MVB FINANCIAL CORP

Previous wording

We continue to adapt our business model due to challenging market conditions, primarily due to the current high interest rate environment, a slowing economy and multiple high-profile bank failures that occurred during the first half of 2023. Interest rates have remained at an elevated level through September 30, 2024, although the Federal Reserve did reduce its key interest rate to a range of 4.75% to 5.00% in September 2024. Lower loan balances are the result of slower market demand, the impact of loan amortization and payoffs and slower loan growth based on overall market conditions and portfolio management. We initiated the process of winding down our digital asset program account relationships, while maintaining operating accounts, during the second quarter of 2024. This decision was prompted by changing market conditions and profitability challenges that contributed to an unfavorable risk/reward dynamic. We remain committed to the gaming, payments and banking-as-a-service industries. 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. Additionally, we have expanded our compliance and risk management team to support the growth in these lines of business.

Current wording

We continue to adapt our business model due to challenging market conditions, primarily due to the current high interest rate environment and a slowing economy, as well as consideration of regulatory and geopolitical environments, among others. Interest rates have remained at an elevated level through March 31, 2025, although the Federal Reserve did reduce its key interest rate to a range of 4.25% to 4.5% in December 2024. Lower loan balances are the result of slower market demand, the impact of loan amortization and payoffs and slower loan growth based on overall market conditions and portfolio management. We remain committed to the gaming, payments and banking-as-a-service industries. 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. Additionally, we have expanded our compliance and risk management team to support the growth in these lines of business.

Previous wording

During the three months ended September 30, 2024, net interest income decreased $3.3 million, noninterest income increased $0.9 million and noninterest expenses decreased by $1.2 million compared to the three months ended September 30, 2023. Our tax-equivalent yield on earning assets in the three months ended September 30, 2024 was 6.32% compared to 6.29% in the three months ended September 30, 2023. Loans receivable decreased by $35.5 million to $2.17 billion during the three months ended September 30, 2024. Our overall cost of interest-bearing liabilities was 4.04% in the three months ended September 30, 2024 compared to 3.58% in the three months ended September 30, 2023. This cost of interest-bearing liabilities, combined with the earning asset yield, resulted in a tax-equivalent net interest margin of 3.61% in the three months ended September 30, 2024, compared to 3.90% in the three months ended September 30, 2023.

Current wording

During the three months ended March 31, 2025, net interest income declined $3.5 million, noninterest income declined $0.8 million and noninterest expenses declined $1.5 million compared to the three months ended March 31, 2024. Our tax-equivalent yield on earning assets in the three months ended March 31, 2025 was 5.91% compared to 6.34% in the three months ended March 31, 2024. Loans receivable declined $36.8 million to $2.06 billion during the three months ended March 31, 2025. Our overall cost of interest-bearing liabilities was 3.71% in the three months ended March 31, 2025 compared to 4.22% in the three months ended March 31, 2024. This cost of interest-bearing liabilities, combined with the earning asset yield, resulted in a tax-equivalent net interest margin of 3.66% in the three months ended March 31, 2025, compared to 3.83% in the three months ended March 31, 2024.

Previous wording

Our net income for the three months ended September 30, 2024 was $2.1 million compared to $3.9 million in the three months ended September 30, 2023. Earnings for the three months ended September 30, 2024 equated to a return on average assets of 0.3% and a return on average equity of 2.8%, compared to the three months ended September 30, 2023 results of 0.5% and 5.8%, respectively. Basic and diluted earnings per share were $0.16 for the three months ended September 30, 2024, compared to $0.30 and $0.29, respectively, for the three months ended September 30, 2023.

Current wording

Our net income for the three months ended March 31, 2025 was $3.6 million compared to $4.5 million in the three months ended March 31, 2024. Earnings for the three months ended March 31, 2025 equated to a return on average assets of 0.4% and a return on average equity of 4.7%, compared to the three months ended March 31, 2024 results of 0.5% and 6.2%, respectively. Basic and diluted earnings per share were $0.28 and $0.27 for the three months ended March 31, 2025, respectively, compared to $0.35 and $0.34, respectively, for the three months ended March 31, 2024.

Previous wording

Tangible book value (“TBV”) per common share was $23.20 and $21.08 as of September 30, 2024 and September 30, 2023, 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.

Current wording

Tangible book value (“TBV”) per common share was $23.85 and $22.48 as of March 31, 2025 and March 31, 2024, 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.

Previous wording

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 certificates of deposit in banks. Interest-bearing liabilities include interest-bearing deposits and borrowed funds such as sweep accounts, repurchase agreements, subordinated debt and the senior term loan. Net interest income, which is the primary source of revenue for the Bank, is also impacted by changes in market interest rates and the mix of interest-earning assets and interest-bearing liabilities.

Current wording

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 certificates of deposit in banks. Interest-bearing liabilities include interest-bearing deposits and borrowed funds such as sweep accounts, repurchase agreements and subordinated debt. Net interest income, which is the primary source of revenue for the Bank, is also impacted by changes in market interest rates and the mix of interest-earning assets and interest-bearing liabilities.

Previous wording

In September 2024, the Federal Reserve lowered its key interest rate from a range of 5.25% to 5.5% as of December 31, 2023 to a range of 4.75% to 5.00% as of September 30, 2024. We continually analyze methods to deploy assets into an earning asset mix to generate a stronger net interest margin.

Current wording

In December 2024, the Federal Reserve lowered its key interest rate to a range of 4.25% to 4.5%, which has not changed as of March 31, 2025. We continually analyze methods to deploy assets into an earning asset mix to generate a stronger net interest margin.

Previous wording

Net interest margin on a tax-equivalent basis was 3.61% for the three months ended September 30, 2024 compared to 3.90% for the three months ended September 30, 2023. The decrease in net interest margin on a tax-equivalent basis primarily reflects higher funding costs and a shift in the mix of earnings assets, partially offset by investment yields. Tax-equivalent net interest spread was 2.28% for the three months ended September 30, 2024 compared to 2.71% for the three months ended September 30, 2023. The difference between the tax-equivalent net interest margin and tax-equivalent net interest spread was 133 basis points in the three months ended September 30, 2024 compared to 119 basis points in the three months ended September 30, 2023 driven by the increase in interest expense and the decline in average assets.

Current wording

Net interest margin on a tax-equivalent basis was 3.66% for the three months ended March 31, 2025 compared to 3.83% for the three months ended March 31, 2024. The decline in net interest margin on a tax-equivalent basis primarily reflects a decline in earning asset yields, partially offset by lower funding costs. Tax-equivalent net interest spread was 2.20% for the three months ended March 31, 2025 compared to 2.12% for the three months ended March 31, 2024. The difference between the tax-equivalent net interest margin and tax-equivalent net interest spread was 146 basis points in the three months ended March 31, 2025 compared to 171 basis points in the three months ended March 31, 2024, driven by the decline in average assets.

Previous wording

Average investment securities increased $49.1 million as the result of a $51.8 million increase in taxable investments, partially offset by a $2.7 million decrease in tax-exempt investments during the three months ended September 30, 2024, compared to the three months ended September 30, 2023. The yield on tax-exempt securities decreased 46 basis points, and the taxable securities yield increased 81 basis points.

Current wording

Average investment securities increased $78.0 million as the result of an $81.6 million increase in taxable investments, partially offset by a $3.6 million decline in tax-exempt investments during the three months ended March 31, 2025, compared to the three months ended March 31, 2024. The yield on taxable securities increased 56 basis points, and the yield on tax-exempt securities increased two basis points.

Previous wording

Average interest-bearing liabilities decreased by $71.0 million for the three months ended September 30, 2024 from the three months ended September 30, 2023. The decrease was primarily the result of average balance decreases of $140.3 million in NOW accounts and $103.4 million in money market checking deposits, partially offset by an increase of $136.7 million in certificates of deposit.

Current wording

Average interest-bearing liabilities declined $82.0 million, which was primarily the result of average balance declines of $74.2 million in NOW accounts, $73.7 million in savings accounts and $73.0 million in money market checking deposits, partially offset by an increase of $140.2 million in certificates of deposit.

Previous wording

Average interest-bearing deposits were $1.89 billion for the three months ended September 30, 2024 and $1.96 billion for the three months ended September 30, 2023.Total interest expense increased by $1.6 million, primarily driven by increases in interest rates. The cost of interest-bearing liabilities increased to 4.04% in the three months ended September 30, 2024 from 3.58% in the three months ended September 30, 2023.

Current wording

Average interest-bearing deposits were $1.73 billion for the three months ended March 31, 2025 and $1.81 billion for the three months ended March 31, 2024. Total interest expense declined $3.3 million, primarily driven by lower interest rates. The cost of interest-bearing liabilities declined to 3.71% in the three months ended March 31, 2025 from 4.22% in the three months ended March 31, 2024.

Previous wording

The provision for credit losses, which is a product of management’s analysis, is recorded in response to inherent losses in the loan portfolio. Credit loss provisions were $1.0 million for the three months ended September 30, 2024, while there was a release of allowance for credit losses of $0.2 million for the three months ended September 30, 2023, respectively. The increase in credit loss provisions is the result of an increase in the required reserve calculated by the pooled loan analysis, which was partially offset by lower calculated reserves of the individually analyzed loans.

Current wording

The provision for credit losses, which is a product of management’s analysis, is recorded in response to inherent losses in the loan and available-for-sale investment security portfolios. Credit loss provisions were $0.2 million and $2.0 million for the three months ended March 31, 2025 and 2024, respectively. The decline in credit loss provisions is the result of a reduction in the required reserve calculated by the pooled loan analysis, driven by both lower loan portfolio balances and lower allocation rates, which was partially offset by higher calculated reserves of individually analyzed loans.

Previous wording

Total loans decreased $35.5 million during the three months ended September 30, 2024, compared to a decrease of $42.0 million in the three months ended September 30, 2023. The decline in loan balances compared to the prior quarters primarily reflects the amortization of the loan portfolio and the Bank’s purposeful effort to improve the overall strength of the loan portfolio through selective originations. The commercial loan portfolio decreased by $34.0 million during the three months ended September 30, 2024, as compared to an increase of $5.1 million in the three months ended September 30, 2023, while the residential mortgage loan portfolio increased by $0.6 million during the three months ended September 30, 2024, as compared to a $23.8 million decrease during the three months ended September 30, 2023. Additionally, our consumer loan portfolio decreased by $2.3 million during the three months ended September 30, 2024, while it decreased by $21.4 million in the three months ended September 30, 2023. Net charge-offs totaled $0.7 million and $5.9 million during the three months ended September 30, 2024 and 2023, respectively.

Current wording

Total loans decreased $36.8 million during the three months ended March 31, 2025, compared to a decrease of $50.3 million in the three months ended March 31, 2024. The decline in loan balances compared to the prior quarter primarily reflects the amortization of the loan portfolio and a purposeful effort to improve the overall strength of the loan portfolio through selective originations and a focus on reducing criticized assets. The commercial loan portfolio decreased by $25.0 million during the three months ended March 31, 2025, as compared to a decrease of $34.0 million in the three months ended March 31, 2024, while the residential mortgage loan portfolio decreased by $8.2 million during the three months ended March 31, 2025, as compared to a $12.1 million decrease during the three months ended March 31, 2024. Additionally, our consumer loan portfolio decreased by $1.9 million during the three months ended March 31, 2025, while it decreased by $2.7 million in the three months ended March 31, 2024. Net charge-offs totaled $0.9 million and $1.3 million during the three months ended March 31, 2025 and 2024, respectively.

Previous wording

Noninterest income for the nine months ended September 30, 2024 and 2023 totaled $21.6 million and $15.3 million, respectively. The increase in noninterest income for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 was primarily the result of a $2.5 million increase in payment card and service charge income and a $0.7 million gain on sale of available-for-sale securities, compared to a $1.5 million loss during the prior year period. There were also losses of $1.0 million on divestiture activity and $1.0 million on the sale of loans for the nine months ended September 30, 2023, without corresponding losses in the current period. These increases were partially offset by a decline in other operating income of $1.5 million.

Current wording

Noninterest income for the three months ended March 31, 2025 and 2024 totaled $7.0 million and $7.8 million, respectively. The decline in noninterest income for the three months ended March 31, 2025 compared to the three months ended March 31, 2024 was primarily the result of a $1.6 million decline in other operating income and a $0.7 million decline on gain on sale of available-for-sale investment securities. Partially offsetting these declines was $0.6 million in equity method investments income from our mortgage segment for the three months ended March 31, 2025, compared to a loss of $1.1 million in the three months ended March 31, 2024, and a $0.6 million gain on divestiture activity related to our sale of Trabian during three months ended March 31, 2025.

Previous wording

Noninterest expense was $29.5 million and $30.7 million in the three months ended September 30, 2024 and 2023, respectively. The decline from the prior period primarily reflects declines of $1.0 million in professional fees and $0.9 million in other operating expenses, partially offset by an increase in salaries and employee benefits of $0.7 million. Approximately 56.7% and 52.1% of noninterest expense for the three months ended September 30, 2024 and 2023, respectively, was related to personnel costs. Personnel costs are a significant part of our noninterest expense as such costs are critical to financial services organizations.

Current wording

Noninterest expense was $28.7 million and $30.2 million in the three months ended March 31, 2025 and 2024, respectively. The decline from the prior period primarily reflects a decline of $2.2 million in professional fees, partially offset by a $0.6 million increase in other operating expenses. Approximately 57.2% and 54.6% of noninterest expense for the three months ended March 31, 2025 and 2024, respectively, was related to personnel costs. Personnel costs are a significant part of our noninterest expense as such costs are critical to financial services organizations.

Previous wording

Our return on average assets was 0.4% for the nine months ended September 30, 2024, compared to 0.9% for the nine months ended September 30, 2023. The decreased return for the nine months ended September 30, 2024 is the result of a $12.7 million decrease in earnings, while average total assets decreased by $35.3 million, mainly the result of a $47.0 million decrease in average consumer loans, a $30.1 million decrease in average real estate loans and a $24.2 million decrease in average commercial loans, offset by a $38.5 million increase in average interest-bearing deposits with banks.

Current wording

Our return on average assets was 0.4% for the three months ended March 31, 2025, compared to 0.5% for the three months ended March 31, 2024. The lower return for the three months ended March 31, 2025 is the result of a $0.9 million decline in earnings and a decline in average total assets of $208.2 million, which was primarily the result of a $104.4 million decline in average interest-bearing balances with banks, a $134.0 million decline in average commercial loans, a $30.0 million decline in average real estate loans and a $14.3 million decline in average consumer loans, partially offset by a $78.0 million increase in average investment securities.

Previous wording

Our return on average stockholders’ equity was 2.8% for the three months ended September 30, 2024, compared to 5.8% for the three months ended September 30, 2023. The decreased return in the three months ended September 30, 2024 is a result of a $1.8 million decrease in earnings, while average equity increased by $28.4 million.

Current wording

Our return on average stockholders’ equity was 4.7% for the three months ended March 31, 2025, compared to 6.2% for the three months ended March 31, 2024. The lower return for the three months ended March 31, 2025 is a result of a $0.9 million decline in earnings, while average equity increased by $15.3 million.

Previous wording

Cash and cash equivalents totaled $610.9 million at September 30, 2024, compared to $398.2 million at December 31, 2023. We believe the current balance of cash and cash equivalents adequately serves our liquidity and performance needs. Total cash and cash equivalents fluctuate daily due to transactions in process and other liquidity demands.

Current wording

Cash and cash equivalents totaled $251.5 million at March 31, 2025, compared to $317.9 million at December 31, 2024. We believe the current balance of cash and cash equivalents adequately serves our liquidity and performance needs. Total cash and cash equivalents fluctuate daily due to transactions in process and other liquidity demands.

Previous wording

Investment securities, including equity securities, totaled $416.6 million at September 30, 2024, compared to $386.4 million at December 31, 2023. The following table presents a summary of the investment securities portfolio as of the periods shown. The available-for-sale securities are reported at estimated fair value.

Current wording

Investment securities, including equity securities, totaled $463.9 million at March 31, 2025, compared to $454.2 million at December 31, 2024. The following table presents a summary of the investment securities portfolio as of the periods shown. The available-for-sale securities are reported at estimated fair value.

Previous wording

Our loan portfolio totaled $2.17 billion as of September 30, 2024 and $2.32 billion as of December 31, 2023. The Bank’s lending is primarily focused in North Central West Virginia, Northern Virginia, North Carolina and South Carolina. The portfolio consists principally of commercial lending, retail lending, which includes single-family residential mortgages, and consumer lending.

Current wording

Our loan portfolio totaled $2.06 billion as of March 31, 2025 and $2.10 billion as of December 31, 2024. The Bank’s lending is primarily focused in North Central West Virginia, Northern Virginia, North Carolina and South Carolina. The portfolio consists principally of commercial lending, retail lending, which includes single-family residential mortgages, and consumer lending.

Previous wording

At September 30, 2024 and December 31, 2023, commercial and non-residential real estate loans comprised the largest component of the loan portfolio. A large portion of commercial loans are secured by real estate and are diverse in terms of geographical location and industry. Loans that are not secured by real estate are typically secured by accounts receivable, mortgages or equipment. While the loan concentration is in commercial loans, the commercial portfolio is comprised of loans to many different borrowers in numerous different industries, generally located in our primary market areas. Additionally, within the commercial portfolio, loans within the healthcare industry, which include loans to physicians, nursing homes and pharmacies, represent 22% of our total loan portfolio as of September 30, 2024.

Current wording

At March 31, 2025 and December 31, 2024, commercial and non-residential real estate loans comprised the largest component of the loan portfolio. A large portion of commercial loans are secured by real estate and are diverse in terms of geographical location and industry. Loans that are not secured by real estate are typically secured by accounts receivable, mortgages or equipment. While the loan concentration is in commercial loans, the commercial portfolio is comprised of loans to many different borrowers in numerous different industries, generally located in our primary market areas. Additionally, within the commercial portfolio, loans within the healthcare industry, which include loans to physicians, nursing homes and pharmacies, represent 23% of our total loan portfolio as of March 31, 2025.

Previous wording

The ACL was $21.5 million, or 0.99% of loans receivable, at September 30, 2024, compared to $22.1 million, or 0.95% of loans receivable, at December 31, 2023. Over the nine months ended September 30, 2024, the ACL was impacted by an increase in provision needed for individually analyzed loans of $1.8 million. Additionally, over the nine months ended September 30, 2024, changes to the loan portfolio balances, qualitative factor adjustments and expected loss forecasts within the expected credit loss calculation resulted in allowance decreases of $1.6 million to both the consumer segment, which includes the subprime automotive portfolio, and the commercial and industrial segment. This decrease was offset by an increase of $0.7 million in allowance required by the residential segment. The commercial real estate, commercial acquisition, development and construction and home equity line of credit segments required a total of $0.1 million of additional allowance over the same period. Bank management expects that the markets in which it lends will experience economic improvements over the next one to two years, and most decreases in estimated loss rates have been further supported by decreases in loan balances in the nine months ended September 30, 2024. This results in marginally lower allocation rates against slightly lower loan balances, resulting in an overall lower allowance needed for the pooled loan portfolio. However, this has been partially offset by the increase in allowance needed by the individually analyzed loans and net-charge-offs. Net charge-offs for the three months ended September 30, 2024 included $0.4 million related to five U.S. Small Business Administration loans secured by business assets and $1.0 million related to the subprime consumer automotive segment.

Current wording

The ACL was $19.2 million, or 0.93% of loans receivable, at March 31, 2025, compared to $19.7 million, or 0.94% of loans receivable, at December 31, 2024. The commercial real estate, residential and consumer segments reflected a total allowance decrease of $0.6 million over the three months ended March 31, 2025. Additionally, over the three months ended March 31, 2025, changes to the loan portfolio balances, qualitative factor adjustments and expected loss forecasts within the expected credit loss calculation resulted in allowance decreases of $0.4 million to both the commercial acquisition, development and construction segment and the commercial and industrial segment. These decreases were partially offset by an increases of $0.4 million in allowance required by the commercial real estate owner occupied segment and an increase in provision needed for individually analyzed loans of $0.4 million. Bank management expects the markets in which it operates will experience potential economic volatility over the next one to two years and most decreases in estimated loss rates have been further supported by decrease in loan balances in the three months ended March 31, 2025. This results in marginally lower allocation rates against slightly lower loan balances, resulting in an overall lower allowance needed for the pooled loan portfolio. Net charge-offs for the three months ended March 31, 2025 included $0.8 million related to five U.S. SBA loans secured by business assets and $0.1 million related to the ALF consumer automotive segment.

Previous wording

The Bank considers a number of alternatives including, but not limited to, deposits, short-term borrowings and long-term borrowings, when evaluating funding sources. Deposits remain the most significant source of funds, totaling $3.00 billion, or 97.4% of funding sources at September 30, 2024. This same information at December 31, 2023 reflected $2.90 billion in deposits representing 97.1% of funding sources. Borrowings, consisting of subordinated debt, FHLB and other borrowings represented 2.4% of funding sources at September 30, 2024, versus 2.7% at December 31, 2023. Repurchase agreements, which are available to large corporate customers, represented 0.2% of funding sources at September 30, 2024 and 0.2% at December 31, 2023.

Current wording

The Bank considers a number of alternatives including, but not limited to, deposits, short-term borrowings and long-term borrowings, when evaluating funding sources. Deposits remain the most significant source of funds, totaling $2.58 billion, or 97.0% of funding sources at March 31, 2025. This same information at December 31, 2024 reflected $2.69 billion in deposits representing 97.2% of funding sources. Borrowings represented 2.8% of funding sources at March 31, 2025, versus 2.7% at December 31, 2024. Repurchase agreements, which are available to large corporate customers, represented 0.2% of funding sources at March 31, 2025 and 0.1% at December 31, 2024.

Previous wording

At September 30, 2024, noninterest-bearing balances totaled $989.1 million, compared to $1.20 billion at December 31, 2023, or 33.0% and 41.3%, respectively, of total deposits. Interest-bearing deposits totaled $2.01 billion at September 30, 2024, compared to $1.70 billion at December 31, 2023.

Current wording

At March 31, 2025, noninterest-bearing balances totaled $1.03 billion, compared to $941.0 million at December 31, 2024, or 40.0% and 34.9%, respectively, of total deposits. Interest-bearing deposits totaled $1.55 billion at March 31, 2025, compared to $1.75 billion at December 31, 2024.

Previous wording

Average interest-bearing deposits were $1.81 billion during the nine months ended September 30, 2024 compared to $1.83 billion during the same time period in 2023 and average noninterest-bearing deposits were $1.11 billion during the nine months ended September 30, 2024 compared to $1.11 billion during the same time period in 2023.

Current wording

Average interest-bearing deposits were $1.73 billion during the three months ended March 31, 2025, compared to $1.81 billion during the same time period in 2024 and average noninterest-bearing deposits were $1.13 billion during the three months ended March 31, 2025 compared to $1.28 billion during the same time period in 2024.

Previous wording

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). Accounts opened at program banks are established in our name as custodian, for the benefit of our account holders. We remain the issuer of all accounts under the applicable account holder agreements and have sole custodial control and transaction authority over the accounts opened at program banks. We maintain the records of each account holder's deposits maintained at program banks. 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 $1.4 billion at September 30, 2024 and $1.1 billion at December 31, 2023 and represent the gaming and banking-as-a-service industries.

Current wording

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). Accounts opened at program banks are established in our name as custodian, for the benefit of our account holders. We remain the issuer of all accounts under the applicable account holder agreements and have sole custodial control and transaction authority over the accounts opened at program banks. We maintain the records of each account holder's deposits maintained at program banks. 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 $1.52 billion at March 31, 2025 and $1.42 billion at December 31, 2024 and primarily represent the gaming and banking-as-a-service industries.

Previous wording

Along with traditional deposits, the Bank has access to both short-term borrowings from FHLB, Federal Reserve Bank 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.

Current wording

Along with traditional deposits, the Bank has access to both short-term borrowings from FHLB, Federal Reserve Bank and overnight repurchase agreements to fund its operations and investments.

Previous wording

Three of our primary deposit verticals are payments, gaming and banking-as-a-service, with such deposits totaling $504.9 million, $391.4 million and $219.1 million as of September 30, 2024, respectively, compared to $449.8 million, $354.1 million and $251.6 million as of December 31, 2023, respectively. Of the gaming deposits, $370.1 million is with our three largest gaming clients at September 30, 2024.

Current wording

Three of our primary deposit verticals are payments, banking-as-a-service and gaming, with such deposits totaling $489.6 million, $317.0 million and $190.8 million as of March 31, 2025, respectively, compared to $505.8 million, $208.1 million and $227.6 million as of December 31, 2024, respectively. Of the gaming deposits, $158.3 million is with our three largest gaming clients at March 31, 2025.

Previous wording

During the nine months ended September 30, 2024, stockholders’ equity increased $13.7 million to $303.2 million. This increase primarily consists of net income of $10.7 million, other comprehensive income of $6.4 million, common stock options exercised of $1.2 million and stock based compensation of $2.5 million, offset by cash dividends paid of $6.5 million.

Current wording

During the three months ended March 31, 2025, stockholders’ equity increased $4.4 million to $310.1 million. This increase primarily consists of net income of $3.6 million, other comprehensive income of $2.1 million, stock based compensation of $0.8 million and common stock options exercised of $0.1 million, offset by cash dividends paid of $2.2 million.

Previous wording

The growth in assets of $104.9 million in the nine months ended September 30, 2024 outpaced the growth in stockholders' equity, and the equity to assets ratio increased from 8.7% at December 31, 2023 to 8.9% at September 30, 2024. We paid dividends to common shareholders of $6.5 million and $6.5 million in the nine months ended September 30, 2024 and 2023, respectively, compared to earnings of $10.7 million and $23.3 million in the nine months ended September 30, 2024 and 2023, respectively, resulting in the dividend payout ratio increasing to 61.7% in the nine months ended September 30, 2024 from 27.7% in the nine months ended September 30, 2023.

Current wording

During the three months ended March 31, 2025, total assets declined $109.0 million. As a result, the equity to assets ratio increased from 9.8% at December 31, 2024 to 10.3% at March 31, 2025. We paid dividends to common shareholders of $2.2 million in the three months ended March 31, 2025 and 2024, respectively, compared to earnings of $3.6 million and $4.5 million in the three months ended March 31, 2025 and 2024, respectively, resulting in the dividend payout ratio increasing to 61.5% in the three months ended March 31, 2025 from 48.7% in the three months ended March 31, 2024.

Previous wording

We and the Bank are also subject to various regulatory capital requirements administered by federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary, actions by regulators that, if undertaken, could have a material effect on our consolidated financial statements. The Bank is required to comply with applicable capital adequacy standards established by the federal banking agencies. West Virginia state chartered banks, such as the Bank, are subject to similar capital requirements adopted by the West Virginia Division of Financial Institutions. Bank regulators have established “risk-based” capital requirements designed to measure capital adequacy. Risk-based capital ratios reflect the relative risks of various assets companies hold in their portfolios. A weight category of 0% (lowest risk assets), 20%, 50%, 100% or 150% (highest risk assets) is assigned to each asset on the balance sheet. 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 to the consolidated financial statements included in Item 8, Financial Statements and Supplementary Data, of the 2023 Form 10-K.

Current wording

MVB and the Bank are also subject to various regulatory capital requirements administered by federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary, actions by regulators that, if undertaken, could have a material effect on our consolidated financial statements. The Bank is required to comply with applicable capital adequacy standards established by the federal banking agencies. West Virginia state chartered banks, such as the Bank, are subject to similar capital requirements adopted by the West Virginia Division of Financial Institutions. Bank regulators have established “risk-based” capital requirements designed to measure capital adequacy. Risk-based capital ratios reflect the relative risks of various assets companies hold in their portfolios. A weight category of 0% (lowest risk assets), 20%, 50%, 100% or 150% (highest risk assets) is assigned to each asset on the balance sheet. Detailed information concerning our risk-based capital ratios can be found in Supervision and Regulation in Item 1, Business and Note 15 – Regulatory Capital

Previous wording

The Bank elected to begin using the CBLR for the first quarter of 2021 and intends to utilize this measure for the foreseeable future. Eligibility criteria to utilize the CBLR include the following:

Current wording

The Bank has elected to use the CBLR and intends to utilize this measure for the foreseeable future. Eligibility criteria to utilize the CBLR include the following:

Previous wording

Maintenance of a sufficient level of liquidity is a primary objective of the ALCO. Liquidity, as defined by the ALCO, is the ability to meet anticipated operating cash needs, loan demand and deposit withdrawals without incurring a sustained negative impact on net interest income. It is our policy to optimize the funding of the balance sheet, continually balancing the stability and cost factors of various funding sources. 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 $645.0 million as of September 30, 2024. These sources of funds should enable us to meet cash obligations as they come due.

Current wording

Maintenance of a sufficient level of liquidity is a primary objective of the ALCO. Liquidity, as defined by the ALCO, is the ability to meet anticipated operating cash needs, loan demand and deposit withdrawals, without incurring a sustained negative impact on net interest income. It is our policy to optimize the funding of the balance sheet, continually balancing the stability and cost factors of various funding sources. 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 $333.9 million as of March 31, 2025. We expect that these sources of funds should enable us to meet cash obligations as they come due.

Previous wording

The main source of liquidity for the Bank comes through deposit growth. Liquidity is also provided from cash generated from investment maturities, principal payments from loans and income from loans and investment securities. For the nine months ended September 30, 2024, cash from operating, investing and financing activities totaled $10.3 million, $114.9 million and $87.5 million, respectively. Significant changes in cash flows during the quarter included inflows from the net change in loans of $141.0 million, the net change in deposits of $100.2 million and sales of available-for-sale investment securities of $24.3 million, partially offset by an outflow of $58.0 million to purchase available-for-sale investment securities.

Current wording

The main source of liquidity for the Bank comes through deposit growth. Liquidity is also provided from cash generated from investment maturities, principal payments from loans and income from loans and investment securities. For the three months ended March 31, 2025, cash from operating and investing activities totaled $14.1 million and $31.3 million, respectively, while cash used in financing activities totaled $111.9 million. Significant cash flows during the quarter included outflows of $111.0 million related to the net change in deposits and $32.9 million to purchase available-for-sale investment securities, partially offset by inflows of $27.7 million from proceeds of loan sales and $27.3 million in maturities and paydowns of available-for-sale investment securities.

Previous wording

When appropriate, the Bank has the ability to take advantage of external sources of funds such as advances from the FHLB, national market certificate of deposit issuance programs, the Federal Reserve discount window, brokered deposits and Certificate of Deposit Account Registry Services. These external sources often provide attractive interest rates and flexible maturity dates that enable the Bank to match funding with the contractual maturity dates of assets. Securities in the investment portfolio are classified as available-for-sale and can be utilized as an additional source of liquidity.

Current wording

When appropriate, the Bank has the ability to take advantage of external sources of funds such as advances from the FHLB, national market certificate of deposit issuance programs, the Federal Reserve discount window, brokered deposits and multiple deposit networks. These external sources often provide attractive interest rates and flexible maturity dates that enable the Bank to match funding with the contractual maturity dates of assets. Securities in the investment portfolio are classified as available-for-sale and can be utilized as an additional source of liquidity.

Previous wording

We believe that the current economic climate in our primary market areas reflects economic climates that are consistent with the general national economic climate. Unemployment in the United States was 3.9% for September 2024 and 3.8% for September 2023.

Current wording

We believe that the current economic climate in our primary market areas reflects economic climates that are consistent with the general national economic climate. Unemployment in the United States was 4.2% for March 2025 and 3.9% for March 2024.

Previous wording

Our exposure to credit loss in the event of nonperformance by the other party to the financial instruments for commitments to extend credit and standby letters of credit is represented by the contractual amount of those instruments. We use the same credit policies when making commitments and conditional obligations as we do for on-balance-sheet instruments.

Current wording

Our exposure to credit loss in the event of nonperformance by the counterparty to the financial instruments for commitments to extend credit and standby letters of credit is represented by the contractual amount of those instruments. We use the same credit policies when making commitments and conditional obligations as we do for on-balance-sheet instruments.

Previous wording

We grant a majority of our commercial, financial, agricultural, real estate and installment loans to customers throughout the North Central West Virginia and Northern Virginia markets. Collateral for loans is primarily residential and commercial real estate, personal property and business equipment. We evaluate the creditworthiness of each of our customers on a case-by-case basis and the amount of collateral they obtain is based on management’s credit evaluation.

Current wording

We grant a majority of our commercial, financial, agricultural, real estate and installment loans to customers throughout the North Central West Virginia, Northern Virginia, North Carolina and South Carolina markets. Collateral for loans is primarily residential and commercial real estate, personal property and business equipment. We evaluate the creditworthiness of each of our customers on a case-by-case basis and the amount of collateral they obtain is based on management’s credit evaluation.