MVB Financial Corp. (MVBF) Earnings Call Transcript & Summary

Hello, and welcome to the 2024 Annual Meeting of Shareholders of MVB Financial Corp. Please note that today's meeting is being recorded. It is now my pleasure to turn today's meeting over to W. Marston Becker, Chairman of MVB Financial Corp. Board of Directors. Chairman Becker, you may begin.

Good morning, everyone, and thank you so much for joining us today. It is my pleasure on behalf of the Board of Directors of MVB Financial Corp. to welcome you to the Annual Shareholders' Meeting. It's also my honor to serve as Chairman of MVB Financial Corp., but I'm pleased to be presiding at today's meeting. Members of our Board of Directors and management team are attending the meeting virtually today. If you are a registered shareholder and have logged on to this meeting with a valid control number, you will be able to vote and ask questions about the proposals during the meeting. You may submit questions by entering your question into the designated field on the web portal. I will address questions, if any, about the proposals after they are presented. I have a copy of the notice of this annual meeting and an affidavit of Computershare the registrar and transfer agent for our common stock, as to the notice of the meeting, which states that on April 8, 2024, a notice of this meeting and notice of Internet availability of proxy materials was mailed to all shareholders of record as of the close of business on March 27, 2024, the record date for this year's annual meeting. This affidavit is available if any shareholder wishes to examine it, and it will be filed with the minutes of the annual meeting. Unless there is a request we will dispense with the reading of the notice of this meeting. There being no request. The reading of the notice of the meeting is dispensed with. Lisa McCormick, the company's Corporate Secretary has been appointed to serve as the Inspector of Election for this meeting. He has signed an oath to act as the inspector of election, and this oath will be filed with the minutes of the meeting. The inspector has the alphabetical list of registered shareholders of the company as of March 27, 2024, the record date for the meeting, which shows the registered shareholders, their respective addresses and the number of shares held by each shareholder. This list was available prior to and will remain available via the virtual meeting web portal during this annual meeting for inspection by shareholders. Secretary McCormick advised me shortly before this meeting began that a quorum is present. So I declare the meeting duly and lawfully convened. I direct the Secretary to file copies of the notice of this meeting together with the proxy statement, form of proxy and the affidavit of Computershare with the minutes of this annual meeting. I'll now call the annual meeting to order. The meeting will be conducted in accordance with the agenda and the rules of conduct, which you can find on the virtual meeting portal. You can also find a link to the annual proxy statement prospectus on the portal. You'll have an opportunity to vote when the polls are opened later in the meeting. Although if you have already submitted your vote via proxy, you do not need to vote again. There are 3 proposals being considered today. Our Board of Directors has unanimously recommended that the shareholders approve each of the 3 proposals. The first item to be voted on today is the election of 3 director nominees. The proxy statement made available to you earlier listed the company's nominees for director. A plurality of the votes cast is required for the election of director. The 3 directors whose terms expire in 2024 have been nominated for a 3-year term expiring in 2027. They are John W. Ebert, Dr. Kelly Nelson; and Jan L. Owen. The second proposal to be voted on at today's meeting is the approval on a nonbinding advisory basis of the compensation of our named executive officers. The company's executive compensation is discussed in detail in the proxy statement that was made available to you earlier. Approval of this proposal requires the number of votes cast favoring the proposal, exceed the votes cast opposing the proposal. The last proposal to be voted on at today's meeting is to ratify the appointment of FORVIS, LLP as the independent registered public accounting firm for 2024. The appointment of FORVIS, LLP is discussed in the proxy statement that was made available to you earlier. Approval of this proposal requires that the number of votes cast favoring the proposal exceed the votes cast opposing the proposal. Adam Thomas with FORVIS, LLP is in attendance at today's meeting and would be pleased to respond to appropriate questions submitted by shareholders, which may be submitted at this time through the online portal. The meeting is now open for any questions that may have been submitted by our shareholders through the web portal. Seeing we have not received any questions related to the proposals and having presented all matters to be voted on by shareholders I declare the polls now open for voting on the proposals. We will take a few moments to ensure all of the online ballots have been properly submitted for the proposals being voted on today. [Voting]

The voting has now been completed, and I would declare the polls for voting are now closed at this time, 10:06 a.m., May 21, 2024. While we finished tabulating votes, I just want to take a minute to express our sincere thank you to all of our shareholders who have taken the time to attend this annual meeting virtually and vote their shares. I've now been advised by Secretary of McCormick that each of the proposals presented today has been preliminarily approved by MVB shareholders with the directors standing for election having been duly elected for the respective terms as described in the proxy statement. The final results of the meeting will appear in a current report on Form 8-K that the company will file within 4 business days from this meeting. Having concluded the official business as set forth in the annual proxy statement, I hereby adjourn the formal portion of the Annual Meeting of Shareholders. I would now like to introduce our CEO, Larry Mazza; who will deliver his CEO presentation.

Thank you, Mr. Chairman. I, too, am grateful for the hard work of MVB's Board of Directors and all of Team MVB, who in 2023 and 2024 and always, have given us their total commitment and live the values and the purpose of Team MVB. Also, I'm appreciative of the shareholders' continued support and insight and comments as we work with them through some of the most challenging times since the 2023 March Madness in banking. So very grateful for our shareholders. As I look at our first slide, we talk about our strategy on a page. There's 2 things on this page that are very permanent to us, and it's our purpose and our values. And our purpose with trusted partners on the financial frontier committed to your success. And we validate that purpose through 5 values that we live every day that we perform against. And those 3 values for trusted partners are love, trust and commitment. We know that if we have those 3 values, we can be trusted partners with anyone. With our team, with our personal partners, with our regulators, et cetera. We look at those values, we know we have a trusted partnership. As far as the financial frontier, the value of activity is crucial. The frontier is always changing in banking today and financial services, and we also must adapt accordingly. And our last value is the value of teamwork. We're committed to the success of our shareholders, our teammates, our communities and our clients and it's critical to have teamwork to bring success to those constituencies. We do all this in a culture of compliance as we move forward in the world that we are in today. When we look at the strategy on the page, there are 4 lanes on the track that we work with our F1 strategy. The first 1 is banking that's tech-forward, which some would call our legacy bank. The bank is a choice of fintech. This is our banking that is tech -- that don't only tech-forward, but works with our fintechs like our gaming clients, our payment clients, in our Banking as a Service clients. Our builders of fintech are a company like Victor, which is, we believe, is a critical source in our API development with our clients also our compliance vehicle as we modernize payments into the future. And our last 1 is backers of fintech. This is where we invest in our fintechs. We talk about our growth vehicles and there are 6 on 2 areas: our qualifying track and our Fast Track. We have Banking as a Service issuing, which is part of payments and Victor are all 3 on the qualifying track. We also have our Fast Track, which is our strategic lending partnerships, which is part of our core commercial and retail and also our payments and acquiring business and our gaming business. Those are our 6 vehicles that we focus on for future growth. What kind of success have we had with those vehicles in '23 and what does it look like in the first quarter of '24. As you can see, we continue to have a positive tangible book value growth going forward since '23, into the first quarter '24, we continue to move that up slightly. The next 1 is our continued and very important franchise value of our deposit base. As you can see, from '23 into the first quarter of '24, we continue to have success. Our noninterest-bearing deposits are 44% of our total deposits now. Our total deposits that are on and off balance sheet are almost $4.7 billion. $1.5 billion are off balance sheet, $1.3 billion, almost $1.4 billion are noninterest-bearing and nearly $1.8 billion are interest-bearing, which we believe is a strong franchise value stability in our balance sheet. When we look at our next slab, which is our growth in our fintech banking in MVB, you can see that our compounded annual growth rate is 41.7%. We have grown those deposits most recently from the end of '23 to the first quarter, which we reported to $2.5 billion. When you look at our gross fee income in that area, it continues to grow very strongly. You can see from '22 to '23 we have gone from $12 million to $15 million in those 2 years. And then in the first quarter, exceeding the first quarter 2023 by almost $1.5 million of growth. So we are pacing above the 2023 gross fee income. The next slide is our loan production. We have a 15% compound annual growth rate in our net loans. Over the past few years, though, because of the economic conditions we have been very conservative in our loan growth. You can see it's very steady from '22 to the first quarter of '24. We plan to continue to be steady until we can see a clear economic positive conditions. In fact it's very difficult to lend in these cycles and we believe the first thing that sense a bank is loan quality. Speaking of loan quality, I think we have some of the best continued, and we have through our history, some of the best asset quality through all cycles. As you can see on the next slide is in our first one, our nonperforming loans to total loans. Ours are 0.33%, and our peers are higher, which is a negative to them at over 0.5%. When you look at our allowance to credit losses, again, another measure that looks at our loan quality and how we're prepared for that. In the first quarter of 2024, we're now over 1% reserve, our peer group is about 1.1%. And then lastly, when you look at loan quality, you look at charge-offs, and we are net charge-offs to average loans has been 0.23, which is very good to our peer group, which is 0.30, which is higher than ours, meaning they have charged off more in the first quarter than Team MVB, which we believe is part of our credit culture and our strong [indiscernible]. Our next slide goes into our insider holdings really affirms the belief by the insiders in MVB. When you look at the ownership, MVB insiders own 15% of the outstanding stock of MVB, 42% is held by retail investors and 43% is held by institutional investors. We still see that strong commitment to our team. On our next slide, we go with our awards and accolades. I think this is very important to us as validation to culture. We have a strong culture. Our teammates live the values, live the purpose and I think it shows in where we are in some of the awards and accolades. In '23, we were the Best Bank to Work For in Fortune as well as the American Bankers Association. And also, we hold for many consecutive quarters a 5-star rating for safety and sound by Bauer. They evaluate banks for depositors to say we're the safest banks. The highest rating you can get is 5 star. There's not a lot of banks that meet that criteria. MVB is one, and I think that is also positive for our depositors as well as our shareholders. With that, I'll open it up to any questions for Team MVB the shareholders now had.

Not hearing any questions. Thank you very much, Larry. And that would conclude the business portion of our meeting today. We really appreciate each and every 1 of you for dialing in, and we would encourage you to reach out to Secretary McCormick, our Corporate Secretary and Investor Relations or Marcie Lipscomb with Investor Relations at 844 MVB Bank, if you have any other questions because we would love to address them. Again, we thank you very much for your support and your investment in MVB Financial Corporation, and that will conclude this year's annual meeting. Thank you.

Ladies and gentlemen, this does conclude MVB Financial Corp.'s Annual Meeting. Thank you for your participation, and you may all disconnect. Have a great day.