217,527										129,385
Other liabilities		18,450										11,903										8,673
Total liabilities		1,581,226										1,555,870										1,371,169
Stockholders’ equity
Preferred stock		7,834										7,834										7,834
Common stock		11,659										11,633										10,525
Paid-in capital		116,925										116,254										99,110
Treasury stock		(1,084		)								(1,084		)								(1,084		)
Retained earnings		49,161										46,852										38,004
Accumulated other comprehensive income		(6,590		)								(8,953		)								(4,798		)
Total stockholders’ equity		177,905										172,536										149,591
Total liabilities and stockholders’ equity		$	1,759,131									$	1,728,406									$	1,520,760
Net interest spread									3.15										3.26										3.14
Net interest income-margin						$	13,972		3.45							$	14,410		3.54							$	11,465		3.29
1 Non-accrual loans are included in total loan balances, lowering the effective yield for the portfolio in the aggregate.

Selected Financial Data (Unaudited) (Dollars in thousands, except per share data)
	Quarterly
		2019				2018				2018				2018				2018
		First Quarter				Fourth Quarter				Third Quarter				Second Quarter				First Quarter
Earnings and Per Share Data:
Net income		$	3,192			$	2,999			$	3,579			$	2,831			$	2,594
Net income available to common shareholders		3,071				2,876				3,456				2,709				2,473
Earnings per share - basic		0.26				0.25				0.30				0.25				0.24
Earnings per share - diluted		0.26				0.24				0.29				0.25				0.23
Cash dividends paid per common share		0.035				0.030				0.030				0.025				0.025
Book value per common share		14.90				14.55				14.13				13.93				13.53
Tangible book value per common share		13.26				12.92				12.48				12.25				11.72
Weighted average shares outstanding - basic		11,607,543				11,582,378				11,416,202				10,634,805				10,474,138
Weighted average shares outstanding - diluted		13,177,281				12,772,222				13,113,259				11,502,148				12,714,353
Performance Ratios:
Return on average assets 1		0.73		%		0.69		%		0.85		%		0.70		%		0.68		%
Return on average equity 1		7.18		%		6.95		%		8.53		%		7.40		%		6.94		%
Net interest margin 2		3.45		%		3.54		%		3.43		%		3.38		%		3.29		%
Efficiency ratio 3		81.14		%		81.36		%		76.63		%		82.09		%		81.64		%
Overhead ratio 1 4		4.19		%		4.28		%		4.38		%		4.76		%		4.40		%
Equity to assets		10.11		%		10.10		%		9.92		%		9.84		%		9.51		%
Asset Quality Data and Ratios:
Charge-offs		$	—			$	801			$	294			$	29			$	356
Recoveries		3				9				13				8				71
Net loan charge-offs to total loans 1 5		—		%		0.24		%		0.09		%		0.01		%		0.10		%
Allowance for loan losses		11,242				10,939				11,439				10,651				10,067
Allowance for loan losses to total loans 6		0.84		%		0.84		%		0.88		%		0.88		%		0.87		%
Nonperforming loans		7,075				7,103				12,846				9,419				9,102
Nonperforming loans to total loans		0.53		%		0.54		%		0.99		%		0.78		%		0.79		%
1 annualized for the quarterly periods presented
2 net interest income as a percentage of average interest earning assets
3 noninterest expense as a percentage of net interest income and noninterest income
4 noninterest expense as a percentage of average assets
5 charge-offs less recoveries
6 excludes loans held for sale

Non-GAAP Reconciliation: Tangible Book Value per Common Share (Unaudited) (Dollars in thousands)
	Quarterly
		2019				2018				2018				2018				2018
		First Quarter				Fourth Quarter				Third Quarter				Second Quarter				First Quarter
Goodwill		$	18,480			$	18,480			$	18,480			$	18,480			$	18,480
Core deposit intangibles		527				550				574				598				622
Total intangibles		19,007				19,030				19,054				19,078				19,102
Total equity		180,872				176,773				170,876				165,795				150,421
Less: Preferred equity		(7,834		)		(7,834		)		(7,834		)		(7,834		)		(7,834		)
Less: Total intangibles		(19,007		)		(19,030		)		(19,054		)		(19,078		)		(19,102		)
Tangible common equity		154,031				149,909				143,988				138,883				123,485
Tangible common equity		154,031				149,909				143,988				138,883				123,485
Common shares outstanding (000s)		11,615				11,607				11,537				11,338				10,539
Tangible book value per common share		$	13.26			$	12.92			$	12.48			$	12.25			$	11.72

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