Financial Performance Overview

MVB Financial Corp. (MVB) is a diversified financial holding company that provides banking, mortgage, insurance, and wealth management services. The company recently released its financial results for the three months ended March 31, 2025, which showed a mixed performance compared to the same period in 2024.

Net Interest Income and Margin

Net interest income, which is the primary source of revenue for the bank, declined by 11.5% to $26.7 million in the first quarter of 2025 compared to $30.1 million in the same period of 2024. This decline was primarily due to a decrease in average earning assets, particularly lower balances in cash, commercial loans, real estate loans, and consumer loans. The net interest margin on a tax-equivalent basis also decreased from 3.83% to 3.66% over this period, reflecting lower yields on earning assets that were only partially offset by lower funding costs.

The bank’s management team continues to analyze ways to deploy assets into a more profitable mix to generate a stronger net interest margin. They are focused on managing the balance sheet’s liquidity and interest rate risk exposure based on changes in economic conditions and interest rate levels.

Provision for Credit Losses

The provision for credit losses, which represents the amount set aside to cover potential loan losses, declined from $2.0 million in the first quarter of 2024 to $0.2 million in the same period of 2025. This decrease was due to a reduction in the required reserve calculated by the pooled loan analysis, driven by both lower loan portfolio balances and lower allocation rates. However, this was partially offset by higher calculated reserves for individually analyzed loans.

The bank’s total loans decreased by $36.8 million during the first quarter of 2025, primarily reflecting the amortization of the loan portfolio and a focus on reducing criticized assets. Net charge-offs were $0.9 million and $1.3 million in the first quarters of 2025 and 2024, respectively.

Noninterest Income

Noninterest income, which includes revenue from sources such as payment card fees, service charges, and gains on asset sales, decreased from $7.8 million in the first quarter of 2024 to $7.0 million in the same period of 2025. This decline was primarily due to a $1.6 million decrease in other operating income and a $0.7 million decrease in gains on the sale of available-for-sale investment securities. These decreases were partially offset by a $0.6 million gain on divestiture activity related to the sale of Trabian and $0.6 million in equity method investment income from the mortgage segment.

Noninterest Expense

Noninterest expense, which includes personnel costs, professional fees, and other operating expenses, decreased from $30.2 million in the first quarter of 2024 to $28.7 million in the same period of 2025. This decline was primarily due to a $2.2 million decrease in professional fees, partially offset by a $0.6 million increase in other operating expenses. Personnel costs remained a significant portion of noninterest expense, accounting for 57.2% and 54.6% of the total in the first quarters of 2025 and 2024, respectively.

Profitability Metrics

MVB’s return on average assets decreased from 0.5% in the first quarter of 2024 to 0.4% in the same period of 2025, primarily due to the decline in earnings and lower average total assets. Similarly, the company’s return on average stockholders’ equity decreased from 6.2% to 4.7% over this period, reflecting the $0.9 million decline in earnings and a $15.3 million increase in average equity.

Financial Condition

As of March 31, 2025, MVB had total assets of $3.30 billion, a decrease of $208.2 million compared to March 31, 2024. This decline was primarily driven by a $104.4 million decrease in average interest-bearing balances with banks, a $134.0 million decrease in average commercial loans, a $30.0 million decrease in average real estate loans, and a $14.3 million decrease in average consumer loans, partially offset by a $78.0 million increase in average investment securities.

The bank’s investment securities portfolio totaled $463.9 million as of March 31, 2025, up from $454.2 million at the end of 2024. The portfolio is primarily composed of U.S. government agency securities, mortgage-backed securities, and municipal securities, with a smaller allocation to corporate debt and other securities.

MVB’s loan portfolio decreased by $36.8 million during the first quarter of 2025, with declines in the commercial, real estate, and consumer loan segments. The bank’s lending is primarily focused in North Central West Virginia, Northern Virginia, North Carolina, and South Carolina, with a significant concentration in the healthcare industry, which represents 23% of the total loan portfolio.

The allowance for credit losses (ACL) was $19.2 million, or 0.93% of loans receivable, at March 31, 2025, compared to $19.7 million, or 0.94% of loans receivable, at the end of 2024. The decrease in the ACL was primarily due to a decline in the commercial real estate, residential, and consumer loan segments, as well as decreases in the commercial acquisition, development and construction, and commercial and industrial segments, partially offset by an increase in the commercial real estate owner-occupied segment and higher reserves for individually analyzed loans.

On the funding side, deposits remained the bank’s primary source of funding, totaling $2.58 billion, or 97.0% of total funding sources, at March 31, 2025. Noninterest-bearing demand deposits increased to $1.03 billion, or 40.0% of total deposits, from $941.0 million, or 34.9% of total deposits, at the end of 2024. The bank also utilizes a custodial deposit transference structure for certain deposit programs, which resulted in $1.52 billion of off-balance sheet deposits at the end of the first quarter of 2025.

Capital and Liquidity

MVB’s stockholders’ equity increased to $310.1 million at March 31, 2025, up from $304.1 million at the end of 2024. The increase was primarily due to net income of $3.6 million, other comprehensive income of $2.1 million, and stock-based compensation of $0.8 million, partially offset by $2.2 million in dividends paid to common shareholders.

The bank’s equity-to-assets ratio increased from 9.8% at the end of 2024 to 10.3% at the end of the first quarter of 2025, reflecting the decline in total assets. MVB’s Community Bank Leverage Ratio, which it uses as its primary capital measure, was 10.9% at March 31, 2025, well above the 9% minimum requirement.

In terms of liquidity, MVB had $333.9 million in liquid assets as of March 31, 2025, which the company believes is sufficient to meet its cash obligations and funding needs. The bank’s main sources of liquidity include deposit growth, cash generated from investment maturities and loan payments, and access to external funding sources such as FHLB advances and the Federal Reserve discount window.

Outlook and Conclusion

MVB’s financial performance in the first quarter of 2025 was mixed, with declines in net interest income, noninterest income, and profitability metrics compared to the same period in 2024. The bank’s management team is focused on deploying assets into a more profitable mix, managing interest rate risk, and controlling noninterest expenses to improve the company’s financial results.

Despite the challenges, MVB maintains a strong capital position and ample liquidity to support its operations and growth initiatives. The company’s diversified business model, which includes banking, mortgage, insurance, and wealth management services, provides some stability and revenue diversification. However, the bank’s future success will depend on its ability to effectively manage growth, adapt to changing market conditions, and execute its strategic plan.

Overall, MVB’s first-quarter 2025 results highlight the need for the company to continue optimizing its balance sheet, improving operational efficiency, and capitalizing on growth opportunities in its key markets and business lines to drive improved financial performance and shareholder value.