129 0 Kommentare MVB Financial Corp. Reports Strong Fourth Quarter 2020 Results and Finishes 2020 with Record Earnings

MVB Financial Corp. (NASDAQ: MVBF) (“MVB Financial,” “MVB,” or the “Company”) today reported net income of $11.8 million, or $1.00 basic and $0.97 diluted earnings per share, for the three months ended December 31, 2020. For the year ended December 31, 2020, the Company reported net income of $37.4 million, or $3.13 basic and $3.06 diluted earnings per share.

Quarterly

Full Year

2020

2019

2020

2019

Fourth Quarter

Third Quarter

Fourth Quarter

Net income

11,838

6,491

4,095

37,411

26,991

Earnings per share - basic

1.00

0.53

0.34

3.13

2.26

Earnings per share - diluted

0.97

0.53

0.32

3.06

2.20

FOURTH QUARTER 2020 HIGHLIGHTS

Deposits: Noninterest-bearing (“NIB”) deposits were $715.8 million as of December 31, 2020, an increase of $73.0 million, or 11.3%, from September 30, 2020, and an increase of $437.2 million, or 157.0%, from December 31, 2019. As of December 31, 2020, NIB deposits were 36.1% of total deposits, compared to 33.9% at September 30, 2020, and 22.0% as of December 31, 2019.
Asset Quality: Allowance for loan losses to total loans was 1.8% as of December 31, 2020, a decrease of four basis points from September 30, 2020, and an increase of 92 basis points from December 31, 2019. Excluding Paycheck Protection Program (“PPP”) loans of $82.0 million which are generally fully guaranteed by the U.S. government, allowance for loan losses to total loans was 1.9% as of December 31, 2020, a decrease of five basis points from September 30, 2020, and an increase of 102 basis points from December 31, 2019.
Growth in Tangible Book Value (“TBV”) per Share: TBV per share, a non-GAAP measure, was $19.73 as of December 31, 2020, an increase of $1.07, or 5.7%, from September 30, 2020, and an increase of $4.53, or 29.8%, from December 31, 2019. A reconciliation of TBV is included as the last page of this release.
Capital: MVB Bank, Inc. (“MVB Bank” or the “Bank”) finished the fourth quarter with consistently strong capital ratios. As of December 31, 2020, the Bank’s leverage ratio was 11.0%, the Tier 1 risk-based capital ratio was 14.6%, and the total risk-based capital ratio was 15.8%. The Company’s tangible common equity to tangible assets was 9.8% as of December 31, 2020. Also, during the fourth quarter of 2020, the Company repurchased 668,390 shares totaling $13.1 million through a share repurchase plan and a tender offer.

FINTECH HIGHLIGHTS

Financial technology related companies (“Fintech”) deposits totaled $533.0 million as of December 31, 2020, an increase of $168.2 million, or 46.1%, from September 30, 2020, and an increase of $382.8 million, or 254.8%, from December 31, 2019.
Gaming deposits, included in total Fintech deposits, were $357.9 million as of December 31, 2020, an increase of $151.3 million, or 73.3%, from September 30, 2020, and an increase of $237.6 million, or 197.5%, from December 31, 2019.

MANAGEMENT OVERVIEW

The Company completed a very successful year and continued to further strengthen capital and maintained a significant allowance for loan losses, all while generating competitive earnings of $11.8 million in the fourth quarter to position the Company for continued success in the future.

The Bank paid off all Federal Home Loan Bank (“FHLB”) and other borrowings during the fourth quarter and further reduced its reliance on brokered certificates of deposit (“CDs”) and higher-cost deposits by replacing these deposits with noninterest-bearing deposits. The growth in noninterest-bearing deposits was primarily driven by MVB’s continual execution of strategic initiatives in Fintech and specialty deposits.

“Despite the challenges of the COVID-19 pandemic, 2020 ended as one of the most successful years in MVB history. MVB completed multiple strategic transactions, created growth in tangible book value and shareholder value during unprecedented times, and onboarded a number of highly talented and experienced Team Members. I could not be more grateful to Team MVB and what we have accomplished,” said Larry F. Mazza, President and CEO, MVB Financial Corp. “MVB is well positioned into 2021 with an extremely strong balance sheet, strong capital and liquidity positions. Our continued execution in our Fintech and gaming verticals gives us the ability to expand our product base on the financial frontier.”

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LOANS

Loans, excluding PPP loans of $82.0 million, totaled $1.37 billion as of December 31, 2020, an increase of $31.1 million, or 2.3%, from September 30, 2020, and a decrease of $2.8 million, or 0.2%, from December 31, 2019. The tax-equivalent yield on loans, including PPP loans, was 4.7% for the quarter ended December 31, 2020, an increase of 20 basis points from the quarter ended September 30, 2020, and a decrease of 39 basis points from the quarter ended December 31, 2019. The increase was primarily due to an increase of $0.9 million in loan fees, an increase of $0.4 million in accretion related to the loans acquired from The First State Bank (“First State”), and the mortgage combination announced during the third quarter of 2020 that caused a significant decrease in lower-yielding loans held-for-sale.

Loans held-for-sale totaled $1.1 million as of December 31, 2020, a decrease of $1.2 million, or 53.2%, from September 30, 2020, and a decrease of $108.7 million, or 99.0%, from December 31, 2019, as a result of the MVB Mortgage combination to form Intercoastal Mortgage, LLC as previously announced on July 1, 2020.

DEPOSITS

Deposits totaled $1.98 billion as of December 31, 2020, an increase of $83.4 million, or 4.4%, from September 30, 2020, and an increase of $717.3 million, or 56.7%, from December 31, 2019. Noninterest-bearing deposits were $715.8 million as of December 31, 2020, an increase of $73.0 million, or 11.3%, from September 30, 2020, and an increase of $437.2 million, or 157.0%, from December 31, 2019. As of December 31, 2020, NIB deposits were 36.1% of total deposits, compared to 33.9% at September 30, 2020, and 22.0% as of December 31, 2019.

Throughout 2020, the Company used the influx of noninterest-bearing deposits to pay off FHLB and other borrowings and decrease reliance on higher-cost funding sources. Also as a result of the increase in deposits, the Company’s loan to deposit ratio was 73.3% as of December 31, 2020.

NET INTEREST INCOME

Net interest income for the quarter ended December 31, 2020, was $17.7 million, an increase of $1.2 million, or 7.1%, compared to the quarter ended September 30, 2020, and an increase of $1.8 million, or 11.5%, compared to the quarter ended December 31, 2019. Net interest margin, on a fully tax-equivalent basis, for the quarter ended December 31, 2020, was 3.4%, a decrease of 1 basis point compared to the quarter ended September 30, 2020, and a decrease of 14 basis points compared to the quarter ended December 31, 2019. Net interest margin was primarily impacted by excess liquidity and PPP loans originated during the second quarter of 2020. For the quarter ended December 31, 2020, excess liquidity accounted for 29 basis points of the decrease and the PPP loans originated during the second quarter accounted for 10 basis points of the decrease. The tax-equivalent adjustments are added to net interest income and are $0.4 million for the quarter ended December 31, 2020, $0.3 million for the quarter ended September 30, 2020, and $0.3 million for the quarter ended December 31, 2019. Excluding the impact of the FDIC-assisted acquisition of First State, the fully-tax equivalent net interest margin for the quarter ended December 31, 2020 would have decreased 12 basis points.

Interest income for the quarter ended December 31, 2020 was $19.4 million, an increase of $0.7 million, or 3.9%, compared to the quarter ended September 30, 2020, and a decrease of $1.9 million, or 8.8%, compared to the quarter ended December 31, 2019. The 90-basis point increase in the yield on real estate loans compared to the quarter ended September 30, 2020, was partially offset by a 7-basis point decrease in the tax-equivalent yield on investment securities. The increase in the yield on real estate loans was due to the mortgage combination announced during the third quarter of 2020 that caused a significant decrease in lower-yielding loans held-for-sale. The decrease in the tax-equivalent yield on earning assets of 101-basis points compared to the quarter ended December 31, 2019 was the result of a 51-basis point decrease in the yield on commercial loans and a 25-basis point decrease in the tax-equivalent yield on investment securities.

A significant factor in the decrease in the tax-equivalent yield on earning assets has been the continuing increase in the Company’s liquidity. For the quarter ended December 31, 2020, interest-bearing deposits with banks, CDs with banks, and investment securities were 31% of average earning assets, compared to 22% for the quarter ended September 30, 2020, and compared to 15% for the quarter ended December 31, 2019.

Interest expense for the quarter ended December 31, 2020 was $1.7 million, a decrease of $0.5 million, or 21.3%, compared to the quarter ended September 30, 2020, and a decrease of $3.7 million, or 68.9%, compared to the quarter ended December 31, 2019. The decrease compared to the quarter ended September 30, 2020 was a result of a 14-basis point decrease in the cost of interest-bearing liabilities, primarily the result of a 180-basis point decrease in the cost of FHLB and other borrowings that was partially offset by a 216-basis point increase in the cost of subordinated debt. The decrease compared to the quarter ended December 31, 2019 was the result of a 104-basis point decrease in the cost of interest-bearing liabilities, primarily the result of a 153-basis point decrease in the cost of FHLB and other borrowings and a 131-basis point decrease in the cost of money market accounts.

An increase in the Company's average noninterest-bearing balances of $144.1 million from the quarter ended September 30, 2020 helped to maintain a 18-basis point favorable spread on the tax-equivalent net interest margin for the quarter ended December 31, 2020, compared to a 21-basis point favorable spread for the quarter ended September 30, 2020.

An increase in the Company’s average noninterest-bearing balances of $389.9 million from the quarter ended December 31, 2019 helped to maintain a 18-basis point favorable spread on the tax-equivalent net interest margin for the quarter ended December 31, 2020 compared to a 35-basis point favorable spread for the quarter ended December 31, 2019.

ASSET QUALITY

Provision for loan losses for the quarter ended December 31, 2020 was $0.2 million, a decrease of $8.4 million, or 97.5%, from the quarter ended September 30, 2020, and remained consistent with the comparable period of 2019. As a result of the changes in provision, allowance for loan losses to total loans, excluding the fair value mark totaling $16.9 million on the loans acquired from First State was 1.8% as of December 31, 2020, a decrease of four basis points from September 30, 2020, and an increase of 92 basis points from December 31, 2019. Excluding PPP loans of $82.0 million, allowance for loan losses to total loans was 1.9% as of December 31, 2020, a decrease of five basis points from September 30, 2020, and an increase of 102 basis points from December 31, 2019. The Company continues to evaluate the effects of COVID-19 as it relates to the asset quality of the loan portfolio and will continue to evaluate and assess the need for additional loan loss provision in 2021.

Nonperforming loans decreased $1.2 million to $13.7 million, or 0.9%, of total loans as of December 31, 2020, compared to September 30, 2020. In addition, net charge-offs were $0.3 million, or 0.1% of total loans for the quarter ended December 31, 2020. Commercial loan modifications continue to decrease and totaled $34.7 million as of December 31, 2020, down from $41.1 million as of September 30, 2020. Mortgage loan modifications also continue to decrease and totaled $13.5 million as of December 31, 2020, down from $15.5 million as of September 30, 2020. These modifications include interest-only payments and payment deferrals. Of the current commercial loan modifications, $32.5 million were related to the hotel portfolio and all related payments are current. These modifications were not considered to be troubled debt restructurings.

NONINTEREST INCOME

Noninterest income for the quarter ended December 31, 2020 was $16.6 million, a decrease of $2.3 million, or 12.3%, compared to the quarter ended September 30, 2020, and an increase of $1.8 million, or 12.3%, compared to the quarter ended December 31, 2019.

The $2.3 million decrease in noninterest income from the quarter ended September 30, 2020, was due to decreases of $3.3 million in gain on mortgage combination transaction recognized during the third quarter of 2020, and $3.1 million in equity method investment income from the MVB Mortgage combination to form Intercoastal Mortgage that occurred during the third quarter of 2020. These decreases were partially offset by a $3.4 million gain the Company recognized from a sale of a portion of one of its Fintech investments.

The $1.8 million increase in noninterest income from the quarter ended December 31, 2019, was due to increases of $10.6 million in equity method investment income from Intercoastal Mortgage and a $3.4 million gain on the sale of equity securities from the sale of a portion of one of the Company’s Fintech investments, and $1.4 million in gain on derivatives. These increases were partially offset by a decrease of $13.0 million in mortgage fee income.

NONINTEREST EXPENSE

Noninterest expense for the quarter ended December 31, 2020 was $20.9 million, an increase of $2.6 million, or 14.4%, compared to the quarter ended September 30, 2020, and a decrease of $4.1 million, or 16.4%, compared to the quarter ended December 31, 2019.

The $2.6 million increase in noninterest expense from the quarter ended September 30, 2020, was due to an increase of $1.8 million in salaries and employee benefits and an increase of $0.9 million in professional fees. The increase in salaries and employee benefits was primarily the result of a $1.0 million increase in incentive compensation and a $0.6 million increase in salaries.

The $4.1 million decrease in noninterest expense from the quarter ended December 31, 2019, was due to a decrease of $3.5 million in salaries and employee benefits and a decrease of $0.7 million in travel, entertainment, dues, and subscriptions expense. Of the decrease in salaries and employee benefits, $7.9 million was related to the MVB Mortgage combination to form Intercoastal Mortgage and was partially offset by a $2.2 million increase in salaries primarily at the Bank and a $1.1 million increase in incentive compensation.

TENDER OFFER AND STOCK REPURCHASE PROGRAM

As previously announced on December 23, 2020, the Company announced the final results of its modified Dutch Auction tender offer to purchase, for cash, up to $45.0 million of its common stock at a price per share not less than $18 and not greater than $20.25. A total of 536,490 shares of the Company’s common stock were repurchased for an aggregate cost of approximately $10.9 million, excluding fees and expenses related to the tender offer.

In connection with the announcement of the final results of the tender offer, the Company also announced that on or before December 31, 2021, the Company may repurchase up to $31.9 million of additional shares of its common stock, including shares that were not otherwise purchased in the aforementioned tender offer, under the Company’s previously announced stock repurchase program. Such repurchases may occur from time to time, on the open market or otherwise, at such prices and upon such terms as the Company may determine and otherwise in accordance with applicable law.

During the fourth quarter of 2020, the Company repurchased 668,390 shares totaling $13.1 million and a total of 796,414 shares totaling $15.0 million were repurchased in 2020. These figures include common stock repurchased through the tender offer.

SUBORDINATED DEBT

As previously announced on November 30, 2020, MVB completed a private placement of $40 million of 4.25% fixed-to-floating rate subordinated notes to certain qualified institutional buyers. The notes are unsecured and have a ten-year term maturing on December 1, 2030.

DIVIDEND

As previously announced on November 18, 2020, MVB issued its fourth quarterly dividend for 2020, totaling a $0.36 per share payout year-to-date. The Company declared a quarterly cash dividend of $0.09 per share payable on December 15, 2020, to shareholders of record at the close of business on December 1, 2020.

SUBSEQUENT EVENT

As previously announced on December 28, 2020, the Company issued a notice of redemption to redeem all of its outstanding shares of Convertible Noncumulative Perpetual Preferred Stock, Series B and Series C. On January 28, 2021, preferred stock in the amount of $7.3 million was redeemed.

About MVB Financial Corp.

MVB Financial Corp., the holding company of MVB Bank, Inc., is publicly traded on The Nasdaq Capital Market under the ticker “MVBF.” Nasdaq is a leading global provider of trading, clearing, exchange technology, listing, information and public company services. Through its subsidiary, MVB Bank, Inc., and the Bank’s subsidiaries, MVB Community Development Corporation, Chartwell Compliance, Paladin Fraud and MVB Technology, the Company provides financial services to individuals and corporate clients in the Mid-Atlantic region and beyond. For more information about MVB, please visit http://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 that are intended to be covered by the protections provided under the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on current expectations about the future and subject to risks and uncertainties. Forward-looking statements include, without limitation, information concerning possible or assumed future results of operations of the Company and its subsidiaries. Forward-looking statements can be identified by the use of words such as “may,” “could,” “should,”, “would,” “will,” “plans,” “believes,” “estimates,” “expects,” “anticipates,” “intends,” “continues,” or the negative of those terms or similar expressions. 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 forward-looking statements. Therefore, undue reliance should not be placed upon any forward-looking statements. Those factors include but are not limited to: market, economic, operational, liquidity, and credit risk; changes in market interest rates; inability to achieve anticipated synergies and successfully integrate recent mergers and acquisitions; inability to successfully execute business plans, including strategies related to investments in financial technology companies; competition; length and severity of the COVID-19 pandemic and its impact on the Company’s business and financial condition; changes in economic, business, and political conditions; changes in demand for loan products and deposit flow; operational risks and risk management failures; and government regulation and supervision. Additional factors that may cause actual results to differ materially from those described in the forward-looking statements can be found in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, as well as its other filings with the SEC, which are available on the SEC’s website at www.sec.gov. Except as required by law, the Company disclaims any obligation to update, revise, or correct 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.
Financial Highlights
Condensed Consolidated Statements of Income
(Unaudited) (Dollars in thousands, except per share data)

	Quarterly						Full Year
	2020		2020		2019		2020		2019
	Fourth Quarter		Third Quarter		Fourth Quarter		2020		2019
Interest income	$	19,353	$	18,627	$	21,230	$	80,453	$	82,361
Interest expense	1,666		2,117		5,365		11,627		22,961
Net interest income	17,687		16,510		15,865		68,826		59,400
Provision for loan losses	214		8,631		232		16,579		1,789
Net interest income after provision for loan losses	17,473		7,879		15,633		52,247		57,611

Noninterest income:
Mortgage fee income	—		7,264		13,015		33,427		41,045
Other income	16,576		11,634		1,741		58,410		23,559
Total noninterest income	16,576		18,898		14,756		91,837		64,604

Noninterest expense:
Salaries and employee benefits	12,269		10,519		15,723		61,629		56,175
Other expense	8,618		7,746		9,260		35,512		31,026
Total noninterest expenses	20,887		18,265		24,983		97,141		87,201

Income from continuing operations, before income taxes	13,162		8,512		5,406		46,943		35,014
Income tax expense - continuing operations	1,324		2,021		1,311		9,532		8,450
Net income from continuing operations	11,838		6,491		4,095		37,411		26,564

Income from discontinued operations, before income taxes	—		—		—		—		575
Income tax expense - discontinued operations	—		—		—		—		148
Net income from discontinued operations	—		—		—		—		427

Net income	$	11,838	$	6,491	$	4,095	$	37,411	$	26,991
Preferred dividends	116		116		115		461		479
Net income available to common stockholders	$	11,722	$	6,375	$	3,980	$	36,950	$	26,512

Earnings per share from continuing operations - basic	$	1.00	$	0.53	$	0.34	$	3.13	$	2.22
Earnings per share from discontinued operations - basic	—		—		—		—		0.04
Earnings per share - basic	$	1.00	$	0.53	$	0.34	$	3.13	$	2.26

Earnings per share from continuing operations - diluted	$	0.97	$	0.53	$	0.32	$	3.06	$	2.16
Earnings per share from discontinued operations - diluted	—		—		—		—		0.04
Earnings per share - diluted	$	0.97	$	0.53	$	0.32	$	3.06	$	2.20

Condensed Consolidated Balance Sheets
(Unaudited) (Dollars in thousands)

	December 31, 2020		September 30, 2020		December 31, 2019
Cash and cash equivalents	$	263,893	$	295,823	$	28,002
Certificates of deposit with banks	11,803		12,301		12,549
Investment securities available-for-sale	410,624		297,964		235,821
Equity securities	27,585		24,164		18,514
Loans held-for-sale	1,062		2,271		109,788
Loans receivable	1,453,744		1,428,593		1,374,541
Allowance for loan losses	(25,844)		(25,913)		(11,775)
Loans receivable, net	1,427,900		1,402,680		1,362,766
Premises and equipment, net	26,203		26,176		21,974
Assets of branches held-for-sale	—		—		46,554
Goodwill	2,350		2,350		19,630
Other assets	160,056		150,730		88,516
Total assets	$	2,331,476	$	2,214,459	$	1,944,114

Noninterest-bearing deposits	$	715,791	$	642,835	$	278,547
Interest-bearing deposits	1,266,598		1,256,122		986,495
Deposits of branches held-for-sale	—		—		188,270
FHLB and other borrowings	—		25,800		222,885
Subordinated debt	43,407		4,124		4,124
Other liabilities	66,197		51,462		51,857
Stockholders' equity	239,483		234,116		211,936
Total liabilities and stockholders' equity	$	2,331,476	$	2,214,459	$	1,944,114

Reportable Segments
(Unaudited)

Twelve Months Ended December 31, 2020	Commercial & Retail Banking		Mortgage Banking		Financial Holding Company		Intercompany Eliminations		Consolidated
(Dollars in thousands)	Commercial & Retail Banking		Mortgage Banking		Financial Holding Company		Intercompany Eliminations		Consolidated
Interest income	$	75,812	$	6,269	$	3	$	(1,631)	$	80,453
Interest expense	10,400		3,139		261		(2,173)		11,627
Net interest income (loss)	65,412		3,130		(258)		542		68,826
Provision for (recovery of) loan losses	16,649		(70)		—		—		16,579
Net interest income (loss) after provision for loan losses	48,763		3,200		(258)		542		52,247

Noninterest Income:
Mortgage fee income	247		33,722		—		(542)		33,427
Other income	30,082		29,768		6,685		(8,125)		58,410
Total noninterest income	30,329		63,490		6,685		(8,667)		91,837

Noninterest Expenses:
Salaries and employee benefits	28,801		21,550		11,278		—		61,629
Other expenses	33,298		5,074		5,265		(8,125)		35,512
Total noninterest expenses	62,099		26,624		16,543		(8,125)		97,141

Income (loss) before income taxes	16,993		40,066		(10,116)		—		46,943
Income tax expense (benefit)	1,752		9,862		(2,082)		—		9,532
Net income (loss)	$	15,241	$	30,204	$	(8,034)	$	—	$	37,411
Preferred stock dividends	—		—		461		—		461
Net income (loss) available to common shareholders	$	15,241	$	30,204	$	(8,495)	$	—	$	36,950

Twelve Months Ended December 31, 2019	Commercial & Retail Banking		Mortgage Banking		Financial Holding Company		Intercompany Eliminations		Consolidated
(Dollars in thousands)	Commercial & Retail Banking		Mortgage Banking		Financial Holding Company		Intercompany Eliminations		Consolidated
Interest income	$	75,874	$	8,342	$	13	$	(1,868)	$	82,361
Interest expense	18,698		6,014		769		(2,520)		22,961
Net interest income (loss)	57,176		2,328		(756)		652		59,400
Provision for loan losses	1,622		167		—		—		1,789
Net interest income (loss) after provision for loan losses	55,554		2,161		(756)		652		57,611

Noninterest Income:
Mortgage fee income	657		41,040		—		(652)		41,045
Other income	23,033		1,289		6,268		(7,031)		23,559
Total noninterest income	23,690		42,329		6,268		(7,683)		64,604

Noninterest Expenses:
Salaries and employee benefits	19,067		28,432		8,676		—		56,175
Other expenses	25,070		8,136		4,851		(7,031)		31,026
Total noninterest expenses	44,137		36,568		13,527		(7,031)		87,201

Income (loss) from continuing operations, before income taxes	35,107		7,922		(8,015)		—		35,014
Income tax expense (benefit) - continuing operations	8,175		2,155		(1,880)		—		8,450
Net income (loss) from continuing operations	$	26,932	$	5,767	$	(6,135)	$	—	$	26,564
Income from discontinued operations, before income taxes	$	—	$	—	$	575	$	—	$	575
Income tax expense - discontinued operations	$	—	$	—	$	148	$	—	$	148
Net income from discontinued operations	$	—	$	—	$	427	$	—	$	427
Net income (loss)	$	26,932	$	5,767	$	(5,708)	$	—	$	26,991
Preferred stock dividends	—		—		479		—		479
Net income (loss) available to common shareholders	$	26,932	$	5,767	$	(6,187)	$	—	$	26,512

Average Balances and Interest Rates
(Unaudited) (Dollars in thousands)

	Three Months Ended						Three Months Ended						Three Months Ended
	December 31, 2020						September 30, 2020						December 31, 2019
	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	$	266,999	$	82	0.12	%	$	174,203	$	45	0.10	%	$	10,332	$	46	1.77	%
CDs with banks	11,938		58		1.93		12,641		61		1.91		12,908		64		1.97
Investment securities:
Taxable	167,968		894		2.12		103,497		411		1.58		134,990		719		2.11
Tax-exempt ²	200,666		1,659		3.29		142,301		1,344		3.75		111,262		1,152		4.11
Loans and loans held-for-sale: ¹
Commercial ³	1,136,899		13,763		4.82		1,160,214		14,108		4.82		1,029,592		13,830		5.33
Tax-exempt ²	7,501		92		4.87		7,752		91		4.66		11,709		134		4.54
Real estate	287,547		3,073		4.25		325,992		2,749		3.35		467,633		5,425		4.60
Consumer	6,053		99		6.51		6,613		119		7.14		8,148		130		6.33
Total loans	1,438,000		17,027		4.71		1,500,571		17,067		4.51		1,517,082		19,519		5.10
Total earning assets	2,085,571		19,720		3.76		1,933,213		18,928		3.88		1,786,574		21,500		4.77
Allowance for loan losses	(26,568)						(18,906)						(11,747)
Cash and due from banks	22,642						28,299						20,014
Other assets	215,716						205,038						136,650
Total assets	$	2,297,361					$	2,147,644					$	1,931,491

Liabilities
Deposits:
NOW	$	475,707	$	446	0.37	%	$	381,375	$	496	0.52	%	$	417,838	$	1,076	1.02	%
Money market checking	492,519		282		0.23		479,418		380		0.31		366,402		1,424		1.54
Savings	50,821		(2)		(0.02)		49,698		7		0.06		36,120		1		0.01
IRAs	13,410		49		1.45		12,389		44		1.41		16,786		81		1.91
CDs	235,412		679		1.15		334,828		967		1.15		341,270		1,733		2.01
Repurchase agreements and federal funds sold	10,070		4		0.16		10,145		4		0.16		9,733		11		0.45
FHLB and other borrowings	19,589		25		0.51		34,138		199		2.31		193,487		997		2.04
Subordinated debt	17,835		183		4.08		4,124		20		1.92		4,124		42		4.04
Total interest-bearing liabilities	1,315,363		1,666		0.50		1,306,115		2,117		0.64		1,385,760		5,365		1.54
Noninterest-bearing demand deposits	686,537						542,467						296,651
Other liabilities	59,841						68,223						41,244
Total liabilities	2,061,741						1,916,805						1,723,655

Stockholders’ equity
Preferred stock	7,334						7,334						7,334
Common stock	12,095						12,066						11,920
Additional paid-in capital	124,970						124,003						121,549
Treasury stock	(5,922)						(2,022)						(1,084)
Retained earnings	98,046						90,113						70,570
Accumulated other comprehensive loss	(903)						(655)						(2,453)
Total stockholders’ equity	235,620						230,839						207,836
Total liabilities and stockholders’ equity	$	2,297,361					$	2,147,644					$	1,931,491

Net interest spread (tax-equivalent)					3.26						3.24						3.23
Net interest income and margin (tax-equivalent) ²			$	18,054	3.44	%			$	16,811	3.45	%			$	16,135	3.58	%
Less: Tax-equivalent adjustments			$	(367)					$	(301)					$	(270)
Net interest spread					3.19						3.18						3.17
Net interest income and margin			$	17,687	3.37	%			$	16,510	3.39	%			$	15,865	3.52	%

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 securities, a tax-equivalent adjustment has been computed using a Federal tax rate of 21% for the periods presented, which is a non-GAAP financial measure. See the reconciliation of this non-GAAP financial measure to its most directly comparable GAAP financial measure following this table. ³ The Company’s PPP loans, totaling $82.0 million at December 31, 2020, are included in this amount for the three months ended December 31, 2020.

Average Balances and Interest Rates
(Unaudited) (Dollars in thousands)

	Twelve Months Ended						Twelve Months Ended						Twelve Months Ended
	December 31, 2020						December 31, 2019						December 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	$	125,259	$	191	0.15	%	$	9,264	$	209	2.26	%	$	5,176	$	108	2.09	%
CDs with banks	12,484		246		1.97		14,097		280		1.99		14,778		295		2.00
Investment securities:
Taxable	121,607		2,448		2.01		129,486		3,055		2.36		150,134		3,580		2.38
Tax-exempt ²	144,389		5,361		3.71		103,235		4,456		4.32		79,161		3,557		4.49
Loans and loans held-for-sale: ¹
Commercial ³	1,136,858		54,434		4.79		987,674		53,087		5.37		854,108		43,099		5.05
Tax-exempt ²	8,966		422		4.70		12,549		561		4.47		14,352		632		4.40
Real estate	403,166		18,100		4.49		447,891		21,220		4.74		395,302		18,794		4.75
Consumer	6,973		465		6.67		8,948		547		6.11		11,349		575		5.07
Total loans	1,555,963		73,421		4.72		1,457,062		75,415		5.18		1,275,111		63,100		4.95
Total earning assets	1,959,702		81,667		4.17		1,713,144		83,414		4.87		1,524,360		70,640		4.63
Allowance for loan losses	(18,079)						(11,318)						(10,530)
Cash and due from banks	26,460						17,625						16,828
Other assets	181,439						131,370						106,600
Total assets	$	2,149,522					$	1,850,821					$	1,637,258

Liabilities
Deposits:
NOW	$	408,110	$	2,521	0.62	%	$	381,092	$	3,586	0.94	%	$	432,789	$	3,246	0.75	%
Money market checking	458,606		2,680		0.58		331,636		5,144		1.55		245,008		2,455		1.00
Savings	45,420		6		0.01		38,324		4		0.01		44,049		29		0.07
IRAs	13,691		218		1.59		17,415		329		1.89		17,894		285		1.59
CDs	349,787		4,869		1.39		387,660		8,376		2.16		319,720		5,620		1.76
Repurchase agreements and federal funds sold	9,856		23		0.23		11,252		48		0.43		18,536		56		0.30
FHLB and other borrowings	68,407		1,049		1.53		183,812		4,704		2.56		190,686		4,259		2.23
Subordinated debt	7,568		261		3.45		12,124		770		6.35		25,774		1,756		6.81
Total interest-bearing liabilities	1,361,445		11,627		0.85		1,363,315		22,961		1.68		1,294,456		17,706		1.37
Noninterest-bearing demand deposits	502,457						258,546						171,631
Other liabilities	61,169						33,810						10,304
Total liabilities	1,925,071						1,655,671						1,476,391

Stockholders’ equity
Preferred stock	7,334						7,660						7,834
Common stock	12,047						11,762						11,082
Additional paid-in capital	130,312						118,837						107,669
Treasury stock	(2,637)						(1,084)						(1,084)
Retained earnings	77,044						61,712						42,509
Accumulated other comprehensive income (loss)	351						(3,737)						(7,143)
Total stockholders’ equity	224,451						195,150						160,867
Total liabilities and stockholders’ equity	$	2,149,522					$	1,850,821					$	1,637,258

Net interest spread (tax-equivalent)					3.32						3.19						3.26
Net interest income and margin (tax-equivalent) ²			$	70,040	3.57	%			$	60,453	3.53	%			$	52,934	3.47	%
Less: Tax-equivalent adjustments			$	(1,214)					$	(1,053)					$	(880)
Net interest spread					3.25						3.13						3.21
Net interest income and margin			$	68,826	3.51	%			$	59,400	3.47	%			$	52,054	3.41	%

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 securities, a tax-equivalent adjustment has been computed using a Federal tax rate of 21% for the periods presented, which is a non-GAAP financial measure. See the reconciliation of this non-GAAP financial measure to its most directly comparable GAAP financial measure following this table. ³ The Company’s PPP loans, totaling $82.0 million at December 31, 2020, are included in this amount for the twelve months ended December 31, 2020.

The following table reconciles, as of the dates set forth below, net interest margin on a fully tax-equivalent basis:

	Three Months Ended									Twelve Months Ended
(Dollars in thousands)	December 31, 2020			September 30, 2020			December 31, 2019			December 31, 2020			December 31, 2019			December 31, 2018
Net interest margin - U.S. GAAP basis
Net interest income	$	17,687		$	16,510		$	15,865		$	68,826		$	59,400		$	52,054
Average interest-earning assets	2,085,571			1,933,213			1,786,574			1,959,702			1,713,144			1,524,360
Net interest margin	3.37		%	3.39		%	3.52		%	3.51		%	3.47		%	3.41		%

Net interest margin - non-U.S. GAAP basis
Net interest income	$	17,687		$	16,510		$	15,865		$	68,826		$	59,400		$	52,054
Plus: Impact of fully tax-equivalent adjustment	367			301			270			1,214			1,053			880
Net interest income on a fully tax- equivalent basis	18,054			16,811			16,135			70,040			60,453			52,934
Average interest-earning assets	2,085,571			1,933,213			1,786,574			1,959,702			1,713,144			1,524,360
Net interest margin on a fully tax- equivalent basis	3.44		%	3.45		%	3.58		%	3.57		%	3.53		%	3.47		%

Selected Financial Data (Unaudited) (Dollars in thousands, except per share data)

	Quarterly									Full Year
	2020			2020			2019			2020			2019
	Fourth Quarter			Third Quarter			Fourth Quarter			2020			2019
Earnings and Per Share Data:
Net income from continuing operations	$	11,838		$	6,491		$	4,095		$	37,411		$	26,564
Net income from discontinued operations	$	—		$	—		$	—		$	—		$	427
Net income	$	11,838		$	6,491		$	4,095		37,411			26,991
Net income available to common shareholders	$	11,722		$	6,375		$	3,980		36,950			26,512
Earnings per share from continuing operations - basic	$	1.00		$	0.53		$	0.34		$	3.13		$	2.22
Earnings per share from discontinued operations - basic	$	—		$	—		$	—		$	—		$	0.04
Earnings per share - basic	$	1.00		$	0.53		$	0.34		$	3.13		$	2.26
Earnings per share from continuing operations - diluted	$	0.97		$	0.53		$	0.32		$	3.06		$	2.16
Earnings per share from discontinued operations - diluted	$	—		$	—		$	—		$	—		$	0.04
Earnings per share - diluted	$	0.97		$	0.53		$	0.32		$	3.06		$	2.20
Cash dividends paid per common share	$	0.09		$	0.09		$	0.07		$	0.36		$	0.195
Book value per common share	$	20.14		$	19.07		$	17.13		$	20.14		$	17.13
Tangible book value per common share ⁸	$	19.73		$	18.66		$	15.20		$	19.73		$	15.20
Weighted-average shares outstanding - basic	11,752,841			11,948,989			11,869,091			11,821,574			11,713,885
Weighted-average shares outstanding - diluted	12,144,471			12,116,418			12,334,423			12,088,106			12,044,667

Performance Ratios:
Return on average assets - continuing operations ¹	2.1		%	1.2		%	0.8		%	1.7		%	1.4		%
Return on average assets - discontinued operations ¹	—		%	—		%	—		%	—		%	—		%
Return on average assets ¹	2.1		%	1.2		%	0.8		%	1.7		%	1.5		%
Return on average equity - continuing operations ¹	20.1		%	11.3		%	7.9		%	16.7		%	13.6		%
Return on average equity - discontinued operations ¹	—		%	—		%	—		%	—		%	0.2		%
Return on average equity ¹	20.1		%	11.3		%	7.9		%	16.7		%	13.8		%
Net interest margin ^{2 3}	3.44		%	3.45		%	3.58		%	3.57		%	3.53		%
Efficiency ⁴	61.0		%	51.6		%	81.6		%	60.5		%	70.3		%
Overhead ^{1 5}	3.6		%	3.4		%	5.2		%	4.5		%	4.7		%
Equity to assets	10.3		%	10.6		%	10.9		%	10.3		%	10.9		%

Asset Quality Data and Ratios:
Charge-offs	$	300		$	111		$	332		$	2,190		$	1,009
Recoveries	$	16		$	5		$	1		$	33		$	55
Net loan charge-offs to total loans ^{1 6}	0.1		%	—		%	0.1		%	0.1		%	0.1		%
Allowance for loan losses	$	25,844		$	25,913		$	11,775		$	25,844		$	11,775
Allowance for loan losses to total loans ⁷	1.8		%	1.8		%	0.9		%	1.8		%	0.9		%
Nonperforming loans	$	13,713		$	14,893		$	5,123		$	13,713		$	5,123
Nonperforming loans to total loans	0.9		%	1.0		%	0.4		%	0.9		%	0.4		%

¹ annualized for the quarterly periods presented
² net interest income as a percentage of average interest earning assets
³ presented on a fully tax-equivalent basis
⁴ noninterest expense as a percentage of net interest income and noninterest income
⁵ noninterest expense as a percentage of average assets
⁶ charge-offs less recoveries
⁷ excludes loans held-for-sale
⁸ This is a non-U.S. GAAP measure that the Company believes is helpful to interpreting financial results. For a reconciliation to the most directly comparable U.S. GAAP financial measure, please see “Non-U.S. GAAP Reconciliation” on the next page.

Non-GAAP Reconciliation: Tangible Book Value per Common Share
(Unaudited) (Dollars in thousands)

	Quarterly						Full Year
	2020		2020		2019		2020		2019
	Fourth Quarter		Third Quarter		Fourth Quarter		2020		2019
Goodwill	$	2,350	$	2,350	$	19,630	$	2,350	$	19,630
Other intangibles	2,400		2,554		3,473		2,400		3,473
Total intangibles	4,750		4,904		23,103		4,750		23,103

Total equity	239,483		234,116		211,936		239,483		211,936
Less: Preferred equity	(7,334)		(7,334)		(7,334)		(7,334)		(7,334)
Less: Total intangibles	(4,750)		(4,904)		(23,103)		(4,750)		(23,103)
Tangible common equity	227,399		221,878		181,499		227,399		181,499

Tangible common equity	227,399		221,878		181,499		227,399		181,499
Common shares outstanding (000s)	11,526		11,889		11,944		11,526		11,944
Tangible book value per common share	$	19.73	$	18.66	$	15.20	$	19.73	$	15.20