2010 Annual Report to Shareholders
MVB FINANCIAL CORP.
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)
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
At or for the Year Ended December 31
$
$
$
$
16,287
5,470
10,817
1,100
2,454
9,139
795
2,237
1.40
1.38
0.10
17.07
1,598
1,626
14,337
5,533
8,804
785
2,190
8,349
454
1,406
0.88
0.86
0.10
16.64
1,602
1,628
13,687
5,949
7,738
595
1,788
7,840
263
828
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
261,116
64,104
390,350
293,913
28,037
219,356
30,456
310,187
232,023
26,746
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
294,044
69,284
414,267
300,434
30,769
232,847
43,886
352,762
264,531
27,138
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
7.18%
8.62%
10.76%
10.83%
11.85%
10.48%
8.19%
8.24%
7.21%
8.01%
10.52%
20.85%
0.57%
0.45%
0.35%
0.62%
0.58%
0.45%
1.04%
0.85%
0.54%
0.25%
-0.28%
-6.36%
7.98%
5.26%
3.22%
5.76%
4.86%
4.34%
12.68%
10.31%
7.44%
3.09%
-2.69%
-1.33%
Leverage Ratio
8.21%
8.55%
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
12.40%
13.31%
12.32%
13.25%
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%
$
21.00
20.00
20.00
20.00
16.00
16.00
14.00
12.38 *
11.90 *
10.48 *
10.00
*
10.00
*
1
MVB Climbs Higher in 2010
Dear Shareholders:
Like the most well-prepared and experienced rock climbers, MVB's fit and agile Team surmounted many challenges in 2010. We
planned strategically to ensure that each member or the MVB Team was prepared to scale new heights. I am pleased to report
to you that 2010 was a truly significant year for Your Most Valuable Bank. Not only did we climb mountains, but the heights we
reached enabled us to see many more summits ahead; summits on which we’re determined to stake our flag.
Significant Success in Rocky Terrain
As I was preparing this letter to you, I reflected on my two years leading the MVB Team and the many positives we have reached
in a most challenging and so-often-uncertain world. Before discussing 2010 results, I would like to describe the “mountains” we
faced and how well our first two years’ accumulative numbers reflect our strength and agility.
In September of 2008, just a few short months before I became President and CEO of MVB Financial Corp, the U.S. and world
economy plunged into what we now call the Great Recession. In fact, during 2010, across the country
(cid:120) Unemployment is still at very high levels;
(cid:120) Housing foreclosures remain brisk;
(cid:120) Real estate prices are off 40% from 2008;
(cid:120) Bank failures rates are some of the highest in history;
(cid:120) Bank profits are some of the lowest in history, and non-performing loans are near historical all-time highs.
Yet, through one of the most difficult economic eras in our nation’s history, your bank has taken advantage of its healthy
financial situation by advancing the opportunities presented during these times and performed very well. MVB’s strong
performance is validated by the following objective cumulative results since I began leading MVB in January 2009:
(cid:120) Grown assets by 60%, or $156 million, to $414 million;
(cid:120)
Increased loans 45%, or $91 million, to $294 million;
(cid:120)
Lifted deposits by 74%, or $127 million, to $300 million;
(cid:120) Grown funding sources by 66%, or $150 million, to $377 million;
(cid:120) Most importantly, significantly increased earnings 170%, or $1,409 million, to $2,237 million;
With all this positive growth, our charge-offs and non-performing loans have remained at some of the best levels in the nation
today.
The MVB Team has successfully navigated a positive path through very rocky terrain. I am humbled by our achievements and
honored to lead such a strong team.
2010 Higher Peaks Reached
The 2010 financials evidence the excellent execution of the whole MVB Team last year. The most profitable year in the bank’s
twelve-year history, 2010 saw a net income increase of $831,000, or 59.1%, to $2.2 million. The net interest income, which rose
$1.9 million or 13.6%, drove the increase and was primarily due to a $61.2 million growth in loans in 2010. And despite
increasing deposits by $35.9 million, MVB was able to decrease its total interest expense by $63,000, as the bank’s cost of funds
declined by approximately ½%.
Beyond climbing the highest mountain ever this year, we’ve continued to strengthen our base camp in preparation for the future
mountains we will climb. As of December 31, 2010, MVB’s balance sheet had grown $61.5 million from year-end 2009. The
biggest reason for this continued success was loan growth of $61.2 million (26.3%). MVB continued to deliver such innovative
products as the Brokerage Buster Account, MVChecking, and MVSavings to our clients, enabling total deposits to increase $35.9
million (13.6%). Total shareholders’ equity increased by $3.6 million (13.4%), the result of 2010 earnings of $2.2 million and the
inclusion of $1.7 million in new capital raised in late 2010 as part of a $8.3 million offering.
2
2011 Continuing the Ascent
As is our practice, we do not rest on our laurels. We do not get to the top of one mountain without turning our eyes to the next.
We are fully engaged, delivering excellent client service every day as MVB grows. And we are poised and equipped to take
advantage of any new, viable window of opportunity that we see. For 2011, as part of our overall strategic plan, I believe we must
effectively execute in the following six priority areas:
1. Sustain financial strength and stability within an accelerated deposits and loan growth environment. We will continue
to aggressively grow quality loans and deposits and build capital. This year, more than ever, we cannot overlook the vital
importance of deposits, core and otherwise. I firmly believe a key element for any bank wishing to significantly add value
is its ability to grow net deposits, month in and month out.
2. Deliver stronger and more diversified earnings. Earnings are MVB’s lifeblood. Earnings provide a return to our
shareholders and allow us to invest in new markets, new projects, and needed improvements. In 2011, we must meet or
exceed our revenue targets and reduce risk by further diversifying our earnings stream. This includes achieving
profitability in our new business areas. While growing revenues is fundamental, cutting costs is also important; we will
continue to reduce waste through reduced duplication and rework.
3. Expand our client base and build deeper client loyalty. To successfully compete and grow, our client service must be
second to none. We must continue to be leaders, not followers, in the marketplace. We will fully implement ClientVoice
to further enhance our services in 2011, focusing on increasing the products and services each client has at MVB.
4. Ensure support services, technology, and infrastructure drive value. We must match our aggressive growth with a
commensurate level of internal support services and infrastructure. We will invest in appropriate technology and tools,
and enhance internal compliance, marketing, operations, back office support, and training.
5. Achieve continuous quality improvement and effective planning in all areas of operation. To remain strong and in the
lead, we must demonstrate continuous improvement across the bank. That means doing it right the first time, every time.
It means proactively seeking out best practices and staying abreast of industry trends and developments.
6.
Invest in our workforce to ensure a healthy and productive team. Our teammates—not our brick and mortar—are
MVB’s must valuable asset. We will strengthen our attention to personal performance, coaching efforts, succession
planning, and remaining competitive in our benefits package. New initiatives include launching a formal Wellness
Program and TeamVoice, designed to establish regular two-way communication with all team members.
Increasing Shareholder Value
In talking with shareholders, MVB Team members, and our clients, I am enthused by the positive energy for the bank and for our
commitment to the future. We remain fully focused on increasing shareholder value through planned growth and effective
operations. We will continue to climb every mountain we face until we have mastered them all. I look forward in sharing with you
our ongoing progress during 2011.
Best Regards,
Larry F. Mazza
President and Chief Executive Officer
3
A summary of key achievements beyond the financials provides further evidence of how well Your Most Valuable
Bank performed in 2010:
MVB Milestones
1.
Increased significantly our commercial lending capacity. An expanded and experienced commercial
lending team brought on board in mid-2010.
2. Raised capital. Started in fourth quarter 2010 and completed in January 2011 MVB’s extremely successful
stock offering to accredited investors, which resulted in 393,305 MVB shares being placed for $21.00 per
share (a total of $8,259,405 of new capital) in record time. I welcome our newest shareholders.
3. Strengthened retail banking presence. As part of our goal to diversify revenues while increasing deposits
and potential referrals, we named a bank-wide Vice President for Retail Banking and Client Services. This
position has already been focusing on deposits, retail loans, and credit cards, all intended to strengthen
our retail banking presence in all markets. Further, we are establishing standards and building consistency
across all bank locations.
4. Hired a Chief Compliance Officer and established Bank Compliance Solutions, a compliance support
service for community banks. This provides MVB with greater depth in compliance with the regulatory
requirements that are ever increasing (e.g., Dodd-Frank).
5. Continued development of correspondent mortgage lending. We made good progress this past year in
building strong footholds with our systems and infrastructure to handle effectively our correspondent
mortgage lending operations. We are confident 2011 will see additional partners and greater loan volume
as we increase our focus in this marketplace.
6. Sustained the value of shares, paid our third annual dividend, and issued a 10% stock dividend. Our
stock price increased to $21 a share, which was the offering price of the new stock issued. Further, we
paid an annual dividend along with a 10% stock dividend.
7. Continued to improve our corporate governance. We continue our efforts to ensure our Boards are well
organized and operating effectively to guide MVB. Part of this was conducting the first annual board
assessment process in 2010, which provided additional areas for improvement.
8. Updated our strategic plan “Building Bank Value.” Our plan includes pinpointed performance
benchmarks, ranging from asset growth targets to return on equity, for MVB to achieve.
4
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5
S.R. Snodgrass, A.C. • 980 National Road • Wheeling, West Virginia 26003-6400 • Phone: (304) 233-5030 • Facsimile: (304) 233-3062
6
MVB Financial Corp.
Consolidated Balance Sheets
(Dollars in thousands, except number of shares)
December 31, 2010 and 2009
ASSETS
Cash and due from banks
Interest bearing balances with banks
Certificates of deposit with other banks
Investment Securities:
Securities held-to-maturity, at cost
Securities available-for-sale, at approximate fair value
Loans:
Less: Allowance for loan losses
Net Loans
Loans held for sale
Bank premises, furniture and equipment
Accrued interest receivable and other assets
2010
2009
$
3,713
10,091
17,734
$
2,321
3,935
49,442
7,460
61,824
294,044
(2,478)
291,566
1,839
7,579
12,461
6,594
37,292
232,847
(2,241)
230,606
1,764
7,757
13,051
TOTAL ASSETS
$
414,267
$
352,762
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Non-interest bearing
Interest bearing
Total Deposits
Accrued interest, taxes, and other liabilities
Repurchase agreements
FHLB and other borrowings
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;
1,802,391 and 1,629,971 shares issued respectively
Additional paid-in capital
Common stock paid for but not issued, par value $1; 90,560 shares
Treasury Stock, 47,218 and 23,036 shares, respectively
Retained earnings
Accumulated other comprehensive loss
Total Stockholders' Equity
$
28,449
271,985
300,434
$
23,493
241,038
264,531
2,703
47,623
28,614
4,124
383,498
1,802
23,864
1,729
(1,006)
4,643
(263)
30,769
2,130
35,641
19,198
4,124
325,624
1,629
20,457
-
(522)
5,917
(343)
27,138
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$
414,267
$
352,762
See Notes to Consolidated Financial Statements
7
MVB Financial Corp.
Consolidated Statements of Income
(Dollars in thousands except Share and Per Share Data)
Years ended December 31, 2010 and 2009
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 FHLB and other 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
Gain on sale of securities
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
Consulting fees
FDIC insurance
Other taxes
Other operating expenses
Loss on investment impairment
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
2010
2009
$
13,468
587
1,427
805
16,287
$
11,844
699
1,197
597
14,337
4,401
474
513
82
5,470
10,817
1,100
9,717
658
265
361
634
88
448
2,454
4,796
590
472
392
295
338
167
130
211
523
190
1,035
-
9,139
3,032
795
4,630
262
533
108
5,533
8,804
785
8,019
770
178
287
616
-
339
2,190
4,241
569
423
531
238
309
174
98
75
444
177
884
186
8,349
1,860
454
$
2,237
$
1,406
$1.40
$1.38
1,598,432
1,625,884
$0.88
$0.86
1,601,986
1,628,102
See Notes to Consolidated Financial Statements
8
MVB Financial Corp.
Consolidated Statements of Cash Flows
(Dollars in thousands)
Years ended December 31, 2010 and 2009
OPERATING ACTIVITIES
Net Income
Adjustments to reconcile net income to net cash provided by
operating activities:
Provision for loan losses
Deferred income tax (benefit)
Depreciation
Stock based compensation
Loans originated for sale
Proceeds of loans sold
Proceeds from sale of other real estate owned
(Gain)/loss on sale of other real estate owned
(Gain) on sale of investment securities
Amortization, net of accretion
Loss on investment impairment
(Increase) in interest receivable and other assets
Increase in accrued interest, taxes, and other liabilities
NET CASH PROVIDED BY/(USED IN) OPERATING ACTIVITIES
INVESTING ACTIVITIES
(Increase) in loans made to customers
Purchases of premises and equipment
Purchases of investment securities available-for-sale
Purchases of investment securities held-to-maturity
(Increase) in deposits with FHLB and Fed, net
Purchases of certificates of deposit with other banks
Proceeds from maturity of certificates of deposit with other banks
Proceeds from sales, maturities and calls of securities available-for-sale
Proceeds from maturities and calls of securities held-to-maturity
Purchase of bank owned life insurance
NET CASH (USED IN) INVESTING ACTIVITIES
FINANCING ACTIVITIES
Net increase in deposits
Net increase in repurchase agreements
Proceeds from FHLB and other borrowings
Principal payments on FHLB and other borrowings
Purchase of treasury stock
Net proceeds of stock offering
Cash dividend
Common stock options exercised
NET CASH PROVIDED BY FINANCING ACTIVITIES
Increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
2010
2009
$
2,237
$
1,406
1,100
(144)
447
46
(46,657)
46,582
866
(61)
(88)
513
-
(409)
573
5,005
(62,060)
(269)
(69,602)
(1,359)
(6,156)
(16,321)
48,029
45,082
474
-
(62,182)
35,903
11,982
205,716
(196,300)
(484)
1,729
(160)
183
58,569
1,392
2,321
785
(39)
445
15
(53,353)
52,704
252
27
-
117
186
(3,029)
295
(189)
(29,600)
(142)
(32,542)
(4,899)
(3,895)
(61,489)
19,047
12,851
7,101
(1,000)
(94,568)
91,466
13,737
9,000
(21,744)
(223)
-
(160)
292
92,368
(2,389)
4,710
Cash and cash equivalents at end of period
$
3,713
$
2,321
Supplemental disclosure of cash flow information
Cash payments for:
Interest on deposits, repurchase agreements and FHLB borrowings
Income taxes
$
$
5,623
811
$
$
5,488
607
See Notes to Consolidated Financial Statements
9
MVB Financial Corp.
Consolidated Statements of Changes in Stockholders' Equity
Years ended December 31, 2010 and 2009
(Dollars in thousands)
Common
Stock
Additional
Paid-in
Capital
Accumulated
Other
Total
Retained Comprehensive
Treasury
Stockholders'
Earnings
Income/(loss)
Stock
Equity
Balance, December 31, 2008
$
1,604
$
20,175
$
4,671
$
(315)
$
(299)
$
25,836
Comprehensive income:
Net Income
Other comprehensive income(loss)
Net fair value adjustment on
securities available for sale, less
reclassification adjustment for realized
losses - net of tax effect of $(31)
Total Comprehensive Income
Minimum pension liability adjustment -
net of tax effect
Cash dividends paid ($0.10 per share)
Stock based compensation
Treasury stock, acquired at cost
Common stock options execised
1,406
1,406
(46)
18
(160)
15
25
267
(223)
(46)
1,360
18
(160)
15
(223)
292
Balance, December 31, 2009
$
1,629
$
20,457
$
5,917
$
(343)
$
(522)
$
27,138
2,237
2,237
Comprehensive income:
Net Income
Other comprehensive income(loss)
Net fair value adjustment on
securities available for sale, less
reclassification adjustment for realized
gains - net of tax effect of $(167)
Total Comprehensive Income
Minimum pension liability adjustment -
net of tax effect
251
(171)
(484)
251
2,488
(171)
(160)
1,729
46
-
(484)
183
Cash dividends paid ($0.10 per share)
(160)
Stock offering in process
Stock based compensation
1,729
46
Stock dividend - 10% stock dividend
160
3,191
(3,351)
Treasury stock, acquired at cost
Common stock options execised
13
170
Balance, December 31, 2010
$
1,802
$
25,593
$
4,643
$
(263)
$
(1,006)
$
30,769
See Notes to Consolidated Financial Statements
10
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MVB FINANCIAL CORP.
December 31, 2010
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 with original maturities of ninety days or less.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of MVB Financial Corp. Inc., and its wholly owned
subsidiaries. All significant intercompany accounts and transactions have been eliminated in 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 Crescent Mortgage Company, Franklin American Mortgage and Freddie MAC, 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. MVB values loans
held for sale at the lower of cost or market. After thorough review of the process the Company has concluded that no material
derivative instruments exist, as the bank obtains pricing information directly from the websites of the secondary mortgage providers
and locks in pricing based upon pre-established margins set by management.
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 the loan agreement. Factors
considered by management in determining impairment include payment status, 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.
11
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MVB FINANCIAL CORP.
December 31, 2010
Loan Origination Fees and Costs
Accounting standards require 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,
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.
furniture and equipment are carried at cost
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 $927 and $941 at December 31, 2010 and 2009, 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 $1,816 and $1,911 at December
31, 2010 and 2009, respectively, and is included in other assets in the accompanying balance sheet.
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 generally accepted accounting standards. Under these
standards 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,
2010 and 2009, the Company held other real estate of $402 and $1,171.
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
The Company accounts for certain endorsement split-dollar life insurance arrangements by recognizing both the cash surrender value
of the insurance asset as well as the liability for the death benefit provided to the employee.
Reclassifications
Certain amounts in the 2009 financial statements have been reclassified to conform to the 2010 financial statement presentation.
12
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MVB FINANCIAL CORP.
December 31, 2010
NOTE 2. INVESTMENT SECURITIES
Amortized cost and approximate fair values of
unrealized gains and losses, are summarized as follows:
(Dollars in thousands)
investment securities held-to-maturity at December 31, 2010,
including gross
Municipal securities
U. S. Agency securities
Amortized
Cost
Unrealized
Gain
6,460
1,000
7,460
$
27
17
44
$
Unrealized
Loss
(62)
-
(62)
$
Approximate
Fair
Value
6,425
1,017
7,442
$
Amortized cost and approximate fair values of
unrealized gains and losses, are summarized as follows:
investment securities held-to-maturity at December 31, 2009,
including gross
Municipal securities
U. S. Agency securities
Amortized
Cost
Unrealized
Gain
5,594
1,000
6,594
$
16
59
75
$
Unrealized
Loss
(59)
-
(59)
$
Approximate
Fair
Value
5,551
1,059
6,610
$
Amortized cost and approximate fair values of investment securities available-for-sale at December 31, 2010 are summarized as
follows:
Amortized
Cost
Unrealized
Gain
Unrealized
Loss
Approximate
Fair
Value
$
$
$
$
U. S. Agency securities
Mortgage-backed securities
Other securities
$
$
$
$
34,903
26,135
124
61,162
16,122
20,802
124
37,048
453
306
-
759
196
111
-
307
Amortized cost and approximate fair values of investment securities available-for-sale at December 31, 2009 are summarized as
follows:
Amortized
Cost
Unrealized
Gain
Unrealized
Loss
Approximate
Fair
Value
$
$
$
$
U. S. Agency securities
Mortgage-backed securities
Other securities
$
$
$
$
The following tables summarize amortized cost and approximate fair values of securities by maturity:
Held to Maturity
Available for sale
December 31, 2010
Amortized
Cost
-
$
115
2,609
4,736
7,460
$
Approximate
Fair
Value
-
$
115
2,618
4,709
7,442
$
Amortized
Cost
-
$
29,324
2,852
28,986
61,162
$
Approximate
Fair
Value
$
-
29,515
2,922
29,387
61,824
$
Within one year
After one year, but within five
After five years, but within ten
After ten Years
Total
13
35,280
26,420
124
61,824
16,300
20,868
124
37,292
(76)
(21)
-
(97)
(18)
(45)
-
(63)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MVB FINANCIAL CORP.
December 31, 2010
Investment securities with a carrying value of $66,426 and $24,724 at December 31, 2010 and 2009, respectively, were pledged to
secure public funds, repurchase agreements and potential borrowings at the Federal Reserve discount window.
The Company's investment portfolio includes securities that are in an unrealized loss position as of December 31, 2010, the details of
which are included in the following table. Although these securities, if sold at December 31, 2010 would result in a pretax loss of
$159, 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
for the economy as a whole. When determining other-than-temporary
impairment on securities, 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, 2010, 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 prospect
The following table discloses investments in an unrealized loss position:
At December 31, 2010, total temporary impairment totaled $159.
Description and number
of positions
Less than 12 months
Fair Value
Unrealized Loss
12 months or more
Fair Value
Unrealized Loss
U.S. Agencies (6)
Mortgage-backed securities (6)
Municipal securities (14)
NOTE 3. LOANS
$
$
8,966
8,533
3,782
21,281
(76)
(21)
(62)
(159)
$
$
-
$
-
-
$
-
$
-
-
-
$
-
The components of loans in the balance sheet at December 31, were as follows:
(Dollars in thousands)
2010
2009
Changes in the allowance for loan losses were as follows for the years ended December 31:
(Dollars in thousands)
2010
2009
$
$
$
$
$
$
$
$
194,605
86,020
13,324
95
294,044
2,241
(912)
49
1,100
2,478
152,463
67,507
12,914
(37)
232,847
1,860
(453)
49
785
2,241
Commercial and non-residential real estate
Residential real estate
Consumer and other
Net deferred fees and costs
Balance at beginning of period
Losses charged to allowance
Recoveries credited to allowance
Provision for loan losses
Balance at end of period
14
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MVB FINANCIAL CORP.
December 31, 2010
The following table summarizes the primary segments of the loan portfolio as of December 31, 2010 (in
thousands):
Commercial
Residential
Home
Equity
Installment
Credit
Cards
Total
December 31, 2010
Total Loans
Individually evaluated for
impairment
Collectively evaluated for
impairment
$194,700
$71,686
$14,334
$12,830
$494
$294,044
$393
$197
$262
$0
$4
$856
$194,307
$71,489
$14,072
$12,830
$490
$293,188
Management evaluates individual loans in all of the commercial segments for possible impairment. Loans are
considered to be impaired when, based on current information and events, it is probable that the Corporation will be
unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the
loan agreement. Factors considered by management in evaluating impairment include payment status, collateral
value, and the probability of collecting scheduled principal and interest payments when due. Management
determines the significance of payment delays and payment shortfalls on a case-by-case basis,
taking into
consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the
reasons for the delay, the borrower's prior payment record, and the amount of the shortfall in relation to the principal
and interest owed. The Corporation also separately evaluates individual consumer and residential mortgage loans
for impairment.
Once the determination has been made that a loan is impaired, the determination of whether a specific
allocation of the allowance is necessary is measured by comparing the recorded investment in the loan to the fair
value of the loan using one of three methods: (a) the present value of expected future future cash flows discounted
at the loan's effective interest rate; (b) the loan's observable market price; or (c) the fair value of the collateral less
selling costs. The method is selected on a loan-by-loan basis, with management primarily utilizing the fair value of
collateral method. The evaluation of the need and amount of a specific allocation of the allowance and whether a
loan can be removed from impairment status is made on a quarterly basis.
The following table presents impaired loans by class, segregated by those for which a specific allowance was
required and those for which a specific allowance was not necessary as of December 31, 2010 (in thousands):
Impaired Loans with
Specific Allowance
Impaired
Loans with
No
Specific
Allowance
Recorded
Investment
Related
Allowance
Recorded
Investment
Total Impaired Loans
Unpaid
Principal
Balance
Recorded
Investment
$59
165
262
0
4
$490
$20
75
99
0
4
$198
$334
32
0
0
0
$366
$393
197
262
0
4
$856
$393
197
262
0
4
$856
December 31, 2010
Commercial
Residential
Home Equity
Installment
Credit Card
Total impaired loans
The following table presents the average recorded investment in impaired loans and related interest income
recognized for the periods indicated (in thousands):
Average investment in impaired loans
Interest income recognized on an accrual
basis on impaired loans
December
2010
$1,901
2009
$2,369
$76
$95
15
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MVB FINANCIAL CORP.
December 31, 2010
loan
Management uses a nine point internal risk rating system to monitor the credit quality of the overall
portfolio. The first six categories are considered not criticized, and are aggregated as "Pass" rated. The criticized
rating categories utilized by management generally follow bank regulatory definitions. The Special Mention
category includes assets that are currently protected but are potentially weak, resulting in an undue and
unwarranted credit risk, but not to the point of justifying a Substandard classification. Loans in the Substandard
category have well-defined weaknesses that jeopardize the liquidation of the debt, and have a distinct possibility
that some loss will be sustained if the weaknesses are not corrected. All loans greater than 90 days past due are
considered Substandard. The portion of any loan that represents a specific allocation of the allowance for loan
losses is placed in the Doubtful category. Any portion of a loan that has been charged off is placed in the Loss
category.
To help ensure that risk ratings are accurate and reflect the present and future capacity of borrowers to repay a
loan as agreed, the Bank has a structured loan rating process with several layers of internal and external oversight.
Generally, consumer and residential mortgage loans are included in the Pass categories unless a specific action,
such as bankruptcy, repossession, or death occurs to raise awareness of a possible credit event. The Bank's Chief
Credit Officer is responsible for the timely and accurate risk rating of the loans in the portfolio at origination and on
an ongoing basis. The Credit Department performs an annual review of all commercial relationships $500,000 or
greater. Confirmation of the appropriate risk grade is included in the review on an ongoing basis. The Bank has an
experienced Credit Department that continually reviews and assesses loans within the portolio. The Bank engages
an external consultant to conduct loan reviews on at least an annual basis. Generally, the external consultant
reviews larger commercial relationships or criticized relationships. The Credit Department compiles detailed
reviews, including plans for resolution, on loans classified as Substandard on a quarterly basis. Loans in the
Special Mention and Substandard categories that are collectively evaluated for impairment are given separate
consideration in the determination of the allowance.
The following table represents the classes of the loan portfolio summarized by the aggregate Pass and the
criticized categories of Special Mention, Substandard and Doubtful within the internal risk rating system as of
December 31, 2010 (in thousands):
December 31, 2010
Commercial
Residential
Home Equity
Installment
Credit Card
Total
Pass
$180,568
69,906
13,945
12,424
488
$277,331
Special
Mention
$8,294
613
99
233
-
$9,239
Substandard Doubtful
Total
$5,446
1,002
262
173
6
$6,889
$392
165
28
-
-
$585
$194,700
71,686
14,334
12,830
494
$294,044
Management further monitors the performance and credit quality of the loan portfolio by analyzing the age of the
portfolio as determined by the length of time a recorded payment is past due. The following table presents the
classes of the loan portfolio summarized by the aging categories of performing loans and nonaccrual loans as of
December 31, 2010 (in thousands):
December 31, 2010
Commercial
Residential
Home Equity
Installment
Credit Card
Total
Current
30-59 Days
Past Due
60-89 Days
Past Due
90 Days +
Past Due
Total
Past Due
Non-
Accrual
Total
Loans
$193,414
68,529
13,979
12,222
490
$288,634
241
1,761
28
141
-
$2,171
-
272
18
158
-
$448
$217
143
47
155
-
$562
$458
2,176
93
454
-
$3,181
$828
981
262
154
4
$2,229
$194,700
71,686
14,334
12,830
494
$294,044
An allowance for loan losses ("ALL") is maintained to absorb losses from the loan portfolio. The ALL is based
on management's continuing evaluation of
the loan portfolio,
assessment of current economic conditions, diversification and size of the portfolio, adequacy of collateral, past and
anticipated loss experience, and the amount of non-performing loans.
the risk characteristics and credit quality of
The Bank's methodology for determining the ALL is based on the requirements of ASC Section 310-10-35 for
loans individually evaluated for impairment (discussed above) and ASC Subtopic 450-20 for loans collectively
evaluated for impairment, as well as the Interagency Policy Statements on the Allowance for Loan and Lease
Losses and other bank regulatory guidance. The total of the two components represents the Bank's ALL.
16
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MVB FINANCIAL CORP.
December 31, 2010
Loans that are collectively evaluated for impairment are analyzed with general allowances being made as
loss trends are used in the estimation of losses in the current
appropriate. For general allowances, historical
portfolio. These historical loss amounts are modified by other qualified factors.
The classes described above, which are based on the Federal call code assigned to each loan, provide the
starting point for the ALL analysis. Management tracks the historical net charge-off activity at the call code level. A
historical charge-off factor is calculated utilizing a defined number of consecutive historical quarters. Commercial,
Mortgage and Consumer pools currently utilize a rolling 12 quarters.
"Pass" rated credits are segregated from "Criticized" credits for the application of qualitative factors.
Loans in
the criticized pools, which possess certain qualities or characteristics that may lead to collection and loss issues, are
closely monitored by management and subject to additional qualitative factors.
Management has identified a number of additional qualitative factors which it uses to supplement the historical
charge-off factor because these factors are likely to cause estimated credit losses associated with the existing loan
pools to differ from historical loss experience. The additional factors that are evaluated quarterly and updated using
information obtained from internal, regulatory, and governmental sources are: national and local economic trends
and conditions; levels of and trends in delinquency rates and non-accrual loans; trends in volume and terms of
loans; effects of changes in lending policies; experience, ability, and depth of lending staff; value of underlying
collateral; and concentrations of credit from a loan type, industy and/or geographic standpoint.
Management reviews the loan portfolio on a quarterly basis using a defined, consistently applied process in
order to make appropriate and timely adjustments to the ALL. When information confirms all or part of specific
loans to be uncollectible, these amounts are promptly charged off against the ALL.
Historically, management has utilized an internally developed spreadsheet to track and apply the various
components of the allowance.
The following table summarizes the primary segments of the ALL, segregated into the amount required for loans
individually evaluated for impairment and the amount required for loans collectively evaluated for impairment as of
December 31, 2010. Activity in the allowance is presented for the year ended December 31, 2010 (in thousands):
ALL balance at
December 31, 2009
Charge-offs
Recoveries
Provision
ALL balance at
December 31, 2010
Individually evaluated
for impairment
Collectively evaluated
for impairment
Commercial
Residential
Home
Equity
Installment
$
1,717
(547)
-
347
$
204
(57)
36
277
$
84
(67)
9
181
$
216
(241)
4
295
Credit
Card
20
$
-
-
-
Total
$
2,241
(912)
49
1,100
$
1,517
$
460
$
207
$
274
$
20
$
2,478
$975
$542
$333
$139
$127
$68
$121
$153
$6
$1,574
$14
$904
The allowance for loan losses is based on estimates, and actual
losses will vary from current estimates.
Management believes that the granularity of the homogeneous pools and the related historical loss ratios and other
qualitative factors, as well as the consistency in the application of assumptions, result
is
representative of the risk found in the components of the portfolio at any given date.
in an ALL that
17
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MVB FINANCIAL CORP.
December 31, 2010
NOTE 4. BANK PREMISES, FURNITURE AND EQUIPMENT
Bank premises, furniture and equipment at December 31, were as follows:
(Dollars in thousands)
2010
2009
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
$
$
$
$
7,533
2,893
10,426
(2,847)
7,579
77,970
27,984
161,534
32,431
515
300,434
2010
2009
$
$
$
$
7,516
2,641
10,157
(2,400)
7,757
60,837
23,123
172,482
7,319
770
264,531
Time deposits of over $100 included above
$
58,661
$
47,518
Maturities of certificates of deposit at December 31, 2010 were as follows:
2011
2012
2013
2014
2015
Total
$
$
55,472
19,373
10,920
3,042
4,757
93,564
NOTE 6. BORROWED FUNDS
The Company is a party to repurchase agreements with certain customers. As of December 31, 2010 and 2009, the
company held repurchase agreements of $47,623 and $35,641.
Information related to repurchase agreements is
summarized below:
(Dollars in thousands)
2010
2009
Balance at end of year
Average balance during the year
Maximum month-end balance
Weighted-average rate during the year
Rate at December 31
$
47,623
44,238
55,550
1.07%
1.00%
$
35,641
27,800
46,163
0.94%
0.97%
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, 2010 was approximately $112,194. At December
31, 2010 and 2009 the Bank had borrowed $24,114 and $19,198.
18
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MVB FINANCIAL CORP.
December 31, 2010
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
payable in monthly installments of $4, including interest of 5.90%
rate note, originating April 2002, due May 2017,
Floating interest rate note, originating March 2003, due December
2011, interest payable monthly, including interest of 0.68%
Fixed interest rate note, originating July 2006, due July 2016, payable
in monthly installments of $8, including interest of 4.50%
2010
2009
$
1,000
$
1,000
933
647
14,126
-
1,341
1,012
662
-
1,380
Fixed interest rate note, originating October 2006, due October 2021,
payable in monthly installments of $6, including interest of 5.20%
1,089
1,109
Fixed interest
payable in monthly installments of $6, including interest of 5.18%
rate note, originating April 2007, due April 2022,
1,034
1,051
Amortizing fixed interest rate note, originating February 2007, due
February 2022, payable in monthly installments of $5,
including
interest of 5.22%
Fixed interest rate note, originating May 2009, due May 2010, interest
of 0.72% payable quarterly
Fixed interest rate note, originating November 2009, due May 2010,
interest of 0.35% 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
913
-
-
1,031
2,000
929
5,000
4,000
1,055
2,000
$
24,114
$
19,198
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, 2010 and 2009 and interest expense of $82 and $109 for the years ended December 31, 2010 and 2009.
19
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MVB FINANCIAL CORP.
December 31, 2010
Borrowings from the FHLB are secured by stock in the FHLB of Pittsburgh, qualifying first mortgage loans, mortgage-
backed securities and certain investment securities.
The bank had borrowed $4,500 in overnight funds at the Federal Reserve discount window on December 31, 2010 at a
rate of 0.75%.
A summary of maturities of these borrowings over the next five years is as follows:
Year
2011
2012
2013
2014
2015
Thereafter
Amount
$
18,847
232
2,244
1,257
271
9,887
32,738
$
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)
2010
2009
Available on lines of credit
Stand-by letters of credit
Other loan commitments
20
$
$
32,539
758
691
33,988
$
$
30,814
1,642
529
32,985
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MVB FINANCIAL CORP.
December 31, 2010
Concentration of Credit Risk
The Company grants a majority of its commercial, financial, agricultural, real estate and installment 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.
Litigation
The subsidiary bank is involved in various legal actions arising in the ordinary course of business.
In the opinion of
management and counsel, the outcome of these matters will not have a significant adverse effect on the consolidated
financial statements.
NOTE 8. INCOME TAXES
Accounting standards require that the Company use an asset and liability approach that requires the recognition of
deferred income tax liabilities and assets for the expected future tax consequences of temporary differences 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:
2010
2009
Federal
State
Deferred expense(benefit)
Federal
State
Income Tax expense
$
$
773
166
939
$
$
392
101
493
$
$
$
$
(119)
(25)
(144)
795
(32)
(7)
(39)
454
Following is a reconciliation of income taxes at federal statutory rates to recorded income taxes for the year ended
December 31:
Tax at Federal tax rate
Tax effect of:
State income tax
Tax exempt earnings
Other
2010
2009
Amount
$
1,031
76
(313)
1
795
$
%
34.0%
2.5%
-10.3%
0.0%
26.2%
Amount
$
632
47
(226)
1
454
$
%
34.0%
2.5%
-12.2%
0.0%
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.
21
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MVB FINANCIAL CORP.
December 31, 2010
Deferred income tax liabilities and (assets) were comprised of the following at December 31:
Depreciation
Unrealized loss on securities available-for-sale
Pension
Gross deferred tax liabilities
Allowance for loan losses
Minimum pension liability
Gross deferred tax (assets)
Net deferred tax (asset)
2010
2009
$
$
299
264
(66)
497
(778)
(381)
(1,159)
$
$
318
98
45
461
(765)
(326)
(1,091)
$
(662)
$
(630)
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.
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,
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.
including interest rates and collateral, as those prevailing at
(Dollars in thousands)
Balance at
Beginning
of Year
Borrowings
Repayments
Balance
at end
of Year
December 31, 2010
$
15,067
$
764
$
(1,836)
$
13,995
December 31, 2009
$
13,517
$
2,468
$
(918)
$
15,067
The Company held related party deposits of $11,812 and $10,941 at December 31, 2010 and December 31, 2009,
respectively.
The Company held related party repurchase agreements of $1,697 and $1,585 at December 31, 2010 and December 31,
2009, 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 $335 and $291 for
the years ended December 31, 2010 and 2009.
22
MVB FINANCIAL CORP.
December 31, 2010
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, 2010 and 2009 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
Accumulated benefit obligation
2010
2009
$
$
2,389
311
142
243
(26)
3,059
1,575
188
57
(26)
1,794
(1,265)
1,093
7
(165)
$
$
$
$
1,812
259
112
221
(15)
2,389
967
284
339
(15)
1,575
(814)
944
9
139
$
$
$
$
$
$
$
2,414
$
1,869
At December 31, 2010 and 2009, the weighted average assumptions used to determine the benefit obligation are as
follows:
Discount rate
Rate of compensation increase
5.50%
3.00%
6.00%
3.00%
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
$ 311
142
(139)
2
44
$ 360
$ 260
112
(116)
2
33
$ 291
At December 31, 2010 and 2009, 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
6.00%
8.00%
3.00%
6.25%
8.00%
3.00%
The Company's pension plan asset allocations at December 31, 2010 and 2009, as well as target allocations for 2011 are
as follows:
Asset Category
Equity securities
Balanced fund
Other
Total
12/31/2010
59%
31%
10%
100%
12/31/2009
63%
32%
5%
100%
2011
Target
75%
20%
5%
100%
23
MVB FINANCIAL CORP.
December 31, 2010
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)
Plan Assets
2011
2010
$ -
2
66
$ -
2
44
The fair value of MVB's pension plan assets at December 31, 2010 by asset class are as follows:
The following table sets forth by level, within the fair value hierarchy, as defined in Note 18 - Fair Value Measurements, the
Plan’s assets at fair value as of December 31, 2010.
Level I
Level II
Level III
Total
31-Dec-10
Assets:
Cash and cash equivalents
Investment in equity securities
Investment in debt
$ 179
$ 1,059
$ -
$ -
$ -
$ 556
$ -
$ -
$ -
$ 179
$ 1,059
$ 556
Total assets at fair value
$ 1,238
$ 556
$ -
$ 1,794
Investment in government and debt securities and short-term investments are valued at the closing price reported on the
active market on which the individual securities are traded.
The methods described above may produce a fair value calculation that may not be indicative of net realizable value or
reflective of future fair values. Furthermore, while the Plan believes its valuation methods are appropriate and consistent
with other market participants, the use of different methodologies or assumptions to determine the fair value of certain
financial instruments could result in a different fair value measurement at the reporting date.
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 01/01/11 through 12/31/11
Estimated future benefit payments reflecting expected future service
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 12/31/2014
1/1/2015 through 12/31/2015
1/1/2016 through 12/31/2020
Cash Flow
$ 552,981
$ 67,593
$ 111,246
$ 122,201
$ 131,706
$ 152,643
$ 1,021,841
NOTE 11. INTANGIBLE ASSETS
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, 2010 the Company has allocated $31 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.
24
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MVB FINANCIAL CORP.
December 31, 2010
NOTE 12. STOCK OFFERING
During 2010 the Company began a confidential offering to accredited investors that resulted in the issuance of 393,305
shares of common stock totaling $8.3 million in additional capital. As of December 31, 2010 the Company had received
signed offering memoranda and payment for 82,328 shares totaling 1.7 million in additional capital at December 31, 2010.
The proceeds of this offering will be used to support current and long-range growth plans of the Company. During 2010
the Company issued 172,420 shares, concluding 2010 with outstanding shares of 1,802,391. A 10% stock dividend
declared December 21, 2010 with a record date of January 25, 2011, payable February 15, 2011 resulted in an additional
159,561 shares.
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, 2007 and 2010 vest in 5 years and
expire 10 years from the date of the grant, with the exception of 10,000 shares granted in 2010 that vest in 3 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:
2010
Weighted-
Average
Exercise
Price
Number
of
Shares
2009
Weighted-
Average
Exercise
Price
Number
of
Shares
Outstanding at
beginning of year
Granted
Adjust for 5% stock
dividend
Exercised
Forfeited/expired
Outstanding at end
of year
Exercisable at end
of year
134,658
99,500
$
15.83
-
161,007
-
$
15.05
-
-
(12,859)
(14,002)
-
$
-
-
-
(26,349)
-
-
$
-
-
207,297
$
17.88
134,658
$
15.83
115,297
$
16.00
124,658
$
15.81
Weighted-average fair
value of options granted
during the year
$
3.10
N/A
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 3.28% for 2010, and a weighted average expected life of the
options of 7 years for 2010. The expected volatility of MVB's stock price used for 2010 options was 1.26%
and the expected dividend yield used was .50%.
The following summarizes information concerning MVB's stock options outstanding at December 31, 2010:
Options Outstanding
Weighted
Average
Remaining
Options Contractual
Exercise Price
Outstanding
Life
$16.00
$20.00
$22.50
115,797
81,500
10,000
6.00
10.00
10.00
Weighted
Average
Exercise
Price
$16.00
$20.00
$22.50
25
Options Exercisable
Weighted
Average
Exercise
Price
Number
Exercisable
115,297
$16.00
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MVB FINANCIAL CORP.
December 31, 2010
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 additional
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
under regulatory accounting practices. The Bank's capital amounts and classifications are also subject to
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, 2010 and 2009, 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 well
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, 2010
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, 2009
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
$
$
32,582
36,275
11.9%
13.3%
N/A
N/A
$
27,258
10.0%
$
$
21,807
21,807
8.0%
8.0%
$
$
30,104
33,797
11.0%
12.4%
N/A
N/A
$
16,355
6.0%
$
$
10,903
10,903
4.0%
4.0%
$
$
30,104
33,797
7.3%
8.2%
N/A
N/A
$
20,590
5.0%
$
$
16,487
16,472
4.0%
4.0%
$
$
28,780
32,191
11.8%
13.2%
N/A
N/A
$
24,300
10.0%
$
$
19,440
19,440
8.0%
8.0%
$
$
26,539
29,950
10.9%
12.3%
N/A
N/A
$
14,580
6.0%
$
$
9,720
9,720
4.0%
4.0%
$
$
26,539
29,950
7.6%
8.6%
N/A
N/A
$
17,508
5.0%
$
$
14,020
14,007
4.0%
4.0%
26
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MVB FINANCIAL CORP.
DECEMBER 31, 2010
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, 2010:
Years ended December 31:
2011
2012
2013
2014
2015
Thereafter
Total minimum payments required:
(Dollars in thousands)
$ 55
55
36
36
36
318
$ 536
Total lease expense for the years ended December 31, 2010 and 2009 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.
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.
27
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MVB FINANCIAL CORP.
DECEMBER 31, 2010
The carrying values and estimated fair values of the Company's financial instruments are summarized as follows:
December 31, 2010
Carrying
Value
Estimated
Fair
Value
(Dollars in thousands)
Financial assets:
Cash and due from banks
Interest bearing balances with banks
Securities available-for-sale
Securities held-to-maturity
Loans
Accrued interest receivable
Financial liabilities:
Deposits
Repurchase agreements
FHLB and other borrowings
Accrued interest payable
Long-term debt
Financial assets:
Cash and due from banks
Interest bearing balances with banks
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
Accrued interest payable
Long-term debt
$
3,713
27,825
61,824
7,460
294,044
1,398
396,264
$
$
$
300,434
47,623
28,614
378
4,124
381,173
$
3,713
27,878
61,824
7,442
302,277
1,398
404,532
$
$
$
307,584
47,671
32,305
378
4,124
392,062
December 31, 2009
Carrying
Value
Estimated
Fair
Value
$
2,321
53,377
37,292
6,594
232,847
1,074
333,505
$
$
$
264,531
35,641
19,198
531
4,124
324,025
$
2,321
53,484
37,292
6,772
233,313
1,074
334,256
$
$
$
263,840
35,712
20,427
531
4,124
324,634
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.
28
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MVB FINANCIAL CORP.
DECEMBER 31, 2010
NOTE 18. FAIR VALUE MEASUREMENTS
Accounting standards require that the Company adopt fair value measurement for financial assets and financial
liabilities. This enhanced guidance for using fair value to measure assets and liabilities applies whenever other
standards require or permit assets or liabilities to be measured at fair value. This guidance does not expand the
use of fair value in any new circumstances.
Accounting standards establish 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 these standards 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 December 31, 2010 by level within the fair value hierarchy. As required by accounting
standards, financial assets and liabilities are classified in their entirety based on the lowest level of input that is
significant to the fair value measurement. The Company classified investments in government securities as Level
2 instruments and valued them using the market approach.
(In Thousands)
Assets:
U.S. Government Agency Securities
Mortgage backed Securities
Other Securities
Total
December 31, 2010
Level I
Level II
Level III
Total
35,280
26,420
124
61,824
35,280
26,420
124
61,824
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, 2010 and 2009, 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
December 31
2010
2009
Cash
Investment in bank subsidiary,
eliminated in consolidation
Other assets
Total assets
Liabilities and shareholders' equity
Liabilities
Other liabilities
Long-term debt
Total liabilities
$
1,779
$
399
32,733
385
34,897
$
4
$
4,124
4,128
29
30,548
319
31,266
$
4
$
4,124
4,128
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MVB FINANCIAL CORP.
DECEMBER 31, 2010
Stockholders' equity
Preferred stock, par value $1,000; 5,000
shares authorized, none issued
Common stock, par value $1; 4,000,000
shares authorized; 1,802,391 and
1,629,971 shares issued
respectively
Additional paid in capital
Common stock paid for but not issued,
par value $1; 82,328 shares issued
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
(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 (loss)/gain
Net cash (used in)
operating activities
INVESTING ACTIVITIES
Investment in subsidiary
Net cash provided by/(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 (used in)/provided by
financing activities
Increase/(decrease) in cash
Cash at beginning of period
$
-
$
-
1,802
23,864
1,729
(1,006)
4,643
(263)
30,769
34,897
$
2010
-
$
176
(176)
(67)
(109)
1,629
20,457
-
(522)
5,917
(343)
27,138
31,266
$
2009
-
$
163
(163)
(62)
(101)
2,346
2,237
$
1,507
1,406
$
2010
2009
$
2,237
$
1,406
(2,346)
(66)
-
46
80
(49)
161
161
1,729
-
183
(160)
(484)
1,268
1,380
399
(1,507)
(62)
(3)
15
(28)
(179)
301
301
-
-
292
(160)
(223)
(91)
31
368
Cash at end of period
$
1,779
$
399
30
DDIRECTORS
MMVB Financial Corp.
Stephen R. Brooks
Dr. Joseph P. Cincinnati
Berniece D. Collis
Harvey M. Havlichek
James R. Martin
Larry F. Mazza
Barbara A. McKinney
Dr. Saad Mossallati
Dr. Kelly R. Nelson
Leonard W. Nossokoff
J. Christopher Pallotta
Nitesh S. Patel
Louis Spatafore
Wayne H. Stanley
Richard L. Toothman
Dr. Michael F. Trent
Samuel J. Warash
MMVB Bank
Stephen R. Brooks
Dr. Joseph P. Cincinnati
Berniece D. Collis
Harvey M. Havlichek
James R. Martin
Larry F. Mazza
Barbara A. McKinney
Dr. Saad Mossallati
Dr. Kelly R. Nelson
Leonard W. Nossokoff
J. Christopher Pallotta
Nitesh S. Patel
Louis Spatafore
Wayne H. Stanley
Richard L. Toothman
Dr. Michael F. Trent
Samuel J. Warash
MMVB Central
David B. Alvarez
Stephen R. Brooks
Dr. Joseph P. Cincinnati
Berniece D. Collis
John W. Ebert
Dr. Carl R. Fischer
Harvey M. Havlichek
Christine B. Ielapi
James R. Martin
Larry F. Mazza
Barbara A. McKinney
Dr. Saad Mossallati
Dr. Kelly R. Nelson
Leonard W. Nossokoff
J. Christopher Pallotta
Nitesh S. Patel
John B. Spadafore
Louis Spatafore
Wayne H. Stanley
Richard L. Toothman
Dr. Michael F. Trent
Roger J. Turner
Samuel J. Warash
MMVB East
Dr. Joseph P. Cincinnati
Berniece D. Collis
Dr. Brian D. Gilpin
Maria K. Lorensen
Kenneth F. Lowe
James R. Martin
Larry F. Mazza
G. Warren Mickey
J. Christopher Pallotta
Christopher B. Shultz
31
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
December 15, 2009
December 31, 2009
December 15, 2010
December 31, 2010
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
Cash dividend
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
0.10 Per share
20.00 Per share
0.10 Per share
21.00 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.
32
MVB Financial Corp.
301 Virginia Avenue
Fairmont, West Virginia 26554
Phones: 304-363-4800; 1-888-689-1877 (cid:129) www.mvbbanking.com