2008 ANNUAL REPORT
2008 ANNUAL REPORT
TO THE
TO THE
SHAREHOLDERS
SHAREHOLDERS
MVB
10
MVB F
MVB F
INANCIAL ORP.
INANCIAL ORP.
C
C
1
MVB Financial Corp.
Selected Financial Data
Amounts in thousands,
except for share data
Summary of Operations
Interest Income
Interest Expense
Net Interest Income
Provisions for Loan Losses
Non-Interest Income
Non-Interest Expense
Applicable Income Tax
Expenses (Benefit)
Net Income (Loss) from operations
Per Share Data
Basic Net Income (Loss)/Share
Fully Diluted Net Income/Share
Cash Dividends Declared
Book Value
Basic weighted-average shares outstanding
Diluted weighted-average shares outstanding
Average Balance Sheet
Summary
Loans, Gross
Investment Securities
Total Assets
Deposits
Capital
End of Period Balance Sheet
Summary
Loans, Gross
Investment Securities
Total Assets
Deposits
Capital
Selected Ratios
Average Equity to
Average Assets
Return on Average Assets
Net Income (Loss)
Return on Average Equity
Net Income (Loss)
At or for the Year
Ended December 31
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
$ 13,687
5,949
7,738
595
1,788
7,840
$
263
1,260
0.52
0.51
0.10
16.11
1,584
1,621
13,274
6,377
6,897
584
1,623
6,240
414
1,282
0.87
0.85
n/a
15.60
1,470
1,509
10,011
4,360
5,651
445
1,240
5,132
341
973
0.68
0.67
n/a
14.82
1,428
1,588
6,651
2,326
4,325
160
876
4,284
195
562
0.57
0.49
n/a
13.52
993
1,153
$ 189,070
27,568
238,785
169,946
25,695
158,495
26,658
205,544
147,454
22,259
124,794
27,335
168,950
122,733
20,015
87,145
22,466
123,668
95,349
12,957
$ 203,241
26,591
258,706
173,065
25,836
181,537
27,843
230,098
157,448
23,525
142,599
28,739
191,284
134,593
21,655
105,214
28,534
151,334
113,953
18,518
5,536
1,570
3,966
269
677
2,689
627
1,058
1.46
1.41
n/a
11.80
726
752
70,252
23,012
101,887
81,414
8,342
78,844
20,791
106,206
85,486
8,843
4,852
1,702
3,150
223
598
2,348
396
781
1.10
1.07
n/a
11.04
708
730
55,301
25,219
91,981
71,657
7,575
62,615
25,073
94,936
75,338
7,818
4,227
1,852
2,375
225
458
2,033
175
400
0.70
0.68
n/a
10.37
571
586
42,153
18,794
74,597
58,294
5,379
48,032
22,335
80,977
64,904
7,340
3,893
2,195
1,698
166
391
1,712
64
147
0.28
0.27
n/a
8.75
533
541
30,560
14,773
59,425
44,924
4,761
35,075
18,121
65,325
49,710
4,798
2,977
1,820
1,157
138
207
1,397
1,188
643
545
104
127
944
(50)
(121)
(118)
(258)
(0.23)
(0.23)
n/a
8.48
517
517
(0.57)
(0.57)
n/a
9.14
517
517
20,429
8,400
42,764
31,646
4,500
26,117
10,093
50,358
38,110
4,622
5,591
5,553
19,461
12,336
4,058
13,899
8,139
34,087
24,006
4,572
10.76%
10.83%
11.85%
10.48%
8.19%
8.24%
7.21%
8.01%
10.52%
20.85%
0.53%
0.62%
0.58%
0.45%
1.04%
0.85%
0.54%
0.25%
-0.28%
-6.36%
4.90%
5.76%
4.86%
4.34%
12.68%
10.31%
7.44%
3.09%
-2.69%
-1.33%
Leverage Ratio
11.49%
11.53%
11.35%
11.82%
8.35%
8.21%
8.95%
7.14%
9.40%
24.20%
Risk-Based Capital Ratios
Tier I Capital
Total Capital
Common Stock Price Per Share
at Year End
* adjusted for 5% stock dividends,
effective June 1, 2001 & August 15, 2004
13.38%
14.26%
13.60%
14.52%
14.37%
15.21%
15.66%
16.45%
11.27%
12.40%
11.98%
13.03%
13.98%
14.96%
12.31%
13.25%
16.20%
17.00%
27.00%
27.60%
$
20.00
20.00
16.00
16.00
14.00
12.38 *
11.90 *
10.48 *
10.00
*
10.00
*
2
Dear Shareholders,
As(cid:2)I(cid:2)write(cid:2)this(cid:2)letter,(cid:2)the(cid:2)national(cid:2)economy(cid:2)looks(cid:2)bleak;(cid:2)but(cid:2)I(cid:2)really(cid:2)believe(cid:2)there(cid:2)are(cid:2)positive(cid:2)signs(cid:2)
Historically,(cid:2)West(cid:2)Virginia(cid:2)has(cid:2)not(cid:2)experienced(cid:2)the(cid:2)dramatic(cid:2)economic(cid:2)growth(cid:2)that(cid:2)many(cid:2)states(cid:2)
Mortgage(cid:2)loan(cid:2)rates(cid:2)are(cid:2)at(cid:2)historic(cid:2)lows.(cid:2)(cid:2)This(cid:2)provides(cid:2)an(cid:2)opportunity(cid:2)for(cid:2)current(cid:2)home(cid:2)owners(cid:2)
for(cid:2)our(cid:2)economic(cid:2)future.(cid:2)(cid:2)My(cid:2)thoughts(cid:2)are(cid:2)probably(cid:2)different(cid:2)than(cid:2)most(cid:2)economically(cid:2)knowledgeable(cid:2)
professionals.(cid:2)
(cid:2)
(cid:2)
Consumer(cid:2)debt(cid:2)has(cid:2)been(cid:2)lower(cid:2)for(cid:2)the(cid:2)last(cid:2)few(cid:2)months.(cid:2)(cid:2)This(cid:2)is(cid:2)generally(cid:2)perceived(cid:2)as(cid:2)negative.(cid:2)(cid:2)
Personally,(cid:2)I(cid:2)believe(cid:2)that(cid:2)it(cid:2)is(cid:2)a(cid:2)positive(cid:2)sign;(cid:2)that(cid:2)consumers(cid:2)are(cid:2)beginning(cid:2)to(cid:2)live(cid:2)within(cid:2)their(cid:2)means(cid:2)and(cid:2)
trying(cid:2)to(cid:2)put(cid:2)their(cid:2)financial(cid:2)affairs(cid:2)in(cid:2)order.(cid:2)(cid:2)Cleaning(cid:2)up(cid:2)their(cid:2)financial(cid:2)affairs(cid:2)will(cid:2)provide(cid:2)them(cid:2)with(cid:2)a(cid:2)
sound(cid:2)foundation(cid:2)as(cid:2)the(cid:2)overall(cid:2)economy(cid:2)begins(cid:2)to(cid:2)move(cid:2)forward.(cid:2)(cid:2)Continuing(cid:2)to(cid:2)increase(cid:2)credit(cid:2)card(cid:2)
debt(cid:2)is(cid:2)irresponsible,(cid:2)especially(cid:2)during(cid:2)difficult(cid:2)economic(cid:2)times.(cid:2)(cid:2)Reality(cid:2)is(cid:2)beginning(cid:2)to(cid:2)set(cid:2)in(cid:2)for(cid:2)those(cid:2)
that(cid:2)have(cid:2)lived(cid:2)beyond(cid:2)their(cid:2)means(cid:2)by(cid:2)overuse(cid:2)of(cid:2)credit.(cid:2)
(cid:2)
(cid:2)
have(cid:2)enjoyed.(cid:2)(cid:2)Conversely,(cid:2)West(cid:2)Virginia(cid:2)has(cid:2)not(cid:2)experienced(cid:2)the(cid:2)sharp(cid:2)declines(cid:2)when(cid:2)those(cid:2)states(cid:2)with(cid:2)
overheated(cid:2)economies(cid:2)decline.(cid:2)(cid:2)During(cid:2)this(cid:2)period(cid:2)of(cid:2)economic(cid:2)decline,(cid:2)I(cid:2)believe(cid:2)we(cid:2)can(cid:2)be(cid:2)happy(cid:2)that(cid:2)
we(cid:2)do(cid:2)business(cid:2)in(cid:2)West(cid:2)Virginia.(cid:2)
(cid:2)
(cid:2)
that(cid:2)have(cid:2)maintained(cid:2)good(cid:2)credit(cid:2)to(cid:2)refinance(cid:2)their(cid:2)existing(cid:2)mortgage(cid:2)at(cid:2)these(cid:2)lower(cid:2)rates.(cid:2)(cid:2)The(cid:2)lower(cid:2)
monthly(cid:2)payment(cid:2)will(cid:2)provide(cid:2)additional(cid:2)cash(cid:2)in(cid:2)their(cid:2)pocket.(cid:2)(cid:2)Those(cid:2)who(cid:2)have(cid:2)been(cid:2)renting(cid:2)because(cid:2)they(cid:2)
could(cid:2)not(cid:2)afford(cid:2)a(cid:2)mortgage(cid:2)payment(cid:2)now(cid:2)have(cid:2)the(cid:2)opportunity(cid:2)to(cid:2)review(cid:2)the(cid:2)prospects(cid:2)of(cid:2)home(cid:2)
ownership(cid:2)again.(cid:2)(cid:2)Low(cid:2)rate(cid:2)mortgage(cid:2)loans(cid:2)with(cid:2)small(cid:2)down(cid:2)payments(cid:2)are(cid:2)still(cid:2)available.(cid:2)(cid:2)Especially(cid:2)in(cid:2)
West(cid:2)Virginia,(cid:2)this(cid:2)availability(cid:2)should(cid:2)lend(cid:2)support(cid:2)to(cid:2)the(cid:2)housing(cid:2)markets.(cid:2)(cid:2)Lower(cid:2)rates(cid:2)also(cid:2)provide(cid:2)an(cid:2)
opportunity(cid:2)for(cid:2)current(cid:2)homeowners(cid:2)to(cid:2)upgrade(cid:2)their(cid:2)home(cid:2)by(cid:2)buying(cid:2)a(cid:2)different(cid:2)home(cid:2)or(cid:2)remodeling(cid:2)their(cid:2)
current(cid:2)home.(cid:2)(cid:2)It(cid:2)is(cid:2)unlikely(cid:2)that(cid:2)there(cid:2)will(cid:2)be(cid:2)a(cid:2)better(cid:2)time(cid:2)to(cid:2)purchase(cid:2)or(cid:2)renovate(cid:2)a(cid:2)home.(cid:2)
(cid:2)
(cid:2)
In(cid:2)the(cid:2)area(cid:2)of(cid:2)mortgage(cid:2)lending,(cid:2)2008(cid:2)was(cid:2)a(cid:2)very(cid:2)good(cid:2)year(cid:2)for(cid:2)MVB.(cid:2)(cid:2)While(cid:2)many(cid:2)institutions(cid:2)
have(cid:2)experienced(cid:2)a(cid:2)falling(cid:2)demand(cid:2)for(cid:2)mortgages,(cid:2)MVB’s(cid:2)mortgage(cid:2)originations(cid:2)remain(cid:2)strong.(cid:2)(cid:2)During(cid:2)
2007,(cid:2)we(cid:2)originated(cid:2)350(cid:2)mortgage(cid:2)loans(cid:2)totaling(cid:2)$42.2(cid:2)million.(cid:2)(cid:2)In(cid:2)2008,(cid:2)we(cid:2)originated(cid:2)341(cid:2)loans(cid:2)for(cid:2)$48.2(cid:2)
million.(cid:2)(cid:2)This(cid:2)represents(cid:2)a(cid:2)decrease(cid:2)in(cid:2)the(cid:2)number(cid:2)of(cid:2)loans(cid:2)originated(cid:2)by(cid:2)2.6%,(cid:2)but(cid:2)an(cid:2)increase(cid:2)of(cid:2)$6(cid:2)
million,(cid:2)or(cid:2)14%(cid:2)increase(cid:2)over(cid:2)2007.(cid:2)(cid:2)As(cid:2)you(cid:2)can(cid:2)see,(cid:2)MVB(cid:2)has(cid:2)not(cid:2)experienced(cid:2)a(cid:2)decrease(cid:2)in(cid:2)mortgage(cid:2)
lending(cid:2)activity.(cid:2)(cid:2)With(cid:2)the(cid:2)lower(cid:2)interest(cid:2)rates,(cid:2)we(cid:2)expect(cid:2)our(cid:2)2009(cid:2)loan(cid:2)production(cid:2)to(cid:2)exceed(cid:2)that(cid:2)for(cid:2)
2008.(cid:2)(cid:2)Our(cid:2)current(cid:2)mortgage(cid:2)loans(cid:2)in(cid:2)process(cid:2)are(cid:2)at(cid:2)a(cid:2)historically(cid:2)high(cid:2)level.(cid:2)
(cid:2)
(cid:2)
have(cid:2)expanded(cid:2)our(cid:2)“Remote(cid:2)Deposit”(cid:2)offering,(cid:2)which(cid:2)allows(cid:2)MVB(cid:2)to(cid:2)provide(cid:2)deposit(cid:2)services(cid:2)to(cid:2)
commercial(cid:2)customers(cid:2)without(cid:2)regard(cid:2)to(cid:2)location.(cid:2)(cid:2)The(cid:2)customer(cid:2)scans(cid:2)the(cid:2)checks(cid:2)and(cid:2)deposit(cid:2)ticket(cid:2)and(cid:2)
then(cid:2)sends(cid:2)them(cid:2)to(cid:2)us(cid:2)electronically(cid:2)for(cid:2)processing.(cid:2)(cid:2)This(cid:2)provides(cid:2)the(cid:2)opportunity(cid:2)for(cid:2)commercial(cid:2)
borrowers(cid:2)that(cid:2)do(cid:2)not(cid:2)have(cid:2)a(cid:2)presence(cid:2)in(cid:2)close(cid:2)proximity(cid:2)to(cid:2)one(cid:2)of(cid:2)our(cid:2)offices(cid:2)to(cid:2)be(cid:2)a(cid:2)deposit(cid:2)customer(cid:2)as(cid:2)
well.(cid:2)(cid:2)While(cid:2)a(cid:2)relatively(cid:2)new(cid:2)product(cid:2)in(cid:2)West(cid:2)Virginia,(cid:2)this(cid:2)service(cid:2)is(cid:2)heavily(cid:2)used(cid:2)by(cid:2)large(cid:2)commercial(cid:2)
organizations(cid:2)very(cid:2)successfully.(cid:2)
(cid:2)
Technology(cid:2)is(cid:2)an(cid:2)area(cid:2)that(cid:2)is(cid:2)constantly(cid:2)changing(cid:2)related(cid:2)to(cid:2)MVB(cid:2)and(cid:2)banking.(cid:2)(cid:2)This(cid:2)year,(cid:2)we(cid:2)
3
Financially,(cid:2)MVB(cid:2)had(cid:2)a(cid:2)good(cid:2)year(cid:2)during(cid:2)a(cid:2)very(cid:2)difficult(cid:2)economic(cid:2)period.(cid:2)(cid:2)Most(cid:2)of(cid:2)you(cid:2)have(cid:2)
Our(cid:2)capital(cid:2)position(cid:2)improved(cid:2)significantly(cid:2)during(cid:2)2008.(cid:2)(cid:2)This(cid:2)is(cid:2)the(cid:2)result(cid:2)of(cid:2)the(cid:2)closing(cid:2)of(cid:2)our(cid:2)
The(cid:2)development(cid:2)of(cid:2)this(cid:2)Remote(cid:2)Deposit(cid:2)technology(cid:2)has(cid:2)provided(cid:2)additional(cid:2)benefits(cid:2)to(cid:2)MVB.(cid:2)(cid:2)
Several(cid:2)areas(cid:2)of(cid:2)our(cid:2)balance(cid:2)sheet(cid:2)grew(cid:2)well(cid:2)during(cid:2)2008.(cid:2)(cid:2)Loans(cid:2)grew(cid:2)approximately(cid:2)$23(cid:2)million(cid:2)
(cid:2)
We(cid:2)no(cid:2)longer(cid:2)ship(cid:2)any(cid:2)documents(cid:2)to(cid:2)our(cid:2)data(cid:2)processor(cid:2)or(cid:2)checks(cid:2)to(cid:2)the(cid:2)Federal(cid:2)Reserve(cid:2)for(cid:2)collection.(cid:2)(cid:2)
The(cid:2)transportation(cid:2)of(cid:2)documents(cid:2)has(cid:2)been(cid:2)replaced(cid:2)by(cid:2)the(cid:2)transmission(cid:2)of(cid:2)electronic(cid:2)images.(cid:2)(cid:2)This(cid:2)
process(cid:2)change(cid:2)has(cid:2)reduced(cid:2)check(cid:2)collection(cid:2)fees(cid:2)and(cid:2)eliminated(cid:2)our(cid:2)courier(cid:2)dependency(cid:2)and(cid:2)expense.(cid:2)(cid:2)
Weather(cid:2)transportation(cid:2)delays(cid:2)are(cid:2)no(cid:2)longer(cid:2)an(cid:2)issue(cid:2)for(cid:2)our(cid:2)data(cid:2)processing.(cid:2)(cid:2)The(cid:2)risk(cid:2)of(cid:2)loss(cid:2)during(cid:2)
courier(cid:2)transportation(cid:2)has(cid:2)been(cid:2)eliminated.(cid:2)(cid:2)The(cid:2)paper(cid:2)items(cid:2)never(cid:2)leave(cid:2)our(cid:2)office.(cid:2)(cid:2)This(cid:2)evolution(cid:2)began(cid:2)
with(cid:2)the(cid:2)adoption(cid:2)of(cid:2)“Check21”(cid:2)legislation(cid:2)in(cid:2)2002.(cid:2)
(cid:2)
(cid:2)
probably(cid:2)seen(cid:2)the(cid:2)Bauer(cid:2)Financial(cid:2)Inc.(cid:2)rating(cid:2)of(cid:2)MVB(cid:2)reproduced(cid:2)in(cid:2)the(cid:2)Third(cid:2)Quarter(cid:2)Report(cid:2)to(cid:2)
Shareholders.(cid:2)(cid:2)Their(cid:2)most(cid:2)recent(cid:2)rating(cid:2)is(cid:2)included(cid:2)in(cid:2)this(cid:2)Annual(cid:2)Report.(cid:2)(cid:2)Bauer(cid:2)Financial,(cid:2)Inc.(cid:2)is(cid:2)an(cid:2)
independent(cid:2)rating(cid:2)service(cid:2)of(cid:2)financial(cid:2)institutions.(cid:2)(cid:2)We(cid:2)are(cid:2)proud(cid:2)to(cid:2)have(cid:2)received(cid:2)their(cid:2)highest(cid:2)award(cid:2)for(cid:2)
seven(cid:2)consecutive(cid:2)quarters.(cid:2)(cid:2)It(cid:2)is(cid:2)important(cid:2)to(cid:2)shareholders(cid:2)to(cid:2)review(cid:2)independent(cid:2)materials(cid:2)related(cid:2)to(cid:2)
MVB.(cid:2)
(cid:2)
(cid:2)
or(cid:2)13%.(cid:2)(cid:2)Most(cid:2)of(cid:2)the(cid:2)growth(cid:2)in(cid:2)loans(cid:2)was(cid:2)in(cid:2)commercial(cid:2)loans.(cid:2)(cid:2)As(cid:2)discussed(cid:2)earlier,(cid:2)consumers(cid:2)have(cid:2)
been(cid:2)paying(cid:2)debt(cid:2)rather(cid:2)than(cid:2)incurring(cid:2)additional(cid:2)debt.(cid:2)(cid:2)As(cid:2)a(cid:2)result,(cid:2)our(cid:2)consumer(cid:2)loans(cid:2)have(cid:2)decreased.(cid:2)(cid:2)
Most(cid:2)mortgage(cid:2)loan(cid:2)customers(cid:2)want(cid:2)a(cid:2)30(cid:2)year(cid:2)fixed-rate(cid:2)loan(cid:2)which(cid:2)we(cid:2)make(cid:2)and(cid:2)sell(cid:2)to(cid:2)the(cid:2)secondary(cid:2)
mortgage(cid:2)market.(cid:2)(cid:2)MVB(cid:2)makes(cid:2)a(cid:2)fee(cid:2)for(cid:2)processing(cid:2)and(cid:2)closing(cid:2)such(cid:2)loans.(cid:2)(cid:2)We(cid:2)are(cid:2)pleased(cid:2)to(cid:2)have(cid:2)
been(cid:2)able(cid:2)to(cid:2)increase(cid:2)our(cid:2)loan(cid:2)portfolio(cid:2)during(cid:2)2008(cid:2)in(cid:2)spite(cid:2)of(cid:2)the(cid:2)economy.(cid:2)(cid:2)We(cid:2)have(cid:2)found(cid:2)that(cid:2)we(cid:2)
have(cid:2)denied(cid:2)many(cid:2)more(cid:2)loans(cid:2)during(cid:2)2008(cid:2)than(cid:2)in(cid:2)past(cid:2)years;(cid:2)quality(cid:2)is(cid:2)our(cid:2)first(cid:2)concern(cid:2)when(cid:2)evaluating(cid:2)
a(cid:2)loan(cid:2)for(cid:2)consideration.(cid:2)
(cid:2)
Our(cid:2)deposits(cid:2)grew(cid:2)nearly(cid:2)$16(cid:2)million(cid:2)or(cid:2)10%(cid:2)during(cid:2)2008.(cid:2)(cid:2)This(cid:2)comes(cid:2)during(cid:2)a(cid:2)time(cid:2)when(cid:2)
(cid:2)
competition(cid:2)for(cid:2)deposits(cid:2)has(cid:2)become(cid:2)fierce.(cid:2)(cid:2)This(cid:2)is(cid:2)a(cid:2)result(cid:2)of(cid:2)competition(cid:2)for(cid:2)funds(cid:2)from(cid:2)the(cid:2)large(cid:2)banks(cid:2)
and(cid:2)brokerage(cid:2)houses.(cid:2)(cid:2)Many(cid:2)of(cid:2)these(cid:2)large(cid:2)organizations(cid:2)are(cid:2)paying(cid:2)rates(cid:2)that(cid:2)exceed(cid:2)normal(cid:2)market(cid:2)
rates(cid:2)of(cid:2)interest(cid:2)for(cid:2)deposits(cid:2)because(cid:2)they(cid:2)no(cid:2)longer(cid:2)have(cid:2)access(cid:2)to(cid:2)the(cid:2)wholesale(cid:2)capital(cid:2)markets.(cid:2)(cid:2)I(cid:2)
suspect(cid:2)that(cid:2)this(cid:2)competition(cid:2)will(cid:2)remain(cid:2)strong(cid:2)for(cid:2)the(cid:2)foreseeable(cid:2)future.(cid:2)
(cid:2)
(cid:2)
stock(cid:2)offering(cid:2)early(cid:2)in(cid:2)2008(cid:2)and(cid:2)our(cid:2)net(cid:2)income(cid:2)for(cid:2)the(cid:2)year.(cid:2)
(cid:2)
(cid:2)
Mortgage(cid:2)Association(cid:2)(“FNMA”)(cid:2)and(cid:2)the(cid:2)Federal(cid:2)Home(cid:2)Loan(cid:2)Mortgage(cid:2)Corp(cid:2)(“FHLMC”)(cid:2)during(cid:2)2008.(cid:2)(cid:2)
One(cid:2)of(cid:2)the(cid:2)actions(cid:2)taken(cid:2)by(cid:2)the(cid:2)US(cid:2)was(cid:2)to(cid:2)eliminate(cid:2)the(cid:2)dividend(cid:2)on(cid:2)all(cid:2)stock(cid:2)of(cid:2)FNMA(cid:2)and(cid:2)FHLMC,(cid:2)both(cid:2)
common(cid:2)and(cid:2)preferred.(cid:2)(cid:2)This(cid:2)action(cid:2)reduced(cid:2)the(cid:2)market(cid:2)value(cid:2)of(cid:2)our(cid:2)FHLMC(cid:2)preferred(cid:2)stock(cid:2)to(cid:2)nearly(cid:2)
zero.(cid:2)(cid:2)As(cid:2)a(cid:2)result(cid:2)of(cid:2)this(cid:2)action,(cid:2)MVB(cid:2)was(cid:2)required(cid:2)to(cid:2)mark(cid:2)these(cid:2)securities(cid:2)to(cid:2)market.(cid:2)(cid:2)The(cid:2)write(cid:2)down(cid:2)
was(cid:2)$432,000,(cid:2)net(cid:2)of(cid:2)the(cid:2)tax(cid:2)benefit(cid:2)of(cid:2)the(cid:2)loss.(cid:2)
(cid:2)
(cid:2)
2007.(cid:2)(cid:2)While(cid:2)flat(cid:2)net(cid:2)income(cid:2)is(cid:2)normally(cid:2)not(cid:2)encouraging,(cid:2)I(cid:2)believe(cid:2)that(cid:2)it(cid:2)is(cid:2)good(cid:2)performance.(cid:2)(cid:2)This(cid:2)is(cid:2)
because(cid:2)of(cid:2)the(cid:2)rapidly(cid:2)decreasing(cid:2)interest(cid:2)rates(cid:2)during(cid:2)late(cid:2)January(cid:2)through(cid:2)March,(cid:2)when(cid:2)the(cid:2)Federal(cid:2)
Reserve(cid:2)decreased(cid:2)interest(cid:2)rates(cid:2)2%(cid:2)in(cid:2)60(cid:2)days.(cid:2)(cid:2)This(cid:2)was(cid:2)a(cid:2)shock(cid:2)to(cid:2)everyone’s(cid:2)portfolio:(cid:2)(cid:2)Rates(cid:2)were(cid:2)
decreased(cid:2)another(cid:2)¾(cid:2)percent(cid:2)on(cid:2)December(cid:2)26,(cid:2)2008.(cid:2)(cid:2)At(cid:2)the(cid:2)current(cid:2)target(cid:2)for(cid:2)federal(cid:2)funds(cid:2)at(cid:2)0(cid:2)-(cid:2).25%,(cid:2)
it(cid:2)would(cid:2)seem(cid:2)like(cid:2)interest(cid:2)rates(cid:2)are(cid:2)at(cid:2)the(cid:2)bottom(cid:2)of(cid:2)their(cid:2)range.(cid:2)
(cid:2)
(cid:2)
MVB.(cid:2)(cid:2)Mrs.(cid:2)Berniece(cid:2)D.(cid:2)Collis(cid:2)and(cid:2)Dr.(cid:2)Joseph(cid:2)P.(cid:2)Cincinnati(cid:2)have(cid:2)been(cid:2)selected(cid:2)to(cid:2)represent(cid:2)the(cid:2)Berkeley(cid:2)
and(cid:2)Jefferson(cid:2)County(cid:2)Division.(cid:2)(cid:2)Mrs.(cid:2)Collis(cid:2)was(cid:2)elected(cid:2)at(cid:2)the(cid:2)last(cid:2)Annual(cid:2)Meeting(cid:2)of(cid:2)shareholders(cid:2)and(cid:2)
Dr.(cid:2)Cincinnati(cid:2)has(cid:2)been(cid:2)nominated(cid:2)for(cid:2)election(cid:2)at(cid:2)the(cid:2)2009(cid:2)Annual(cid:2)Meeting.(cid:2)(cid:2)Both(cid:2)individuals(cid:2)are(cid:2)highly(cid:2)
respected(cid:2)in(cid:2)their(cid:2)profession.(cid:2)(cid:2)Mrs.(cid:2)Collis(cid:2)is(cid:2)Vice(cid:2)President(cid:2)of(cid:2)Minghini’s(cid:2)General(cid:2)Contractors,(cid:2)Inc.(cid:2)and(cid:2)Dr.(cid:2)
Cincinnati(cid:2)is(cid:2)an(cid:2)orthopedic(cid:2)surgeon.(cid:2)(cid:2)We(cid:2)welcome(cid:2)these(cid:2)two(cid:2)directors(cid:2)to(cid:2)our(cid:2)Board(cid:2)and(cid:2)look(cid:2)forward(cid:2)to(cid:2)
them(cid:2)sharing(cid:2)their(cid:2)knowledge(cid:2)and(cid:2)expertise(cid:2)with(cid:2)us.(cid:2)
(cid:2)
(cid:2)
One(cid:2)of(cid:2)the(cid:2)issues(cid:2)that(cid:2)community(cid:2)banks(cid:2)have(cid:2)been(cid:2)discussing(cid:2)for(cid:2)years(cid:2)is(cid:2)“too(cid:2)big(cid:2)to(cid:2)fail”.(cid:2)(cid:2)This(cid:2)
related(cid:2)to(cid:2)the(cid:2)belief(cid:2)by(cid:2)many(cid:2)that(cid:2)the(cid:2)regulatory(cid:2)playing(cid:2)field(cid:2)was(cid:2)not(cid:2)equal.(cid:2)(cid:2)The(cid:2)US(cid:2)Government(cid:2)would(cid:2)
protect(cid:2)the(cid:2)very(cid:2)large(cid:2)institutions(cid:2)from(cid:2)failing(cid:2)but(cid:2)treat(cid:2)small(cid:2)institutions(cid:2)much(cid:2)differently.(cid:2)(cid:2)The(cid:2)Federal(cid:2)
regulators(cid:2)always(cid:2)stated(cid:2)that(cid:2)there(cid:2)was(cid:2)no(cid:2)such(cid:2)thing(cid:2)as(cid:2)“too(cid:2)big(cid:2)to(cid:2)fail”.(cid:2)(cid:2)I(cid:2)suggest(cid:2)that(cid:2)over(cid:2)the(cid:2)last(cid:2)year,(cid:2)
“too(cid:2)big(cid:2)to(cid:2)fail”(cid:2)has(cid:2)become(cid:2)a(cid:2)reality.(cid:2)(cid:2)Look(cid:2)at(cid:2)the(cid:2)very(cid:2)large(cid:2)institutions;(cid:2)our(cid:2)government(cid:2)has(cid:2)indeed(cid:2)made(cid:2)
sure(cid:2)they(cid:2)did(cid:2)not(cid:2)fail.(cid:2)(cid:2)I(cid:2)cannot(cid:2)judge(cid:2)whether(cid:2)this(cid:2)is(cid:2)good(cid:2)or(cid:2)not.(cid:2)(cid:2)There(cid:2)is(cid:2)now(cid:2)some(cid:2)whispering(cid:2)that(cid:2)
there(cid:2)needs(cid:2)to(cid:2)be(cid:2)some(cid:2)size(cid:2)limitations(cid:2)on(cid:2)financial(cid:2)institutions(cid:2)going(cid:2)forward.(cid:2)(cid:2)I(cid:2)concur(cid:2)with(cid:2)this(cid:2)because(cid:2)
I(cid:2)personally(cid:2)believe(cid:2)that(cid:2)many(cid:2)large(cid:2)organizations(cid:2)became(cid:2)too(cid:2)large(cid:2)to(cid:2)effectively(cid:2)manage.(cid:2)(cid:2)This(cid:2)is(cid:2)
probably(cid:2)a(cid:2)good(cid:2)idea,(cid:2)but(cid:2)the(cid:2)“horse(cid:2)is(cid:2)already(cid:2)out(cid:2)of(cid:2)the(cid:2)barn”.(cid:2)(cid:2)How(cid:2)would(cid:2)you(cid:2)take(cid:2)the(cid:2)current(cid:2)“Big(cid:2)
Four”(cid:2)institutions(cid:2)apart?(cid:2)
(cid:2)
As(cid:2)most(cid:2)everyone(cid:2)is(cid:2)aware,(cid:2)the(cid:2)United(cid:2)States(cid:2)Government(cid:2)(“US”)(cid:2)took(cid:2)over(cid:2)the(cid:2)Federal(cid:2)National(cid:2)
Net(cid:2)income(cid:2)for(cid:2)2008,(cid:2)excluding(cid:2)the(cid:2)FHLMC(cid:2)write-down(cid:2)was(cid:2)$1.26(cid:2)million(cid:2)versus(cid:2)$1.28(cid:2)million(cid:2)in(cid:2)
Since(cid:2)the(cid:2)2008(cid:2)Letter(cid:2)to(cid:2)Shareholders,(cid:2)we(cid:2)have(cid:2)added(cid:2)two(cid:2)directors(cid:2)to(cid:2)the(cid:2)Board(cid:2)of(cid:2)Directors(cid:2)of(cid:2)
4
For(cid:2)years,(cid:2)the(cid:2)very(cid:2)large(cid:2)financial(cid:2)institutions,(cid:2)brokerage(cid:2)houses(cid:2)and(cid:2)insurance(cid:2)companies,(cid:2)
MVB(cid:2)has(cid:2)tentatively(cid:2)been(cid:2)approved(cid:2)for(cid:2)participation(cid:2)in(cid:2)the(cid:2)Department(cid:2)of(cid:2)the(cid:2)Treasury(cid:2)Troubled(cid:2)
(cid:2)
wanted(cid:2)to(cid:2)repeal(cid:2)a(cid:2)long(cid:2)standing(cid:2)regulation,(cid:2)the(cid:2)Glass-Steagal(cid:2)Act.(cid:2)(cid:2)This(cid:2)Regulation(cid:2)prohibited(cid:2)the(cid:2)three(cid:2)
from(cid:2)becoming(cid:2)involved(cid:2)in(cid:2)each(cid:2)others(cid:2)business.(cid:2)(cid:2)In(cid:2)1999,(cid:2)the(cid:2)“Big(cid:2)Guys”(cid:2)won;(cid:2)Glass-Steagal(cid:2)was(cid:2)
repealed.(cid:2)(cid:2)I(cid:2)cannot(cid:2)tell(cid:2)you(cid:2)the(cid:2)current(cid:2)mess(cid:2)would(cid:2)not(cid:2)have(cid:2)happened,(cid:2)but(cid:2)I(cid:2)sincerely(cid:2)believe(cid:2)that(cid:2)the(cid:2)
mess(cid:2)would(cid:2)either,(cid:2)not(cid:2)have(cid:2)happened(cid:2)or(cid:2)would(cid:2)have(cid:2)been(cid:2)far(cid:2)less(cid:2)damaging.(cid:2)(cid:2)Again,(cid:2)the(cid:2)“Big(cid:2)Guys”(cid:2)
know(cid:2)best.(cid:2)
(cid:2)
(cid:2)
Asset(cid:2)Relief(cid:2)Program(cid:2)Capital(cid:2)Purchase(cid:2)Program(cid:2)(TARP).(cid:2)(cid:2)I(cid:2)previously(cid:2)provided(cid:2)information(cid:2)that(cid:2)MVB(cid:2)has(cid:2)
applied(cid:2)for(cid:2)participation(cid:2)in(cid:2)the(cid:2)program.(cid:2)(cid:2)The(cid:2)participation(cid:2)was(cid:2)based(cid:2)on(cid:2)the(cid:2)TARP(cid:2)proceeds(cid:2)being(cid:2)an(cid:2)
insurance(cid:2)policy(cid:2)to(cid:2)protect(cid:2)MVB(cid:2)from(cid:2)catastrophic(cid:2)economic(cid:2)problems.(cid:2)(cid:2)MVB(cid:2)is(cid:2)a(cid:2)well(cid:2)capitalized(cid:2)
institution(cid:2)currently(cid:2)and(cid:2)expects(cid:2)to(cid:2)be(cid:2)a(cid:2)well(cid:2)capitalized(cid:2)institution(cid:2)in(cid:2)the(cid:2)future.(cid:2)(cid:2)Unfortunately,(cid:2)we(cid:2)are(cid:2)
sailing(cid:2)in(cid:2)unchartered(cid:2)economic(cid:2)waters(cid:2)and(cid:2)do(cid:2)not(cid:2)know(cid:2)what(cid:2)the(cid:2)future(cid:2)holds.(cid:2)(cid:2)This(cid:2)is(cid:2)the(cid:2)reason(cid:2)for(cid:2)our(cid:2)
participation(cid:2)application.(cid:2)
(cid:2)
(cid:2)
Economic(cid:2)Stimulus(cid:2)Package(cid:2)(ESP).(cid:2)(cid:2)There(cid:2)are(cid:2)a(cid:2)number(cid:2)of(cid:2)provisions(cid:2)in(cid:2)ESP(cid:2)that(cid:2)relate(cid:2)to(cid:2)TARP(cid:2)on(cid:2)a(cid:2)
retroactive(cid:2)and(cid:2)a(cid:2)going(cid:2)forward(cid:2)basis.(cid:2)(cid:2)As(cid:2)a(cid:2)result(cid:2)of(cid:2)these(cid:2)provisions,(cid:2)it(cid:2)is(cid:2)no(cid:2)longer(cid:2)clear(cid:2)if(cid:2)it(cid:2)is(cid:2)in(cid:2)the(cid:2)
best(cid:2)interest(cid:2)of(cid:2)MVB(cid:2)to(cid:2)participate(cid:2)in(cid:2)TARP.(cid:2)(cid:2)While(cid:2)the(cid:2)ESP(cid:2)is(cid:2)law,(cid:2)there(cid:2)are(cid:2)no(cid:2)rules(cid:2)or(cid:2)guidelines(cid:2)written(cid:2)
to(cid:2)implement(cid:2)the(cid:2)ESP.(cid:2)(cid:2)Until(cid:2)these(cid:2)are(cid:2)formalized,(cid:2)we(cid:2)cannot(cid:2)make(cid:2)a(cid:2)decision(cid:2)as(cid:2)to(cid:2)whether(cid:2)MVB(cid:2)should(cid:2)
participate(cid:2)in(cid:2)TARP(cid:2)or(cid:2)not.(cid:2)(cid:2)It(cid:2)is(cid:2)unlikely(cid:2)this(cid:2)decision(cid:2)can(cid:2)be(cid:2)made(cid:2)before(cid:2)this(cid:2)Annual(cid:2)Report(cid:2)goes(cid:2)to(cid:2)
print.(cid:2)(cid:2)We(cid:2)should(cid:2)be(cid:2)able(cid:2)to(cid:2)update(cid:2)you(cid:2)at(cid:2)our(cid:2)Annual(cid:2)Shareholders(cid:2)Meeting(cid:2)and(cid:2)in(cid:2)the(cid:2)first(cid:2)quarter(cid:2)of(cid:2)
2009(cid:2)Report(cid:2)to(cid:2)Shareholders.(cid:2)
(cid:2)
The(cid:2)day(cid:2)after(cid:2)we(cid:2)received(cid:2)the(cid:2)preliminary(cid:2)approval,(cid:2)President(cid:2)Obama(cid:2)signed(cid:2)into(cid:2)law(cid:2)the(cid:2)
During(cid:2)the(cid:2)past(cid:2)year,(cid:2)there(cid:2)have(cid:2)been(cid:2)many(cid:2)changes(cid:2)to(cid:2)the(cid:2)FDIC(cid:2)Insurance(cid:2)available(cid:2)to(cid:2)insured(cid:2)
It(cid:2)is(cid:2)hard(cid:2)to(cid:2)imagine(cid:2)that(cid:2)MVB(cid:2)has(cid:2)been(cid:2)open(cid:2)for(cid:2)10(cid:2)years.(cid:2)The(cid:2)bank(cid:2)opened(cid:2)with(cid:2)a(cid:2)single(cid:2)office(cid:2)
institutions(cid:2)and(cid:2)their(cid:2)customers.(cid:2)(cid:2)Coverage(cid:2)is(cid:2)no(cid:2)longer(cid:2)the(cid:2)same(cid:2)at(cid:2)each(cid:2)institution(cid:2)as(cid:2)institutions(cid:2)may(cid:2)
now(cid:2)elect(cid:2)to(cid:2)participate(cid:2)in(cid:2)optional(cid:2)additional(cid:2)coverage.(cid:2)(cid:2)MVB(cid:2)has(cid:2)elected(cid:2)to(cid:2)participate(cid:2)in(cid:2)all(cid:2)coverage(cid:2)
offered(cid:2)by(cid:2)the(cid:2)FDIC.(cid:2)(cid:2)Please(cid:2)consult(cid:2)with(cid:2)one(cid:2)of(cid:2)us(cid:2)if(cid:2)you(cid:2)have(cid:2)any(cid:2)questions(cid:2)about(cid:2)FDIC(cid:2)Insurance(cid:2)
coverage(cid:2)with(cid:2)MVB(cid:2)or(cid:2)other(cid:2)institutions.(cid:2)(cid:2)Account(cid:2)titling(cid:2)is(cid:2)an(cid:2)important(cid:2)consideration(cid:2)in(cid:2)determining(cid:2)
coverage.(cid:2)(cid:2)Currently,(cid:2)a(cid:2)husband(cid:2)and(cid:2)wife(cid:2)can(cid:2)have(cid:2)FDIC(cid:2)Insurance(cid:2)of(cid:2)$1(cid:2)million(cid:2)or(cid:2)more(cid:2)very(cid:2)easily(cid:2)in(cid:2)
MVB.(cid:2)
(cid:2)
(cid:2)
January(cid:2)4,(cid:2)1999.(cid:2)(cid:2)The(cid:2)time(cid:2)has(cid:2)gone(cid:2)by(cid:2)very(cid:2)quickly.(cid:2)(cid:2)There(cid:2)have(cid:2)been(cid:2)many(cid:2)additions(cid:2)and(cid:2)changes(cid:2)
during(cid:2)these(cid:2)years,(cid:2)including(cid:2)four(cid:2)offices(cid:2)and(cid:2)70(cid:2)staff(cid:2)members.(cid:2)(cid:2)There(cid:2)is(cid:2)one(cid:2)thing(cid:2)that(cid:2)I(cid:2)am(cid:2)proud(cid:2)to(cid:2)say(cid:2)
has(cid:2)not(cid:2)changed;(cid:2)we(cid:2)have(cid:2)great(cid:2)staff(cid:2)members(cid:2)in(cid:2)each(cid:2)office(cid:2)that(cid:2)are(cid:2)concerned(cid:2)about(cid:2)providing(cid:2)first(cid:2)
class(cid:2)customer(cid:2)service(cid:2)to(cid:2)each(cid:2)person(cid:2)they(cid:2)come(cid:2)in(cid:2)contact(cid:2)with.(cid:2)(cid:2)Our(cid:2)approach(cid:2)to(cid:2)Banking(cid:2)is(cid:2)to(cid:2)provide(cid:2)
great(cid:2)service,(cid:2)not(cid:2)treat(cid:2)our(cid:2)customers(cid:2)as(cid:2)a(cid:2)number(cid:2)and(cid:2)try(cid:2)to(cid:2)milk(cid:2)them(cid:2)for(cid:2)all(cid:2)they(cid:2)are(cid:2)worth.(cid:2)(cid:2)The(cid:2)big(cid:2)
institutions(cid:2)try(cid:2)to(cid:2)fool(cid:2)their(cid:2)customers(cid:2)with(cid:2)complex(cid:2)products(cid:2)that(cid:2)are(cid:2)difficult(cid:2)to(cid:2)understand(cid:2)and(cid:2)not(cid:2)for(cid:2)
everyone.(cid:2)(cid:2)MVB(cid:2)provides(cid:2)old(cid:2)fashion(cid:2)products(cid:2)and(cid:2)services(cid:2)that(cid:2)our(cid:2)customers(cid:2)need(cid:2)and(cid:2)understand.(cid:2)
(cid:2)
(cid:2)
MVB.(cid:2)(cid:2)I(cid:2)will(cid:2)remain(cid:2)as(cid:2)a(cid:2)member(cid:2)of(cid:2)the(cid:2)Board(cid:2)of(cid:2)Directors(cid:2)and(cid:2)serve(cid:2)as(cid:2)Chairman(cid:2)of(cid:2)the(cid:2)Board(cid:2)beginning(cid:2)
in(cid:2)May,(cid:2)2009.(cid:2)(cid:2)Larry(cid:2)Mazza(cid:2)has(cid:2)become(cid:2)President(cid:2)and(cid:2)CEO(cid:2)of(cid:2)MVB(cid:2)as(cid:2)of(cid:2)January(cid:2)1,(cid:2)2009.(cid:2)(cid:2)Please(cid:2)
provide(cid:2)him(cid:2)the(cid:2)same(cid:2)wonderful(cid:2)support(cid:2)that(cid:2)I(cid:2)have(cid:2)received.(cid:2)
(cid:2)
(cid:2)
wonderful(cid:2)time(cid:2)that(cid:2)has(cid:2)gone(cid:2)very(cid:2)quickly.(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
Prior(cid:2)to(cid:2)our(cid:2)Annual(cid:2)Shareholders(cid:2)Meeting,(cid:2)I(cid:2)will(cid:2)have(cid:2)retired(cid:2)from(cid:2)the(cid:2)active(cid:2)management(cid:2)of(cid:2)
The(cid:2)future(cid:2)for(cid:2)MVB(cid:2)is(cid:2)bright.(cid:2)(cid:2)Thank(cid:2)you(cid:2)for(cid:2)the(cid:2)opportunity(cid:2)to(cid:2)serve(cid:2)MVB.(cid:2)(cid:2)It(cid:2)has(cid:2)been(cid:2)a(cid:2)
Best(cid:2)regards,(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
5
10
MVB BANK
MVB BANK
WV Division of Banking Approves Charter
Monongahela Valley Banks Starts Capital Campaign
Unveiling of Plans for a New Bank Office
Groundbreaking for the New Office on Virginia Avenue
in Fairmont, WV
Completion of Capital Campaign
Monongahela Valley Bank Officially Opens Its Doors
Grand Opening Celebration
Monongahela Valley Bank Opens a Branch Office in the
Middletown Mall Shop ‘n Save in Fairmont, WV
MVB Financial Corp. Formed
Groundbreaking for the New Bridgeport Office
In Harrison County
Reached $100,000,000 In Total Assets
Monongahela Valley Bank Officially Changed Its Name to
MVB Bank, Inc.
Harrison County Officially Opens Its Office
MVB Financial Corp. Enters into the Eastern Panhandle
with the Purchase of Susquehanna Bancshares, Incorporated
in Charles Town
Reached $200,000,000 In Total Assets
MVB Opened an Office in Martinsburg, in Berkeley County
10/97
11/97
03/98
05/98
06/98
01/99
04/99
05/00
01/04
03/04
06/04
03/05
08/05
10/05
01/06
07/07
10 Years of Banking Done Right!
6
S.R. Snodgrass, A.C. • 980 National Road • Wheeling, West Virginia 26003-6400 • Phone: (304) 233-5030 • Facsimile: (304) 233-3062
7
MVB(cid:2)Financial(cid:2)Corp.
Consolidated(cid:2)Balance(cid:2)Sheets
(Dollars(cid:2)in(cid:2)thousands,(cid:2)except(cid:2)number(cid:2)of(cid:2)shares)
December(cid:2)31,(cid:2)2008(cid:2)and(cid:2)2007
ASSETS
Cash(cid:2)and(cid:2)due(cid:2)from(cid:2)banks
Interest(cid:2)bearing(cid:2)balances(cid:2)with(cid:2)banks
Certificates(cid:2)of(cid:2)deposit(cid:2)with(cid:2)other(cid:2)banks
Investment(cid:2)Securities:
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)Securities(cid:2)held-to-maturity,(cid:2)at(cid:2)cost
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)Securities(cid:2)available-for-sale,(cid:2)at(cid:2)approximate(cid:2)market(cid:2)value
(cid:2)
Loans:(cid:2)
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)Less:(cid:2)(cid:2)Allowance(cid:2)for(cid:2)loan(cid:2)losses
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)Net(cid:2)Loans
Loans(cid:2)held(cid:2)for(cid:2)sale
Bank(cid:2)premises,(cid:2)furniture(cid:2)and(cid:2)equipment(cid:2)
Accrued(cid:2)interest(cid:2)receivable(cid:2)and(cid:2)other(cid:2)assets
(cid:2)
TOTAL(cid:2)ASSETS
(cid:2)
LIABILITIES(cid:2)AND(cid:2)STOCKHOLDERS'(cid:2)EQUITY
2008
2007
$(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
4,710
40
7,000
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
8,796
17,795
(cid:2)(cid:2)(cid:2)
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
(cid:2)(cid:2)(cid:2)
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
203,241
(1,860)
201,381
1,115
8,060
9,809
$(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
4,926
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
490
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
-
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
1,814
26,029
(cid:2)(cid:2)(cid:2)
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
(cid:2)(cid:2)(cid:2)
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
181,537
(1,733)
179,804
217
8,244
8,574
$(cid:2)
258,706
$(cid:2)
230,098
Deposits:(cid:2)
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)Non-interest(cid:2)bearing
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)Interest(cid:2)bearing
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)Total(cid:2)Deposits
(cid:2)
Accrued(cid:2)interest,(cid:2)taxes,(cid:2)and(cid:2)other(cid:2)liabilities
Repurchase(cid:2)agreements
Federal(cid:2)Home(cid:2)Loan(cid:2)Bank(cid:2)and other borrowings
Long-term(cid:2)debt
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)Total(cid:2)Liabilities
(cid:2)
STOCKHOLDERS'(cid:2)EQUITY
(cid:2)
Preferred(cid:2)stock,(cid:2)par(cid:2)value(cid:2)$1,000;(cid:2)5,000(cid:2)shares(cid:2)authorized,(cid:2)none(cid:2)issued
Common(cid:2)stock,(cid:2)par(cid:2)value(cid:2)$1;(cid:2)4,000,000(cid:2)shares(cid:2)authorized;
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)1,603,622(cid:2)and(cid:2)1,508,081(cid:2)shares(cid:2)issued(cid:2)respectively
Additional(cid:2)paid-in(cid:2)capital
Treasury(cid:2)Stock,(cid:2)15,469(cid:2)and(cid:2)8,919(cid:2)shares,(cid:2)respectively
Retained(cid:2)earnings(cid:2)
Accumulated(cid:2)other(cid:2)comprehensive(cid:2)loss
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)Total(cid:2)Stockholders'(cid:2)Equity
(cid:2)
TOTAL(cid:2)LIABILITIES(cid:2)AND(cid:2)STOCKHOLDERS'(cid:2)EQUITY
$(cid:2)(cid:2)(cid:2)
22,495
150,570
173,065
1,835
21,904
31,942
4,124
232,870
1,604
20,175
(299)
4,671
(315)
25,836
$(cid:2)
258,706
$(cid:2)(cid:2)(cid:2)
19,129
138,319
157,448
1,601
19,817
23,583
4,124
206,573
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
1,508
18,450
(168)
4,140
(405)
23,525
$(cid:2)
230,098
8
MVB(cid:2)Financial(cid:2)Corp.
Consolidated(cid:2)Statements(cid:2)of(cid:2)Income
(Dollars(cid:2)in(cid:2)thousands(cid:2)except(cid:2)Share(cid:2)and(cid:2)Per(cid:2)Share(cid:2)Data)
Years(cid:2)ended(cid:2)December(cid:2)31,(cid:2)2008(cid:2)and(cid:2)2007
INTEREST INCOME
Interest and fees on loans
Interest on deposits with other banks
Interest on investment securities - taxable
Interest on tax exempt loans and securities
Total interest income
INTEREST EXPENSE
Interest on deposits
Interest on repurchase agreements
Interest on Federal Home Loan Bank borrowings
Interest on long-term debt
Total interest expense
NET INTEREST INCOME
Provision for loan losses
Net interest income after provision for loan losses
OTHER INCOME
Service charges on deposit accounts
Income on bank owned life insurance
Visa debit card income
Income on loans held for sale
Other operating income
OTHER EXPENSES
Salaries and employee benefits
Occupancy expense
Equipment depreciation and maintenance
Data processing
Visa debit card expense
Advertising
Legal and accounting fees
Printing, stationery and supplies
Other taxes
Other operating expenses
Loss on impairment of FHLMC preferred stock
Income before income taxes
Income tax expense
Net Income
Basic net income per share
Diluted net income per share
Basic weighted average shares outstanding
Diluted weighted average shares outstanding
9
2008
2007
$
11,902
34
1,334
417
13,687
$
11,631
102
1,207
334
13,274
4,765
303
678
203
5,949
7,738
595
7,143
681
180
249
411
267
1,788
4,022
528
399
547
212
235
113
110
162
812
700
7,840
1,091
263
4,859
725
568
225
6,377
6,897
584
6,313
647
167
212
377
220
1,623
3,485
406
351
593
152
266
85
115
127
660
-
6,240
1,696
414
$
828
$
1,282
$0.52
$0.51
1,584,295
1,621,172
$0.87
$0.85
1,470,167
1,509,404
2008
2007
$(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
828
(cid:2)
$(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
1,282
MVB(cid:2)Financial(cid:2)Corp.
Consolidated(cid:2)Statements(cid:2)of(cid:2)Cash(cid:2)Flows
(Dollars(cid:2)in(cid:2)thousands)
Years(cid:2)ended(cid:2)December(cid:2)31,(cid:2)2008(cid:2)and(cid:2)2007
OPERATING(cid:2)ACTIVITIES
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)Net(cid:2)Income
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)Adjustments(cid:2)to(cid:2)reconcile(cid:2)net(cid:2)income(cid:2)to(cid:2)net(cid:2)cash(cid:2)provided(cid:2)by
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)operating(cid:2)activities:
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)Provision(cid:2)for(cid:2)loan(cid:2)losses
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)Deferred(cid:2)income(cid:2)tax(cid:2)(benefit)
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)Depreciation
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)Stock(cid:2)based(cid:2)compensation
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)Loans(cid:2)originated(cid:2)for(cid:2)sale
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)Proceeds(cid:2)of(cid:2)loans(cid:2)sold
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)Amortization,(cid:2)net(cid:2)of(cid:2)accretion
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)Loss(cid:2)on(cid:2)impairment(cid:2)of(cid:2)FHLMC(cid:2)preferred(cid:2)stock
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(Increase)(cid:2)in(cid:2)interest(cid:2)receivable(cid:2)and(cid:2)other(cid:2)assets
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)Increase(cid:2)in(cid:2)accrued(cid:2)interest,(cid:2)taxes,(cid:2)and(cid:2)other(cid:2)liabilities
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)NET(cid:2)CASH(cid:2)(USED(cid:2)IN)/PROVIDED(cid:2)BY(cid:2)OPERATING(cid:2)ACTIVITIES
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
(cid:2)(cid:2)(cid:2)(cid:2)
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
595
(24)
441
15
(34,570)
33,672
16
700
(1,845)
234
62
INVESTING(cid:2)ACTIVITIES
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(Increase)(cid:2)in(cid:2)loans(cid:2)made(cid:2)to(cid:2)customers
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)Purchases(cid:2)of(cid:2)premises(cid:2)and(cid:2)equipment
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)Purchases(cid:2)of(cid:2)investment(cid:2)securities(cid:2)available-for-sale
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)Purchases(cid:2)of(cid:2)investment(cid:2)securities(cid:2)held-to-maturity
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)Decrease/(increase)(cid:2)in(cid:2)deposits(cid:2)with(cid:2)Federal(cid:2)Home(cid:2)Loan(cid:2)Bank,(cid:2)net
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)Purchases(cid:2)of(cid:2)certificates(cid:2)of(cid:2)deposit(cid:2)with(cid:2)other(cid:2)banks
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)Proceeds(cid:2)from(cid:2)maturity(cid:2)of(cid:2)certificates(cid:2)of(cid:2)deposit(cid:2)with(cid:2)other(cid:2)banks
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)Proceeds(cid:2)from(cid:2)sales,(cid:2)maturities(cid:2)and(cid:2)calls(cid:2)of(cid:2)securities(cid:2)available-for-s
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)Proceeds(cid:2)from(cid:2)maturities(cid:2)and(cid:2)calls(cid:2)of(cid:2)securities(cid:2)held-to-maturity
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)Purchase(cid:2)of(cid:2)bank(cid:2)owned(cid:2)life(cid:2)insurance
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)NET(cid:2)CASH(cid:2)(USED(cid:2)IN)(cid:2)INVESTING(cid:2)ACTIVITIES
(cid:2)(cid:2)(cid:2)(cid:2)
(22,172)
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
(257)
(cid:2)(cid:2)(cid:2)(cid:2)
(14,229)
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
(7,000)
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
450
(7,000)
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
-
22,351
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
-
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
-
(cid:2)(cid:2)(cid:2)(cid:2)
(27,857)
FINANCING(cid:2)ACTIVITIES
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)Net(cid:2)increase(cid:2)in(cid:2)deposits
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)Net(cid:2)increase/(decrease)(cid:2)in(cid:2)repurchase(cid:2)agreements
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)Proceeds(cid:2)from(cid:2)Federal(cid:2)Home(cid:2)Loan(cid:2)Bank(cid:2)borrowings
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)Principal(cid:2)payments(cid:2)on(cid:2)Federal(cid:2)Home(cid:2)Loan(cid:2)Bank(cid:2)borrowings
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)Proceeds(cid:2)from(cid:2)long-term(cid:2)borrowings
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)Purchase(cid:2)of(cid:2)treasury(cid:2)stock
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)Net(cid:2)proceeds(cid:2)of(cid:2)stock(cid:2)offering
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)Cash(cid:2)dividend
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)Common(cid:2)stock(cid:2)options(cid:2)exercised
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)NET(cid:2)CASH(cid:2)PROVIDED(cid:2)BY(cid:2)FINANCING(cid:2)ACTIVITIES
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
15,617
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
2,087
(cid:2)(cid:2)(cid:2)
176,550
(168,191)
(cid:2)(cid:2)
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
-
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
(131)
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
1,735
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
(159)
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
71
27,579
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
584
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
(117)
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
364
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
13
(cid:2)(cid:2)(cid:2)(cid:2)
(27,887)
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
28,963
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
23
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
-
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
(1,205)
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
564
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
2,584
(cid:2)(cid:2)(cid:2)(cid:2)
(38,995)
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
(2,115)
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
(6,625)
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
(1,000)
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
(437)
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
-
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
-
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
7,110
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
1,500
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
(500)
(cid:2)(cid:2)(cid:2)(cid:2)
(41,062)
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
22,855
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
(392)
(cid:2)(cid:2)(cid:2)
100,455
(cid:2)(cid:2)(cid:2)(cid:2)
(90,662)
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
4,124
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
(150)
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
586
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
-
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
171
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
36,987
(Decrease)(cid:2)in(cid:2)cash(cid:2)and(cid:2)cash(cid:2)equivalents
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
(216)
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
(1,491)
Cash(cid:2)and(cid:2)cash(cid:2)equivalents(cid:2)at(cid:2)beginning(cid:2)of(cid:2)period
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
4,926
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
6,417
Cash(cid:2)and(cid:2)cash(cid:2)equivalents(cid:2)at(cid:2)end(cid:2)of(cid:2)period
$(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
4,710
$(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
4,926
Supplemental(cid:2)disclosure(cid:2)of(cid:2)cash(cid:2)flow(cid:2)information
Cash(cid:2)payments(cid:2)for:
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)Interest(cid:2)on(cid:2)deposits,(cid:2)repurchase(cid:2)agreements(cid:2)and(cid:2)FHLB(cid:2)borrowings
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)Income(cid:2)taxes
$(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
$(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
5,790
644
$(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
$(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
6,034
500
10
MVB(cid:2)Financial(cid:2)Corp.
Consolidated(cid:2)Statements(cid:2)of(cid:2)Changes(cid:2)in(cid:2)Stockholders'(cid:2)Equity
Years(cid:2)ended(cid:2)December(cid:2)31,(cid:2)2008(cid:2)and(cid:2)2007
(Dollars(cid:2)in(cid:2)thousands)
Balance,(cid:2)December(cid:2)31,(cid:2)2006
Comprehensive(cid:2)income:
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)Net(cid:2)Income
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)Other(cid:2)comprehensive(cid:2)income(loss)
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)Net(cid:2)fair(cid:2)value(cid:2)adjustment(cid:2)on
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)securities(cid:2)available(cid:2)for(cid:2)sale,(cid:2)less
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)reclassification(cid:2)adjustment(cid:2)for(cid:2)realized
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)gains(cid:2)-(cid:2)net(cid:2)of(cid:2)tax(cid:2)effect(cid:2)of(cid:2)$45
Total(cid:2)Comprehensive(cid:2)Income
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)Minimum(cid:2)pension(cid:2)liability(cid:2)adjustment
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)net(cid:2)of(cid:2)tax(cid:2)effect
Stock(cid:2)offering
Stock(cid:2)based(cid:2)compensation
Treasury(cid:2)stock,(cid:2)acquired(cid:2)at(cid:2)cost
Common(cid:2)stock(cid:2)options(cid:2)exercised
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
29
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
557
13
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
11
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
160
Common(cid:2)(cid:2)(cid:2)
Stock
Additional
Paid-in
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Income/(loss)
Treasury
Stock
Total
Stockholders'
Equity
$(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
1,468
$(cid:2)(cid:2)(cid:2)
17,720
$(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
2,858
$(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
(373)
$(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
(18)
$(cid:2)(cid:2)(cid:2)
21,655
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
1,282
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
1,282
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
67
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
(99)
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
67
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
1,349
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
(99)
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
586
13
(150)
171
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
(150)
Balance,(cid:2)December(cid:2)31,(cid:2)2007
Comprehensive(cid:2)income:
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)Cumulative(cid:2)effect(cid:2)of(cid:2)change(cid:2)in(cid:2)accounting
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)for(cid:2)split-dollar(cid:2)life(cid:2)insurance(cid:2)arrangements
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)Net(cid:2)Income
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)Other(cid:2)comprehensive(cid:2)income(loss)
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)Net(cid:2)fair(cid:2)value(cid:2)adjustment(cid:2)on
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)securities(cid:2)available(cid:2)for(cid:2)sale,(cid:2)less
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)reclassification(cid:2)adjustment(cid:2)for(cid:2)realized
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)gains(cid:2)-(cid:2)net(cid:2)of(cid:2)tax(cid:2)effect(cid:2)of(cid:2)$235
Total(cid:2)Comprehensive(cid:2)Income
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)Minimum(cid:2)pension(cid:2)liability(cid:2)adjustment(cid:2)-
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)net(cid:2)of(cid:2)tax(cid:2)effect
(cid:2)
(cid:2)
Stock(cid:2)offering
Cash(cid:2)dividends(cid:2)paid(cid:2)($0.10(cid:2)per(cid:2)share)
Stock(cid:2)based(cid:2)compensation
Treasury(cid:2)stock,(cid:2)acquired(cid:2)at(cid:2)cost
Common(cid:2)stock(cid:2)options(cid:2)execised
$(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
1,508
$(cid:2)(cid:2)(cid:2)
18,450
$(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
4,140
$(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
(405)
$(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
(168)
$(cid:2)(cid:2)(cid:2)
23,525
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
(138)
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
828
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
352
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
(262)
(cid:2)
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
(159)
89
7
1,646
15
64
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
(131)
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
(138)
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
828
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
352
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
1,180
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
(262)
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
1,735
(159)
15
(131)
71
Balance,(cid:2)December(cid:2)31,(cid:2)2008
$(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
1,604
$(cid:2)(cid:2)(cid:2)
20,175
$(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
4,671
$(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
(315)
$(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
(299)
$(cid:2)(cid:2)(cid:2)
25,836
11
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MVB FINANCIAL CORP.
December 31, 2008
Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Operations
MVB Financial Corp., "the Company", provides banking services to the domestic market with the primary market
areas being the Marion, Harrison, Jefferson and Berkeley counties of West Virginia. To a large extent,
the
operations of the Company, such as loan portfolio management and deposit growth, are directly affected by the
market area economies.
Cash and Cash Equivalents
Cash and cash equivalents include cash and due from banks.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of MVB Financial Corp. Inc., and its
intercompany accounts and transactions have been eliminated in
wholly owned subsidiaries. All significant
consolidation.
Management Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of revenues and expenses during the reporting period.
Estimates, such as the allowance for loan losses, are based upon known facts and circumstances. Estimates are
revised by management in the period such facts and circumstances change. Actual results could differ from these
estimates.
Investment Securities
Debt securities that management has the ability and intent to hold to maturity are classified as held-to-maturity and
carried at cost, adjusted for amortization of premium and accretion of discounts computed by the interest method
from purchase date to maturity. Other marketable securities are classified as available-for-sale and are carried at
fair value. Unrealized gains and losses on securities available-for-sale, net of the deferred income tax effect, are
recognized as direct increases or decreases in stockholders' equity. Cost of securities sold is recognized using the
specific identification method.
Loans Held for Sale
Through Taylor, Bean and Whitaker, MVB Bank, Inc. has the ability to offer customers long-term fixed rate mortgage
products without holding these instruments in the bank's loan portfolio. After thorough review of the contract with
Taylor, Bean and Whitaker, the Company has concluded that no material derivative instruments exist.
Loans and Allowance for Loan Losses
Loans are stated at the amount of unpaid principal reduced by an allowance for loan losses. Loans are considered
delinquent when scheduled principal or interest payments are 31 days past due.
Interest income on loans is
recognized on an accrual basis. The allowance for loan losses is maintained at a level deemed adequate to absorb
probable losses inherent in the loan portfolio. The Company consistently applies a quarterly loan review process to
continually evaluate loans for changes in credit risk. This process serves as the primary means by which the
Company evaluates the adequacy of the allowance for loan losses, and is based upon periodic review of the
collectibility of loans in light of historical experience, the nature and volume of the loan portfolio, adverse situations
that may affect the borrower's ability to repay, estimated value of any underlying collateral and prevailing economic
conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision
as more information becomes available.
The allowance consists of specific and general components. The specific component relates to loans that are
impaired. The general component covers non-classified loans and is based upon historical loss experience adjusted
for qualitative factors.
A loan is considered impaired when, based upon current information and events, it is probable that the Company will
be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of
include payment status,
the loan agreement. Factors considered by management
collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that
experience insignificant payment delays and shortages generally are not classified as impaired. Generally the
Company considers impaired loans to include loans classified as non-accrual loans and loans past due for longer
than 90 days.
in determining impairment
12
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MVB FINANCIAL CORP.
December 31, 2008
Loan Origination Fees and Costs
Loan origination fees and costs are accounted for according to Statement of Financial Accounting Standards No. 91,
which requires that loan origination and commitment fees and direct loan origination costs be deferred and the net
amount amortized as an adjustment of the related loan's yield.
Bank Premises, Furniture and Equipment
Bank premises, furniture and equipment are carried at cost less accumulated depreciation. The provision for
depreciation is computed for financial reporting by the straight-line-method based on the estimated useful lives of
assets, which range from 7 to 40 years on buildings and leasehold improvements and 3 to 10 years on furniture,
fixtures and equipment.
Intangible Assets
The excess of the cost of an acquired company over the fair value of the net assets and identified intangibles
acquired is recorded as goodwill. The net carrying amount of intangible assets was $956 and $975 at December 31,
2008 and 2007, respectively.
Other Investments
Federal Home Loan Bank (FHLB) stock is recorded at cost and considered to be restricted as the Company is
required by the FHLB to hold this investment, and the only market for this stock is the issuing agency. FHLB stock
totaled $1,479 and $1,181 at December 31, 2008 and 2007, respectively, and is included in other assets in the
accompanying balance sheet. The Company also held $187 in Silverton Bank, N.A. stock at December 31, 2008
and 2007.
Income Taxes
Deferred income taxes are reported for timing differences between items of income or expense reported in the
financial statements and those reported for income tax purposes. The differences relate principally to accretion of
discounts on investment securities, provision for loan losses, minimum pension liability, and differences between
book and tax methods of depreciation.
Stock Based Compensation
The Company accounts for stock-based compensation in accordance with Statement of Financial Accounting
Standards No. 123R, "Share-Based Payment," (SFAS No. 123R) which was issued by the Financial Accounting
Standards Board (FASB) in December 2004. SFAS No. 123R revises SFAS 123 "Accounting for Stock Based
Compensation," and supersedes APB No. 25, Accounting for Stock Issued to Employees," (APB No. 25) and its
related interpretations. Under SFAS No. 123R, the Company is required to record compensation expense for all
awards granted after the date of adoption and for any unvested options previously granted.
Foreclosed Assets Held for Resale
Foreclosed assets held for resale acquired in satisfaction of mortgage obligations and in foreclosure proceedings are
recorded at the lower of cost or fair value less estimated selling costs at the time of foreclosure, with any valuation
adjustments charged to the allowance for loan losses. Any unrealized gains or losses on sale are then recorded in
other non-interest expense. At December 31, 2008 and 2007, the Company held other real estate of $818 and $55.
Net Income Per Common Share
Diluted net income per common share includes any dilutive effects of stock options, and is computed by dividing net
income by the average number of common shares outstanding during the period, adjusted for the dilutive effect of
options under The Company's 2003 Stock Incentive Plan.
Comprehensive Income
Accounting principles generally require that recognized revenue, expenses, gains and losses be included in net
income. Although certain changes in assets and liabilities, such as unrealized gains and losses on available-for-sale
securities and minimum pension liability, are reported as a separate component of the equity section of the balance
sheet, such items, along with net income, are components of comprehensive income.
Endorsement Split-Dollar Life Insurance Arrangements
On January 1, 2008, the Company changed its accounting policy and recognized a cumualtive-effect adjustment to
retained earnings totaling $138 related to accounting for certain endorsement split-dollar life insurance
arrangements in connection with the adoption of Emerging Issues Task Force Issue No. 06-4, Accounting for
Deferred Compensation and Postretirement Benefit Aspects of Endorsement Split Dollar Life Insuarnce
Arrangements .
Reclassifications
Certain amounts in the 2007 financial statements have been reclassified to conform to the 2008 financial statement
presentation.
13
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MVB FINANCIAL CORP.
December 31, 2008
NOTE 2. INVESTMENT SECURITIES
Amortized cost and approximate market values of investment securities held-to-maturity at December 31, 2008,
including gross unrealized gains and losses, are summarized as follows:
(Dollars in thousands)
Municipal securities
U. S. Agency securities
Amortized
Cost
Unrealized
Gain
807
7,989
8,796
$
7
131
138
$
Unrealized
Loss
(1)
-
(1)
$
Approximate
Market
Value
813
8,120
8,933
$
Amortized cost and approximate market values of investment securities held-to-maturity at December 31, 2007,
including gross unrealized gains and losses, are summarized as follows:
Municipal securities
U. S. Agency securities
Amortized
Cost
Unrealized
Gain
816
998
1,814
$
5
-
$
5
Unrealized
Loss
(2)
-
(2)
$
Approximate
Market
Value
819
998
1,817
$
Amortized cost and approximate market values of investment securities available-for-sale at December 31, 2008 are
summarized as follows:
Amortized
Cost
Unrealized
Gain
Unrealized
Loss
Approximate
Market
Value
U. S. Agency securities
Mortgage-backed securities
Other securities
$
$
$
$
$
$
$
$
Amortized cost and approximate market values of investment securities available-for-sale at December 31, 2007 are
summarized as follows:
Amortized
Cost
Unrealized
Gain
Unrealized
Loss
Approximate
Market
Value
$
$
$
$
15,025
2,325
124
17,474
21,793
3,678
700
124
26,295
327
5
-
332
93
-
-
-
93
U. S. Agency securities
Mortgage-backed securities
Corporate securities
Other securities
-
(11)
-
(11)
(32)
(56)
(271)
-
(359)
$
$
$
$
The following tables summarize amortized cost and approximate market values of securities by maturity:
Held to Maturity
Available for sale
December 31, 2008
15,352
2,319
124
17,795
21,854
3,622
429
124
26,029
103
5,139
7,608
4,945
17,795
Amortized
Cost
Approximate
Market
Value
$
$
103
4,991
7,556
4,824
17,474
$
$
Within one year
After one year, but within five
After five years, but within ten
After ten Years
Total
Amortized
Cost
-
$
278
5,416
3,102
8,796
$
Approximate
Market
Value
-
$
284
5,481
3,168
8,933
$
14
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MVB FINANCIAL CORP.
December 31, 2008
Investment securities with a carrying value of $21,904 and $20,512 at December 31, 2008 and 2007, respectively,
were pledged to secure public funds and repurchase agreements.
for the economy as a whole. When determining other-than-temporary impairment on securities,
The Company's investment portfolio includes securities that are in an unrealized loss position as of December 31,
2008, the details of which are included in the following table. Although these securities, if sold at December 31,
2008 would result in a pretax loss of $12, the Company has no intent to sell the applicable securities at such market
values, and maintains the Company has the ability to hold these securities until all principal has been recovered.
Declines in the market values of these securities can be traced to general market conditions which reflect the
prospect
the
Company considers such factors as adverse conditions specifically related to a certain security or to specific
conditions in an industry or geographic area, the time frame securities have been in an unrealized loss position, the
Company's ability to hold the security for a period of time sufficient to allow for anticipated recovery in value, whether
or not the security has been downgraded by a rating agency, and whether or not the financial condition of the security
issuer has severely deteriorated. As of December 31, 2008, the Company considers all securities with unrealized
loss positions to be temporarily impaired, and consequently, does not believe the Company will sustain any material
realized losses as a result of the current temporary decline in market value.
The following table discloses investments in an unrealized loss position:
At December 31, 2008, total temporary impairment totaled $12.
Description and number
of positions
Less than 12 months
12 months or more
Fair Value
Unrealized Loss
Fair Value
Unrealized Loss
U.S. Agencies (0)
Mortgage-backed securities (11)
Municipal securities (1)
$
-
1,343
-
1,343
$
$
-
(5)
-
$
(5)
-
$
133
226
359
$
-
$
(6)
(1)
(7)
$
NOTE 3. LOANS
The components of loans in the balance sheet at December 31, were as follows:
(Dollars in thousands)
2008
2007
Commercial and non-residential real estate
Residential real estate
Consumer and other
$
137,872
52,303
13,066
203,241
$
$
$
128,535
42,030
10,972
181,537
Changes in the allowance for loan losses were as follows for the years ended December 31:
(Dollars in thousands)
2008
2007
Balance at beginning of period
Losses charged to allowance
Recoveries credited to allowance
Provision for loan losses
Balance at end of period
$
$
1,733
(483)
14
596
1,860
1,206
(68)
11
584
1,733
$
$
Impaired loans are accounted for in accordance with Statement of Financial Accounting Standards No. 114,
Accounting by Creditors for Impairment of Loans, as amended by Statement of Financial Accounting Standards No.
118. The Company considers a loan impaired when, based on current information and events, it is probable that a
creditor will be unable to collect all amounts due according to the contractual terms of the loan agreement.
Impaired loan information for the years ended December 31:
2008
2007
Impaired loans with an allocated allowance
Impaired loans without an allocated allowance
Total impaired loans
Allocated allowance on impaired loans
Average impaired loans
Income recognized on impaired loans
$
-
470
470
$
-
590
38
$
$
$
876
417
1,293
162
725
44
$
15
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MVB FINANCIAL CORP.
December 31, 2008
NOTE 4. BANK PREMISES, FURNITURE AND EQUIPMENT
Bank premises, furniture and equipment at December 31, were as follows:
(Dollars in thousands)
2008
2007
Bank Premises
Equipment, furniture and fixtures
Allowance for depreciation
NOTE 5. DEPOSITS
Deposits at December 31, were as follows:
(Dollars in thousands)
Demand deposits of individuals, partnerships, and corporations
Interest bearing
Non-interest bearing
Time and savings deposits of individuals, partnerships and corporations
Deposits of states and political subdivisions
Official checks
Total Domestic Deposits
$
$
7,509
2,506
10,015
(1,955)
8,060
7,368
2,391
9,759
(1,515)
8,244
$
$
2008
2007
$
$
17,317
20,304
132,924
898
1,622
173,065
13,640
18,557
120,683
3,996
572
157,448
$
$
Time deposits of over $100 included above
$
36,725
$
34,580
Maturities of certificates of deposit at December 31, 2008 were as follows:
2009
2010
2011
2012
2013
Total
NOTE 6. BORROWED FUNDS
$
$
53,824
14,053
3,538
4,662
6,144
82,221
The Company is a party to repurchase agreements with certain customers. As of December 31, 2008 and 2007, the
Information related to repurchase agreements is
company held repurchase agreements of $21,904 and $19,817.
summarized below:
(Dollars in thousands)
2007
2008
Balance at end of year
Average balance during the year
Maximum month-end balance
Weighted-average rate during the year
Rate at December 31
21,904
$
19,420
23,783
1.56%
0.69%
19,817
$
18,360
20,481
3.95%
3.41%
MVB Bank, Inc. (the Bank) is a member of the Federal Home Loan Bank ("FHLB") of Pittsburgh, Pennsylvania.
The remaining maximum borrowing capacity with the FHLB at December 31, 2008 was approximately $22,806. At
December 31, 2008 and 2007 the Bank had borrowed $30,942 and $23,583.
16
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MVB FINANCIAL CORP.
December 31, 2008
Borrowings from the FHLB as of December 31 were as follows:
(Dollars in thousands)
Fixed interest rate note, originating April 1999, due April 2014,
interest of 5.405% is payable monthly
Fixed interest rate note, originating January 2005, due January
2020, payable in monthly installments of $11, including interest of
5.140%
Fixed interest rate note, originating April 2002, due May 2017,
payable in monthly installments of $4, including interest of 5.90%
2008
2007
$
1,000
$
1,000
1,087
676
1,158
689
Floating interest rate note, originating March 2003, due December
2011, interest payable monthly, including interest of 0.59%
18,545
10,296
Fixed interest rate note, originating July 2006, due July 2016,
payable in monthly installments of $8, including interest of 4.50%
Fixed interest rate note, originating October 2006, due October
2021, payable in monthly installments of $6, including interest of
5.20%
Fixed interest rate note, originating April 2007, due April 2022,
payable in monthly installments of $6, including interest of 5.18%
Amortizing fixed interest rate note, originating February 2007, due
February 2022, payable in monthly installments of $5, including
interest of 5.22%
Fixed interest
September 2008, interest of 4.53% payable quarterly
rate note, originating September 2007, due
Fixed interest rate note, originating November 2007, due April
2008, interest of 4.80% payable quarterly
Fixed interest rate note, originating November 2007, due April
2008, interest of 4.60% payable quarterly
Fixed interest rate note, originating December 2007, due December
2017, payable in monthly installments of $7, including interest of
5.25%
Fixed interest rate note, originating March 2008. due March 2013,
interest of 2.37% payable quarterly
Fixed interest rate note, originating March 2008. due March 2009,
interest of 2.26% payable quarterly
1,417
1,452
1,127
1,068
944
-
-
-
1,078
2,000
2,000
1,145
1,085
958
700
2,700
1,300
1,100
-
-
$
30,942
$
23,583
In March 2007 the Company completed the private placement of $4 million Floating Rate, Trust Preferred Securities
through its MVB Financial Statutory Trust I subsidiary (the "Trust"). The Company established the Trust for the sole
purpose of issuing the Trust Preferred Securities pursuant to an Amended and Restated Declaration of Trust. The
proceeds from the sale of
the Trust Preferred Securities will be loaned to the Company under subordinated
Debentures (the "Debentures") issued to the Trust pursuant to an Indenture. The Debentures are the only asset of
the Trust. The Trust Preferred Securities have been issued to a pooling vehicle that will use the distributions on the
Trust Preferred Securities to securitize note obligations. The securities issued by the Trust are includable for
regulatory purposes as a component of the Company's Tier I capital.
The Trust Preferred Securities and the Debentures mature in 30 years and are redeemable by the Company after
five years.
Interest payments are due in March, June, September and December and are adjusted at the interest
due dates at a rate of 1.62% over the three month LIBOR Rate. The Company reflects borrowed funds in the
amount of $4.1 million as of December 31, 2008 and 2007 and interest expense of $203 and $225 for the years
ended December 31, 2008 and 2007.
17
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MVB FINANCIAL CORP.
December 31, 2008
Borrowings from the FHLB are secured by stock in the FHLB of Pittsburgh, qualifying first mortgage loans, mortgage-
backed securities and certain investment securities.
Additionally the Bank has a line of credit of $3,000 available from Silverton Bank, N.A. There were no borrowings
against this line of credit at December 31, 2008 or 2007.
The bank had borrowed $1,000 at the Federal Reserve discount window for 90 days beginning December 2008,
maturing March 2009 at a rate of 1.25%
A summary of maturities of these borrowings over the next five years is as follows:
Year
2009
2010
2011
2012
2013
Thereafter
Amount
$
3,199
210
18,766
232
2,244
11,415
36,066
$
NOTE 7. COMMITMENTS AND CONTINGENT LIABILITIES
Financial Instruments with Off-Balance-Sheet Risk
The Company is a party to financial instruments with off-balance-sheet risk in the normal course of business to meet
the financing needs of its customers. These financial instruments include commitments to extend credit and standby
letters of credit. These instruments involve, to varying degrees, elements of credit and interest rate risk in excess of
the amounts recognized in the statements of financial condition.
The Company's 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. The Company uses the same credit policies in making commitments and conditional obligations as it
does for on-balance-sheet instruments.
Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition
established in the contract. Commitments generally have fixed expiration dates or other termination clauses and
may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon,
the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates
each customers' credit worthiness on a case-by-case basis. The amount and type of collateral obtained, if deemed
necessary by the Company upon extension of credit, varies and is based on management's credit evaluation of the
customer.
Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a
customer to a third party. Standby letters of credit generally have fixed expiration dates or other termination clauses
and may require payment of a fee. The credit risk involved in issuing letters of credit is essentially the same as that
involved in extending loans to customers. The Company's policy for obtaining collateral, and the nature of such
collateral, is essentially the same as that involved in making commitments to extend credit.
Total contractual amounts of the commitments as of December 31 were as follows:
(Dollars in thousands)
2008
2007
Available on lines of credit
Stand-by letters of credit
Other loan commitments
Concentration of Credit Risk
$
$
44,165
1,814
563
46,542
$
$
41,528
1,000
608
43,136
The Company grants a majority of
loans to
customers throughout the Marion, Harrison, Jefferson and Berkeley County areas of West Virginia and adjacent
counties. Collateral for loans is primarily residential and commercial real estate, personal property, and business
equipment. The Company evaluates the credit worthiness of each of its customers on a case-by-case basis, and the
amount of collateral it obtains is based upon management's credit evaluation.
financial, agricultural, real estate and installment
its commercial,
Litigation
The subsidiary bank is involved in various legal actions arising in the ordinary course of business.
management and counsel,
consolidated financial statements.
In the opinion of
these matters will not have a significant adverse effect on the
the outcome of
18
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MVB FINANCIAL CORP.
December 31, 2008
NOTE 8. INCOME TAXES
The Company records income taxes in accordance with Statement of Financial Accounting Standards No. 109 (FAS
109), Accounting for Income Taxes. FASB 109 is an asset and liability approach that requires the recognition of
temporary differences
deferred income tax liabilities and assets for the expected future tax consequences of
between the carrying amounts and the tax basis of other assets and liabilities.
The amount reflected as income taxes represents federal and state income taxes on financial statement income.
Certain items of income and expense, primarily the provision for possible loan losses, allowance for losses on
foreclosed assets held for resale, depreciation, and accretion of discounts on investment securities are reported in
different accounting periods for income tax purposes.
The provisions for income taxes for the years ended December 31, were as follows:
(Dollars in thousands)
Current:
2008
2007
Federal
State
$
$
$
$
451
80
531
244
43
287
(20)
(4)
(24)
263
$
$
$
$
(99)
(18)
(117)
414
Deferred expense(benefit)
Federal
State
Income Tax expense
Following is a reconciliation of income taxes at federal statutory rates to recorded income taxes for the year ended
December 31:
2008
2007
Amount
%
Amount
%
Tax at Federal tax rate
Tax effect of:
State income tax
Tax exempt earnings
Other
$
371
27
(136)
1
263
$
34.0%
2.5%
-12.5%
0.0%
24.0%
$
577
42
(173)
(32)
414
$
34.0%
2.5%
-10.2%
-2.0%
24.3%
Deferred tax assets and liabilities are the result of timing differences in recognition of revenue and expense for
income tax and financial statement purposes.
Deferred income tax liabilities and (assets) were comprised of the following at December 31:
Depreciation
Pension
Gross deferred tax liabilities
Unrealized loss on securities available-for-sale
Allowance for loan losses
Minimum pension liability
Gross deferred tax (assets)
2008
$
255
26
281
128
(643)
(338)
(853)
2007
$
279
19
298
(106)
(636)
(164)
(906)
Net deferred tax (asset)
$
(572)
$
(608)
No deferred income tax valuation allowance is provided since it is more likely than not that realization of the deferred
income tax asset will occur in future years.
19
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MVB FINANCIAL CORP.
December 31, 2008
NOTE 9. RELATED PARTY TRANSACTIONS
The Company has granted loans to officers and directors of the Company and to their associates. Related party
loans are made on substantially the same terms, including interest rates and collateral, as those prevailing at the
time for comparable transactions with unrelated parties and do not involve more than normal risk of collectibility. Set
forth below is a summary of the related loan activity.
(Dollars in thousands)
Balance at
Beginning
of Year
Borrowings
Repayments
Balance
at end
of Year
December 31, 2008
$
6,213
$
8,832
$
(1,528)
$
13,517
December 31, 2007
$
6,882
$
1,038
$
(1,707)
$
6,213
The Company held related party deposits of $5,981 and $7,358 at December 31, 2008 and December 31, 2007,
respectively.
The Company held related party repurchase agreements of $1,867 and $5,051 at December 31, 2008 and
December 31, 2007, respectively.
NOTE 10. PENSION PLAN
The Company participates in a trusteed pension plan known as the Allegheny Group Retirement Plan covering
virtually all full-time employees. Benefits are based on years of service and the employee's compensation. The
Company's funding policy is to fund normal costs of the plan as accrued. Contributions are intended to provide not
only for benefits attributed to service to date, but also for those benefits expected to be earned in the future. The
Company participated in the pension plan beginning January 1, 1999. The Company has recognized estimated
pension expense of $301 and $300 for the years ended December 31, 2008 and 2007.
Information pertaining to the activity in the Company's defined benefit plan, using the latest available actuarial
valuations with a measurement date of December 31, 2008 and 2007 is as follows:
(Dollars in thousands)
Change in benefit obligation
Benefit obligation at beginning of year
Service cost
Interest cost
Actuarial loss
Benefits paid
Benefit obligation at end of year
Change in plan assets:
Fair value of plan assets at beginning of year
Actual return on plan assets
Employer contribution
Benefits paid
Fair value of plan assets at end of year
Funded status
Unrecognized net actuarial loss
Unrecognized prior service cost
Prepaid pension cost recognized
2008
2007
$
$
$
$
$
1,396
271
100
70
(25)
1,812
1,058
(386)
320
(25)
967
(845)
924
12
91
$
836
250
69
265
(24)
1,396
664
118
300
(24)
1,058
(338)
395
14
71
$
$
$
$
$
$
Accumulated benefit obligation
$
1,471
$
1,089
At December 31, 2008 and 2007, the weighted average assumptions used to determine the benefit obligation are as
follows:
Discount rate
Rate of compensation increase
6.25%
3.00%
6.25%
3.00%
20
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MVB FINANCIAL CORP.
December 31, 2008
The components of net periodic pension cost are as follows:
Service cost
Interest cost
Expected return on plan assets
Amortization of prior service costs
Amortization of loss
Net periodic pension cost
$ 232
86
(87)
2
25
$ 258
$ 250
69
(57)
3
35
$ 300
At December 31, 2008 and 2007, the weighted average assumptions used to determine net periodic pension cost
are as follows:
Discount rate
Expected long-term rate of return on plan assets
Rate of compensation increase
6.25%
8.00%
3.00%
6.00%
8.50%
3.00%
The Company's pension plan asset allocations at December 31, 2008 and 2007, as well as target allocations for
2009 are as follows:
Asset Category
Equity securities
Balanced fund
Other
Total
2009 Target
70%
25%
5%
100%
12/31/2008
64%
30%
6%
100%
12/31/2007
67%
28%
5%
100%
The net transition obligation (asset), prior service cost (credit), and estimated net loss (gain) for the plan that are
expected to be amortized from accumulated other comprehensive income into net periodic benefit cost over the next
fiscal year are shown in the table below.
Expected amortization of transition obligation (asset)
Expected amortization of prior service cost (credit)
Expected amortization of net loss (gain)
2009
2008
$ -
2
33
$ -
2
26
Below we show the best estimate of the plan contribution for next fiscal year. We also show the benefits expected to
be paid in each of the next five fiscal years, and in the aggregate for the five fiscal years thereafter.
Contributions for the period of 1/1/2009 through 12/31/2009
Estimated future benefit payments reflecting expected future service
1/1/2009 through 12/31/2009
1/1/2010 through 12/31/2010
1/1/2011 through 12/31/2011
1/1/2012 through 12/31/2012
1/1/2013 through 12/31/2013
1/1/2014 through 12/31/2018
NOTE 11. INTANGIBLE ASSETS
Cash Flow
$ 338,751
$ 41,576
46,760
56,802
85,286
97,032
574,533
On October 7, 2005, the Company purchased a full service office in the Charles Town area of Jefferson County
West Virginia. This office held assets of $1.8 million and total deposits of $17.1 million. As a result of this
transaction, the Company recorded intangible assets. As of December 31, 2008 the Company has allocated $60 to
core deposit intangibles, which are being amortized using the double-declining balance method over 10 years. The
remaining $896 has been recorded as goodwill, and is evaluated for impairment on October 1st each year by the
Company.
21
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MVB FINANCIAL CORP.
December 31, 2008
NOTE 12. STOCK OFFERING
During 2008 the Company closed a public stock offering of 200,000 shares of common stock by issuing 89,208
shares, in addition to 29,350 shares issued in 2007. This offering when completed totaled $2.3 million. The
proceeds of this offering were used to support the growth of the bank and to increase the legal lending limit to
one borrower. At December 31, 2007, outstanding shares totaled 1,508,081. During 2008, the Company
issued 95,541 shares, concluding 2008 with outstanding shares of 1,603,622.
NOTE 13. STOCK OPTIONS
The MVB Financial Corp. Incentive Stock Plan provides for the issuance of stock options to selected employees.
Under the provisions of the plan, the option price per share shall not be less than the fair market value of the
common stock on the date of the grant. All options granted prior to 2004 vest in 4 years, and expire 10 years
from the date of grant. For options granted in 2004 and 2005 the vesting period has been accelerated to fully
vest at December 31, 2005. These options also expire 10 years from the date of the grant. Options granted in
2006 and 2007 vest in 5 years and expire 10 years from the date of the grant.
The following summarizes MVB's stock options as of December 31, and the changes for the year then ended:
2008
2007
Weighted-
Average
Exercise
Price
Number
of
Shares
Weighted-
Average
Exercise
Price
Number
of
Shares
167,330
-
$
14.91
-
176,812
15,000
$
14.63
16.00
-
(6,323)
-
$
-
-
-
-
(14,482)
(10,000)
$
-
-
-
161,007
$
15.05
167,330
$
14.91
147,507
$
15.00
150,330
$
14.78
N/A
$
3.52
Outstanding at beginning
of year
Granted
Adjust for 5% stock
dividend
Exercised
Forfeited/expired
Outstanding at end of
year
Exercisable at end of
year
Weighted-average fair
value of options granted
during the year
The fair value for the options was estimated at the date of grant using a Black-Scholes option-pricing
model with an average risk-free interest rate of 4.65% for 2007, and a weighted-average expected
life of the options of 7 years for 2007. The expected volatility of MVB's stock price used for 2007
options was 12.5% and the expected dividend yield used was .500%.
The following summarizes information concerning MVB's stock options outstanding at December 31, 2008:
Options Outstanding
Options Exercisable
Weighted
Average
Remaining
Options Contractual
Exercise Price
Outstanding
Life
$9.98
$10.48
$12.38
$16.00
22,490
1,575
2,100
134,842
2.00
3.00
6.00
8.00
Weighted
Average
Exercise
Price
$9.98
$10.48
$12.38
$16.00
Weighted
Average
Exercise
Price
Number
Exercisable
22,490
1,575
2,100
121,342
$9.98
$10.48
$12.38
$16.00
22
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MVB FINANCIAL CORP.
December 31, 2008
NOTE 14. REGULATORY CAPITAL REQUIREMENTS
The Bank is subject to various regulatory capital requirements administered by the federal banking agencies
requirements can initiate certain mandatory, and possibly additiona
Failure to meet minimum capital
discretionary, actions by regulators that, if undertaken, could have a direct material effect on the Company's
financial statements. Under capital adequacy guidelines the Bank must meet specific capital guidelines that
involve quantitative measures of the Bank's assets, liabilities, and certain off-balance sheet items as calculated
to
under regulatory accounting practices. The Bank's capital amounts and classifications are also subject
qualitative judgments by the regulators about components, risk weightings, and other factors.
Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain
minimum amounts and ratios of Total and Tier I capital to risk-weighted assets, and of Tier I capital to average
assets, as defined. As of December 31, 2008 and 2007, the Bank meets all capital adequacy requirements to
which it is subject.
The most recent notification from the Federal Deposit
Insurance Corporation categorized the Bank as wel
capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, the
Bank must maintain minimum total risk-based, Tier I risk-based, and Tier I leverage ratios as set forth in the table
below. Both the Company's and the Bank's actual capital amounts and ratios are presented in the table below.
ACTUAL
MINIMUM
TO BE WELL
CAPITALIZED
MINIMUM
FOR CAPITAL
ADEQUACY PURPOSES
AMOUNT
RATIO
AMOUNT
RATIO
AMOUNT
RATIO
(Dollars in thousands)
As of December 31, 2008
Total Capital
(to risk-weighted assets)
Consolidated
Subsidiary Bank
Tier I Capital
(to risk-weighted assets)
Consolidated
Subsidiary Bank
Tier I Capital
(to average assets)
Consolidated
Subsidiary Bank
As of December 31, 2007
Total Capital
(to risk-weighted assets)
Consolidated
Subsidiary Bank
Tier I Capital
(to risk-weighted assets)
Consolidated
Subsidiary Bank
Tier I Capital
(to average assets)
Consolidated
Subsidiary Bank
$
$
26,547
30,053
12.6%
14.3%
N/A
$
21,060
N/A
10.0%
$
$
16,868
16,848
8.0%
8.0%
$
$
24,687
28,193
11.7%
13.4%
N/A
$
12,636
N/A
6.0%
$
$
8,434
8,424
4.0%
4.0%
$
$
24,687
28,193
10.1%
11.5%
N/A
$
12,268
N/A
5.0%
$
$
9,825
9,815
4.0%
4.0%
$
$
24,117
27,329
12.8%
14.5%
N/A
$
18,823
N/A
10.0%
$
$
15,132
15,058
8.0%
8.0%
$
$
22,384
25,596
11.8%
13.6%
N/A
$
11,294
N/A
6.0%
$
$
7,566
7,529
4.0%
4.0%
$
$
22,384
25,596
10.1%
11.5%
N/A
$
11,103
N/A
5.0%
$
$
8,893
8,882
4.0%
4.0%
23
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MVB FINANCIAL CORP.
December 31, 2008
NOTE 15. REGULATORY RESTRICTION ON DIVIDEND
The approval of the regulatory agencies is required if the total of all dividends declared by the Bank in any
calendar year exceeds the Bank's net profits, as defined, for that year combined with its retained net profits for
the preceding two calendar years.
NOTE 16. LEASES
The Company leases land and building space for the operation of some banking offices. All such leases qualify
as operating leases. Following is a schedule by year of future minimum lease payments required under
operating leases that have initial or remaining non-cancelable lease terms in excess of one year as of
December 31, 2008:
Years ended December 31:
2009
2010
2011
2012
2013
Thereafter
Total minimum payments required:
(Dollars in thousands)
$ 55
55
55
55
55
375
$ 650
Total lease expense for the years ended December 31, 2008 and 2007 was $54 and $54, respectively.
NOTE 17. FAIR VALUE OF FINANCIAL INSTRUMENTS
The following summarizes the methods and significant assumptions used by the Company in estimating its fair
value disclosures for financial instruments.
Short-term financial instruments: The carrying values of short-term financial instruments including cash and
due from banks, interest bearing balances - FHLB, and certificates of deposit in other banks approximate the fair
value of these instruments.
Securities: Estimated fair values of securities are based on quoted market prices, where available. If quoted
market prices are not available, estimated fair values are based on quoted market prices of comparable
securities.
Loans: The estimated fair values for loans are computed based on scheduled future cash flows of principal
and interest, discounted at interest rates currently offered for loans with similar terms of borrowers of similar
credit quality. No prepayments of principal are assumed.
Accrued interest receivable and payable: The carrying values of accrued interest receivable and payable
approximate their estimated fair values.
Repurchase agreements: The fair values of repurchase agreements approximate their estimated fair values.
Deposits: The estimated fair values of demand deposits (i.e., non interest bearing checking, NOW and money
market), savings accounts and other variable rate deposits approximate their carrying values. Fair values of
fixed maturity deposits are estimated using a discounted cash flow methodology at rates currently offered for
deposits with similar remaining maturities. Any intangible value of long-term relationships with depositors is not
considered in estimating the fair values disclosed.
24
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MVB FINANCIAL CORP.
December 31, 2008
Off-balance sheet instruments: The fair values of commitments to extend credit and standby letters of credit
are estimated using the fees currently charged to enter into similar agreements, taking into account the
remaining terms of agreements and the present credit standing of the counterparties. The amounts of fees
currently charged on commitments and standby letters of credit are deemed insignificant, and therefore, the
estimated fair values and carrying values are not shown.
The carrying values and estimated fair values of the Company's financial instruments are summarized as
follows:
December 31, 2008
Carrying
Value
Estimated
Fair
Value
(Dollars in thousands)
Financial assets:
Cash and due from banks
Interest bearing balances - FHLB
Securities available-for-sale
Securities held-to-maturity
Loans
Accrued interest receivable
Financial liabilities:
Deposits
Repurchase agreements
Federal Home Loan Bank Borrowings
Accrued interest payable
Long-term debt
Financial assets:
Cash and due from banks
Interest bearing balances - FHLB
Securities available-for-sale
Securities held-to-maturity
Loans
Accrued interest receivable
$
4,710
7,040
17,795
8,796
203,241
1,123
242,705
$
$
173,065
21,904
31,942
486
4,124
231,521
$
$
4,710
7,040
17,795
8,629
205,273
1,123
244,570
$
$
166,142
22,123
32,261
486
4,124
225,136
$
December 31, 2007
Carrying
Value
Estimated
Fair
Value
$
4,926
490
26,029
1,812
179,903
1,182
214,342
$
$
4,926
490
26,029
1,814
181,537
1,182
215,978
$
25
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MVB FINANCIAL CORP.
December 31, 2008
Financial liabilities:
Deposits
Repurchase agreements
Federal Home Loan Bank Borrowings
Accrued interest payable
Accrued interest payable
Long-term debt
$
157,448
19,817
23,583
523
4,124
205,495
$
$
152,725
19,777
23,819
523
4,124
200,968
$
Fair value estimates are made at a specific point in time, based on relevant market information about the
financial instrument. These estimates do not reflect any premium or discount that could result from offering for
sale at one time the Company's entire holdings of a particular financial instrument. Because no market exists for
a significant portion of the Company's financial instruments, fair value estimates are based on judgments
regarding future expected loss experience, current economic conditions, risk characteristics of various financial
instruments and other factors. These estimates are subjective in nature and involve uncertainties and matters
of significant judgment and therefore, cannot be determined with precision. Changes in assumptions could
significantly affect the estimates. Fair value estimates are based on existing on-and-off balance sheet financial
instruments without attempting to estimate the value of anticipated future business and the value of assets and
liabilities that are not considered financial instruments.
NOTE 18. FAIR VALUE MEASUREMENTS
Effective january 1, 2008, the Company adopted the provisions of FAS No. 157, Fair Value Measurements , for
financial assets and financial liabilities. FAS No. 157 provides enhanced guidance for using fair value to
measure assets and liabilities. The standard applies whenever other standards require or permit assets or
liabilities to be measured at fair value. The standard does not expand the use of fair value in any new
circumstances. The FASB issued Staff Position No. 157-1, Application of FASB Statement No. 157 to FASB
Statement No. 13 and Other Accounting Pronouncements That Address Fair Value Measurements for Purposes
of Lease Classification or Measurement under Statement 13 , which removed leasing transactions accounted for
under FAS No. 13 and related guidance from the scope of FAS No. 157. The FASB also issued Staff Position
No. 157-2, Partial Deferral of the Effective Date of Statement 157 , which deferred the effective date of FAS No.
157 for all nonfinancial assets and nonfinancial liabilities to fiscal years beginning after November 15, 2008.
FAS No. 157 establishes a hierarchal disclosure framework associated with the level of pricing observability
utilized in measuring assets and liabilities at fair value. The three broad levels defined by FAS No. 157
hierarchy are as follows:
Level I: Quoted prices are available in active markets for identical assets or liabilities as of the reported date.
Level II: Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly
observable as of the reported date. The nature of these assets and liabilities include items for which quoted
prices are available but traded less frequently, and items that are fair valued using other financial instruments,
the parameters of which can be directly observed.
Level III: Assets and liabilities that have little to no pricing observability as of the reported date. These items
do not have two-way markets and are measured using management's best estimate of fair value, where the
inputs into the determination of fair value require significant management judgment or estimation.
The following table presents the assets and liabilities reported on the consolidated statements of financial
condition at their fair value as of September 30, 2008 by level within the fair value hierarchy. As required by
FAS 157, financial assets and liabilities are classified in their entirety based on the lowest level of input that is
significant to the fair value measurement.
(In Thousands)
Assets:
Investment securities, available for sale
December 31, 2008
Level I
Level II
Level III
Total
17,795
17,795
26
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MVB FINANCIAL CORP.
December 31, 2008
NOTE 19. CONDENSED FINANCIAL STATEMENTS OF PARENT COMPANY
The investment of the Company in its second tier subsidiaries is presented on the equity method of accounting.
Information relative to the parent company's balance sheets at December 31, 2008 and 2007, and the related
statements of income and cash flows for each of those years are presented below:
(Dollars in thousands, except share data)
Balance Sheets
Assets
Cash
Investment in bank subsidiary,
eliminated in consolidation
Other assets
Total assets
Liabilities and shareholders' equity
Liabilities
Other liabilities
Long-term debt
Total liabilities
Stockholders' equity
Preferred stock, par value $1,000; 5,000
shares authorized, none issued
Common stock, par value $1; 4,000,000
shares authorized; 1,603,622 and
1,508,081 shares issued
respectively
Additional paid in capital
Treasury stock
Retained earnings
Accumulated other comprehensive income
Total stockholders' equity
Total liabilities and stockholders' equity
(Dollars in thousands)
Statements of Income
Income - dividends from bank subsidiary
Expenses - operating
Income/(Loss) before income taxes and
undistributed income
Income tax (benefit)
Income after tax
Equity in undistributed income of bank
subsidiary
Net income
December 31
2008
2007
$
368
$
675
29,342
257
29,967
$
$
7
4,124
4,131
26,737
248
27,660
$
$
11
4,124
4,135
$
-
$
-
1,604
20,175
(299)
4,671
(315)
25,836
29,967
$
2008
$
-
250
(250)
(60)
(190)
1,508
18,437
(168)
4,153
(405)
23,525
27,660
$
2007
-
$
232
(232)
(72)
(160)
1,018
828
$
1,442
1,282
$
27
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MVB FINANCIAL CORP.
December 31, 2008
(Dollars in thousands)
Statements of Cash Flows
OPERATING ACTIVITIES
Net income
Equity in undistributed income of bank
subsidiary
(Increase) in other assets
(Decrease)/increase in other liabilities
Stock option expense
Unrealized gain/(loss)
2008
2007
$
828
$
1,282
(1,018)
(149)
(4)
15
90
(1,442)
(244)
11
13
(33)
Net cash (used in)
operating activities
INVESTING ACTIVITIES
Investment in subsidiary
Net cash (used in)
investing activities
FINANCING ACTIVITIES
Proceeds of stock offering
Proceeds from long-term borrowings
Common stock options exercised
Cash dividend
Purchase of treasury stock
Net cash provided by
financing activities
(Decrease)/increase in cash
Cash at beginning of period
(238)
(413)
(1,585)
(3,754)
(1,585)
(3,754)
1,736
-
70
(159)
(131)
1,516
(307)
675
587
4,124
171
-
(150)
4,732
565
110
Cash at end of period
$
368
$
675
28
Media Release
CONTACT:(cid:2)
TEL:(cid:2)
FAX:(cid:2)
BAUERFINANCIAL, Inc.
1.800.388.6686(cid:2)
1.800.230.9569(cid:2)
www.bauerfinancial.com(cid:2)
customerservice@bauerfinancial.com(cid:2)
(cid:2)
FOR IMMEDIATE RELEASE:
To the Editor:
New Year, New Banking Concerns, But Not if You
Bank at MVB Bank
January 2009: MVB Bank, Fairmont, West Virginia proudly announces it has earned
BAUERFINANCIAL, Inc.’s highest 5-Star Superior rating for financial strength and stability.
BAUERFINANCIAL has been analyzing the nation’s banks for over 25 years and has earned the reputation as
“the Nation’s Bank Rating Firm”, so to garner its highest 5-Star rating is a time-honored badge of
distinction. Customers of MVB Bank can be proud that their bank still shines, even under the watchful eye
of the BAUERFINANCIAL microscope. The rating is based on the overall financial picture of the bank and
at 5-Stars indicates that MVB Bank is one of the strongest banks in the nation. This is the seventh
consecutive quarter that MVB Bank has earned this highest honor.
“ This New Year in particular brings with it a whole new set of worries, but where a consumer banks
shouldn’t be one of them”, remarks Karen L. Dorway, president of BAUERFINANCIAL. “Some banks
ignored proper loan underwriting standards in recent years and are now paying the price for that decision.
But, MVB Bank is a prime example of a bank that has stuck to traditional, conservative banking strategies,
which, in this climate, is exactly what the ‘other banks’ are returning to. MVB Bank is a model of banking
safety and soundness and its customers can rest assured in that knowledge.”
Established in 1999, MVB Bank has been serving the banking needs of its neighbors and friends for 10
years. It currently operates through five conveniently located offices in Bridgeport. Charles Town,
Fairmont and Martinsburg and can also be found on the internet at www.mvbbanking.com.
MVB Bank: “West Virginia’s Most Valuable Bank.”
BAUERFINANCIAL, INC., Coral Gables, Florida, the nation’s leading independent bank rating and research
firm, has been reporting on and analyzing the performance of U.S. banks and credit unions since 1983. No
institution pays for its rating, nor can it be eluded. Consumers may obtain star-ratings by visiting
www.bauerfinancial.com.
###
BAUERFINANCIAL, INC. 2655 LeJeune Road, Penthouse One, Coral Gables, FL 33134.
29
Barbara(cid:2)L.(cid:2)Alexander
Robert(cid:2)L.(cid:2)Bell
Stephen(cid:2)R.(cid:2)Brooks
Berniece(cid:2)D.(cid:2)Collis
Harvey(cid:2)M.(cid:2)Havlichek
James(cid:2)R.(cid:2)Martin
Larry(cid:2)F.(cid:2)Mazza
Dr.(cid:2)Saad(cid:2)Mossallati
Dr.(cid:2)Kelly(cid:2)R.(cid:2)Nelson
Barbara(cid:2)L.(cid:2)Alexander
Robert(cid:2)L.(cid:2)Bell
Stephen(cid:2)R.(cid:2)Brooks
Berniece(cid:2)D.(cid:2)Collis
Harvey(cid:2)M.(cid:2)Havlichek
James(cid:2)R.(cid:2)Martin
Larry(cid:2)F.(cid:2)Mazza
Dr.(cid:2)Saad(cid:2)Mossallati
Dr.(cid:2)Kelly(cid:2)R.(cid:2)Nelson
Leonard(cid:2)W.(cid:2)Nossokoff
J.(cid:2)Christopher(cid:2)Pallotta
Nitesh(cid:2)S.(cid:2)Patel
Louis(cid:2)Spatafore
Wayne(cid:2)H.(cid:2)Stanley
Richard(cid:2)L.(cid:2)Toothman
Dr.(cid:2)Michael(cid:2)F.(cid:2)Trent
Samuel(cid:2)J.(cid:2)Warash
Leonard(cid:2)W.(cid:2)Nossokoff
J.(cid:2)Christopher(cid:2)Pallotta
Nitesh(cid:2)S.(cid:2)Patel
Louis(cid:2)Spatafore
Wayne(cid:2)H.(cid:2)Stanley
Richard(cid:2)L.(cid:2)Toothman
Dr.(cid:2)Michael(cid:2)F.(cid:2)Trent
Samuel(cid:2)J.(cid:2)Warash
David(cid:2)B.(cid:2)Alvarez
John(cid:2)W.(cid:2)Ebert
Dr.(cid:2)Carl(cid:2)R.(cid:2)Fischer
Harvey(cid:2)M.(cid:2)Havlichek
Christine(cid:2)B.(cid:2)Ielapi
James(cid:2)R.(cid:2)Martin
Larry(cid:2)F.(cid:2)Mazza
Dr.(cid:2)Saad(cid:2)Mossallati
Dr.(cid:2)Kelly(cid:2)R.(cid:2)Nelson
Roger(cid:2)J.(cid:2)Turner
John(cid:2)B.(cid:2)Spadafore
Wayne(cid:2)H.(cid:2)Stanley
Dr.(cid:2)Joseph(cid:2)Cincinnati
Berniece(cid:2)D.(cid:2)Collis
Dr.(cid:2)Brian(cid:2)D.(cid:2)Gilpin
Harvey(cid:2)M.(cid:2)Havlichek
Kenneth(cid:2)F.(cid:2)Lowe
James(cid:2)R.(cid:2)Martin
Larry(cid:2)F.(cid:2)Mazza
G.(cid:2)Warren(cid:2)Mickey
Timothy(cid:2)R.(cid:2)Procita
Christopher(cid:2)B.(cid:2)Shultz
Barbara(cid:2)L.(cid:2)Alexander
Robert(cid:2)L.(cid:2)Bell
Stephen(cid:2)R.(cid:2)Brooks
Berniece(cid:2)D.(cid:2)Collis
Harvey(cid:2)M.(cid:2)Havlichek
James(cid:2)R.(cid:2)Martin
Larry(cid:2)F.(cid:2)Mazza
Dr.(cid:2)Saad(cid:2)Mossallati
Dr.(cid:2)Kelly(cid:2)R.(cid:2)Nelson
Leonard(cid:2)W.(cid:2)Nossokoff
J.(cid:2)Christopher(cid:2)Pallotta
Nitesh(cid:2)S.(cid:2)Patel
Louis(cid:2)Spatafore
Wayne(cid:2)H.(cid:2)Stanley
Richard(cid:2)L.(cid:2)Toothman
Dr.(cid:2)Michael(cid:2)F.(cid:2)Trent
Samuel(cid:2)J.(cid:2)Warash
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Summary of Stock Prices/ Transactions
July 15, 1998
October 15, 1999
December 31, 1999
December 31, 2000
June 1, 2001
December 31, 2001
November 1, 2002
December 31, 2002
December 31, 2003
August 15, 2004
December 31, 2004
July 1, 2005
December 31, 2005
December 31, 2006
July 1, 2007
December 31, 2007
December 15, 2008
December 31, 2008
Original issue
Secondary offering
Last price before end of the year
Last price before end of the year
Stock dividend
Last price before end of the year
Secondary offering
Last price before end of the year
Last price before end of the year
Stock dividend
Last price before end of the year
Secondary offering
Last price before end of the year
Last price before end of the year
Secondary offering
Last price before end of the year
Cash dividend
Last price before end of the year
$10.00 per share
11.00 per share
11.00 per share
11.00 per share
5%
11.00 per share
12.50 per share
12.50 per share
13.00 Per share
5%
14.00 Per share
16.00 Per share
16.00 Per share
16.00 Per share
20.00 Per share
20.00 Per share
$0.10 Per share
20.00 Per share
The above information is provided as a guide to your cost basis in your MVB common
stock. There have been very few transactions in the MVB common stock and usually we are aware
of the sales price. However, there may be other transactions in MVB common stock at prices which
are not known to MVB. We believe the above information will help in future years when such
information is needed for tax purposes.
Please contact Lisa Wanstreet, Corporate Secretary, if you have any questions. She may be
reached at (304) 367-8697.
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MVB Financial Corp.
301 Virginia Avenue
Fairmont, West Virginia 26554
Phones: 304-363-4800; 1-888-689-1877 • www.mvbbanking.com
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