West Virginia | | | 6022 | | | 20-0034461 |
(State or other jurisdiction of incorporation or organization) | | | (Primary Standard Industrial Classification Code Number) | | | (I.R.S. Employer Identification No.) |
James J. Barresi Evan A. Toebbe Squire Patton Boggs (US) LLP 201 E. Fourth Street, Suite 1900 Cincinnati, OH 45202 (513) 361-1200 | | | Stuart M. Rigot Jonathan A. Greene Wyrick Robbins Yates & Ponton LLP 4101 Lake Boone Trail, Suite 300 Raleigh, NC 27607 (919) 781-4000 |
Large accelerated filer | | | ☐ | | | | | Accelerated filer | | | ☒ | |
Non-accelerated filer | | | ☐ | | | | | Smaller reporting company | | | ☐ | |
| | | | | | | Emerging growth company | | | ☐ |
| | | Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer) ☐ | |
| | | Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer) ☐ |
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Larry F. Mazza Chief Executive Officer MVB Financial Corp. | | | Eric J. Bergevin President and Chief Executive Officer Integrated Financial Holdings, Inc. |
| • | A proposal to approve the merger agreement and the transactions contemplated by the merger agreement, including the merger of IFH with and into MVB, with MVB as the surviving company, and the issuance of shares of MVB common stock as merger consideration (the “MVB merger proposal”). |
| • | A proposal to approve an amendment to MVB’s articles of incorporation to effect an increase in the number of authorized shares of MVB common stock from 20,000,000 to 40,000,000 (the “MVB articles amendment proposal”). |
| • | A proposal to adjourn the MVB special meeting, if necessary or appropriate, to solicit additional proxies if, immediately prior to such adjournment, there are not sufficient votes to approve the MVB merger proposal or the MVB articles amendment proposal, or to ensure that any supplement or amendment to the accompanying joint proxy statement/prospectus is timely provided to holders of MVB common stock (the “MVB adjournment proposal”). |
| | | By Order of the Board of Directors | |
| | |  | |
| | | Larry F. Mazza Chief Executive Officer |
| • | A proposal to approve the merger agreement and the transactions contemplated thereby, including the merger with MVB (the “IFH merger proposal”); and |
| • | A proposal to adjourn the IFH special meeting, if necessary or appropriate, to solicit additional proxies if, immediately prior to such adjournment, there are not sufficient votes to approve the IFH merger proposal or to ensure that any supplement or amendment to the accompanying joint proxy statement/prospectus is timely provided to holders of IFH common stock (the “IFH adjournment proposal”). |
| | | By Order of the Board of Directors | |
| | |  | |
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| | | Eric J. Bergevin President and Chief Executive Officer |
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| | | Exhibit A – Form of Voting and Support Agreement | | | Annex A, Exhibit A | |
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| • | “IFH” refers to Integrated Financial Holdings, Inc., a North Carolina corporation; |
| • | “West Town Bank” refers to West Town Bank & Trust, an Illinois state-chartered bank and a wholly owned subsidiary of IFH; |
| • | “IFH bylaws” refers to the bylaws of Integrated Financial Holdings, Inc.; |
| • | “IFH articles of incorporation” refers to the articles of incorporation of Integrated Financial Holdings, Inc., as amended; |
| • | “IFH common stock” refers to, collectively the voting common stock and non-voting stock of IFH, par value $1.00 per share; |
| • | “MVB” refers to MVB Financial Corp., a West Virginia corporation; |
| • | “MVB Bank” refers to MVB Bank, Inc., a West Virginia state chartered bank and a wholly owned subsidiary of MVB; |
| • | “MVB articles of incorporation” refers to the articles of incorporation of MVB, as amended; |
| • | “MVB bylaws” refers to the amended and restated bylaws of MVB, as amended; |
| • | “MVB common stock” refers to the common stock of MVB, $1.00 par value per share; |
| Q: | Why am I receiving this joint proxy statement/prospectus? |
| A: | You are receiving this joint proxy statement/prospectus because MVB and IFH entered into an Agreement and Plan of Merger and Reorganization (as may be amended, modified or supplemented from time to time in accordance with its terms, the “merger agreement”), pursuant to which IFH will merge with and into MVB (the “merger”) with MVB as the surviving entity. Following the merger, West Town Bank and MVB Bank will merge (the “bank merger,” and together with the merger, the “mergers”), with MVB Bank as the surviving bank. A copy of the merger agreement is attached as Annex A to this joint proxy statement/prospectus and is incorporated by reference herein. In this joint proxy statement/prospectus, we refer to the closing of the transactions contemplated by the merger agreement as the “closing” and the date on which the closing occurs as the “closing date.” |
| • | MVB shareholders must approve the merger agreement and the transactions contemplated by the merger agreement, including the merger of IFH with and into MVB, with MVB as the surviving company, and the issuance of shares of MVB common stock as merger consideration (the “MVB merger proposal”); and |
| • | IFH shareholders must approve the merger agreement and the transactions contemplated thereby, including the merger with MVB (the “IFH merger proposal”). |
| Q: | What will happen in the merger? |
| A: | In the merger, MVB and IFH will merge, with MVB as the surviving entity. In the bank merger, which will occur following the merger, MVB Bank and West Town Bank will merge, with MVB Bank as the surviving bank. |
| Q: | When and where will each of the special meetings take place? |
| A: | The MVB special meeting will be held virtually via the internet on [ ], 2022 at [ ], Eastern Time. As we continue to monitor the status of the COVID-19 (coronavirus) pandemic and, in order to support the health and safety of our shareholders, employees and community, the MVB special meeting will be held in a virtual-only format conducted via live webcast, which means that you will be able to participate in substantially the same manner as if you were attending the meeting in person, including the ability to submit questions and vote your shares electronically during the meeting via live webcast. If you are a holder of record, you may attend the MVB special meeting by visiting [www.virtualshareholdermeeting.com/MVBF2022SM] and entering the control number that is printed on your proxy card. If you are not a shareholder, you will be able to attend the meeting by visiting [www.virtualshareholdermeeting.com/MVBF2022SM] and registering as a guest. If you enter the meeting as a guest, you will not be able to vote or submit questions during the meeting. You may log in beginning at [ ] (Eastern Time) on [ ], 2022. The MVB special meeting will begin promptly at [ ] (Eastern Time). An archived copy of the webcast will also be available under the Investor Relations tab on the Company’s website at www.mvbbanking.com through [ ], 2022. |
| Q: | What matters will be considered at each of the special meetings? |
| A: | At the MVB special meeting, MVB shareholders will be asked to consider and vote on the following proposals: |
| • | MVB Proposal 1: The MVB merger proposal; |
| • | MVB Proposal 2: The MVB articles amendment proposal; and |
| • | MVB Proposal 2: The MVB adjournment proposal. |
| • | IFH Proposal 1: The IFH merger proposal; and |
| • | IFH Proposal 2: The IFH adjournment proposal. |
| Q: | What will holders of IFH common stock receive in the merger? |
| A: | In the merger, holders of IFH common stock will receive 1.21 shares of MVB common stock for each share of IFH common stock held immediately prior to the completion of the merger. MVB will not issue any fractional shares of MVB common stock in the merger. Holders of IFH common stock who would otherwise be entitled to a fractional share of MVB common stock in the merger will instead receive an amount in cash (rounded to the nearest cent) determined by multiplying the average of the daily closing-sale price per share of MVB common stock on NASDAQ, as reported by THE WALL STREET JOURNAL, for the consecutive period of five (5) full trading days ending on the day preceding the closing date by the fraction of a share (rounded to the nearest thousandth when expressed in decimal form) of MVB common stock that such shareholder would otherwise be entitled to receive. |
| Q: | What will holders of MVB common stock receive in the merger? |
| A: | In the merger, holders of MVB common stock will not receive any consideration, and their shares of MVB common stock will remain outstanding and will constitute shares of MVB following the merger. Following the merger, shares of MVB common stock will continue to be traded on NASDAQ. |
| Q: | Will the value of the merger consideration change between the date of this joint proxy statement/prospectus and the time the merger is completed? |
| A: | Yes. Although the number of shares of MVB common stock that IFH shareholders will receive is fixed, the value of the merger consideration will fluctuate between the date of this joint proxy statement/prospectus and the completion of the merger based upon the market value for MVB common stock. Any fluctuation in the market price of MVB common stock will change the value of the shares of MVB common stock that IFH shareholders will receive. |
| Q: | How will the merger affect IFH equity awards? |
| A: | The merger agreement provides that, at the effective time, each option granted by IFH to purchase shares of IFH common stock under an IFH stock plan, whether vested or unvested, that is outstanding and unexercised immediately prior to the effective time (a “IFH Stock Option”) shall without any further action on the part of any holder thereof, be assumed by MVB and shall be converted into an option to purchase MVB common stock (a “Purchaser Stock Option”). Each such Purchaser Stock Option as so assumed and converted shall continue to have, and shall be subject to, the same terms and conditions as applied to the IFH Stock Option immediately prior to the effective time. As of the effective time, each such Purchaser Stock Option as so assumed and converted shall be an option to acquire that number of whole shares of MVB common stock (rounded down to the nearest whole share) equal to the product of (i) the number of shares of IFH common stock subject to such IFH Stock Option, multiplied by (ii) 1.21, at an exercise price per share of MVB common Stock (rounded up to the nearest whole cent) equal to the quotient obtained by dividing (A) the exercise price per share of IFH common stock subject to such IFH Stock Option by (B) 1.21, provided, that the exercise price and the number of shares of MVB common stock subject to the Purchaser Stock Option shall be determined in a manner consistent with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and, in the case of IFH Stock Options that are intended to qualify as incentive stock options within the meaning of Section 422 of the Code, consistent with the requirements of Section 424(a) of the Code. |
| Q: | How does the MVB board of directors recommend that I vote at the MVB special meeting? |
| A: | The MVB board of directors unanimously recommends that you vote “FOR” the MVB merger proposal, “FOR” the MVB articles amendment proposal and “FOR” the MVB adjournment proposal. |
| Q: | How does the IFH board of directors recommend that I vote at the IFH special meeting? |
| A: | The IFH board of directors unanimously recommends that you vote “FOR” the IFH merger proposal and “FOR” the IFH adjournment proposal. In considering the recommendations of the IFH board of directors, IFH shareholders should be aware that IFH directors and executive officers may have interests in the merger that are different from, or in addition to, the interests of IFH shareholders generally. For a more complete description of these interests, see the information provided in the section entitled “The Merger—Interests of IFH Directors and Executive Officers in the Merger” beginning on page 104. |
| Q: | Who is entitled to vote at the MVB special meeting? |
| A: | The record date for the MVB special meeting is [ ], 2022. All MVB shareholders who held shares at the close of business on the record date for the MVB special meeting are entitled to receive notice of, |
| Q: | Who is entitled to vote at the IFH special meeting? |
| A: | The record date for the IFH special meeting is [ ], 2022. All IFH shareholders who held shares at the close of business on the record date for the IFH special meeting are entitled to receive notice of, and to vote at, the IFH special meeting. Each holder of IFH common stock is entitled to cast one (1) vote on each matter properly brought before the IFH special meeting for each share of IFH common stock that such holder owned of record as of the record date. The IFH voting common stock and IFH non-voting common stock will vote as separate voting groups on the proposals to be considered at the IFH special meeting. As of [ ], 2022, there were [ ] outstanding shares of IFH voting common stock and 21,740 outstanding shares of IFH non-voting common stock. |
| Q: | What constitutes a quorum for the MVB special meeting? |
| A: | The presence at the MVB special meeting, virtually or by proxy, of holders of a majority of the outstanding shares of MVB common stock entitled to vote at the MVB special meeting will constitute a quorum for the transaction of business at the MVB special meeting. Abstentions will be included in determining the number of shares present at the meeting for the purpose of determining the presence of a quorum. |
| Q: | What constitutes a quorum for the IFH special meeting? |
| A: | The presence at the IFH special meeting, in person or by proxy, of holders of a majority of the votes entitled to be cast by a voting group at the IFH special meeting will constitute a quorum for the transaction of business at the IFH special meeting with respect to that voting group. Abstentions will be included in determining the number of shares present at the meeting for the purpose of determining the presence of a quorum. |
| Q: | What vote is required for the approval of each proposal at the MVB special meeting? |
| A: | MVB Proposal 1: MVB merger proposal. Approval of the MVB merger proposal requires the affirmative vote of a majority of the votes cast on the proposal, assuming a quorum is present. |
| Q: | What vote is required for the approval of each proposal at the IFH special meeting? |
| A: | IFH merger proposal. Approval of the IFH merger proposal requires (i) the affirmative vote of a majority of the outstanding shares of IFH voting common stock entitled to vote on the merger proposal, voting as a separate voting group, and (ii) the affirmative vote of a majority of the outstanding shares of IFH non-voting common stock entitled to vote on the merger proposal, voting as a separate voting group. As of the record date of the IFH special meeting, all outstanding shares of IFH non-voting common stock were held by a single shareholder affiliated with the Chairman of IFH’s board of directors. |
| Q: | What if I hold shares in both MVB and IFH? |
| A: | If you hold shares of both MVB common stock and IFH common stock, you will receive separate packages of proxy materials. A vote cast as an MVB shareholder will not count as a vote cast as an IFH shareholder, and a vote cast as an IFH shareholder will not count as a vote cast as an MVB shareholder. Therefore, please submit separate proxies for your shares of MVB common stock and your shares of IFH common stock. |
| Q: | How can I attend, vote and ask questions at the MVB special meeting or the IFH special meeting? |
| A: | Record Holders. If you hold shares directly in your name as the holder of record of MVB or IFH common stock, you are a “record holder” and your shares may be voted at the MVB special meeting or the IFH special meeting by you, as applicable. If you choose to vote your shares virtually at the MVB special meeting via the applicable special meeting website, you will need the control number, as described below. |
| Q: | How can I vote my shares without attending my respective special meeting? |
| A: | Whether you hold your shares directly as the holder of record of MVB common stock or IFH common stock or beneficially in “street name,” you may direct your vote by proxy without attending the MVB special meeting or the IFH special meeting, as applicable. |
| Q: | What do I need to do now? |
| A: | After carefully reading and considering the information contained in this document, please vote as soon as possible. If you hold shares of MVB common stock or IFH common stock, please respond by completing, signing and dating the accompanying proxy card and returning it in the enclosed postage-paid envelope, or by submitting your proxy through the internet or, in the case of MVB shareholders, by telephone, as soon as possible so that your shares may be represented at your meeting. Please note that if you are a beneficial owner with shares held in “street name,” you should follow the voting instructions provided by your bank, broker, trustee or other nominee. |
| Q: | If I am a beneficial owner with my shares held in “street name” by a bank, broker, trustee or other nominee, will my bank, broker, trustee or other nominee vote my shares for me? |
| A: | No. Your bank, broker, trustee or other nominee cannot vote your shares without instructions from you. You should instruct your bank, broker, trustee or other nominee how to vote your shares in accordance with the instructions provided to you. Please check the voting instruction form used by your bank, broker, trustee or other nominee. |
| Q: | What is a “broker non-vote”? |
| A: | Banks, brokers and other nominees who hold shares in street name for a beneficial owner of those shares typically have the authority to vote in their discretion on “routine” proposals when they have not received instructions from beneficial owners. However, banks, brokers and other nominees are not allowed to exercise their voting discretion with respect to the approval of matters determined to be “non-routine” without specific instructions from the beneficial owner. |
| • | MVB merger proposal: your bank, broker, trustee or other nominee may not vote your shares on the MVB merger proposal, which broker non-votes, if any, will not be counted as a vote cast and will not have any effect on the outcome of the MVB merger proposal, assuming a quorum is present; |
| • | MVB articles amendment proposal: your bank, broker, trustee or other nominee may not vote your shares on the MVB articles amendment proposal, which broker non-votes, if any, will not be counted as a vote cast and will not have any effect on the outcome of the MVB merger proposal, assuming a quorum is present; and |
| • | MVB adjournment proposal: your bank, broker, trustee or other nominee may not vote your shares on the MVB adjournment proposal, which broker non-votes, if any, will have no effect on the outcome of such proposal. |
| • | IFH merger proposal: your bank, broker, trustee or other nominee may not vote your shares on the IFH merger proposal, which broker non-votes, if any, will have the same effect as a vote “AGAINST” such proposal; |
| • | IFH adjournment proposal: your bank, broker, trustee or other nominee may not vote your shares on the IFH adjournment proposal, which broker non-votes, if any, will have no effect on the outcome of such proposal. |
| Q: | What if I fail to vote or abstain? |
| A: | For purposes of the MVB special meeting, an abstention occurs when an MVB shareholder attends the MVB special meeting and does not vote or returns a proxy with an “abstain” instruction. |
| • | MVB merger proposal: Abstentions and failures to submit a proxy or vote virtually at the MVB special meeting, or failure to instruct your bank or broker how to vote, will not be counted as a vote cast and will not have any effect on the outcome of the MVB merger proposal, assuming a quorum is present. |
| • | MVB articles amendment proposal: Abstentions and failures to submit a proxy or vote virtually at the MVB special meeting, or failure to instruct your bank or broker how to vote, will not be counted as a vote cast and will not have any effect on the outcome of the MVB articles amendment proposal, assuming a quorum is present. |
| • | MVB adjournment proposal: An abstention will have the same effect as a vote “AGAINST” the MVB adjournment proposal. If an MVB shareholder is not present at the MVB special meeting and does not respond by proxy, it will have no effect on the outcome of such proposal. |
| • | IFH merger proposal: An abstention will have the same effect as a vote “AGAINST” the IFH merger proposal. If an IFH shareholder is not present at the IFH special meeting and does not respond by proxy, it will also have the same effect as a vote “AGAINST” the IFH merger proposal. |
| • | IFH adjournment proposal: An abstention will have the same effect as a vote “AGAINST” the IFH adjournment proposal. If an IFH shareholder is not present at the IFH special meeting and does not respond by proxy, it will have no effect on the outcome of such proposal. |
| Q: | Why is my vote important? |
| A: | If you do not vote, it will be more difficult for MVB or IFH to obtain the necessary quorum to hold its special meeting and to obtain the shareholder approval that each of its board of directors is recommending and seeking. Assuming that a quorum is present, the affirmative vote of a majority of the votes cast on the proposal is required to approve the MVB merger proposal. The IFH merger proposal must be approved by (i) the affirmative vote of a majority of the outstanding shares of IFH voting common stock entitled to vote on the merger proposal, voting as a separate voting group, and (ii) the affirmative vote of a majority of the outstanding shares of IFH non-voting common stock entitled to vote on the merger proposal, voting as a separate voting group. Abstentions and failures to submit a proxy or vote virtually at the MVB special meeting, or failure to instruct your bank or broker how to vote, will not be counted as votes cast and will not have any effect on the outcome of the MVB merger proposal, assuming a quorum is present. Failure to submit a proxy or vote virtually or in person, as applicable, at the IFH special meeting, or failure to instruct your bank or broker how to vote, or abstention will have the same effect as a vote “AGAINST” the IFH merger proposal. |
| Q: | What will happen if I return my proxy card without indicating how to vote? |
| A: | If you sign and return your proxy card without indicating how to vote on any particular proposal, the shares of MVB common stock represented by your proxy will be voted as recommended by the MVB board of directors with respect to such proposals, or the shares of IFH common stock represented by your proxy will be voted as recommended by the IFH board of directors with respect to such proposals, as the case may be. |
| Q: | Can I change my vote after I have delivered my proxy or voting instruction card? |
| A: | If you directly hold shares of MVB common stock or IFH common stock in your name as a record holder, you can change your vote at any time before your proxy is voted at your meeting. You can do this by: |
| • | submitting a written statement that you would like to revoke your proxy to the corporate secretary of MVB or IFH, as applicable; |
| • | signing and returning a proxy card with a later date; |
| • | in the case of MVB shareholders, attending the special meeting virtually and voting at the special meeting via the special meeting website; |
| • | in the case of IFH shareholders, attending the IFH special meeting and voting in person at the meeting; or |
| • | voting by the internet or, in the case of MVB shareholders, by telephone at a later time. |
| • | contacting your bank, broker, trustee or other nominee; or |
| • | in the case of MVB shareholders, attending the special meeting virtually and voting your shares via the special meeting website if you have your control number, which can be found on the voting instructions provided by your bank, broker, trustee or other nominee. Please contact your bank, broker, trustee or other nominee for further instructions. |
| Q: | Will MVB be required to submit the MVB merger proposal to its shareholders even if the MVB board of directors has withdrawn, modified or qualified its recommendation? |
| A: | Yes. Unless the merger agreement is terminated before the MVB special meeting, MVB is required to submit the MVB merger proposal to its shareholders even if the MVB board of directors has withdrawn, modified or qualified its recommendation in favor of the merger. |
| Q: | Will IFH be required to submit the IFH merger proposal to its shareholders even if the IFH board of directors has withdrawn, modified or qualified its recommendation? |
| A: | Yes. Unless the merger agreement is terminated before the IFH special meeting, IFH is required to submit the IFH merger proposal to its shareholders even if the IFH board of directors has withdrawn, modified or qualified its recommendation in favor of the merger. |
| Q: | Are holders of MVB common stock entitled to dissenters’ rights? |
| A: | No. Holders of MVB common stock are not entitled to dissenters’ rights under the West Virginia Business Corporation Act (the “WVBCA”). For more information, see the section entitled “The Merger—Appraisal or Dissenters’ Rights in the Merger” beginning on page 111. |
| Q: | Are holders of IFH common stock entitled to appraisal rights? |
| A: | Yes. Holders of IFH common stock are entitled to appraisal rights under the North Carolina Business Corporation Act (the “NCBCA”). For more information, see the section entitled “The Merger—Appraisal or Dissenters’ Rights in the Merger” beginning on page 111. |
| Q: | Are there any risks that I should consider in deciding whether to vote for the approval of the MVB merger proposal, the IFH merger proposal, or the other proposals to be considered at the MVB special meeting and the IFH special meeting, respectively? |
| A: | Yes. You should read and carefully consider the risk factors set forth in the section entitled “Risk Factors” beginning on page 25. You also should read and carefully consider the risk factors of MVB in the documents that are incorporated by reference into this joint proxy statement/prospectus. |
| Q: | What are the material U.S. federal income tax consequences of the merger to holders of IFH common stock? |
| A: | The merger has been structured to qualify as a reorganization under Section 368(a) of the Code for U.S. federal income tax purposes, and it is a condition to our respective obligations to complete the merger that each of MVB and IFH receives a legal opinion to the effect that the merger will so qualify. Accordingly, holders of IFH common stock will not be required to recognize any gain or loss for U.S. federal income tax purposes on the exchange of their IFH common stock for MVB common stock in the merger, except for any gain or loss that may result from the receipt of cash instead of a fractional share of MVB common stock. You should be aware that the tax consequences to you of the merger may depend upon your own situation. In addition, you may be subject to state, local or foreign tax laws that are not discussed in this joint proxy statement/prospectus. You should therefore consult with your own tax advisor for a full understanding of the tax consequences to you of the merger. For a more complete discussion of the material U.S. federal income tax consequences of the merger, see the section entitled “Material U.S. Federal Income Tax Consequences of the Merger” beginning on page 133. |
| Q: | When is the merger expected to be completed? |
| A: | Neither MVB nor IFH can predict the actual date on which the merger will be completed, or if the merger will be completed at all, because completion is subject to conditions and factors outside the control of both companies. IFH must obtain the approval of IFH shareholders for the IFH merger proposal, and MVB must obtain the approval of MVB shareholders for the MVB merger proposal. MVB and IFH must also obtain necessary regulatory approvals and satisfy certain other closing conditions. MVB and IFH expect the merger to be completed promptly once MVB and IFH have obtained their respective shareholders’ approvals noted above, have obtained necessary regulatory approvals, and have satisfied certain other closing conditions. |
| Q: | What are the conditions to complete the merger? |
| A: | The obligations of MVB and IFH to complete the merger are subject to the satisfaction or waiver of certain closing conditions contained in the merger agreement, including, but not limited to, the receipt of required regulatory approvals and the expiration of all statutory waiting periods without the imposition of any materially burdensome regulatory condition, the receipt of certain tax opinions, approval by MVB shareholders of the MVB merger proposal and approval by IFH shareholders of the IFH merger proposal. For more information, see “The Merger Agreement—Conditions to Complete the Merger” beginning on page 128. |
| Q: | What happens if the merger is not completed? |
| A: | If the merger is not completed, holders of IFH common stock will not receive any consideration for their shares of IFH common stock in connection with the merger. Instead IFH will remain an independent private company, and IFH’s voting common stock will continue to be traded on OTCQX. In addition, if the merger agreement is terminated in certain circumstances, a termination fee of $3.9 million will be payable by IFH. See “The Merger Agreement—Termination Fee” beginning on page 130 for a more detailed discussion of the circumstances under which a termination fee will be required to be paid. |
| Q: | What happens if I sell my shares after the applicable record date but before my company’s special meeting? |
| A: | Each of the MVB and IFH record date is earlier than the date of the MVB special meeting and the IFH special meeting, as applicable, and earlier than the date that the merger is expected to be completed. If you sell or otherwise transfer your shares of MVB common stock or IFH common stock, as applicable, after the applicable record date but before the date of the applicable special meeting, you will retain your right to vote at such special meeting (provided that such shares remain outstanding on the date of such special meeting), but, with respect to the IFH common stock, you will not have the right to receive the merger consideration to be received by IFH shareholders in connection with the merger. In order to receive the merger consideration, you must hold your shares of IFH common stock through the completion of the merger. |
| Q: | Should I send in my stock certificates now? |
| A: | No. Please do not send in your stock certificates with your proxy. After the merger is completed, an exchange agent designated by MVB and mutually acceptable to IFH (the “exchange agent”) will send you instructions for exchanging IFH stock certificates, if your shares are certificated, for the consideration to be received in the merger. See “The Merger Agreement—Exchange of Shares” beginning on page 117. |
| Q: | What should I do if I receive more than one set of voting materials for the same special meeting? |
| A: | If you are a beneficial owner and hold shares of MVB common stock or IFH common stock in “street name” and also are a record holder and hold shares directly in your name or otherwise or if you hold shares of MVB common stock or IFH common stock in more than one (1) brokerage account, you may receive more than one (1) set of voting materials relating to the same special meeting. |
| Q: | Who can help answer my questions? |
| A: | MVB shareholders: If you have any questions about the merger or how to submit your proxy or voting instruction card, or if you need additional copies of this document or the enclosed proxy card or voting instruction card, you should contact Lisa J. McCormick, Corporate Secretary of MVB, at (304) 363-4800 or by email to lmccormick@mvbbanking.com. |
| Q: | Where can I find more information about MVB? |
| A: | You can find more information about MVB from the various sources described under “Where You Can Find More Information” beginning on page 152. |
| Q: | What is householding and how does it affect me? |
| A: | The SEC permits companies to send a single set of proxy materials to any household at which two (2) or more shareholders reside, unless contrary instructions have been received, but only if the applicable shareholders provide advance notice and follow certain procedures. In such cases, each shareholder continues to receive a separate notice of the meeting and proxy card. Certain brokerage firms may have instituted householding for beneficial owners of MVB common stock and IFH common stock, as applicable, held through brokerage firms. If your family has multiple accounts holding MVB common stock or IFH common stock, as applicable, you may have already received a householding notification from your broker. Please contact your broker directly if you have any questions or require additional copies of this joint proxy statement/prospectus. The broker will arrange for delivery of a separate copy of this joint proxy statement/prospectus promptly upon your written or oral request. You may decide at any time to revoke your decision to household, and thereby receive multiple copies. |
| | | MVB Common Stock | | | IFH Common Stock | | | Implied Value of One Share of IFH Common Stock | |
August 11, 2022 | | | $34.54 | | | $26.60 | | | $41.79 |
[ ], 2022 | | | $[] | | | $[] | | | $[] |
| • | benefits, including cash payments, under existing employment and change in control agreements for certain executive officers of IFH; |
| • | lump sum cash payments under the West Town Bank Supplemental Executive Benefit Plan for certain executive officers of IFH; |
| • | entry into employment agreements with Messrs. Eric Bergevin, Michael Breckheimer and A. Riddick Skinner to be effective immediately upon closing of the merger; |
| • | the accelerated vesting of restricted stock awards to executive officers and directors of IFH; |
| • | the vesting of certain stock options held by IFH directors and executive officers in connection with a termination of service following the merger; |
| • | the right to continued indemnification and directors’ and officers’ liability insurance coverage; and |
| • | an agreement with the chairman of the IFH board of directors that he continue to be appointed to serve on the board of directors of Dogwood State Bank, an entity in which IFH holds a non-controlling interest. |
| • | the requisite MVB vote and the requisite IFH vote having been obtained (see “The Merger Agreement—Meetings; Recommendation of MVB’s and IFH’s Boards of Directors” beginning on page 126 for additional information regarding the “requisite MVB vote” and the “requisite IFH vote”); |
| • | the authorization for listing on NASDAQ, subject to official notice of issuance, of the MVB common stock to be issued in the merger; |
| • | all requisite regulatory approvals having been obtained and remaining in full force and effect, and all statutory waiting periods in respect thereof having expired or been terminated, without the imposition of any materially burdensome regulatory condition (see “The Merger—Regulatory Approvals” beginning on page 108 for additional information regarding the “requisite regulatory approvals” and the “materially burdensome regulatory condition”); |
| • | the effectiveness of the registration statement of which this joint proxy statement/prospectus is a part, and the absence of any stop order (or proceedings for such purpose initiated or threatened and not withdrawn); |
| • | no order, injunction or decree by any court or governmental entity of competent jurisdiction or other legal restraint or prohibition preventing the consummation of the merger, the bank merger or any of the other transactions contemplated by the merger agreement being in effect, and no statute, rule, regulation, order, injunction or decree having been enacted, entered, promulgated or enforced by any governmental entity which prohibits or makes illegal the consummation of the merger; |
| • | the accuracy of the representations and warranties of the other party contained in the merger agreement as of the date on which the merger agreement was entered into and as of the date on which the merger is completed, subject to the materiality standards provided in the merger agreement (and the receipt by each party of an officers’ certificate from the other party to such effect); |
| • | the performance by the other party in all material respects of all obligations, covenants and agreements required to be performed by it under the merger agreement at or prior to the date on which the merger is completed (and the receipt by each party of an officers’ certificate from the other party to such effect); |
| • | receipt by each party of an opinion of legal counsel to the effect that on the basis of facts, representations and assumptions set forth or referred to in such opinion, the merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Code; |
| • | the continued effectiveness of certain employment agreements between MVB and employees of IFH (see “The Merger—Interests of IFH Directors and Executive Officers in the Merger” beginning on page 104 for additional information regarding such employment agreements); |
| • | immediately prior to the closing, not more than ten (10%) of IFH common stock shall be held by persons who either have exercised, or are then entitled to exercise, appraisal rights under the NCBCA; and |
| • | settlement of certain litigation pending against West Town Bank (see “Information About the Companies—IFH—Legal Proceedings” beginning on page 57 for additional information regarding the “RESPA Litigation” which is to be settled prior to the closing). |
| • | by mutual written consent of MVB and IFH; |
| • | by either MVB or IFH if any governmental entity that must grant a requisite regulatory approval has denied approval of the merger or the transactions contemplated by the merger agreement and such |
| • | by either MVB or IFH if the merger has not been completed on or before August 1, 2023 (the “termination date”), unless the failure of the merger to be completed by such date is due to the failure of the party seeking to terminate the merger agreement to perform or observe its covenants and agreements under the merger agreement; |
| • | by either MVB or IFH (provided that the terminating party is not then in material breach of any representation, warranty, obligation, covenant or other agreement contained in the merger agreement) if there is a breach of any of the covenants or agreements or any of the representations or warranties (or any such representation or warranty ceases to be true) set forth in the merger agreement on the part of IFH, in the case of a termination by MVB, or on the part of MVB, in the case of a termination by IFH, which either individually or in the aggregate would constitute, if occurring or continuing on the date the merger is completed, the failure of a closing condition of the terminating party and which is not cured within forty-five (45) days following written notice to the party committing such breach, or by its nature or timing cannot be cured during such period (or such fewer days as remain prior to the termination date); |
| • | by MVB, if, prior to the time the requisite IFH vote is obtained, (i) IFH or the IFH board of directors (A) submits the merger agreement to its shareholders without a recommendation for approval, or otherwise withdraws, qualifies or materially and adversely modifies (or publicly discloses its intention to withdraw, qualify or materially and adversely modify) its recommendation to approve the merger agreement, or approves or recommends to its shareholders an acquisition proposal other than the merger, (B) fails to publicly recommend against a publicly announced acquisition proposal within five (5) business days of being requested to do so by MVB or fails to publicly reconfirm the recommendation in favor of the merger within five (5) business days of being requested to do so by MVB or (C) shall have breached its obligations relating to non-solicitation of acquisition proposals or its obligations related to shareholder approval and the IFH board recommendation; or (ii) a tender offer or exchange offer for 25% or more of the outstanding shares of IFH common stock is commenced (other than by MVB), and the board of directors of IFH recommends that the shareholders of IFH tender their shares in such tender or exchange offer or otherwise fails to recommend that such shareholders reject such tender offer or exchange offer within ten (10) business days (or such fewer number of days as remains prior to the IFH special meeting) after the commencement of such tender or exchange offer; |
| • | by IFH, if prior to such time as the requisite MVB vote is obtained, MVB or the board of directors of MVB (i) submits the merger agreement to its shareholders without a recommendation for approval, or otherwise withdraws or materially and adversely modifies (or publicly discloses its intention to withdraw or materially and adversely modify) its recommendation in favor of the merger agreement, or (ii) shall have breached its obligations related to shareholder approval and the MVB board of directors’ recommendation; or |
| • | (i) by MVB, or by IFH provided that IFH shall not be in material breach of any of its obligations related to shareholder approval and the IFH board of directors’ recommendation, if the requisite IFH vote shall not have been obtained by reason of the failure to obtain the requisite IFH vote at the IFH special meeting or at any adjournment or postponement thereof or (ii) by IFH, or by MVB provided that MVB shall not be in material breach of any of its obligations related to shareholder approval and the MVB board of directors’ recommendation, if the requisite MVB vote shall not have been obtained by reason of the failure to obtain the requisite MVB vote at the MVB special meeting or at any adjournment or postponement thereof. |
| • | the average of the per share closing prices of a share of MVB common stock during the twenty (20) consecutive full trading days ending on the trading day prior to the determination date (which we refer to as the “MVB market value”) is less than 82.5% of the average of the per share closing prices of a share of MVB common stock during the twenty (20) consecutive full trading days ending on August 11, 2022 (which we refer to as the “starting date”), the last trading day immediately preceding the date of the first public announcement of entry into the merger agreement (which we refer to as the “initial MVB market value”); and |
| • | the number obtained by dividing the MVB market value by the initial MVB market value (which we refer to as the “purchaser ratio”) is less than the number obtained by dividing the average of the closing prices of the NASDAQ Bank Index (BANK) for the twenty (20) consecutive full trading days ending on the trading day prior to the determination date (which we refer to as the “final index price”) by the average of the closing prices of the NASDAQ Bank Index (BANK) for the twenty (20) consecutive full trading days ending on the starting date and subtracting 0.175 from such quotient (which we refer to as the “index ratio”). |
| • | the MVB merger proposal; |
| • | the MVB articles amendment proposal; and |
| • | the MVB adjournment proposal. |
| • | the IFH merger proposal; and |
| • | the IFH adjournment proposal. |
| | | MVB Common Stock | | | IFH Common Stock | | | Implied Value of One Share of IFH Common Stock to be Converted into MVB Common Stock | |
August 11, 2022 | | | $34.54 | | | $26.60 | | | $41.79 |
[ ], 2022 | | | $[] | | | $[] | | | $[] |
| • | the occurrence of any event, change or other circumstances that could give rise to the right of one or both of the parties to terminate the definitive merger agreement between MVB and IFH; |
| • | the outcome of any legal proceedings instituted against MVB or IFH; |
| • | the possibility that the proposed transaction will not close when expected or at all because required regulatory, shareholder or other approvals are not received or other conditions to the closing are not satisfied on a timely basis or at all, or are obtained subject to conditions that are not anticipated (and the risk that required regulatory approvals may result in the imposition of conditions that could adversely affect the combined company or the expected benefits of the proposed transaction); |
| • | the ability of MVB and IFH to meet expectations regarding the timing, completion and accounting and tax treatments of the proposed transaction; |
| • | the risk that any announcements relating to the proposed transaction could have adverse effects on the market price of the common stock of MVB; |
| • | the possibility that the anticipated benefits of the proposed transaction will not be realized when expected or at all, including as a result of the impact of, or problems arising from, the integration of the two (2) companies or as a result of the strength of the economy and competitive factors in the areas where MVB and IFH do business; |
| • | certain restrictions during the pendency of the proposed transaction that may impact the parties’ ability to pursue certain business opportunities or strategic transactions; |
| • | the possibility that the transaction may be more expensive to complete than anticipated, including as a result of unexpected factors or events; |
| • | the possibility that subsequent federal legislative and regulatory action and reforms affecting the financial institutions industry may substantially impact the economic benefits of the proposed transaction; |
| • | diversion of management’s attention from ongoing business operations and opportunities; |
| • | the possibility that the parties may be unable to achieve expected synergies and operating efficiencies in the merger within the expected timeframes or at all and to successfully integrate IFH’s operations and those of MVB; |
| • | such integration may be more difficult, time consuming or costly than expected; |
| • | revenues following the proposed transaction may be lower than expected; |
| • | IFH’s and MVB’s success in executing their respective business plans and strategies and managing the risks involved in the foregoing; |
| • | the dilution caused by MVB’s issuance of additional shares of its capital stock in connection with the proposed transaction; |
| • | effects of the announcement, pendency or completion of the proposed transaction on the ability of MVB and IFH to retain customers and retain and hire key personnel and maintain relationships with their suppliers, and on their operating results and businesses generally; |
| • | risks related to the potential impact of general economic, political and market factors on the companies or the proposed transaction and other factors that may affect future results of MVB and IFH; |
| • | continuing impacts and disruptions resulting from the spread of COVID-19 and its variants; |
| • | uncertainty as to the effects of inflation on MVB, IFH and the proposed transaction; and |
| • | the impact of changing interest rates on IFH and MVB. |
| • | limit the combined company’s ability to obtain additional financing for working capital, capital expenditures, debt service requirements, acquisitions and general corporate or other purposes; |
| • | restrict the combined company from making strategic acquisitions or cause the combined company to make non-strategic divestitures; |
| • | restrict the combined company from paying dividends to its shareholders; |
| • | increase the combined company’s vulnerability to general economic and industry conditions; and |
| • | require a substantial portion of cash flow from operations to be dedicated to the payment of principal and interest on the combined company’s indebtedness, thereby reducing the combined company’s ability to use cash flows to fund its operations, capital expenditures and future business opportunities. |
| • | their employees may experience uncertainty about their future roles, which might adversely affect MVB’s and IFH’s ability to retain and hire key personnel and other employees; |
| • | customers, suppliers, business partners and other parties with which MVB and IFH maintain business relationships may experience uncertainty about their future and seek alternative relationships with third parties, seek to alter their business relationships with MVB and IFH or fail to extend an existing relationship with MVB and IFH; and |
| • | MVB and IFH have each expended and will continue to expend significant costs, fees and expenses for professional services and transaction costs in connection with the proposed merger. |
| • | The acquisition of IFH by MVB under the provision of the Financial Accounting Standards Board Accounting Standards Codification 805, Business Combinations, where the assets and liabilities of IFH will be recorded by MVB at their respective fair values as of the date the merger is completed; |
| • | The distribution of shares of MVB common stock to IFH’s stockholders in exchange for shares of IFH common stock (based upon a 1.21 exchange ratio); |
| • | Certain reclassifications to conform historical financial statement presentation of IFH to MVB; and |
| • | Direct transaction costs in connection with the merger. |
(in thousands) | | | MVB Historical | | | IFH Historical | | | IFH Adjustments (see Note 2) | | | Pro Forma Adjustments | | | | | Pro Forma Combined | |
ASSETS | | | | | | | | | | | | | ||||||
Cash and cash equivalents: | | | | | | | | | | | | | ||||||
Cash and due from banks | | | $5,973 | | | $4,700 | | | $— | | | $— | | | | | $10,673 | |
Interest-bearing balances with banks | | | 155,788 | | | 21,981 | | | — | | | — | | | | | 177,769 | |
Total cash and cash equivalents | | | 161,761 | | | 26,681 | | | — | | | — | | | | | 188,442 | |
Certificates of deposits with banks | | | 496 | | | 1,499 | | | — | | | — | | | | | 1,995 | |
Investment securities available-for-sale | | | 376,737 | | | 19,038 | | | — | | | (334) | | | (a) | | | 395,441 |
Equity securities | | | 34,250 | | | 17,982 | | | — | | | — | | | | | 52,232 | |
Loans held-for-sale | | | 11,856 | | | 59,592 | | | — | | | 2,850 | | | (b) | | | 74,298 |
Loans receivable | | | 2,215,114 | | | 266,259 | | | — | | | (6,327) | | | (c) | | | 2,475,046 |
Allowance for loan losses | | | (22,734) | | | (6,361) | | | — | | | 6,361 | | | (d) | | | (22,734) |
Loans receivable, net | | | 2,192,380 | | | 259,898 | | | — | | | 34 | | | | | 2,452,312 | |
Premises and equipment | | | 25,272 | | | 4,238 | | | — | | | 5,637 | | | (e) | | | 35,147 |
Loan servicing assets | | | — | | | 4,178 | | | (4,178) | | | — | | | | | — | |
Bank-owned life insurance | | | 42,744 | | | 5,304 | | | — | | | — | | | | | 48,048 | |
Equity method investments | | | 39,787 | | | — | | | — | | | — | | | | | 39,787 | |
Accrued interest receivable and other assets | | | 95,157 | | | — | | | 25,492 | | | (2,471) | | | (f) | | | 120,908 |
| | | | | | | | | 2,730 | | | (g) | | | |||||
Accrued interest receivable | | | — | | | 2,139 | | | (2,139) | | | — | | | | | — | |
Other assets | | | — | | | 13,161 | | | (13,161) | | | — | | | | | — | |
Other intangible assets | | | — | | | 6,014 | | | (6,014) | | | — | | | | | — | |
Goodwill | | | 3,988 | | | 15,764 | | | — | | | (12,381) | | | (h) | | | 7,371 |
TOTAL ASSETS | | | $2,984,428 | | | $435,488 | | | $— | | | $(3,935) | | | | | $3,415,981 | |
| | | | | | | | | | | | ||||||||
LIABILITIES | | | | | | | | | | | | | ||||||
Deposits: | | | | | | | | | | | | | ||||||
Noninterest-bearing | | | $1,342,916 | | | $83,544 | | | $— | | | $— | | | | | $1,426,460 | |
Interest-bearing | | | 1,272,054 | | | 250,026 | | | — | | | 1,244 | | | (i) | | | 1,523,324 |
Total deposits | | | 2,614,970 | | | 333,570 | | | — | | | 1,244 | | | | | 2,949,784 | |
Accrued interest payable and other liabilities | | | 32,238 | | | — | | | 10,247 | | | 9,750 | | | (j) | | | 62,735 |
| | | | | | | | | 10,500 | | | (g) | | | |||||
Accrued interest payable | | | — | | | 308 | | | (308) | | | — | | | | | — | |
Other liabilities | | | — | | | 9,939 | | | (9,939) | | | — | | | | | — | |
Repurchase agreements | | | 11,152 | | | — | | | — | | | — | | | | | 11,152 | |
Subordinated debt | | | 73,158 | | | — | | | — | | | — | | | | | 73,158 | |
Total liabilities | | | 2,731,518 | | | 343,817 | | | — | | | 21,494 | | | | | 3,096,829 | |
STOCKHOLDERS’ EQUITY | | | | | | | | | | | | | ||||||
Common stock | | | 13,077 | | | 2,249 | | | — | | | (2,249) | | | (k) | | | 15,798 |
| | | | | | | | | 2,721 | | | (l) | | | |||||
Additional paid-in capital | | | 145,480 | | | 24,498 | | | — | | | (24,498) | | | (k) | | | 216,043 |
| | | | | | | | | 70,563 | | | (l) | | | |||||
Retained earnings | | | 139,904 | | | 67,781 | | | — | | | (67,781) | | | (k) | | | 132,134 |
| | | | | | | | | (7,770) | | | (g) | | | |||||
Accumulated other comprehensive income | | | (29,420) | | | (1,985) | | | — | | | 1,985 | | | (k) | | | (29,420) |
Treasury stock | | | (16,741) | | | — | | | — | | | — | | | | | (16,741) | |
Total equity attributable to parent | | | 252,300 | | | 92,543 | | | — | | | (27,029) | | | | | 317,814 | |
Noncontrolling interest | | | 610 | | | (872) | | | — | | | 1,600 | | | (m) | | | 1,338 |
Total stockholders’ equity | | | 252,910 | | | 91,671 | | | — | | | (25,429) | | | | | 319,152 | |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | | | $2,984,428 | | | $435,488 | | | $— | | | $(3,935) | | | | | $3,415,981 |
(in thousands, except per share data) | | | MVB Historical | | | IFH Historical | | | IFH Adjustments (see Note 2) | | | Pro Forma Adjustments | | | | | Pro Forma Combined | |
INTEREST INCOME | | | | | | | | | | | | | ||||||
Interest and fees on loans | | | $47,285 | | | $11,114 | | | $— | | | $740 | | | (a) | | | $59,139 |
Interest on deposits with banks | | | 540 | | | — | | | 113 | | | — | | | | | 653 | |
Interest on investment securities | | | 1,486 | | | — | | | 211 | | | — | | | | | 1,697 | |
Investment securities and deposits | | | — | | | 324 | | | (324) | | | — | | | | | — | |
Interest on tax-exempt loans and securities | | | 2,041 | | | — | | | — | | | — | | | | | 2,041 | |
Total interest income | | | 51,352 | | | 11,438 | | | — | | | 740 | | | | | 63,530 | |
INTEREST EXPENSE | | | | | | | | | | | | | ||||||
Interest on deposits | | | 1,317 | | | 1,045 | | | — | | | (113) | | | (b) | | | 2,249 |
Interest on short-term borrowings | | | 14 | | | 24 | | | — | | | — | | | | | 38 | |
Interest on subordinated debt | | | 1,513 | | | — | | | — | | | — | | | | | 1,513 | |
Total interest expense | | | 2,844 | | | 1,069 | | | — | | | (113) | | | | | 3,800 | |
NET INTEREST INCOME | | | 48,508 | | | 10,369 | | | — | | | 853 | | | | | 59,730 | |
Provision for loan losses | | | 6,380 | | | 640 | | | — | | | — | | | | | 7,020 | |
Net interest income after provision for loan losses | | | 42,128 | | | 9,729 | | | — | | | 853 | | | | | 52,710 | |
NONINTEREST INCOME | | | | | | | | | | | | | ||||||
Payment card and service charge income | | | 6,657 | | | — | | | 222 | | | — | | | | | 6,879 | |
Insurance and investment services income | | | 472 | | | — | | | — | | | — | | | | | 472 | |
Gain on sale of available-for-sale securities, net | | | 650 | | | — | | | — | | | — | | | | | 650 | |
Gain on sale of equity securities, net | | | 100 | | | — | | | — | | | — | | | | | 100 | |
Gain on sale of loans, net | | | 2,488 | | | — | | | 2,812 | | | — | | | | | 5,300 | |
Holding gain (loss) on equity securities, net | | | (85) | | | — | | | 5,994 | | | — | | | | | 5,909 | |
Compliance and consulting income | | | 7,619 | | | — | | | — | | | — | | | | | 7,619 | |
Equity method investment income | | | 1,687 | | | — | | | — | | | — | | | | | 1,687 | |
Equity method investment gain. | | | 1,874 | | | — | | | — | | | — | | | | | 1,874 | |
Government loan servicing and processing revenue | | | — | | | 4,580 | | | — | | | — | | | | | 4,580 | |
Changes in fair value in marketable securities | | | — | | | 5,994 | | | (5,994) | | | — | | | | | — | |
Mortgage revenue | | | — | | | 1,239 | | | — | | | — | | | | | 1,239 | |
Government lending revenue | | | — | | | 3,891 | | | (3,891) | | | — | | | | | — | |
SBA documentation preparation fees | | | — | | | 272 | | | — | | | — | | | | | 272 | |
Loan servicing rights | | | — | | | 185 | | | — | | | — | | | | | 185 | |
Other operating income | | | 2,317 | | | 900 | | | 1,150 | | | — | | | | | 4,367 | |
Total noninterest income | | | 23,779 | | | 17,061 | | | 293 | | | — | | | | | 41,133 | |
NONINTEREST EXPENSE | | | | | | | | | | | | | ||||||
Salaries and employee benefits | | | 36,944 | | | — | | | 13,332 | | | — | | | | | 50,276 |
(in thousands, except per share data) | | | MVB Historical | | | IFH Historical | | | IFH Adjustments (see Note 2) | | | Pro Forma Adjustments | | | | | Pro Forma Combined | |
Occupancy expense | | | 1,879 | | | — | | | 702 | | | — | | | | | 2,581 | |
Equipment depreciation and maintenance | | | 2,493 | | | — | | | 851 | | | 70 | | | (c) | | | 3,414 |
Data processing and communications | | | 2,071 | | | — | | | 700 | | | — | | | | | 2,771 | |
Marketing, contributions and sponsorships | | | 520 | | | — | | | 535 | | | — | | | | | 1,055 | |
Professional fees | | | 5,350 | | | 1,042 | | | — | | | — | | | | | 6,392 | |
Insurance, tax and assessment expense | | | 1,150 | | | — | | | 230 | | | — | | | | | 1,380 | |
Travel, entertainment, dues and subscriptions | | | 4,321 | | | — | | | 224 | | | — | | | | | 4,545 | |
Compensation | | | — | | | 13,332 | | | (13,332) | | | — | | | | | — | |
Occupancy and equipment | | | — | | | 598 | | | (598) | | | — | | | | | — | |
Loan related expenses | | | — | | | 896 | | | (896) | | | — | | | | | — | |
Data processing expense | | | — | | | 520 | | | (520) | | | — | | | | | — | |
Advertising | | | — | | | 535 | | | (535) | | | — | | | | | — | |
Insurance expense | | | — | | | 230 | | | (230) | | | — | | | | | — | |
Software | | | — | | | 851 | | | (851) | | | — | | | | | — | |
Communications | | | — | | | 180 | | | (180) | | | — | | | | | — | |
Foreclosed asset expense | | | — | | | 233 | | | (233) | | | — | | | | | — | |
Director fees | | | — | | | 351 | | | (351) | | | — | | | | | — | |
Intangible amortization expense | | | — | | | 340 | | | (340) | | | — | | | | | — | |
Other operating expenses | | | 3,953 | | | 896 | | | 1,785 | | | (124) | | | (d) | | | 6,510 |
Total noninterest expense | | | 58,681 | | | 20,004 | | | 293 | | | (53) | | | | | 78,925 | |
Income before income taxes | | | 7,226 | | | 6,786 | | | — | | | 907 | | | | | 14,919 | |
Income taxes | | | 1,764 | | | 1,895 | | | — | | | 236 | | | (e) | | | 3,895 |
Net income before noncontrolling interest | | | 5,462 | | | 4,891 | | | — | | | 671 | | | | | 11,024 | |
Net loss attributable to noncontrolling interest | | | 358 | | | 80 | | | — | | | — | | | | | 438 | |
Net income | | | $5,820 | | | $4,971 | | | $— | | | $671 | | | | | $11,462 | |
Weighted-average shares outstanding: | | | | | | | | | | | | | ||||||
Basic | | | 12,132,223 | | | 2,166,953 | | | | | 554,337 | | | (f) | | | 14,853,513 | |
Diluted | | | 12,870,892 | | | 2,242,687 | | | | | 478,603 | | | (f) | | | 15,592,182 | |
Earnings per share: | | | | | | | | | | | | | ||||||
Basic | | | $0.48 | | | $2.29 | | | | | | | | | $0.77 | |||
Diluted | | | $0.45 | | | $2.22 | | | | | | | | | $0.74 |
(in thousands, except per share data) | | | MVB Historical | | | IFH Historical | | | IFH Adjustments (see Note 2) | | | Pro Forma Adjustments | | | | | Pro Forma Combined | |
INTEREST INCOME | | | | | | | | | | | | | ||||||
Interest and fees on loans | | | $75,282 | | | $18,457 | | | $— | | | $1,851 | | | (a) | | | $95,590 |
Interest on deposits with banks | | | 506 | | | — | | | 158 | | | — | | | | | 664 | |
Interest on investment securities | | | 2,405 | | | — | | | 298 | | | — | | | | | 2,703 | |
Investment securities and deposits | | | — | | | 456 | | | (456) | | | — | | | | | — | |
Interest on tax-exempt loans and securities | | | 5,236 | | | — | | | — | | | — | | | | | 5,236 | |
Total interest income | | | 83,429 | | | 18,913 | | | — | | | 1,851 | | | | | 104,193 | |
INTEREST EXPENSE | | | | | | | | | | | | | ||||||
Interest on deposits | | | 3,977 | | | 2,576 | | | — | | | (1,131) | | | (b) | | | 5,422 |
Interest on short-term borrowings | | | 105 | | | 4 | | | — | | | — | | | | | 109 | |
Interest on subordinated debt | | | 2,188 | | | — | | | — | | | — | | | | | 2,188 | |
Total interest expense | | | 6,270 | | | 2,580 | | | — | | | (1,131) | | | | | 7,719 | |
NET INTEREST INCOME | | | 77,159 | | | 16,333 | | | — | | | 2,982 | | | | | 96,474 | |
Provision (release of allownace) for loan losses | | | (6,275) | | | 1,946 | | | — | | | — | | | | | (4,329) | |
Net interest income after provision for loan losses | | | 83,434 | | | 14,387 | | | — | | | 2,982 | | | | | 100,803 | |
NONINTEREST INCOME | | | | | | | | | | | | | ||||||
Payment card and service charge income | | | 7,524 | | | — | | | 243 | | | — | | | | | 7,767 | |
Insurance and investment services income | | | 1,003 | | | — | | | — | | | — | | | | | 1,003 | |
Gain on sale of available-for-sale securities, net | | | 3,875 | | | — | | | — | | | — | | | | | 3,875 | |
Gain on sale of equity securities, net | | | 5 | | | — | | | — | | | — | | | | | 5 | |
Gain on sale of loans, net | | | 4,178 | | | — | | | 6,975 | | | — | | | | | 11,153 | |
Holding gain on equity securities, net | | | 3,776 | | | — | | | 1,998 | | | — | | | | | 5,774 | |
Compliance and consulting income | | | 9,625 | | | — | | | — | | | — | | | | | 9,625 | |
Equity method investment income | | | 17,428 | | | — | | | — | | | — | | | | | 17,428 | |
Equity method investment gain. | | | — | | | — | | | — | | | — | | | | | — | |
Gains on acquisition and divestiture activity | | | 10,783 | | | — | | | — | | | — | | | | | 10,783 | |
Government loan servicing and processing revenue | | | — | | | 24,526 | | | — | | | — | | | | | 24,526 | |
Changes in fair value in marketable securities | | | — | | | 1,998 | | | (1,998) | | | — | | | | | — | |
Mortgage revenue | | | — | | | 6,106 | | | — | | | — | | | | | 6,106 | |
Government lending revenue | | | — | | | 7,937 | | | (7,937) | | | — | | | | | — | |
SBA documentation preparation fees | | | — | | | 992 | | | — | | | — | | | | | 992 | |
Loan servicing rights | | | — | | | 537 | | | — | | | — | | | | | 537 | |
Other operating income | | | 4,399 | | | (967) | | | 3,493 | | | — | | | | | 6,925 | |
Total noninterest income | | | 62,596 | | | 41,129 | | | 2,774 | | | — | | | | | 106,499 | |
NONINTEREST EXPENSE | | | | | | | | | | | | | ||||||
Salaries and employee benefits | | | 60,210 | | | — | | | 23,652 | | | 5,500 | | | (g) | | | 89,362 |
Occupancy expense | | | 4,347 | | | — | | | 1,181 | | | — | | | | | 5,528 |
(in thousands, except per share data) | | | MVB Historical | | | IFH Historical | | | IFH Adjustments (see Note 2) | | | Pro Forma Adjustments | | | | | Pro Forma Combined | |
Equipment depreciation and maintenance | | | 4,642 | | | — | | | 6,587 | | | 141 | | | (c) | | | 11,370 |
Data processing and communications | | | 4,431 | | | — | | | 1,295 | | | — | | | | | 5,726 | |
Marketing, contributions and sponsorships | | | 525 | | | — | | | 1,428 | | | — | | | | | 1,953 | |
Professional fees | | | 10,770 | | | 2,817 | | | — | | | 3,450 | | | (g) | | | 17,037 |
Insurance, tax and assessment expense | | | 2,032 | | | — | | | 519 | | | — | | | | | 2,551 | |
Travel, entertainment, dues and subscriptions | | | 5,092 | | | — | | | 586 | | | — | | | | | 5,678 | |
Compensation | | | — | | | 23,652 | | | (23,652) | | | — | | | | | — | |
Occupancy and equipment | | | — | | | 1,181 | | | (1,181) | | | — | | | | | — | |
Loan related expenses | | | — | | | 1,430 | | | (1,430) | | | — | | | | | — | |
Data processing expense | | | — | | | 899 | | | (899) | | | — | | | | | — | |
Advertising | | | — | | | 1,428 | | | (1,428) | | | — | | | | | — | |
Insurance expense | | | — | | | 519 | | | (519) | | | — | | | | | — | |
Software | | | — | | | 6,587 | | | (6,587) | | | — | | | | | — | |
Communications | | | — | | | 396 | | | (396) | | | — | | | | | — | |
Foreclosed asset expense | | | — | | | 822 | | | (822) | | | — | | | | | — | |
Director fees | | | — | | | 721 | | | (721) | | | — | | | | | — | |
Intangible amortization expense | | | — | | | 698 | | | (698) | | | — | | | | | — | |
Other operating expenses | | | 5,403 | | | 1,399 | | | 5,859 | | | (247) | | | (d) | | | 13,964 |
| | | | | | | | | 1,550 | | | (g) | | | |||||
Total noninterest expense | | | 97,452 | | | 42,549 | | | 2,774 | | | 10,394 | | | | | 153,169 | |
Income before income taxes | | | 48,578 | | | 12,967 | | | — | | | (7,412) | | | | | 54,133 | |
Income taxes | | | 9,882 | | | 867 | | | — | | | (1,927) | | | (e) | | | 8,822 |
Net income before noncontrolling interest | | | 38,696 | | | 12,100 | | | — | | | (5,485) | | | | | 45,311 | |
Net loss attributable to noncontrolling interest | | | 425 | | | 631 | | | — | | | — | | | | | 1,056 | |
Net income | | | 39,121 | | | 12,731 | | | — | | | (5,485) | | | | | 46,367 | |
Preferred dividends | | | 35 | | | — | | | — | | | — | | | | | 35 | |
Net income available to common shareholders | | | $39,086 | | | $12,731 | | | $— | | | $(5,485) | | | | | $46,332 | |
Weighted-average shares outstanding: | | | | | | | | | | | | | ||||||
Basic | | | 11,778,557 | | | 2,153,700 | | | | | 567,590 | | | (f) | | | 14,499,847 | |
Diluted | | | 12,613,620 | | | 2,228,663 | | | | | 492,627 | | | (f) | | | 15,334,910 | |
Earnings per share: | | | | | | | | | | | | | ||||||
Basic | | | $3.32 | | | $5.91 | | | | | | | | | $3.20 | |||
Diluted | | | $3.10 | | | $5.71 | | | | | | | | | $3.02 |
IFH Historical Consolidated Balance Sheet | | | MVB Unaudited Pro Forma Consolidated Balance Sheet | | | Reclassifications at June 30, 2022 |
(in thousands) | | | | | ||
Loan servicing assets | | | | | $(4,178) | |
Accrued interest receivable | | | | | (2,139) | |
Other assets | | | | | (13,161) | |
Other intangible assets | | | | | (6,014) | |
| | | Accrued interest receivable and other assets | | | 25,492 | |
Accrued interest payable | | | | | (308) | |
Other liabilities | | | | | (9,939) | |
| | | Accrued interest payable and other liabilities | | | 10,247 |
IFH Historical Consolidated Income Statement | | | MVB Unaudited Pro Forma Consolidated Income Statement | | | Reclassifications for the Six Months Ended June 30, 2022 | | | Reclassifications for the Year Ended December 31, 2021 |
(in thousands) | | | | | | | |||
Interest income: | | | | | | | |||
Investment securities and deposits | | | | | $(324) | | | $(456) | |
| | | Interest on deposits with banks | | | 113 | | | 158 | |
| | | Interest on investment securities | | | 211 | | | 298 | |
Noninterest income: | | | | | | | |||
Government lending revenue | | | | | (3,891) | | | (7,937) | |
Changeds in fair value of marketable securities | | | | | (5,994) | | | (1,998) | |
Other operating income | | | | | 1,150 | | | 3,493 | |
| | | Payment card and service charge income | | | 222 | | | 243 | |
| | | Gain on sale of loans, net | | | 2,812 | | | 6,975 | |
| | | Holding gain (loss) on equity securities, net | | | 5,994 | | | 1,998 | |
Noninterest expense: | | | | | | | |||
Compensation | | | | | (13,332) | | | (23,652) | |
Occupancy and equipment | | | | | (598) | | | (1,181) | |
Loan related expenses | | | | | (896) | | | (1,430) | |
Data processing expense | | | | | (520) | | | (899) | |
Advertising | | | | | (535) | | | (1,428) | |
Insurance expense | | | | | (230) | | | (519) | |
Software | | | | | (851) | | | (6,587) | |
Communications | | | | | (180) | | | (396) | |
Foreclosed asset expense | | | | | (233) | | | (822) | |
Director fees | | | | | (351) | | | (721) | |
Intangible amortization expense | | | | | (340) | | | (698) | |
Other operating expenses | | | | | 1,785 | | | 5,859 | |
| | | Salaries and employee benefits | | | 13,332 | | | 23,652 | |
| | | Occupancy expense | | | 702 | | | 1,181 | |
| | | Equipment depreciation and maintenance | | | 851 | | | 6,587 | |
| | | Data processing and communications | | | 700 | | | 1,295 | |
| | | Marketing, contributions and sponsorships | | | 535 | | | 1,428 | |
| | | Insurance, tax and assessment expense | | | 230 | | | 519 | |
| | | Travel, entertainment, dues and subscriptions | | | 224 | | | 586 |
($ in thousands, except per share data) | | | October 7, 2022 | | | 10% Increase | | | 10% Decrease |
IFH common shares | | | 2,249,000 | | | 2,249,000 | | | 2,249,000 |
Exchange ratio | | | 1.21 | | | 1.21 | | | 1.21 |
MVB common shares | | | 2,721,290 | | | 2,721,290 | | | 2,721,290 |
MVB common share price, October 7, 2022 | | | $26.93 | | | $29.62 | | | $24.24 |
Pro forma purchase price consideration | | | $73,284 | | | $80,613 | | | $65,956 |
Preliminary goodwill/(bargain purchase gain) | | | $3,383 | | | 10,711 | | | (3,945) |
($ in thousands) | | | |
Assets | | | |
Cash and cash equivalents: | | | $26,681 |
Certificates of deposits with banks | | | 1,499 |
Investment securities available-for-sale | | | 18,704 |
Equity securities | | | 17,982 |
Loans held-for-sale | | | 62,442 |
Loans receivable | | | 259,932 |
Premises and equipment | | | 9,875 |
Bank-owned life insurance | | | 5,304 |
Accrued interest receivable and other assets | | | 23,021 |
Total assets | | | 425,440 |
Liabilities | | | |
Deposits | | | 334,814 |
Accrued interest payable and other liabilities | | | 19,997 |
Total liabilities | | | 354,811 |
Noncontrolling interest | | | 728 |
Net assets acquired | | | $69,901 |
| (a) | reflect adjustment to investment securities available-for-sale to the preliminary estimated fair value; |
| (b) | reflect adjustment to loans held-for-sale to the preliminary estimated fair value; |
| (c) | reflect adjustments to loans receivable, including the fair values of the interest rate mark for the loan portfolio of $(1.7) million and credit mark for the loan portfolio of $(4.6) million; |
| (d) | eliminate historical IFH allowance for loan losses; |
| (e) | reflect adjustments to premises and equipment to the preliminary estimated fair value; |
| (f) | reflect adjustments to core deposit intangible assets to the preliminary estimated fair value of $3.5 million; |
| (g) | record accrual for estimated direct transaction costs of $10.5 million, net of estimated income tax of $2.7 million; |
| (h) | eliminate historical IFH goodwill of $15.8 million and record estimated goodwill associated with the merger of $3.4 million; |
| (i) | reflect adjustment to time deposits to the preliminary estimated fair value; |
| (j) | reflect accrual for litigation settled subsequent to period-end; |
| (k) | eliminate historical IFH stockholders’ equity; |
| (l) | reflect issuance of MVB common stock of $73.3 million; and |
| (m) | reflect adjustment to noncontrolling interest to the preliminary estimated fair value. |
| (a) | net adjustments to interest and fees on loans of $0.7 million and $1.9 million for the six months ended June 30, 2022 and the year ended December 31, 2021, respectively, to reflect estimated amortization of the net discount on acquired loans receivable. The loan fair value adjustment is amortized using the sum-of-the-years-digits method over five years; |
| (b) | net adjustments to deposit interest expense of $(0.1) million and $(1.1) million for the six months ended June 30, 2022 and the year ended December 31, 2021, respectively, to reflect estimated accretion from fair value mark on time deposits. The time deposit fair value adjustment is amortized over 1.1 years. |
| (c) | net adjustments to equipment depreciation and maintenance of $0.1 million for both the six months ended June 30, 2022 and the year ended December 31, 2021 to reflect estimated depreciation from fair value adjustment to premises and equipment. Premises and equipment fair value is depreciated on a straight-line basis over 40 years. |
| (d) | net adjustments to other operating expenses of $(0.1) million and $(0.2) million for the six months ended June 30, 2022 and the year ended December 31, 2021, respectively, to adjust estimated amortization of acquired core deposit intangible assets. Core deposit intangible assets fair value are amortized on a straight-line basis over 10 years; |
| (e) | record the tax expense or benefit on additional income or loss for the periods; |
| (f) | net change in weighted-average shares outstanding for the elimination of IFH common shares and issuance of 2.7 million MVB common shares; and |
| (g) | record estimated direct transaction costs of $10.5 million. |
Comparative Per Share Data | | | MVB Historical | | | IFH Historical | | | Pro Forma Combined | | | Equivalent Pro Forma Per Share of IFH(1) |
Book Value | | | | | | | | | ||||
As of June 30, 2022 | | | $20.63 | | | $41.15 | | | $21.26 | | | $25.72 |
As of December 31, 2021 | | | $22.70 | | | $40.30 | | | $23.47 | | | $28.40 |
Cash Dividends Paid | | | | | | | | | ||||
For the six monhts ended June 30, 2022 | | | $0.34 | | | $— | | | $0.28 | | | $0.34 |
For the year ended December 31, 2021 | | | $0.51 | | | $— | | | $0.41 | | | $0.50 |
Basic Earnings | | | | | | | | | ||||
For the six monhts ended June 30, 2022 | | | $0.48 | | | $2.29 | | | $0.77 | | | $0.93 |
For the year ended December 31, 2021 | | | $3.32 | | | $5.91 | | | $3.20 | | | $3.87 |
Diluted Earnings | | | | | | | | | ||||
For the six monhts ended June 30, 2022 | | | $0.45 | | | $2.22 | | | $0.74 | | | $0.89 |
For the year ended December 31, 2021 | | | $3.10 | | | $5.71 | | | $3.02 | | | $3.66 |
| (1) | The equivalent pro forma per share amounts of IFH were calculated by multiplying the pro forma combined amounts by the fixed exchange ratio of 1.21 shares of MVB common stock for each share of IFH common stock. |
| • | the MVB merger proposal; |
| • | the MVB articles amendment proposal; and |
| • | the MVB adjournment proposal. |
| • | by telephone: by calling the toll-free number indicated on the accompanying proxy card and following the recorded instructions; |
| • | through the internet: by visiting the website indicated on the accompanying proxy card and following the instructions; or |
| • | by completing and returning the accompanying proxy card in the enclosed postage-paid envelope. The envelope requires no additional postage if mailed in the United States. |
| • | submitting a written statement that you would like to revoke your proxy to the corporate secretary of MVB; |
| • | signing and returning a proxy card that is dated and received on a later date; |
| • | attending the MVB special meeting virtually and voting at the MVB special meeting via the MVB special meeting website; or |
| • | voting by telephone or the internet at a later time. |
| • | contacting your bank, broker, trustee or other nominee; or |
| • | attending the special meeting virtually and voting your shares via the special meeting website if you have your control number, which can be found on the voting instructions provided by your bank, broker, trustee or other nominee. Please contact your bank, broker, trustee or other nominee for further instructions. |
| • | the IFH merger proposal; and |
| • | the IFH adjournment proposal. |
| • | Complete and return the proxy card in the enclosed postage-paid envelope. The envelope requires no additional postage if mailed in the United States; or |
| • | Vote by proxy through the Internet: by visiting the website indicated on the accompanying proxy card and following the instructions. |
| • | submitting a written statement that you would like to revoke your proxy to the corporate secretary of IFH, whose mailing address is: 8450 Falls of Neuse Rd., Suite 202, Raleigh, North Carolina 27615; |
| • | signing and returning a proxy card that is dated and received on a later date; or |
| • | attending the IFH special meeting and voting in person at the meeting. |
Name of Beneficial Owner | | | Amount and Nature of Beneficial Ownership(1) | | | Percentage of Class(2) |
Directors and Executive Officers | | | | | ||
Eric J. Bergevin(3) | | | 127,364 | | | 5.58% |
Michael Breckheimer | | | 13,600 | | | * |
Steven E. Crouse | | | 8,700 | | | * |
Melissa D. Marsal | | | 25,440 | | | 1.13% |
Marc H. McConnell(4) | | | 163,801 | | | 7.31% |
Jeffrey K. Moore | | | 158,051 | | | 7.05% |
Randall C. Ramsey | | | 27,564 | | | 1.23% |
A. Riddick Skinner | | | 37,496 | | | 1.67% |
Joseph T. Snyder(5) | | | 44,000 | | | 1.96% |
Jimmy E. Stallings(6) | | | 34,809 | | | 1.55% |
Sandra Warren(7) | | | 34,050 | | | 1.52% |
David Wicklund | | | 15,699 | | | * |
All directors and executive officers as a group (12 persons) | | | 690,574 | | | 29.61% |
| * | Indicates beneficial ownership of less than 1% of the issued and outstanding shares of voting common stock. |
| (1) | Included in the beneficial ownership tabulations are the following shares underlying options to purchase shares of common stock of IFH that were outstanding and exercisable as of October 18, 2022 (or will become exercisable within 60 days of such date): Mr. Bergevin—43,800 shares; Mr. Breckheimer—2,850 shares; Mr. Crouse—1,700 shares; Ms. Marsal—11,850 shares; Mr. McConnell—1,200 shares; Dr. Moore—2,200 shares; Mr. Ramsey 2,200 shares; Mr. Skinner—9,150 shares; Mr. Snyder—300 shares; Mr. Stallings—12,200 shares; Ms. Warren—5,200 shares, Mr. Wicklund—300 shares; and for all directors and executive officers as a group—92,950 shares. |
| (2) | The calculation of the percentage of class beneficially owned by each individual and the group is based on the sum of (i) a total of 2,239,209 shares of voting common stock outstanding as of October 18, 2022, and (ii) options to purchase shares of common stock which are exercisable as of or within 60 days of such date. |
| (3) | Ownership listed for Mr. Begevin includes 800 shares owned individually by Mr. Bergevin’s spouse, 5,000 shares owned by his children, and 22,690 owed jointly with his spouse. |
| (4) | Ownership listed for Mr. McConnell includes 119,001 shares owned by McConnell Legacy Investments, LLC and 500 shares owned by his children. |
| (5) | Ownership listed for Mr. Snyder includes 32,500 shares held by a trust for which he is trustee. |
| (6) | Ownership listed for Mr. Stallings includes 12,903 shares held jointly with, and 6,662 shares owned individualy by, his spouse. |
| (7) | Ownership listed for Ms. Warren includes 7,071 shares owned individually by Ms. Warren’s spouse. |
| • | net interest income increased by $1.8 million or 12% year over year as a result of balance sheet growth; |
| • | the provision for loan losses decreased $2.5 million or 56% during the same period as credit quality improved; and |
| • | non-interest income increased by $7.6 million or 22% year over year driven by an increase in government lending revenues as the economy began to reopen after the easing of pandemic-related restrictions. |
| | | For the six-months ended June 30, 2022 | | | For the Years Ended December 31, | ||||||||||||||||||||||
| | | 2021 | | | 2020 | ||||||||||||||||||||||
(Dollars in thousands) | | | Average Amount | | | Interest | | | Average Rate | | | Average Amount | | | Interest | | | Average Rate | | | Average Amount | | | Interest | | | Average Rate |
Loans, net of allowance | | | $301,232 | | | $11,114 | | | 7.38% | | | $277,508 | | | $18,457 | | | 6.65% | | | $253,846 | | | $17,486 | | | 6.89% |
Investment securities | | | 20,488 | | | 193 | | | 1.88% | | | 18,449 | | | 268 | | | 1.45% | | | 14,862 | | | 283 | | | 1.90% |
Other interest-earnings assets | | | 44,843 | | | 131 | | | 0.58% | | | 65,618 | | | 188 | | | 0.29% | | | 20,818 | | | 185 | | | 0.89% |
Total interest-earning assets | | | 366,563 | | | 11,438 | | | 6.24% | | | 361,575 | | | 18,913 | | | 5.23% | | | 289,526 | | | 17,954 | | | 6.20% |
Other assets | | | 71,504 | | | | | | | 65,294 | | | | | | | 65,630 | | | | | ||||||
Total assets | | | $438,067 | | | | | | | $426,869 | | | | | | | $355,156 | | | | | ||||||
Deposits: | | | | | | | | | | | | | | | | | | | |||||||||
Interest-bearing checking accounts | | | $11,850 | | | 34 | | | 0.57% | | | $12,106 | | | 55 | | | 0.45% | | | $9,614 | | | 63 | | | 0.66% |
Money markets | | | 52,333 | | | 123 | | | 0.47% | | | 40,045 | | | 191 | | | 0.48% | | | 28,724 | | | 282 | | | 0.98% |
Savings | | | 13,005 | | | 10 | | | 0.15% | | | 11,683 | | | 18 | | | 0.15% | | | 10,933 | | | 17 | | | 0.16% |
Time deposits | | | 162,581 | | | 878 | | | 1.08% | | | 171,817 | | | 2,312 | | | 1.35% | | | 142,936 | | | 2,932 | | | 2.05% |
Borrowings | | | 7,466 | | | 24 | | | 0.64% | | | 4,914 | | | 4 | | | 0.08% | | | 13,141 | | | 182 | | | 1.38% |
Total interest-bearing liabilities | | | 247,235 | | | 1,069 | | | 0.86% | | | 240,565 | | | 2,580 | | | 1.07% | | | 205,348 | | | 3,476 | | | 1.69% |
Noninterest-bearing deposits | | | 95,798 | | | | | | | 101,833 | | | | | | | 72,709 | | | | | ||||||
Other liabilities | | | 4,453 | | | | | | | 1,357 | | | | | | | 4,683 | | | | | ||||||
Shareholders equity | | | 90,581 | | | | | | | 83,114 | | | | | | | 72,416 | | | | | ||||||
Total liabilities and shareholders equity | | | $438,067 | | | | | | | $426,869 | | | | | | | $355,156 | | | | | ||||||
Net interest income/interest rate spread | | | | | $10,369 | | | 5.38% | | | | | $16,333 | | | 4.16% | | | | | $14,478 | | | 4.51% | |||
Net interest margin | | | | | | | 5.66% | | | | | | | 4.52% | | | | | | | 5.00% | ||||||
Ratio of interest-bearing assets to interest-bearing liabilities | | | 148.27% | | | | | | | 150.30% | | | | | | | 140.99% | | | | | ||||||
| | | Year Ended December 31, 2021 vs. 2022 | |||||||
| | | Increase (Decrease) Due to | |||||||
| | | Volume | | | Rate | | | Total | |
| | | (In thousands) | |||||||
Interest income | | | | | | | |||
Loans, net of allowance | | | $ 1,630 | | | $(659) | | | $971 |
Investment securities | | | 68 | | | (83) | | | (15) |
Other interest-earnings assets | | | 398 | | | (395) | | | 3 |
Total interest income (taxable-equivalent basis) | | | 2,096 | | | (1,137) | | | 959 |
Interest expense | | | | | | | |||
Deposits: | | | | | | | |||
Interest-bearing checking accounts | | | 16 | | | (24) | | | (8) |
Money markets | | | 111 | | | (202) | | | (91) |
Savings | | | 1 | | | — | | | 1 |
Time deposits | | | 592 | | | (1,212) | | | (620) |
Borrowings | | | (114) | | | (64) | | | (178) |
Total interest expense | | | 606 | | | (1,502) | | | (896) |
Net interest income increase | | | $1,490 | | | $365 | | | $1,855 |
| | | Six Months Ended June 30, | | | Year Ended December 31, | |||||||
(in thousands) | | | 2022 | | | 2021 | | | 2021 | | | 2020 |
Allowance at beginning of period | | | $5,547 | | | $5,144 | | | $5,144 | | | $3,837 |
Provision for loan losses | | | 640 | | | 672 | | | 1,946 | | | 4,460 |
Loans charged off | | | | | | | | | ||||
Residential real estate | | | — | | | — | | | — | | | 61 |
Commercial real estate | | | 49 | | | 179 | | | 355 | | | 2,792 |
Commercial and industrial | | | 402 | | | 12 | | | 1,248 | | | 331 |
Consumer and other | | | — | | | — | | | — | | | 15 |
Total charge-offs | | | 451 | | | 191 | | | 1,603 | | | 3,199 |
Recoveries of loans previously charged off | | | | | | | | | ||||
Commercial real estate | | | 474 | | | — | | | — | | | — |
Commercial and industrial | | | 151 | | | 10 | | | 60 | | | 45 |
Consumer and other | | | — | | | — | | | — | | | 1 |
Total recoveries | | | 625 | | | 10 | | | 60 | | | 46 |
Net chargeoffs (recoveries) | | | (174) | | | 181 | | | 1,543 | | | 3,153 |
Balance end of period | | | $6,361 | | | $5,635 | | | $5,547 | | | $5,144 |
Allowance for loan losses to nonperforming loans | | | 137% | | | 98% | | | 81% | | | 60% |
Allowance for loan losses to end of period loans | | | 1.95% | | | 2.02% | | | 1.93% | | | 1.81% |
Net charge-offs to average loans outstanding | | | 0.05% | | | 0.06% | | | 0.55% | | | 1.22% |
| | | Six Months Ended June 30, | | | Year Ended December 31, | |||||||
(in thousands) | | | 2022 | | | 2021 | | | 2021 | | | 2020 |
Government loan servicing and processing revenue | | | $4,580 | | | $14,603 | | | $24,526 | | | $21,234 |
Changes in fair vaue in marketable equity securities | | | 5,994 | | | 1,998 | | | 1,998 | | | — |
Mortgage revenue | | | 1,239 | | | 3,479 | | | 6,106 | | | 6,789 |
Government lending revenue | | | 3,891 | | | 5,137 | | | 7,937 | | | 3,178 |
SBA documentation preparation fees | | | 272 | | | 675 | | | 992 | | | 704 |
Loan servicing rights | | | 185 | | | 480 | | | 537 | | | 98 |
Other noninterest income | | | 900 | | | 764 | | | (967) | | | 1,503 |
Total noninterest income | | | $17,061 | | | $27,136 | | | $41,129 | | | $33,506 |
| | | Six Months Ended June 30, | | | Year Ended December 31, | |||||||
(in thousands) | | | 2022 | | | 2021 | | | 2021 | | | 2020 |
Compensation | | | $13,332 | | | $12,012 | | | $23,652 | | | $19,016 |
Occupancy and equipment | | | 598 | | | 603 | | | 1,181 | | | 1,042 |
Loan related expenses | | | 896 | | | 683 | | | 1,430 | | | 926 |
Data processing expense | | | 520 | | | 436 | | | 899 | | | 696 |
Advertising expense | | | 535 | | | 502 | | | 1,428 | | | 507 |
Insurance expense | | | 230 | | | 299 | | | 519 | | | 434 |
Professional fees | | | 1,042 | | | 1,342 | | | 2,817 | | | 2,259 |
Software | | | 851 | | | 4,915 | | | 6,587 | | | 3,377 |
Communications | | | 180 | | | 197 | | | 396 | | | 348 |
Foreclosed asset expense, net | | | 233 | | | 955 | | | 822 | | | 1,800 |
Directors fees | | | 351 | | | 195 | | | 721 | | | 657 |
Intangible amortization expense | | | 340 | | | 361 | | | 698 | | | 745 |
Other noninterest expense | | | 896 | | | 776 | | | 1,399 | | | 1,491 |
Total noninterest expense | | | $20,004 | | | $23,276 | | | $42,549 | | | $33,298 |
| | | June 30, 2022 | ||||||||||
(in thousands) | | | Amortized Cost | | | Gross Unrealized Gains | | | Gross Unrealized Losses | | | Fair Value |
Investment securities available for sale: | | | | | | | | | ||||
SBA pooled securities | | | $187 | | | $3 | | | $— | | | $190 |
Government sponsored enterprises mortgage backed securities | | | 20,883 | | | 1 | | | 2,514 | | | 18,370 |
Government sponsored enterprises collateralized mortgage obligations | | | 481 | | | — | | | 3 | | | 478 |
Total investment securities available for sale | | | $21,551 | | | $4 | | | $2,517 | | | $19,038 |
Investment in marketable equity securities | | | | | | | | | ||||
Marketable equity securities | | | $9,990 | | | $7,992 | | | $— | | | $17,982 |
| | | December 31, 2021 | ||||||||||
(in thousands) | | | Amortized Cost | | | Gross Unrealized Gains | | | Gross Unrealized Losses | | | Fair Value |
Investment securities available for sale: | | | | | | | | | ||||
SBA pooled securities | | | $243 | | | $3 | | | $— | | | $246 |
Government sponsored enterprises mortgage backed securities | | | 20,007 | | | 192 | | | 323 | | | 19,876 |
Government sponsored enterprises collateralized mortgage obligations | | | 546 | | | 3 | | | — | | | 549 |
Total investment securities available for sale | | | $20,796 | | | $198 | | | $323 | | | $20,671 |
| | | December 31, 2021 | ||||||||||
(in thousands) | | | Amortized Cost | | | Gross Unrealized Gains | | | Gross Unrealized Losses | | | Fair Value |
Investment in marketable equity securities | | | | | | | | | ||||
Marketable equity securities | | | $9,990 | | | $1,998 | | | $— | | | $11,988 |
| | | December 31, 2020 | ||||||||||
(in thousands) | | | Amortized Cost | | | Gross Unrealized Gains | | | Gross Unrealized Losses | | | Fair Value |
Investment securities available for sale: | | | | | | | | | ||||
SBA pooled securities | | | $345 | | | $3 | | | $— | | | $348 |
Government sponsored enterprises mortgage backed securities | | | 14,157 | | | 384 | | | 23 | | | 14,518 |
Government sponsored enterprises collateralized mortgage obligations | | | 853 | | | 2 | | | — | | | 855 |
Total investment securities available for sale | | | $15,355 | | | $389 | | | $23 | | | $15,721 |
Investment in marketable equity securities | | | | | | | | | ||||
Marketable equity securities | | | $9,990 | | | $— | | | $— | | | $9,990 |
| | | June 30, 2022 | ||||||||||||||||
| | | Less than twelve months | | | Twelve months or more | | | Total | ||||||||||
(in thousands) | | | Fair value | | | Unrealized losses | | | Fair value | | | Unrealized losses | | | Fair value | | | Unrealized losses |
Government sponsored enterprises mortgage backed securities | | | $14,777 | | | $1,793 | | | $3,539 | | | $721 | | | $18,316 | | | $2,514 |
Government sponsored collateralized mortgage obligations | | | 478 | | | 3 | | | — | | | — | | | 478 | | | 3 |
Total | | | $15,255 | | | $1,796 | | | $3,539 | | | $721 | | | $18,794 | | | $2,517 |
| | | December 31, 2021 | ||||||||||||||||
| | | Less than twelve months | | | Twelve months or more | | | Total | ||||||||||
(in thousands) | | | Fair value | | | Unrealized losses | | | Fair value | | | Unrealized losses | | | Fair value | | | Unrealized losses |
Government sponsored enterprises mortgage backed securities | | | $11,865 | | | $230 | | | $2,548 | | | $93 | | | $14,413 | | | $323 |
Total | | | $11,865 | | | $230 | | | $2,548 | | | $93 | | | $14,413 | | | $323 |
| | | December 31, 2020 | ||||||||||||||||
| | | Less than twelve months | | | Twelve months or more | | | Total | ||||||||||
(in thousands) | | | Fair value | | | Unrealized losses | | | Fair value | | | Unrealized losses | | | Fair value | | | Unrealized losses |
Government sponsored enterprises mortgage backed securities | | | $3,013 | | | $23 | | | $— | | | $— | | | $3,013 | | | $23 |
Total | | | $3,013 | | | $23 | | | $— | | | $— | | | $3,013 | | | $23 |
| | | June 30, 2022 | | | December 31, | |||||||||||||
(in thousands) | | | 2021 | | | 2020 | ||||||||||||
Commercial | | | $155,931 | | | 59% | | | $143,182 | | | 56% | | | $144,878 | | | 55% |
Real Estate: | | | | | | | | | | | | | ||||||
Commercial real estate | | | 75,709 | | | 29% | | | 79,394 | | | 30% | | | 81,591 | | | 30% |
Residential real estate | | | 32,855 | | | 12% | | | 35,066 | | | 14% | | | 38,913 | | | 15% |
Consumer | | | 57 | | | 0% | | | 74 | | | 0% | | | 159 | | | 0% |
Total gross loans | | | 264,552 | | | 100% | | | 257,716 | | | 100% | | | 265,541 | | | 100% |
Net deferred loan costs | | | 1,707 | | | | | 1,909 | | | | | 1,729 | | | |||
Allowance for loan losses | | | (6,361) | | | | | (5,547) | | | | | (5,144) | | | |||
Loans held for investment, net | | | $259,898 | | | | | $254,078 | | | | | $262,126 | | | |||
| | | June 30, 2022 | | | December 31, | ||||
(in thousands) | | | 2021 | | | 2020 | |||
Nonaccrual loans | | | $4,656 | | | $6,848 | | | $8,506 |
Foreclosed assets | | | — | | | 618 | | | 2,372 |
Loan 90 days past due still accruing | | | — | | | — | | | — |
Total nonperforming assets | | | $4,656 | | | $7,466 | | | $10,878 |
Total loans held for investment, gross | | | $264,552 | | | $257,716 | | | $264,541 |
Nonaccrual loans to toal loans | | | 1.76% | | | 2.90% | | | 4.11% |
| | | Six-month period June 30, 2022 | | | Year ended December 31, | |||||||||||||
| | | 2021 | | | 2020 | |||||||||||||
(in thousands) | | | Balance | | | Weighted Average Rate | | | Balance | | | Weighted Average Rate | | | Balance | | | Weighted Average Rate |
Interest-bearing checking | | | $11,850 | | | 0.57% | | | $12,106 | | | 0.46% | | | $9,614 | | | 0.66% |
Money markets | | | 52,333 | | | 0.47% | | | 40,045 | | | 0.48% | | | 28,724 | | | 0.98% |
Savings accounts | | | 13,005 | | | 0.16% | | | 11,683 | | | 0.16% | | | 10,933 | | | 0.16% |
Time deposits | | | 162,581 | | | 1.08% | | | 171,817 | | | 1.35% | | | 142,936 | | | 2.05% |
Total nonmaturity deposits | | | 239,769 | | | 0.87% | | | 235,651 | | | 1.09% | | | 192,207 | | | 1.71% |
Non-interest bearing | | | 95,798 | | | 0.00% | | | 101,833 | | | 0.00% | | | 72,709 | | | 0.00% |
Total deposits | | | $335,567 | | | 0.62% | | | $337,484 | | | 0.76% | | | $264,916 | | | 1.24% |
| | | June 30, 2022 | | | December 31, | ||||
| | | 2021 | | | 2020 | ||||
| | | (in thousands) | |||||||
| | | $53,688 | | | $88,966 | | | $50,839 | |
(in thousands) | | | June 30, 2022 | | | Weighted Rate |
Three months or less | | | $28,908 | | | 0.90% |
Over three through six months | | | 21,999 | | | 0.88% |
Over six months through twelve months | | | 25,698 | | | 0.66% |
Over twelve months through twenty-four months | | | 19,182 | | | 1.18% |
Over twnety-four months | | | 13,511 | | | 1.92% |
| | | $109,298 | | | 1.02% |
(in thousands) | | | June 30, 2022 | | | Weighted Rate |
Three months or less | | | $10,000 | | | 1.00% |
Over three through six months | | | 25,000 | | | 1.59% |
Over six months through twelve months | | | — | | | 0.00% |
Over twelve months through twenty-four months | | | 15,000 | | | 1.28% |
Over twnety-four months | | | 20,245 | | | 0.49% |
| | | $70,245 | | | 1.12% |
West Town Bank | | | June 30, 2022 | |||||||||||||||
Dollars in thousands | | | Actual | | | Basel III Fully Phased-In | | | To Be Well-Capitalized Under Prompt Corrective Action Provisions | |||||||||
| | | Amount | | | Ratio | | | Amount | | | Ratio | | | Amount | | | Ratio | |
Total risk based capital | | | $51,706 | | | 16.78% | | | $32,351 | | | 10.50% | | | $30,811 | | | 10.00% |
Tier 1 risk based capital | | | 47,824 | | | 15.52% | | | 26,189 | | | 8.50% | | | 24,648 | | | 8.00% |
Common equity tier 1 capital | | | 47,824 | | | 15.22% | | | 21,567 | | | 7.00% | | | 20,027 | | | 6.50% |
Tier 1 leverage capital | | | 47,824 | | | 12.19% | | | 15,688 | | | 4.00% | | | 19,610 | | | 5.00% |
West Town Bank | | | December 31, 2021 | |||||||||||||||
Dollars in thousands | | | Actual | | | Basel III Fully Phased-In | | | To Be Well-Capitalized Under Prompt Corrective Action Provisions | |||||||||
| | | Amount | | | Ratio | | | Amount | | | Ratio | | | Amount | | | Ratio | |
Total risk based capital | | | $49,418 | | | 17.17% | | | $30,221 | | | 10.50% | | | $28,782 | | | 10.00% |
Tier 1 risk based capital | | | 45,797 | | | 15.91% | | | 24,465 | | | 8.50% | | | 23,026 | | | 8.00% |
Common equity tier 1 capital | | | 45,797 | | | 15.91% | | | 20,147 | | | 7.00% | | | 18,708 | | | 6.50% |
Tier 1 leverage capital | | | 45,797 | | | 11.46% | | | 15,982 | | | 4.00% | | | 19,978 | | | 5.00% |
West Town Bank | | | December 31, 2020 | |||||||||||||||
Dollars in thousands | | | Actual | | | Basel III Fully Phased-In | | | To Be Well-Capitalized Under Prompt Corrective Action Provisions | |||||||||
| | | Amount | | | Ratio | | | Amount | | | Ratio | | | Amount | | | Ratio | |
Total risk based capital | | | $37,888 | | | 13.30% | | | $29,912 | | | 10.50% | | | $28,488 | | | 10.00% |
Tier 1 risk based capital | | | 34,308 | | | 12.04% | | | 24,214 | | | 8.50% | | | 22,790 | | | 8.00% |
Common equity tier 1 capital | | | 34,308 | | | 12.04% | | | 19,941 | | | 7.00% | | | 18,517 | | | 6.50% |
Tier 1 leverage capital | | | 34,308 | | | 10.06% | | | 13,645 | | | 4.00% | | | 17,056 | | | 5.00% |
| | | June 30, 2022 | | | December 31, | ||||
(in thousands) | | | 2021 | | | 2020 | |||
Commitments to make loans and unused lines of credit | | | $40,240 | | | $18,231 | | | $15,555 |
Hypothetical shift in interest rates (in bps) | | | Estimated Resulting Theoretical Net Interest Income | |||||||||||||||
| | July 31, 2022 | | | January 31, 2022 | | | July 31, 2021 | |||||||||||
| | Amount% | | | Change | | | Amount% | | | Change | | | Amount% | | | Change | ||
(dollars in thousands) | | | | | | | | | | | | | ||||||
200 | | | $17,764 | | | 15.40% | | | $14,859 | | | 23.80% | | | $13,131 | | | 23.09% |
100 | | | 16,541 | | | 7.45% | | | 13,395 | | | 11.60% | | | 11,988 | | | 12.37% |
0 | | | 15,394 | | | 0.00% | | | 12,003 | | | 0.00% | | | 10,668 | | | 0.00% |
(100) | | | 14,253 | | | -7.41% | | | 11,159 | | | -7.03% | | | 9,928 | | | -6.94% |
(200) | | | 13,551 | | | -11.97% | | | 10,175 | | | -15.23% | | | 9,568 | | | -10.32% |
| • | each of MVB’s and IFH’s business, operations, financial condition, asset quality, earnings, markets and prospects; |
| • | the strategic rationale for the merger, including facilitating the expansion of MVB’s government guaranteed lending business, including SBA and USDA originations and servicing; |
| • | the current and prospective environment in the financial services industry, including economic conditions and the interest rate and regulatory environments, the accelerating pace of technological change in the financial services industry, operating costs resulting from regulatory and compliance mandates, scale and marketing expenses, increasing competition from both banks and non-bank financial and financial technology firms, current financial market conditions, current employment market conditions and the likely effects of these factors on MVB’s potential growth, development, productivity and strategic options both with and without the merger; |
| • | the compatibility of MVB’s and IFH’s cultures and philosophies; |
| • | the complementary nature of the products, customers and markets of the two (2) companies, which MVB believes should provide the opportunity to mitigate risks and increase potential returns; |
| • | the benefits and opportunities IFH will bring to MVB, including enhanced scale and product offerings, which should improve the ability of the combined company to attract and retain talent and customers; |
| • | the anticipated pro forma financial impact of the merger on MVB, including potential tangible book value accretion, as well as positive impact on earnings, return on equity, asset quality, liquidity and regulatory capital levels; |
| • | the expectation of cost synergies resulting from the merger, which will enable, among other things, increased spending on technology; |
| • | the expectation that the merger will offer potentially significant revenue synergies across business lines and the fact that such revenue synergies were identified but not included in the financial analysis; |
| • | its review and discussions with MVB’s senior management concerning MVB’s due diligence examination of, among other areas, the operations, financial condition and regulatory compliance programs and prospects of IFH; |
| • | its understanding that MVB’s shareholders would own approximately eighty two percent (82%) of the combined company’s common stock; |
| • | the fact that the exchange ratio is fixed, with no adjustment in the merger consideration to be received by IFH shareholders as a result of possible increases or decreases in the trading price of IFH or MVB stock following the announcement of the merger, which the MVB board of directors believed was consistent with market practice for transactions of this type and with the strategic purpose of the transaction; |
| • | the opinion, dated August 12, 2022, of Stephens to MVB’s board of directors as to the fairness, from a financial point of view and as of the date of the opinion, to MVB of the consideration to be given by MVB in the proposed merger, as more fully described below under “The Merger—Opinion of Old MVB’s Advisor”; |
| • | its review with MVB’s outside legal counsel of the material terms of the merger agreement, including the representations, warranties, covenants, deal protection and termination provisions; |
| • | its expectation that the required regulatory approvals could be obtained in a timely fashion; |
| • | the fact that MVB’s shareholders will have the opportunity to vote to approve the merger agreement; |
| • | the fact that the directors of the combined company would be the current members of the MVB board of directors; |
| • | the fact that the current executive officers of MVB would continue as executive officers of the combined company; |
| • | the execution of employment agreements with certain key employees of IFH in connection with the merger, which the MVB board of directors believes is important to enhancing the likelihood that the strategic benefits that MVB expects to achieve as a result of the merger will be realized; |
| • | the fact that MVB’s current headquarters in Fairmont, West Virginia will remain the headquarters for MVB and MVB Bank; and |
| • | MVB’s past record of integrating many acquisitions and of realizing expected financial and other benefits of such acquisitions and the strength of MVB’s management and infrastructure to successfully complete the integration process. |
| • | the possibility that the anticipated benefits of the transaction will not be realized when expected or at all, including as a result of the impact of, or difficulties arising from, the integration of the two (2) companies or as a result of the strength of the economy, general market conditions and competitive factors in the areas where MVB and IFH operate businesses; |
| • | the costs to be incurred in connection with the merger and the integration of IFH’s and MVB’s respective businesses and the possibility that the transaction and the integration may be more expensive to complete than anticipated, including as a result of unexpected factors or events; |
| • | the possibility of encountering difficulties in achieving anticipated cost savings and synergies in the amounts currently estimated or within the time frame currently contemplated; |
| • | the possibility of encountering difficulties in successfully integrating the businesses, operations and workforces of MVB and IFH; |
| • | the risk of losing key MVB or IFH employees during the pendency of the merger and following the closing; |
| • | the possible diversion of management focus and resources from the operation of MVB’s business while working to implement the transaction and integrate the two (2) companies; |
| • | the reputational risks associated with IFH’s cannabis business; |
| • | the risks associated with the pending RESPA Litigation; |
| • | the risk that, because the exchange ratio under the merger agreement would not be adjusted for changes in the market price of MVB common stock or IFH common stock, the value of the shares of MVB common stock to be issued to IFH shareholders upon the completion of the merger could be significantly more than the value of such shares immediately prior to the announcement of the parties’ entry into the merger agreement; |
| • | the risk that the regulatory and other approvals required in connection with the merger may not be received in a timely manner or at all or may impose conditions that may adversely affect the anticipated operations, synergies and financial results of MVB following the completion of the merger; |
| • | the potential for legal claims challenging the merger; and |
| • | the other risks described under the sections entitled “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements.” |
| (i) | reviewed certain publicly available financial statements and reports regarding MVB and IFH; |
| (ii) | reviewed certain audited financial statements regarding MVB and IFH; |
| (iii) | reviewed certain internal financial statements, management reports and other financial and operating data concerning MVB and IFH prepared by management of MVB and management of IFH, respectively (see the section entitled “Certain Unaudited Prospective Financial Information” for additional information regarding unaudited prospective financial information of MVB and IFH); |
| (iv) | reviewed, on a pro forma basis, in reliance upon consensus research estimates and upon financial projections and other information and assumptions concerning MVB and IFH provided by management of MVB and management of IFH, respectively, the effect of the proposed merger on the balance sheet, capitalization ratios, earnings and tangible book value both in the aggregate and, where applicable, on a per share basis of MVB; |
| (v) | reviewed the reported prices and trading activity for the common stock of MVB and IFH; |
| (vi) | compared the financial performance of MVB and IFH with that of certain other publicly-traded companies and their securities that Stephens deemed relevant to Stephens’ analysis of the proposed merger; |
| (vii) | reviewed the financial terms, to the extent publicly available, of certain merger or acquisition transactions that Stephens deemed relevant to Stephens’ analysis of the proposed merger; |
| (viii) | reviewed the then most recent draft of the merger agreement and related documents provided to Stephens by MVB; |
| (ix) | discussed with management of MVB and management of IFH the operations of and future business prospects for MVB and IFH and the anticipated financial consequences of the proposed merger to MVB and IFH; |
| (x) | assisted in MVB’s deliberations regarding the material terms of the proposed merger and MVB’s negotiations with IFH; and |
| (xi) | performed such other analyses and provided such other services as Stephens deemed appropriate. |
| (i) | the proposed merger and any related transactions will be consummated on the terms of the latest draft of the merger agreement provided to Stephens, without material waiver or modification; |
| (ii) | the representations and warranties of each party in the merger agreement and in all related documents and instruments referred to in the merger agreement are true and correct; |
| (iii) | each party to the merger agreement and all related documents will perform all of the covenants and agreements required to be performed by such party under such documents; |
| (iv) | all conditions to the completion of the proposed merger will be satisfied within the time frames contemplated by the merger agreement without any waivers; |
| (v) | that in the course of obtaining the necessary regulatory, lending or other consents or approvals (contractual or otherwise) for the proposed merger and any related transactions, no restrictions, including any divestiture requirements or amendments or modifications, will be imposed that would have a material adverse effect on the contemplated benefits of the proposed merger to MVB; |
| (vi) | there has been no material change in the assets, liabilities, financial condition, results of operations, business or prospects of MVB or IFH since the date of the most recent financial statements made available to Stephens, and that no legal, political, economic, regulatory or other development has occurred that will adversely impact MVB or IFH; and |
| (vii) | the proposed merger will be consummated in a manner that complies with applicable law and regulations. |
Price / Reported Tangible Book Value: | | | 1.27x |
Price / Adjusted Tangible Book Value:(1) | | | 1.41x |
Price / Last Twelve Months (“LTM”) Earnings: | | | 10.1x |
Price / 2022 Estimated Earnings:(2) | | | 11.2x |
Price / 2023 Estimated Earnings: | | | 15.6x |
Core Deposit Premium: | | | 9.3% |
| (1) | Calculated using tangible book value per share at June 30th, 2022 adjusted for ($7.4) million of net after-tax expenses related to the estimated litigation settlement |
| (2) | 2022 estimated earnings exclude ($7.4) million of net after-tax expenses related to the estimated litigation settlement |
Quaint Oak Bancorp Inc. (QNTO) | | | First Resource Bancorp (FRSB) |
Ledyard Financial Group Inc. (LFGP) | | | OptimumBank Holdings Inc. (OPHC) |
United Bancorp Inc. (UBCP) | | | First Bancshares Inc. (FBSI) |
InsCorp Inc. (IBTN) | | | High Country Bancorp Inc. (HCBC) |
Century Next Financial Corp. (CTUY) | | | Northeast Indiana Bancorp (NIDB) |
Muncy Bank Financial (MYBF) | | | FinWise Bancorp (FINW) |
University Bancorp Inc. (UNIB) | | | Infinity Bank (INFT) |
U & I Financial Corp. (UNIF) | | | The Farmers Bank Appomattox (FBPA) |
SVB & T Corp. (SVBT) | | | Logansport Financial Corp. (LOGN) |
| (1) | Publically-traded banks includes banks traded on NYSE, NYSEAM, NASDAQ, OTCQB, and OTCQX exchanges. |
| (2) | Core ROAA as defined by S&P Global Market Intelligence. |
| | | | | Selected Companies | ||||||||
| | | IFH | | | 25th Percentile | | | Median | | | 75th Percentile | |
Total Assets | | | $435 | | | $424 | | | $498 | | | $616 |
TCE / TA | | | 17.6% | | | 8.5% | | | 9.6% | | | 10.7% |
Loans / Deposits | | | 79.8% | | | 76.3% | | | 92.5% | | | 96.0% |
NPA / Assets(1) | | | 1.07% | | | 0.53% | | | 0.31% | | | 0.14% |
LTM GAAP ROAA | | | 2.07% | | | 1.10% | | | 1.26% | | | 1.76% |
LTM Core ROAA(2) | | | 1.41% | | | 1.11% | | | 1.22% | | | 1.58% |
LTM GAAP ROATCE(2) | | | 12.9% | | | 12.1% | | | 12.7% | | | 15.1% |
Market Capitalization | | | $60 | | | $37 | | | $53 | | | $66 |
Price / Tangible Book Value | | | 0.82x | | | 0.96x | | | 1.08x | | | 1.27x |
Price / LTM EPS | | | 6.5x | | | 6.6x | | | 7.9x | | | 8.9x |
Price / MRQ EPS | | | 10.6x | | | 6.7x | | | 7.9x | | | 10.3x |
Dividend Yield | | | — | | | 0.3% | | | 1.9% | | | 4.0% |
| (1) | NPAs / Assets excludes restructured loans from nonperforming assets. |
| (2) | As defined by S&P Global Market Intelligence. |
Acquirer | | | Target | | | Announcement Date |
Bank First Corporation | | | Hometown Bancorp Ltd. | | | 7/26/2022 |
Somerset Savings Bank SLA | | | Regal Bancorp Inc. | | | 7/25/2022 |
HomeTrust Bancshares Inc. | | | Quantum Capital Corp. | | | 7/25/2022 |
Middlefield Banc Corp. | | | Liberty Bancshares (Ada OH) | | | 5/26/2022 |
Cambridge Bancorp | | | Northmark Bank | | | 5/23/2022 |
The First Bancshares | | | Beach Bancorp Inc. | | | 4/26/2022 |
Bank First Corporation | | | Denmark Bancshares Inc. | | | 1/19/2022 |
Civista Bancshares Inc. | | | Comunibanc Corp. | | | 1/10/2022 |
Alerus Financial Corp. | | | MPB BHC Inc. | | | 12/8/2021 |
InBankshares Corp | | | Legacy Bank | | | 11/30/2021 |
Bus. First Bancshares Inc. | | | Texas Citizens Bancorp Inc. | | | 10/21/2021 |
Eagle Bancorp Montana Inc. | | | First Community Bancorp Inc. | | | 10/1/2021 |
BayCom Corp | | | Pacific Enterprise Bancorp | | | 9/7/2021 |
SouthPoint Bancshares Inc. | | | Merchants Financial Svcs Inc. | | | 8/25/2021 |
Acquirer | | | Target | | | Announcement Date |
Seacoast Banking Corp. of FL | | | Sabal Palm Bancorp Inc. | | | 8/23/2021 |
First Mid Bancshares | | | Delta Bancshares Co. | | | 7/29/2021 |
Finward Bancorp | | | Royal Financial Inc. | | | 7/29/2021 |
First Western Financial Inc. | | | Teton Financial Services Inc. | | | 7/22/2021 |
Farmers National Banc Corp. | | | Cortland Bancorp | | | 6/23/2021 |
United Community Banks Inc. | | | Aquesta Financial Holdings | | | 5/27/2021 |
Equity Bancshares Inc. | | | American State Bancshares Inc. | | | 5/17/2021 |
Southern California Bancorp | | | Bank of Santa Clarita | | | 4/27/2021 |
Colony Bankcorp Inc. | | | SouthCrest Financial Group Inc. | | | 4/22/2021 |
SmartFinancial Inc. | | | Sevier County Bancshares Inc. | | | 4/14/2021 |
Seacoast Banking Corp. of FL | | | Legacy Bank of Florida | | | 3/23/2021 |
Fidelity D & D Bancorp Inc. | | | Landmark Bancorp Inc. | | | 2/26/2021 |
BancorpSouth Bank | | | FNS Bancshares Inc. | | | 1/13/2021 |
| | | | | Selected Transactions | ||||||||
| | | IFH | | | 25th Percentile | | | Median | | | 75th Percentile | |
Deal Value | | | $97 | | | $53 | | | $63 | | | $107 |
Target Total Assets | | | $435 | | | $421 | | | $534 | | | $674 |
Target TCE / TA | | | 17.6% | | | 9.3% | | | 10.2% | | | 10.7% |
Target NPA / Assets | | | 1.1% | | | 0.8% | | | 0.4% | | | 0.1% |
Target LTM ROAA | | | 2.07% | | | 0.67% | | | 0.98% | | | 1.18% |
Price / Tangible Book Value | | | 1.27x | | | 1.26x | | | 1.46x | | | 1.58x |
Price / LTM Earnings | | | 10.1x | | | 11.9x | | | 15.6x | | | 18.1x |
Core Deposit Premium | | | 9.4% | | | 3.2% | | | 4.9% | | | 7.9% |
Buyer | | | Target | | | Date |
HomeTrust Bancshares Inc. | | | Quantum Capital Corp. | | | 7/25/2022 |
DFCU Financial | | | First Citrus Bancorp. Inc. | | | 5/12/2022 |
The First Bancshares | | | Beach Bancorp Inc. | | | 4/26/2022 |
Southern Bancorp Inc. | | | FCB Financial Services Inc. | | | 1/31/2022 |
BankFirst Capital Corp. | | | Citizens Bank of Fayette | | | 10/14/2021 |
SouthPoint Bancshares Inc. | | | Merchants Financial Svcs Inc. | | | 8/25/2021 |
Seacoast Banking Corp. of FL | | | Sabal Palm Bancorp Inc. | | | 8/23/2021 |
Lake Michigan CU | | | Pilot Bancshares Inc. | | | 6/16/2021 |
United Community Banks Inc. | | | Aquesta Financial Holdings | | | 5/27/2021 |
Colony Bankcorp Inc. | | | SouthCrest Financial Group Inc. | | | 4/22/2021 |
SmartFinancial Inc. | | | Sevier County Bancshares Inc. | | | 4/14/2021 |
Seacoast Banking Corp. of FL | | | Legacy Bank of Florida | | | 3/23/2021 |
First National Corp. | | | Bank of Fincastle | | | 2/18/2021 |
Investar Holding Corp. | | | Cheaha Financial Group Inc. | | | 1/25/2021 |
BancorpSouth Bank | | | FNS Bancshares Inc. | | | 1/13/2021 |
| | | | | Selected Transactions | ||||||||
| | | IFH | | | 25th Percentile | | | Median | | | 75th Percentile | |
Deal Value | | | $97 | | | $40 | | | $68 | | | $106 |
Target Total Assets | | | $435 | | | $323 | | | $533 | | | $675 |
Target TCE / TA | | | 17.6% | | | 7.6% | | | 9.3% | | | 12.1% |
Target NPA / Assets | | | 1.1% | | | 0.8% | | | 0.5% | | | 0.2% |
Target LTM ROAA | | | 2.07% | | | 0.84% | | | 1.01% | | | 1.26% |
Price / Tangible Book Value | | | 1.27x | | | 1.45x | | | 1.54x | | | 1.85x |
Price / LTM Earnings | | | 10.1x | | | 12.5x | | | 15.4x | | | 17.8x |
Core Deposit Premium | | | 9.4% | | | 4.6% | | | 6.7% | | | 9.8% |
| | | MVB | | | IFH | |
Ownership: | | | | | ||
Pro Forma Ownership at 1.210x Exchange Ratio | | | 82% | | | 18% |
Balance Sheet: | | | | | ||
Total Assets (excl. PPP) | | | 87% | | | 13% |
Total Net Loans (excl. PPP) | | | 87% | | | 13% |
Total Deposits | | | 89% | | | 11% |
Tangible Common Equity (“TCE”) | | | 77% | | | 23% |
Litigation Adjusted TCE(1) | | | 79% | | | 21% |
Profitability | | | | | ||
2021 Reported Earnings | | | 76% | | | 24% |
2022 Estimated Earnings(2) | | | 70% | | | 30% |
2023 Estimated Earnings | | | 86% | | | 14% |
Market Data: | | | | | ||
Market Capitalization | | | 88% | | | 12% |
| (1) | Counterparty adjusted for ($7.4) million of net after-tax expenses related to the estimated litigation settlement |
| (2) | Counterparty 2022 estimated earnings exclude ($7.4) million of net after-tax expenses related to the estimated litigation settlement |
| • | each of IFH’s and MVB’s business, operations, financial condition, stock performance, asset quality, earnings and prospects, and the interest rate environment; increased operating costs resulting from regulatory and compliance mandates; increasing competition from both banks and non-bank financial and financial technology firms; current financial market conditions; and the likely effects of the foregoing factors on IFH’s and the combined company’s potential growth, development, profitability and strategic options. In reviewing these factors, including the information obtained through due diligence, the IFH board of directors considered that IFH’s and MVB’s respective business, operations and risk profile complement each other and that the companies’ separate earnings and prospects, and the synergies and scale potentially available in the proposed merger, create the opportunity for the combined company to leverage complementary and diversified revenue streams and to have superior future earnings and prospects compared to IFH’s earnings and prospects on a stand-alone basis; |
| • | MVB’s earnings track record and the market performance of its common stock, as well as MVB’s historical cash dividend payouts on its common stock; |
| • | the nature of the merger as an all-stock transaction and the ability of IFH’s shareholders to benefit from MVB’s potential growth and stock appreciation since it is more likely that the combined entity will have superior future earnings and prospects compared to IFH’s earnings and prospects on an |
| • | the perceived ability of MVB to complete a merger transaction from a financial and regulatory perspective, and the prospects for such approvals being obtained in a timely fashion and without the imposition of any adverse conditions; |
| • | the financial and other terms of the merger agreement, including the amount and nature of the consideration proposed to be paid, which IFH’s board reviewed with its outside financial and legal advisors; |
| • | the fact that the exchange ratio would be fixed, which the IFH board of directors believed was consistent with market practice for transactions of this type and with the strategic purpose of the transaction; |
| • | the termination right of IFH negotiated under the merger agreement that provides IFH a qualified termination right if MVB’s common stock underperforms both its historial price and the Nasdaq Bank Index by certain thresholds, as more fully described under “The Merger Agreement—Termination of the Merger Agreement” beginning on page 128; |
| • | the fact that the outside date under the merger agreement allows for sufficient time to complete the merger; |
| • | the uniqueness of IFH’s strategy and long-term strategic plan, as compared to similarly sized community banks, and the fact that MVB’s strategic plan and initiatives uniquely mirror many of IFH’s goals and strategies, including the focus on non-interest income strategies and opportunities, a belief in investing in technology, and a shared belief in the strategic and financial benefits of partnering with, and investing in, emerging technologies and non-bank companies, such as Fintechs; |
| • | the opportunities and complementary aspects of IFH’s government-guaranteed lending platform and MVB’s low cost and non-interest bearing deposit franchise; |
| • | MVB’s and IFH’s shared entrepreneurial cultures; |
| • | the expectation that the proposed merger with MVB will generally be a tax-free transaction to IFH’s shareholders with respect to MVB common stock received by virtue of the merger; |
| • | the potential expense-saving and revenue-enhancing opportunities in connection with the merger, the related potential impact on the combined company’s earnings and the fact that the nature of the stock merger consideration would allow former IFH shareholders to participate in the potential future upside as MVB shareholders; |
| • | the expectation that the merger will provide holders of IFH common stock the opportunity to receive a substantial premium over the historical trading prices for their shares, as well as the increased trading volume of MVB’s common stock as compared to IFH’s common stock; |
| • | the anticipated effect of the acquisition on IFH’s retained employees, including new employment agreements to be entered into by MVB with certain key, revenue-generating employees of IFH, and the terms of severance for employees who would not be retained; |
| • | the financial analyses provided by Raymond James, IFH’s financial advisor, regarding the merger, and its opinion, delivered to IFH’s board of directors on August 10, 2022, that as of that date, the exchange ratio provided under the merger agreement was fair, from a financial point of view, to the holders of IFH’s common stock; |
| • | the view of the IFH board of directors of the capability and likelihood for other potential counterparties to emerge and that, although the merger agreement contains a covenant prohibiting IFH from soliciting third-party acquisition proposals, it permits the IFH board of directors to consider and respond to unsolicited proposals, subject to certain requirements, as more fully described under “The Merger Agreement—Agreement Not to Solicit Other Offers” beginning on page 127; |
| • | IFH’s board of directors’ knowledge of the current environment in the financial services industry, including national, regional and local economic conditions, continued industry consolidation, increased regulatory burdens, evolving trends in technology and increasing nationwide and global competition, the current financial market conditions, the current environment for community banks, and the likely effects of these factors on IFH’s and the combined company’s potential growth, development, profitability and strategic options, and the historical prices of IFH and MVB common shares; |
| • | its knowledge of IFH’s prospects as an independent entity, including challenges relating to rising interest rates, both from a funding perspective and the impact on IFH’s historical mortgage business; increased competition in the government guaranteed lending space from larger competitors, which could impact pricing as well as employee retention risk; and potential short-term declines in profitability if larger portions of its government guaranteed loans were retained to increase its asset size and grow its balance sheet on a stand-alone basis; and |
| • | its belief that the merger is more favorable to IFH’s shareholders than the alternatives to the merger, which belief was formed based on the careful review undertaken by IFH’s board of directors, with the assistance of its management and outside financial and legal advisors. |
| • | the fact that, while IFH expects that the merger will be consummated, there can be no assurance that all conditions to the parties’ obligations to complete the merger agreement will be satisfied, including the risk that certain regulatory approvals, the receipt of which are conditions to the consummation of the merger, might not be obtained, and, as a result, the merger may not be consummated; |
| • | the restrictions on the conduct of IFH’s business prior to the completion of the merger, which are customary for merger agreements involving financial institutions, but which, subject to specific exceptions, could delay or prevent IFH from undertaking business opportunities that may arise or any other action it would otherwise take with respect to the operations of IFH absent the pending completion of the merger; |
| • | the impact of entering into the merger agreement on IFH’s recent strategic initiative to expand its cannabis and hemp lines of business, which may be deemphasized while the merger is pending and potentially discontinued if the merger is consummated; |
| • | the significant risks and costs involved in connection with entering into or completing the merger, or failing to complete the merger in a timely manner, or at all, including as a result of any failure to obtain required regulatory approvals or shareholder approvals, such as the risks and costs relating to diversion of management and employee attention from other strategic opportunities and operational matters, potential employee attrition, and the potential effect on business and customer relationships; |
| • | the fact that IFH would be prohibited from soliciting acquisition proposals after execution of the merger agreement, and the possibility that the $3,900,000 termination fee payable by IFH upon the termination of the merger agreement under certain circumstances could discourage other potential acquirers from making a competing bid to acquire IFH; |
| • | the fact that some of IFH’s directors and executive officers have other interests in the merger that are different from, or in addition to, their interests as IFH shareholders; |
| • | the possibility of litigation in connection with the merger; and |
| • | the other risks described under the sections entitled “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements”. |
| • | reviewed the financial terms and conditions as stated in the draft of the merger agreement dated as of August 9, 2022; |
| • | reviewed certain information related to the historical condition and prospects of IFH and MVB, as made available to Raymond James by or on behalf of IFH, including, but not limited to, (a) financial projections for each of IFH and MVB prepared by the management of IFH (together the “Projections”) and (b) certain forecasts and estimates of potential cost savings, operating efficiencies, revenue effects, and other pro forma financial adjustments expected to result from the merger, which were authorized and reviewed by management of IFH (the “Pro Forma Financial Adjustments”); (see the section entitled “Certain Unaudited Prospective Financial Information” for additional information regarding unaudited prospective financial information of MVB and IFH); |
| • | reviewed IFH’s and MVB’s (a) audited consolidated financial statements for the years ended December 31, 2021, December 31, 2020 and December 31, 2019; and (b) unaudited consolidated financial statements for the three-month periods ended March 31, 2022 and June 30, 2022; |
| • | reviewed IFH’s and MVB’s recent public filings and certain other publicly available information regarding IFH and MVB; |
| • | reviewed the financial and operating performance of IFH and MVB and those of other selected public companies that Raymond James deemed to be relevant; |
| • | considered certain publicly available financial terms of certain transactions Raymond James deemed to be relevant; |
| • | reviewed the current and historical market prices and trading volume for IFH common stock and for MVB’s common stock, and the current market prices of the publicly traded securities of certain other companies that Raymond James deemed to be relevant; |
| • | compared the relative contributions of IFH and MVB to certain financial statistics of the combined company on a pro forma basis; |
| • | conducted such other financial studies, analyses and inquiries and considered such other information and factors as Raymond James deemed appropriate; |
| • | received a certificate addressed to Raymond James from a member of senior management of IFH regarding, among other things, the accuracy of the information, data and other materials (financial or otherwise) provided to, or discussed with, Raymond James by or on behalf of IFH; and |
| • | discussed with members of the senior management of IFH and MVB certain information relating to the aforementioned and any other matters which Raymond James deemed relevant to its inquiry including, but not limited to, the past and current business operations of IFH and MVB, respectively, and the financial condition and future prospects and operations of IFH and MVB, respectively. |
| | | Relative Contribution | | | Implied Exchange Ratio | ||||
| | | MVB Financial | | | Integrated Financial Holdings | | |||
Total Assets | | | 87.3% | | | 12.7% | | | 0.81x |
Total Gross Loans | | | 87.2% | | | 12.8% | | | 0.81x |
Total Deposits | | | 88.7% | | | 11.3% | | | 0.71x |
Tangible Common Equity(1) | | | 78.9% | | | 21.1% | | | 1.49x |
LTM Net Income(2) | | | 84.6% | | | 15.4% | | | 1.01x |
2022E Net Income(2)(3) | | | 84.3% | | | 15.7% | | | 1.04x |
2023E Net Income | | | 85.4% | | | 14.6% | | | 0.95x |
Exchange Ratio in the Merger | | | | | | | 1.210x | ||
| (1) | IFH statistic adjusted for settlement of pending lawsuit assumes $10.0 million pre-tax charge, which IFH expects to accrue for in Q3 2022 |
| (2) | LTM and 2022E net income exclude the 2022Q1 nonrecurring after-tax gain on Dogwood State Bank (DSBX) stock of approximately $4.3 million |
| (3) | 2022E net income excludes the impact of $10.0 million pre-tax accrual for pending litigation for illustrative purposes |
| | | Implied Per Share Value | | | Implied Exchange Ratio | |||||||||||||
| | | MVB Financial | | | Integrated Financial Holdings | | ||||||||||||
| | | Low | | | High | | | Low | | | High | | | Low/High | | | High/Low | |
Net Income Terminal Multiple | | | $46.35 | | | $56.22 | | | $46.70 | | | $52.91 | | | 0.83x | | | 1.14x |
Exchange Ratio in the Merger | | | | | | | | | | | 1.210x | |||||||
Selected Companies for MVB Financial | | | Selected Companies for Integrated |
Southern BancShares (NC) (SBNC) | | | Village Bank & Tr Finl Corp. (VBFC) |
Carter Bankshares (CARE) | | | PB Financial Corporation (PBNC) |
Summit Financial Group Inc. (SMMF) | | | Bank of Botetourt (BORT) |
Burke & Herbert Bank & Trust (BHRB) | | | Community First Bancorporation (CFOK) |
HomeTrust Bancshares Inc. (HTBI) | | | Bank of South Carolina Corp. (BKSC) |
First Community Bankshares Inc (FCBC) | | | Oak Ridge Financial Services (BKOR) |
Primis Financial Corp. (FRST) | | | Farmers Bankshares Inc. (FBVA) |
American National Bankshares (AMNB) | | | Touchstone Bankshares (TSBA) |
Blue Ridge Bankshares Inc. (BRBS) | | | Citizens Bancorp of Virginia (CZBT) |
C&F Financial Corp. (CFFI) | | | KS Bancorp Inc. (KSBI) |
John Marshall Bancorp Inc. (JMSB) | | | Surrey Bancorp (SRYB) |
FVCBankcorp Inc. (FVCB) | | | Lumbee Guaranty Bank (LUMB) |
MainStreet Bcshs (MNSB) | | | M&F Bancorp Inc. (MFBP) |
Virginia National Bkshs Corp. (VABK) | | | blueharbor bank (BLHK) |
National Bankshares Inc. (NKSH) | | | Lifestore Financial Group (LSFG) |
Peoples Bancorp of NC Inc. (PEBK) | | | Oak View Bankshares (OAKV) |
| | | Selected Companies for MVB Financial | ||||
| | | 25th Percentile | | | 75th Percentile | |
Tangible Book Value | | | 115% | | | 150% |
LTM Earnings per Share | | | 9.4x | | | 11.8x |
| | | Selected Companies for Integrated Financial Holdings | ||||
| | | 25th Percentile | | | 75th Percentile | |
LTM Earnings per Share | | | 8.3x | | | 10.4x |
Tangible Book Value | | | 101% | | | 125% |
| | | Implied Per Share Value | | | Implied Exchange Ratio | |||||||||||||
| | | MVB Financial | | | Integrated Financial Holdings | | ||||||||||||
| | | 25th Percentile | | | 75th Percentile | | | 25th Percentile | | | 75th Percentile | | | Low/High | | | High/Low | |
Tangible Book Value | | | $23.19 | | | $30.15 | | | $29.56 (1) | | | $36.74 (1) | | | 0.98x | | | 1.58x |
LTM Earnings per Share | | | $19.31 | | | $24.13 | | | $17.57 | | | $22.20 | | | 0.73x | | | 1.15x |
Exchange Ratio in the Merger | | | | | | | | | | | 1.210x | |||||||
| (1) | Adjustment for settlement of pending lawsuit assumed $10.0 million pre-tax charge which IFH expects to accrue in Q3 2022 |
| • | Bank First Corporation / Hometown Bancorp Ltd. – July 26, 2022 |
| • | HomeTrust Bancshares Inc. / Quantum Capital Corp. – July 25, 2022 |
| • | Somerset Savings Bank SLA / Regal Bancorp Inc. – July 25, 2022 |
| • | CrossFirst Bankshares, Inc, / Farmers & Stockmens Bank – June 13, 2022 |
| • | Middlefield Banc Corp. / Liberty Bancshares (Ada OH) – May 26, 2022 |
| • | Cambridge Bancorp / Northmark Bank – May 23, 2022 |
| • | DFCU Financial / First Citrus Bancorp, Inc. – May 12, 2022 |
| • | Arizona FCU / Horizon Community Bank – March 10, 2022 |
| • | BAWAG Group AG / Peak Bancorp – February 2, 2022 |
| • | Bank First Corporation / Denmark Bancshares Inc. – January 19, 2022 |
| • | Civista Bancshares, Inc. / Comunianc Corp. – January 10, 2022 |
| • | HomeTrust Bancshares Inc. / Quantum Capital Corp. – July 25, 2022 |
| • | DFCU Financial / First Citrus Bancorp, Inc. – May 12, 2022 |
| • | Seacoast Banking Corp. of FL / Sabal Palm Bancorp, Inc. – August 23, 2021 |
| • | Lake Michigan CU / Pilot Bancshares Inc. – June 16, 2021 |
| • | United Community Banks Inc. / Aquesta Financial Holdings – May 27, 2021 |
| • | Colony Bankcorp Inc. / SouthCrest Financial Group, Inc. – April 22, 2021 |
| • | SmartFinancial Inc. / Sevier County Bancshares Inc. – April 14, 2021 |
| • | Seacoast Banking Corp. of FL / Legacy Bank of Florida – March 23, 2021 |
| • | BancorpSouth Bank / FNS Bancshares Inc. – January 13, 2021 |
| | | Integrated Financial Statistic | | | Percentiles | | | Implied Exchange Ratio | |||||||
| | | 25th Percentile | | | 75th Percentile | | | 25th Percentile | | | 75th Percentile | ||||
Tangible Book Value(1) | | | $29.34 | | | 138% | | | 191% | | | 1.24x | | | 1.72x |
Capital Adj. Tangible Book Value(1) | | | $13.55 | | | 139% | | | 196% | | | 0.58x | | | 0.81x |
LTM Earnings per Share | | | $2.13 | | | 13.9x | | | 19.2x | | | 0.91x | | | 1.25x |
Premium to Core Deposits | | | $255,620 | | | 4.1% | | | 10.0% | | | 1.04x | | | 1.25x |
Exchange Ratio in the Merger | | | | | | | | | 1.210x | ||||||
| | | Integrated Financial Statistic | | | Percentiles | | | Implied Exchange Ratio | |||||||
| | | 25th Percentile | | | 75th Percentile | | | 25th Percentile | | | 75th Percentile | ||||
Tangible Book Value(1) | | | $29.34 | | | 153% | | | 187% | | | 1.38x | | | 1.68x |
Capital Adj. Tangible Book Value(1) | | | $13.55 | | | 147% | | | 199% | | | 0.61x | | | 0.83x |
LTM Earnings per Share | | | $2.13 | | | 11.9x | | | 18.1x | | | 0.78x | | | 1.18x |
Premium to Core Deposits | | | $255,620 | | | 5.1% | | | 9.8% | | | 1.08x | | | 1.24x |
Exchange Ratio in the Merger | | | | | | | | | 1.210x | ||||||
| (1) | IFH statistic adjusted for settlement of pending lawsuit assumed $10.0 million pre-tax charge which IFH expects to accrue in Q3 2022 |
| | | 6 Months Ended | | | 12 Months Ended | ||||||||||
| | | December 31, 2022 | | | December 31, 2023 | | | December 31, 2024 | | | December 31, 2025 | | | December 31, 2026 | |
Earnings Per Share | | | $1.02 | | | $2.86 | | | $4.50 | | | $4.73 | | | $4.96 |
Common Dividends Per Share | | | $0.34 | | | $0.68 | | | $0.68 | | | $0.68 | | | $0.68 |
Tangible Assets ($000s) | | | $3,060,968 | | | $3,222,402 | | | $3,412,073 | | | $3,611,652 | | | 3,821,637 |
| | | 6 Months Ended | | | 12 Months Ended | ||||||||||
| | | December 31, 2022 | | | December 31, 2023 | | | December 31, 2024 | | | December 31, 2025 | | | December 31, 2026 | |
Net Income ($000s) | | | ($4,081) | | | $6,109 | | | $7,176 | | | $7,893 | | | $8,682 |
Earnings Per Share | | | ($1.77) | | | $2.66 | | | $3.12 | | | $3.43 | | | $3.78 |
Common Dividends Per Share | | | $0.00 | | | $0.00 | | | $0.00 | | | $0.00 | | | $0.00 |
Tangible Assets ($000s) | | | $430,407 | | | $471,492 | | | $516,940 | | | $567,531 | | | $623,114 |
| | | 6 Months Ended | | | 12 Months Ended | ||||||||||
| | | December 31, 2022 | | | December 31, 2023 | | | December 31, 2024 | | | December 31, 2025 | | | December 31, 2026 | |
Earnings Per Share | | | $1.02 | | | $2.86 | | | $4.50 | | | $4.73 | | | $4.96 |
Common Dividends Per Share | | | $0.34 | | | $0.68 | | | $0.72 | | | $0.76 | | | $0.80 |
Tangible Assets ($000s) | | | $3,057,167 | | | $3,221,391 | | | $3,413,973 | | | $3,616,267 | | | 3,828,698 |
| | | 6 Months Ended | | | 12 Months Ended | ||||||||||
| | | December 31, 2022 | | | December 31, 2023 | | | December 31, 2024 | | | December 31, 2025 | | | December 31, 2026 | |
Net Income ($000s) | | | ($4,426) | | | $6,559 | | | $7,848 | | | $8,508 | | | $8,935 |
Earnings Per Share | | | ($1.92) | | | $2.85 | | | $3.39 | | | $3.65 | | | $3.84 |
Common Dividends Per Share | | | $0.00 | | | $0.00 | | | $0.00 | | | $0.00 | | | $0.00 |
Tangible Assets ($000s) | | | $429,481 | | | $443,029 | | | $442,132 | | | $456,921 | | | $483,233 |
Name of Individual | | | Number of Unvested Restricted Shares | | | Total $ Value of Unvested Restricted Shares(1) |
Non-Employee Directors | | | | | ||
Marc H. McConnell | | | 3,200 | | | $136,832 |
Dr. Jeffrey Moore | | | 1,600 | | | 68,416 |
Randy Ramsey | | | 1,600 | | | 68,416 |
Joseph T. Snyder | | | 1,600 | | | 68,416 |
Jimmy Stallings | | | 1,600 | | | 68,416 |
Sandra Warren | | | 1,600 | | | 68,416 |
David G. Wicklund | | | 1,600 | | | 68,416 |
| | | | | |||
Executive Officers | | | | | ||
Eric J. Bergevin(2) | | | 13,000 | | | 555,880 |
Michael Breckheimer | | | 6,200 | | | 265,112 |
Steven E. Crouse | | | 4,200 | | | 179,592 |
Melissa Marsal | | | 6,200 | | | 265,112 |
A. Riddick Skinner | | | 5,708 | | | 244,074 |
Totals: | | | 48,108 | | | $2,057,098 |
| (1) | To calculate the value of the unvested restricted shares of IFH common stock held by the applicable individuals, we have assumed a value of MVB’s common stock of $35.34, which was the average closing market price of a share of the MVB common stock over the first five business days following the first public announcement of the merger on August 12, 2022 (inclusive of the announcement date). The $35.34 has then been multiplied by the 1.21 exchange ratio, to arrive at a value for each share of IFH common stock for which vesting is accelerated of $42.76. |
| (2) | Mr. Bergevin is the only employee of IFH that is also a director of IFH. |
| • | The shareholder must be entitled to vote on the merger. |
| • | The shareholder must deliver to IFH, before the vote on approval or disapproval of the merger agreement is taken, written notice of the shareholder’s intent to demand payment if the plan of merger is effectuated. This notice must be in addition to and separate from any proxy or vote against the plan of merger. Neither voting against, abstaining from voting, nor failing to vote on the plan of merger will constitute a notice within the meaning of Article 13. |
| • | The shareholder must not vote, or cause or permit to be voted, any shares in favor of the plan of merger. A failure to vote will satisfy this requirement, as will a vote against the plan of merger, but a vote in favor of the plan of merger, by proxy or in person, or the return of a signed proxy which does not specify a vote against approval of the plan of merger or contain a direction to abstain, will constitute a waiver of the shareholder’s appraisal rights. |
| • | Identify the first date of any announcement of the principal terms of the merger to the shareholders. If such an announcement was made, the form must require the shareholder to certify whether beneficial ownership of the shares was acquired before that date. For more information regarding this requirement, see “—After-Acquired Shares” below. |
| • | Require the shareholder to certify that the shareholder did not vote for or consent to the transaction. |
| • | State where the appraisal form is to be returned, where certificates for certificated shares must be deposited, and the date by which such certificates must be deposited. |
| • | State a date by which MVB must receive the appraisal form from the shareholder, known as the “Demand Deadline.” The date may not be less than 40 nor more than 60 days after the date the appraisal notice and form are sent. |
| • | State that if the appraisal form is not received by MVB by the specified date, the shareholder will be deemed to have waived the right to demand appraisal. |
| • | Provide an estimate of the fair value of the shares by MVB (as successor to IFH). |
| • | Disclose that, if requested in writing by the shareholder, MVB will disclose within ten days after the Demand Deadline the number of shareholders who have returned their appraisal forms and the total number of shares owned by them. |
| • | Establish a date within 20 days of the Demand Deadline by which shareholders can withdraw the request for appraisal. |
| • | Include a copy of Article 13 of the NCBCA. |
| • | IFH’s most recently available balance sheet, income statement, and statement of cash flows as of the end of or for the fiscal year ending not more than sixteen months before the date of payment, and the latest available quarterly financial statements, if any; |
| • | a statement of MVB’s estimate of the fair value of the shares, which must equal or exceed MVB’s estimate in the earlier-circulated appraisal notice; and |
| • | a statement that the shareholder has the right to submit a final payment demand as described below and that the shareholder will lose the right to submit a final payment demand if he or she does not act within the specified time frame. |
| • | provide affected shareholders with IFH’s most recently available balance sheet, income statement, and statement of cash flows as of the end of or for the fiscal year ending not more than sixteen months before the date of payment, and the latest available quarterly financial statements, if any; |
| • | provide MVB’s estimate of the fair value of their shares, plus interest; |
| • | inform such shareholders that they may accept MVB’s estimate of the fair value of their shares, plus interest, in full satisfaction of their claim or submit a final payment demand; |
| • | inform such shareholders that if they wish to accept MVB’s estimate of the fair value of their shares, plus interest, they must notify MVB within 30 days of receipt of the offer; and |
| • | inform such shareholders that those shareholders that do not properly demand appraisal will be deemed to have accepted MVB’s estimate of the fair value of their shares, plus interest. |
| • | corporate matters, including due organization and qualification and subsidiaries; |
| • | capitalization; |
| • | authority relative to execution and delivery of the merger agreement and the absence of conflicts with, or violations of, organizational documents or other obligations as a result of the mergers; |
| • | required governmental and other regulatory and self-regulatory filings and consents and approvals in connection with the mergers; |
| • | reports to regulatory authorities; |
| • | financial statements, internal controls, books and records, and absence of undisclosed liabilities; |
| • | broker’s fees payable in connection with the merger; |
| • | the absence of certain changes or events; |
| • | legal proceedings; |
| • | tax matters; |
| • | employee matters and employee benefit matters; |
| • | compliance with applicable laws; |
| • | certain material contracts; |
| • | absence of agreements with regulatory authorities; |
| • | risk management instruments; |
| • | environmental matters; |
| • | investment securities and commodities; |
| • | real property; |
| • | intellectual property; |
| • | related party transactions; |
| • | inapplicability of takeover statutes; |
| • | absence of action or circumstance that would prevent the merger from qualifying as a reorganization under Section 368(a) of the Code; |
| • | opinions from each party’s respective financial advisor(s); |
| • | the accuracy of information supplied for inclusion in this joint proxy statement/prospectus and other similar documents; |
| • | loan portfolio matters; |
| • | insurance matters; |
| • | information security; |
| • | IFH’s cannabis business; and |
| • | IFH’s mortgage banking business. |
| • | changes, after the date of the merger agreement, in U.S. generally accepted accounting principles or applicable regulatory accounting requirements; |
| • | changes, after the date of the merger agreement, in laws, rules or regulations (including any COVID-19 pandemic measures) of general applicability to companies in the industries in which such party and its subsidiaries operate, or interpretations thereof by courts or governmental entities; |
| • | changes, after the date of the merger agreement, in global, national or regional political conditions (including the outbreak of war or acts of terrorism) or in economic or market (including equity, credit and debt markets, as well as changes in interest rates) conditions affecting the financial services industry generally and not specifically relating to such party or its subsidiaries (including any such changes arising out of the COVID-19 pandemic or any COVID-19 pandemic measures); |
| • | changes, after the date of the merger agreement, resulting from hurricanes, earthquakes, tornadoes, floods or other natural disasters or from any outbreak of any disease or other public health event (including the COVID-19 pandemic); |
| • | public disclosure of the consummation of the transactions contemplated by the merger agreement or actions expressly required by the merger agreement or that are taken with the prior written consent of the other party in contemplation of the transactions contemplated by the merger agreement; |
| • | a decline in the trading price of a party’s common stock or the failure, in and of itself, to meet internal or other estimates, predictions, projections or forecasts of revenue, net income or any other measure of financial performance or budget, business or strategic plan for any period (provided that the underlying causes of such decline or failure may be taken into account in determining whether a material adverse effect has occurred); |
| • | the expenses incurred by MVB and IFH in negotiating, documenting, effecting and consummating the transactions contemplated by the merger agreement; or |
| • | changes proximately caused by the impact of the execution or announcement of the merger agreement and the consummation of the transactions contemplated thereby on relationships with customers or employees (including the loss of personnel subsequent to the date of the merger agreement). |
| • | other than in the ordinary course of business consistent with past practice, incur any indebtedness for borrowed money (other than indebtedness of IFH or any of its wholly-owned subsidiaries to IFH or any of its subsidiaries), assume, guarantee, endorse or otherwise as an accommodation become responsible for the obligations of any other individual, corporation or other entity; |
| • | adjust, split, combine or reclassify any capital stock; |
| • | make, declare or pay any dividend, or make any other distribution on, or directly or indirectly redeem, purchase or otherwise acquire, any shares of its capital stock or any securities or obligations convertible (whether currently convertible or convertible only after the passage of time or the occurrence of certain events) into or exchangeable for any shares of its capital stock (except (A) dividends paid by any of the subsidiaries of IFH to IFH or any of its wholly-owned subsidiaries, or (B) the acceptance of shares of IFH common stock as payment for the exercise price of IFH stock options or for withholding taxes incurred in connection with the exercise of IFH stock options or the vesting or settlement of IFH equity awards, in each case in accordance with past practice and the terms of the applicable award agreements); |
| • | grant any IFH equity awards (or any similar award that would be an IFH equity award had it been issued under an IFH stock plan) or other equity-based awards or interests, or grant any individual, corporation or other entity any right to acquire any shares of its capital stock; |
| • | issue, sell or otherwise permit to become outstanding any additional shares of capital stock or securities convertible or exchangeable into, or exercisable for, any shares of its capital stock or any options, warrants, or other rights of any kind to acquire any shares of capital stock, except pursuant to the exercise of stock options or the settlement of equity compensation awards outstanding as of the date of the merger agreement in accordance with their terms; |
| • | sell, transfer, mortgage, encumber or otherwise dispose of any of its material properties or assets or any business to any person, or cancel, release or assign any indebtedness to any such person or any claims held by any such person, in each case other than in the ordinary course of business consistent with past practice or pursuant to contracts or agreements in force at the date of the merger agreement; |
| • | except for transactions in the ordinary course of business consistent with past practice, make any material investment either by purchase of stock or securities, contributions to capital, property transfers, or purchase of any property or assets of any other individual, corporation or other entity other than a wholly-owned subsidiary of IFH; |
| • | terminate, materially amend, or waive any material provision of, any material contract, or make any change in any instrument or agreement governing the terms of any of its securities, or material lease or contract, other than normal renewals of contracts and leases without material adverse changes of terms with respect to IFH, or enter into any contract that would constitute a material contract if it were in effect on the date of the merger agreement, except for transactions in the ordinary course of business consistent with past practice; |
| • | except as required under applicable law, the terms of any IFH benefit plan existing as of the date hereof, or as set forth in the IFH disclosure schedules, (i) enter into, establish, adopt, amend or terminate any IFH benefit plan, or any arrangement that would be an IFH benefit plan if in effect on the date hereof, other than with respect to broad-based welfare benefit plans (other than severance) in the ordinary course of business consistent with past practice and as would not reasonably be expected to materially increase the cost of benefits under any such IFH benefit plan, as the case may be, (ii) increase the compensation or benefits payable to any current or former employee, director or individual consultant, other than increases for current employees with an annual base salary below $100,000 in connection with a promotion (permitted hereunder) or change in responsibilities, in each case, in the ordinary course of business consistent with past practice and to a level consistent with similarly situated peer employees, (iii) accelerate the vesting of any equity-based awards or other compensation or benefits, (iv) enter into any new, or amend any existing, employment, severance, change in control, retention, collective bargaining agreement or similar agreement or arrangement, (v) fund any rabbi trust or similar arrangement, or in any other way secure the payment of compensation or benefits under any IFH benefit plan, (vi) terminate the employment or services of any employee with an annual base salary (exclusive of commissions) equal to or in excess of $150,000, other than for cause, or (vii) hire or promote any employee with an annual base salary equal to or in excess of $100,000 (other than as a replacement hire or promotion on substantially similar terms of employment as the departed employee), or significantly change the responsibilities assigned to any such employee; |
| • | settle any material claim, suit, action or proceeding, other than those relating to any foreclosure action by IFH or except in the ordinary course of business consistent with past practice in an amount and for consideration not in excess of $100,000 individually or $250,000 in the aggregate and that would not impose any material restriction on the business of it or its subsidiaries or MVB, as the surviving corporation; |
| • | take any action or knowingly fail to take any action where such action or failure to act could reasonably be expected to prevent the merger from qualifying as a “reorganization” within the meaning of Section 368(a) of the Code; |
| • | amend its articles of incorporation, its bylaws or comparable governing documents of its subsidiaries; |
| • | merge or consolidate itself or any of its subsidiaries with any other person, or restructure, reorganize or completely or partially liquidate or dissolve it or any of its subsidiaries; |
| • | materially restructure or materially change its investment securities or derivatives portfolio or its interest rate exposure, through purchases, sales or otherwise, or the manner in which the portfolio is classified or reported or purchase any security rated below investment grade, in each case, other than (i) in the ordinary course of business consistent with past practice or (ii) as may be required by GAAP or any applicable laws, regulations, guidelines or policies imposed by a governmental entity; |
| • | take any action that is intended or expected to result in any of its representations and warranties set forth in the merger agreement being or becoming untrue in any material respect at any time prior to the effective time, or in any of the conditions to the merger not being satisfied or in a violation of any provision of the merger agreement, except, in every case, as may be required by applicable law; |
| • | implement or adopt any change in its accounting principles, practices or methods, other than as may be required by GAAP or applicable law; |
| • | enter into any new line of business or change in any material respect its lending, investment, underwriting, risk and asset liability management and other banking and operating, securitization and servicing policies (including any change in the maximum ratio or similar limits as a percentage of its capital exposure applicable with respect to its loan portfolio or any segment thereof), except as required by applicable law, regulation or policies imposed by any governmental entity; |
| • | make any loans or extensions of credit except (i) in the ordinary course of business consistent with past practice, (ii) with aggregate outstanding commitments to any borrower or group of related borrowers not in excess of $750,000, (iii) government guaranteed loans with unguaranteed portions not exceeding $1,250,000, or (iv) pursuant to existing commitments; provided, that MVB shall be required to respond to any requests for a consent to make such loan or extension of credit in writing within two (2) business days after the loan package is delivered to MVB; |
| • | make any material changes in its policies and practices with respect to (i) underwriting, pricing, originating, acquiring, selling, servicing, or buying or selling rights to service, loans or (ii) its investment, risk and asset liability management or hedging practices and policies, in each case except as required by law or requested by a regulatory agency; |
| • | make, or commit to make, any individual capital expenditures in excess of $100,000; |
| • | make any tax election in the ordinary course of business that is inconsistent with IFH’s (or its subsidiaries’) prior practices, make any other tax election, change or revoke any material tax election, change an annual tax accounting period, adopt or change any tax accounting method, file any amended tax return, enter into any closing agreement with respect to taxes, or settle any tax claim, audit, assessment or dispute or surrender any right to claim a refund of taxes; |
| • | make application for the opening, relocation or closing of any, or open, relocate or close any, branch office, loan production office or other significant office or operations facility of it or its subsidiaries; |
| • | knowingly take any action that is intended to or would reasonably be likely to prevent, materially impede or materially delay the ability of MVB, IFH or their respective subsidiaries to obtain any necessary approvals of any governmental entity required for the merger (including the requisite regulatory approvals) or to perform their covenants and agreements under the merger agreement or to consummate the transactions contemplated thereby; |
| • | increase or decrease the rate of interest paid on time deposits, or on certificates of deposit, except in a manner consistent with market conditions and pursuant to policies consistent with past practices; |
| • | extend or shorten the maturity dates on any loans or extensions of credit or extend or shorten the term on any time deposits except, in each case, as consistent with past practice but, in no event, for a period greater than twelve (12) months; provided, that MVB shall be required to respond to any requests for a consent to such modification within two (2) business days after the request is received by MVB; or |
| • | agree to take, make any commitment to take, or adopt any resolutions of its board of directors or similar governing body in support of, any of the foregoing. |
| • | amend its articles of incorporation, its regulations or comparable governing documents of its subsidiaries in a manner that would adversely affect the economic benefits of the merger to the holders of the IFH common stock; |
| • | adjust, split, combine or reclassify any capital stock; |
| • | adopt or publicly propose a plan of complete or partial liquidation or resolutions providing for or authorizing such a liquidation or a dissolution of MVB; |
| • | make any written communications to the employees of IFH or any of its subsidiaries without prior consultation with the IFH and consideration of any IFH comments in good faith; |
| • | take any action or knowingly fail to take any action where such action or failure to act could reasonably be expected to prevent the merger from qualifying as a “reorganization” within the meaning of Section 368(a) of the Code; or |
| • | agree to take, make any commitment to take, or adopt any resolutions of its board of directors or similar governing body in support of, any of the foregoing. |
| • | the requisite MVB vote and the requisite IFH vote having been obtained; |
| • | the authorization for listing on NASDAQ, subject to official notice of issuance, of the MVB common stock to be issued in the merger; |
| • | all requisite regulatory approvals having been obtained and remaining in full force and effect, and all statutory waiting periods in respect thereof having expired or been terminated, without the imposition of any materially burdensome regulatory condition; |
| • | the effectiveness of the registration statement of which this joint proxy statement/prospectus is a part, and the absence of any stop order (or proceedings for such purpose initiated or threatened and not withdrawn); |
| • | no order, injunction or decree by any court or governmental entity of competent jurisdiction or other legal restraint or prohibition preventing the consummation of the merger or any of the other transactions contemplated by the merger agreement being in effect, and no statute, rule, regulation, order, injunction or decree having been enacted, entered, promulgated or enforced by any governmental entity which prohibits or makes illegal the consummation of the merger; |
| • | the accuracy of the representations and warranties of the other party contained in the merger agreement as of the date on which the merger agreement was entered into and as of the date on which the merger is completed, subject to the materiality standards provided in the merger agreement (and the receipt by each party of an officers’ certificate from the other party to such effect); |
| • | the performance by the other party in all material respects of all obligations, covenants and agreements required to be performed by it under the merger agreement at or prior to the date on which the merger is completed (and the receipt by each party of an officers’ certificate from the other party to such effect); |
| • | in the case of MVB’s obligations to complete the merger, settlement of the RESPA Litigation; |
| • | receipt by each party of an opinion of legal counsel to the effect that on the basis of facts, representations and assumptions set forth or referred to in such opinion, the merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Code; |
| • | in the case of MVB’s obligations to complete the merger, the continued effectiveness of certain employment agreements between MVB and employees of IFH (see “The Merger—Interests of IFH Directors and Executive Officers in the Merger” beginning on page 104 for additional information regarding such employment agreements); and |
| • | in the case of MVB’s obligations to complete the merger, immediately prior to the closing, not more than ten (10%) of IFH common stock shall be held by persons who either have exercised, or are then entitled to exercise, appraisal rights under the NCBCA. |
| • | by mutual written consent of MVB and IFH; |
| • | by either MVB or IFH if any governmental entity that must grant a requisite regulatory approval has denied approval of the merger or the transactions contemplated by the merger agreement and such denial has become final and nonappealable or any governmental entity of competent jurisdiction has issued a final and nonappealable order permanently enjoining or otherwise prohibiting or making illegal the transactions contemplated by the merger agreement, unless the failure to obtain a requisite regulatory approval is due to the failure of the party seeking to terminate the merger agreement to perform or observe its covenants and agreements under the merger agreement; |
| • | by either MVB or IFH if the merger has not been completed on or before August 1, 2023 (the “termination date”), unless the failure of the merger to be completed by such date is due to the failure of the party seeking to terminate the merger agreement to perform or observe its covenants and agreements under the merger agreement; |
| • | by either MVB or IFH (provided that the terminating party is not then in material breach of any representation, warranty, obligation, covenant or other agreement contained in the merger agreement) if there is a breach of any of the covenants or agreements or any of the representations or warranties (or any such representation or warranty ceases to be true) set forth in the merger agreement on the part of IFH, in the case of a termination by MVB, or on the part of MVB, in the case of a termination by IFH, which either individually or in the aggregate would constitute, if occurring or continuing on the date the merger is completed, the failure of a closing condition of the terminating party and which is not cured within forty-five (45) days following written notice to the party committing such breach, or by its nature or timing cannot be cured during such period (or such fewer days as remain prior to the termination date); |
| • | by MVB, if, prior to the time the requisite IFH vote is obtained, (i) IFH or the IFH board of directors (A) submits the merger agreement to its shareholders without a recommendation for approval, or otherwise withdraws, qualifies or materially and adversely modifies (or publicly discloses its intention to withdraw, qualify or materially and adversely modify) its recommendation to approve the merger agreement, or approves or recommends to its shareholders an acquisition proposal other than the merger, (B) fails to publicly recommend against a publicly announced acquisition proposal within five (5) business days of being requested to do so by MVB or fails to publicly reconfirm the recommendation in favor of the merger within five (5) business days of being requested to do so by MVB or (C) shall have breached its obligations relating to non-solicitation of acquisition proposals or its obligations related to shareholder approval and the IFH board recommendation; or (ii) a tender offer or exchange offer for 25% or more of the outstanding shares of IFH common stock is commenced (other than by MVB), and the board of directors of IFH recommends that the shareholders of IFH tender their shares in such tender or exchange offer or otherwise fails to recommend that such shareholders reject such tender offer or exchange offer within ten (10) business days (or such fewer number of days as remains prior to the IFH special meeting) after the commencement of such tender or exchange offer; |
| • | by IFH, if prior to such time as the requisite MVB vote is obtained, MVB or the board of directors of MVB (i) submits the merger agreement to its shareholders without a recommendation for approval, or otherwise withdraws or materially and adversely modifies (or publicly discloses its intention to withdraw or materially and adversely modify) its recommendation in favor of the merger agreement, or (ii) shall have breached its obligations related to shareholder approval and the MVB board of directors’ recommendation; or |
| • | (i) by MVB, or by IFH provided that IFH shall not be in material breach of any of its obligations related to shareholder approval and the IFH board of directors’ recommendation, if the requisite IFH vote shall not have been obtained by reason of the failure to obtain the requisite IFH vote at the IFH special meeting or at any adjournment or postponement thereof or (ii) by IFH, or by MVB provided that MVB shall not be in material breach of any of its obligations related to shareholder approval and the MVB board of directors’ recommendation, if the requisite MVB vote shall not have been obtained by reason of the failure to obtain the requisite MVB vote at the MVB special meeting or at any adjournment or postponement thereof. |
| • | the average of the per share closing prices of a share of MVB common stock during the twenty (20) consecutive full trading days ending on the trading day prior to the determination date (which we refer to as the “MVB market value”) is less than 82.5% of the average of the per share closing prices of a share of MVB common stock during the twenty (20) consecutive full trading days ending on August 11, 2022 (which we refer to as the “starting date”), the last trading day immediately preceding the date of the first public announcement of entry into the merger agreement (which we refer to as the “initial MVB market value”); and |
| • | the number obtained by dividing the MVB market value by the initial MVB market value (which we refer to as the “purchaser ratio”) is less than the number obtained by dividing the average of the closing prices of the NASDAQ Bank Index (BANK) for the twenty (20) consecutive full trading days ending on the trading day prior to the determination date (which we refer to as the “final index price”) by the average of the closing prices of the NASDAQ Bank Index (BANK) for the twenty (20) consecutive full trading days ending on the starting date and subtracting 0.175 from such quotient (which we refer to as the “index ratio”). |
| • | in the event that the merger agreement is terminated by MVB pursuant to the fifth bullet set forth under “—Termination of the Merger Agreement” above. |
| • | in the event, after the date of the merger agreement and prior to the termination of the merger agreement, a bona fide acquisition proposal has been communicated to or otherwise made known to the IFH board of directors or IFH’s senior management or has been made directly to the IFH shareholders generally, or any person has publicly announced (and not withdrawn) an acquisition proposal with respect to IFH, and (i) (a) thereafter the merger agreement is terminated by either MVB or IFH because the merger has not been completed prior to the termination date, and IFH has not obtained the requisite IFH vote or (b) thereafter the merger agreement is terminated by MVB based on a breach of the merger agreement by IFH that would constitute the failure of an applicable closing condition or |
| • | in favor of the adoption of the merger agreement, and in favor of each of the other actions contemplated by the merger agreement; |
| • | against approval of any proposal made in opposition to, or in competition with, the merger or any other transactions contemplated by the merger agreement; and |
| • | against any of the following actions (other than those actions that relate to the merger and any other transactions between the MVB and IFH as contemplated by the merger agreement): (i) any merger, consolidation, business combination, sale of assets, or reorganization of IFH or any subsidiary of IFH, (ii) any sale, lease or transfer of any significant part of the assets of IFH or any subsidiary of IFH, (iii) any reorganization, recapitalization, dissolution, liquidation or winding up of IFH or any subsidiary of IFH, (iv) any material change in the capitalization of IFH or any subsidiary of IFH, or the corporate structure of IFH or any subsidiary of IFH, or (iv) any other action that is intended, or could reasonably be expected to, impede, interfere with, delay, postpone, discourage or adversely affect the merger or any other transactions between MVB and IFH as contemplated by the merger agreement. |
| • | a financial institution; |
| • | a tax-exempt organization; |
| • | a pass-through entity (or an investor in a pass-through entity); |
| • | an insurance company; |
| • | a mutual fund; |
| • | a dealer or broker in stocks and securities, or currencies; |
| • | a trader in securities that elects mark-to-market treatment; |
| • | a holder of IFH common stock that received IFH common stock through the exercise of an employee stock option, through a tax qualified retirement plan, or otherwise as compensation; |
| • | a person that is not a U.S. holder; |
| • | a person that has a functional currency other than the U.S. dollar; |
| • | a real estate investment trust; |
| • | a regulated investment company; |
| • | a holder of IFH common stock that holds IFH common stock as part of a hedge, straddle, constructive sale, wash sale, conversion or other integrated transaction; or |
| • | a United States expatriate. |
| • | a holder that receives solely shares of MVB common stock (or receives MVB common stock and cash solely in lieu of a fractional share) in exchange for shares of IFH common stock generally will not recognize any gain or loss upon the merger, except with respect to the cash received in lieu of a fractional share of MVB common stock as further described below; |
| • | the aggregate tax basis of the MVB common stock received in the merger (including fractional share interests in MVB common stock deemed received and exchanged for cash) will be equal to the holder’s aggregate tax basis in the IFH common stock for which it is exchanged; and |
| • | the holding period of MVB common stock received in the merger (including any fractional shares deemed received and redeemed as described below) will include the holder’s holding period of the IFH common stock for which it is exchanged. |
| • | furnishes a correct taxpayer identification number, certifies that the holder is not subject to backup withholding on IRS Form W-9 (or an applicable substitute or successor form) included in the election form/letter of transmittal the holder will receive, and otherwise complies with all the applicable requirements of the backup withholding rules; or |
| • | provides proof of an applicable exemption from backup withholding. |
| • | Staggered Directors’ Terms. The directors of MVB are elected for staggered terms of three years with approximately one-third of the directors being elected in any one year. This provision has the effect of making it more difficult and time consuming for a shareholder who has acquired or controls a majority of MVB outstanding common stock to gain immediate control of the board of directors or otherwise disrupt MVB’s management. |
| • | 75% Vote Required to Remove Directors. MVB’s articles of incorporation provide that holders of at least 75% of the voting power of shares entitled to vote generally in the election of directors may remove a director, with or without cause. This provision in MVB’s articles and bylaws makes it more difficult for a third party to fill vacancies created by removal with its own nominees. |
| • | MVB’s Articles of Incorporation. MVB’s articles contain supermajority provisions. The supermajority provisions in MVB’s articles of incorporation and bylaws provide that the affirmative vote of the holders of at least 75% of the outstanding shares of the voting stock of MVB would be required to amend or repeal articles of incorporation provisions dealing with the classification of the board of directors, director nominations, appointment to newly created directorships, vacancies of directors, removal of directors and certain business combinations by unsolicited and unapproved third parties. |
| • | Amendment of Bylaws. MVB’s articles also require a 75% affirmative vote of the outstanding shares of the voting stock to amend the bylaws to change the number of directors, change the procedure for filling director vacancies, change the director removal process or to change the Bylaw amendment requirements. |
| • | Fair Price Provision. MVB’s articles of incorporation contain what is known as a “fair price provision.” The fair price provision requires the approval of at least 75% of MVB’s shares entitled to vote to approve transactions with an interested shareholder except in cases where either; (1) price criteria and procedural requirements are satisfied, or (2) a majority of MVB’s board of directors recommends the transaction to the shareholders. If the minimum price criteria and procedural requirements are met or the requisite approval of MVB’s board of directors are given, the normal requirements of West Virginia law would apply. |
| | | MVB | | | IFH | ||||
Authorized Capital Stock: | | | MVB is authorized to issue 20,000,000 shares of common stock, $1.00 par value; 20,000,000 shares of authorized Class A common stock, $1.00 par value and 20,000 shares of preferred stock, $1,000.00 par value. If the MVB articles amendment proposal is approved, effective upon the filing of the articles of amendment to the MVB articles of incorporation, the MVB articles of incorporation will authorize MVB to issue 40,000,000 shares of MVB common stock. As of the record date for the MVB special meeting, there were [ ] shares of MVB common stock and no shares of MVB Class A common stock or preferred stock issued and outstanding and [ ] shares of MVB common stock reserved for issuance under various stock based equity plans. All outstanding shares of MVB capital stock are fully paid and non-assessable. | | | IFH is authorized to issue 8,000,000 shares of voting common stock, $1.00 par value; 1,000,000 shares of non-voting common stock, $1.00 par value and 1,000,000 shares of preferred stock, $100.00 par value. As of the record date for the IFH special meeting, there were [ ] shares of IFH voting common stock issued and outstanding; 21,740 shares of IFH non-voting common stock issued and outstanding; no shares of preferred stock issued and outstanding. All outstanding shares of IFH capital stock are fully paid and non-assessable. | |||
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Voting: | | | Common Stock. Pursuant to MVB’s articles of incorporation, holders of MVB common stock are generally entitled to one vote for each share of common stock. Preferred Stock. MVB’s board of directors is authorized to determine the voting rights of preferred stock. | | | Voting Common Stock. Pursuant to IFH’s articles of incorporation, holders of IFH voting common stock are generally entitled to one vote for each share of voting common stock. Non-Voting Common Stock. Pursuant to IFH’s articles of incorporation, holders of IFH non-voting common stock have no voting power and are generally not entitled to vote on any matter, except (a) as otherwise required by law and (b) that a vote of at least two-thirds of the outstanding shares of IFH non-voting common stock is required (i) to amend, alter or repeal any provision of IFH’s articles of incorporation that significantly | |||
| | | MVB | | | IFH | ||||
| | | | | and adversely affects the rights, preferences or terms of the IFH non-voting common stock in a manner that is different from the effect of such amendment, alteration or repeal on the IFH voting common stock and (ii) to liquidate, dissolve or wind-up the business and affairs of the corporation. Preferred Stock. IFH’s board of directors is authorized to determine the voting rights of preferred stock.. | |||||
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Size of Board of Directors | | | The MVB bylaws currently provide for a Board of Directors composed of five (5) to twenty-five (25) members. Currently the Board consists of eight (8) directors. | | | The IFH bylaws currently provide for a Board of Directors composed of five (5) to twelve (12) members. Currently the IFH Board of Directors consists of eight (8) directors. | |||
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Classes of Directors | | | MVB has three classes of directors consisting of three (3) Board members whose term expires in 2025, two (2) Board members whose term expires in 2024 and three (3) Board members whose term expires in 2023. | | | IFH has three classes of directors consisting of two Board members whose terms expire in 2025, three Board members whose terms expire in 2024 and three Board members whose terms expire in 2023. | |||
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Nomination of Directors | | | The MVB bylaws provide that nominations for directors may be made by: (1) the board; or (2) by any shareholder of any outstanding class of capital stock of MVB entitled to vote for the election of directors. Nominations made by shareholders must be made in writing, delivered or mailed to the President of MVB not less than 90 days prior to the anniversary of the previous year’s annual meeting of shareholders; provided, however, that if the date of the annual meeting is more than 30 days before or more than 70 days after the anniversary of the previous year’s annual meeting, the nominations must be mailed or delivered to the President not later than the close of business on the later of the 90th day prior to such annual meeting or the 10th day following the day on which public announcement of the date of such meeting is first made. The nominations must include the following: (1) the name and address of proposed nominee(s); (2) the principal occupation of nominee(s); (3) the total shares to be voted for each nominee; (4) the name and address of nominating shareholder; and (5) the number of shares owned by nominating shareholder. | | | The IFH bylaws provide that nominations for director may be made by: (1) the Nominating Committee of the Board of Directors; or (2) by any IFH shareholder. The IFH Nominating Committee shall deliver written nominations to the Secretary at least 45 days prior to the date of the annual meeting. Shareholders must deliver director nominations, in writing, to the Secretary at least 75 days but no more than 90 days prior to the date of the annual meeting. Such nominations must include the following: (1) name, age, business address and residence address of the proposed nominee(s); (2) the principal occupation or employment of the proposed nominee(s); (3) the number of shares of IFH beneficially owned by the proposed nominee(s); (4) the balance, as of the most recent quarter-end, of all deposit accounts and loan accounts the proposed nominee(s) maintains with West Town Bank; (5) a fully completed and executed financial and biographical report for the proposed nominee(s); and (6) such | |||
| | | MVB | | | IFH | ||||
| | | | | other information as may reasonably be requested by the IFH Nominating Committee. | |||||
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Election of Directors | | | Directors are elected by a plurality of the votes cast. | | | Directors are elected by a plurality of the votes cast. | |||
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Removal of Directors | | | Under West Virginia law any member of the board may be removed, with or without cause, by the affirmative vote of a majority of all the votes entitled to be cast for the election of directors; provided, however, that a director may not be removed if the number of votes sufficient to elect the director under cumulative voting is voted against the director’s removal. According to MVB’s articles of incorporation, any director may be removed from office, with or without cause, and only by the affirmative vote of the holders of 75% of the combined voting power of the then outstanding shares of stock entitled to vote generally in the election of directors, voting together as a single class. | | | Pursuant to IFH’s articles of incorporation, any director or the entire Board of Directors may be removed, at any time, by the affirmative vote of the holders of at least 66-2/3% of the outstanding shares of IFH capital stock entitled to vote generally in the election of directors, voting as one class for this purpose, cast at a meeting of the shareholder called for that purpose. If a series of IFH preferred stock is entitled to vote as a separate class to elect one or more directors of IFH, then directors so elected may only be removed by the holders of such preferred stock. | |||
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Filing Vacancies on the Board of Directors | | | MVB’s bylaws provide that each vacancy, resulting from an increase in the number of directors, death, resignation, disqualification, removal or other cause, existing on the board of directors shall be filled by the affirmative vote of a majority of the remaining directors, even though less than a quorum of the board of directors. Any directorship to be filled by the board of directors by reason of a vacancy resulting from the death, resignation, disqualification, removal or other cause shall hold office for the remainder of the full term of the class of directors in which the vacancy occurred and until such director’s successor shall have been elected and qualified, and any director elected by reason of an increase in the number of directors shall hold office only until the next election of directors by the shareholders and until such director’s successor shall have been elected and qualified. | | | The IFH bylaws provide that vacancies occurring due to an increase in the number of directorships may be filled by the affirmative vote of two-thirds of the directors then in office. Under North Carolina Law, shareholders would also be entitled to fill such vacancy if the IFH directors did not do so. | |||
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Quorum | | | Under the MVB’s bylaws, a majority of the outstanding shares of MVB entitled to vote, represented in person or by proxy constitutes a quorum. | | | Under the IFH bylaws, a majority of the outstanding shares of IFH entitled to vote, represented in person or by proxy constitutes a quorum. | |||
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Notice of Shareholder Meetings | | | The MVB bylaws require that the notice of annual and special meetings be given, by or at the direction of the Chairman of the Board, President, Secretary or other officer or other | | | The IFH bylaws require that written notice, stating the place, day, and hour of an annual meeting or special meeting and the purpose(s) for which such meeting is | |||
| | | MVB | | | IFH | ||||
| | | persons calling the meeting, personally or by mailing to each shareholder a written notice specifying the place, day and hour of such meeting and the purpose or purposes for which the meeting is called, not less than 10 nor more than 60 days before the date of such meeting. If mailed, the notice must be addressed to the shareholders as they respectively appear upon the stock transfer books of MVB. | | | called, must be provided to each shareholder of record entitled to vote at such meeting not fewer than ten (10) nor more than sixty (60) days before the date of such meeting. Such notice may be delivered personally or by mail. If mailed, such notice should be mailed to the address of the shareholder as it appears on the stock transfer books or records of IFH as of the record date, with postage prepaid. When a shareholders’ meeting is adjourned for thirty (30) days or more, notice of the adjourned meeting must be given as in the case of an original meeting. For any shareholders’ meeting adjourned for less than thirty (30) days, an announcement at the meeting at which such adjournment is taken serves as sufficient notice. | ||||
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Call of Special Meetings of Shareholders | | | MVB’s bylaws provide that special meetings of the shareholders may be called by the Chairman of the Board, the directors, the President, the Secretary or any number of shareholders owning in the aggregate at least 10% of the number of shares outstanding entitled to vote at the meeting. | | | The IFH articles of incorporation provide that special meetings of the shareholders may be called by the Board of Directors or by a duly designated committee of the Board of Directors, provided that the powers and authorities of such committee include the power and authority to call such special meetings. Under North Carolina Law, a special meeting of the shareholders may be called by the written demand of such a special meeting by the holders of at least 10% of all of the votes entitled to be cast on any issue proposed to be considered at the proposed special meeting. | |||
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Advance Notice of Shareholder Proposals | | | Shareholders may submit proposals for business to be considered at MVB’s annual meeting of shareholders, and include those proposals in MVB’s proxy statement and form of proxy delivered to shareholders, in accordance with the requirements of Rule 14a-8 of Regulation 14A promulgated under the Securities Exchange Act of 1934. With respect to shareholder proposals not wishing to be included in MVB’s proxy statement and form of proxy, but rather to be brought as business at the annual meeting of shareholders, MVB’s bylaws prescribe certain advance notice procedures. MVB’s bylaws state | | | Neither the IFH bylaws nor the IFH articles of incorporation contain provisions providing for advance notice of shareholder proposals besides those rights described in the “Nomination of Directors” section above. | |||
| | | MVB | | | IFH | ||||
| | | that the proposal must satisfy the following requirements: (1) the shareholder must have given notice of the proposal in writing, delivered to the Secretary of MVB, either in person or mailed by certified mail at the principal offices of MVB, not less than 90 days nor more than 120 days prior to the first anniversary of the preceding year’s annual meeting (provided, however, in the event that the date of the annual meeting is more than 30 days before or more than 70 days after the anniversary date, the notice must be delivered not earlier than the close of business on the 120th day prior to such annual meeting and not later than the close of business on the later of the 90th day prior to such annual meeting or the tenth day following the day on which public announcement of the date of such meeting is first made; (2) the notice must comply with the requirements of Article II of the MVB bylaws (as detailed below); and (3) the business must be a proper matter for shareholder action under West Virginia law. A shareholder’s notice of business proposed to be conducted at an annual meeting of shareholders that is made under Article II of the MVB bylaws shall be signed by the shareholder of record who intends to make the proposal (or such shareholder’s duly authorized proxy or other representative), shall bear the date of signature of such shareholder (or proxy or other representative) and shall set forth: (1) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting (including the text of any resolutions proposed for consideration and, in the event that such business includes a proposal to amend the MVB bylaws, the text of the proposed amendment); (2) the name and address, as they appear on MVB’s books, of such shareholder proposing such business; (3) the class and number of shares of MVB which are beneficially owned by the shareholder and any other ownership interest in the shares of MVB, whether economic or otherwise; (4) any material interest of the shareholder in such business; (5) a representation that the person sending the notice is a shareholder of record on the record date and shall remain such through the meeting date; and (6) a representation that such shareholder intends to appear in person or by proxy at such | | | |||||
| | | MVB | | | IFH | ||||
| | | meeting to move the consideration of the business set forth in the notice. | | | |||||
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Anti-Takeover Provisions | | | Certain provisions of MVB’s articles of incorporation and bylaws and the West Virginia Business Corporation Act may have the effect of impeding the acquisition of control of MVB by means of a tender offer, a proxy fight, open-market purchases or otherwise in a transaction not approved by the board of directors. These provisions may have the effect of discouraging a future takeover attempt which is not approved by the board of directors but which individual shareholders may deem to be in their best interests or in which our shareholders may receive a substantial premium for their shares over then-current market prices. As a result, shareholders who might desire to participate in such a transaction may not have an opportunity to do so. For example, MVB has a staggered, or classified, board, which means it would take more than one annual shareholders’ meeting for a majority of the MVB board of directors to be replaced. | | | IFH’s articles of incorporation and the NCBCA contain certain anti-takeover provisions that may discourage or may make more difficult or expensive a tender offer, change in control or takeover attempt that is opposed by IFH’s board of directors. These provisions could discourage potential acquisition proposals and could delay or prevent a change in control, even though a majority of IFH’s shareholders may consider such proposal desirable. For example, IFH has a staggered, or classified, board, which means it would take more than one annual shareholders’ meeting for a majority of the IFH board of directors to be replaced. | |||
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Indemnification of Directors and Officers and Insurance | | | Section 31D-8-851 of the West Virginia Business Corporation Act provides in part that each West Virginia corporation has the power to indemnify any director against liability incurred in a proceeding against him or her by reason of being or having been such director (other than in an action by or in the right of the corporation) if he or she acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, the best interests of the corporation, or, in the case of any criminal proceeding, he or she had no reasonable cause to believe his conduct was unlawful. With respect to an action by or in the right of the corporation, except for reasonable expenses incurred in the proceeding as to which he or she meets the foregoing standard of conduct, a director may not be indemnified. A director also may not be indemnified unless ordered by a court if he or she is adjudged liable on the basis that he or she received a financial benefit to which he or she was not entitled. Under West Virginia law, a corporation must indemnify a director who was wholly successful on the merits in the proceeding against reasonable expenses of the proceeding. A corporation may advance expenses incurred by a director in such a proceeding if he or she affirms in writing that he or she believes in good faith that he or she has met | | | North Carolina law provides that each North Carolina corporation has the power to indemnify any director against liability incurred as a result of any threatened, pending or completed litigation or criminal proceedings provided the director (i) conducted himself in good faith, (ii) reasonably believed that, in the context of his official capacity with the corporation, his conduct was in the best interests of the corporation; and, in all other cases, that his conduct was at least not opposed to the best interests of the corporation; and (iii) in the case of any criminal proceeding, had no reasonable cause to believe that his conduct was illegal. A corporation may not indemnify a director (i) in connection with a proceeding by or in the right of the corporation in which the director was adjudged liable to the corporation or (ii) in connection with any other proceedings charging improper personal benefit to him, whether or not involving action in his official capacity, in which he was adjudged liable on the basis that personal benefit was improperly received by him. A corporation must indemnify a director who was wholly successful on the merits in | |||
| | | MVB | | | IFH | ||||
| | | the standard of conduct and agrees to return the advanced expenses if it is determined he or she is not entitled to indemnification. Section 31D-8-856 of the West Virginia Business Corporation Act provides that a West Virginia corporation may indemnify and advance expenses to an officer of the corporation who is a party to a proceeding because he or she is an officer of the corporation to the same extent as a director and, if he or she is an officer but not a director, to a further extent as may be provided by the articles of incorporation, the bylaws, a resolution of the board of directors or contract, except for (i) liability in connection with a proceeding by or in the right of the corporation other than for reasonable expenses incurred in connection with the proceeding or (ii) liability arising out of conduct that constitutes (a) receipt by him or her of a financial benefit to which he or she is not entitled, (b) an intentional infliction of harm on the corporation or the shareholders or (c) an intentional violation of criminal law. A corporation must indemnify an officer who is not a director and who was wholly successful on the merits in the proceeding against reasonable expenses of the proceeding. MVB’s articles of incorporation provide that MVB shall indemnify, to the fullest extent permitted by law, any current or former legal representative, officer or director of the Company or a person serving as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise at the MVB’s request against all expenses, liability and loss (including, without limitation, attorneys’ fees and disbursements, judgments, fines, ERISA or other similar or dissimilar excise taxes or penalties and amounts paid or to be paid in settlement) incurred by him or her in connection with a claim or proceeding against him or her by reason of his being or having been in such role. Expenses, including, without limitation, attorneys’ fees and disbursements, incurred in defending or participating in such proceeding shall be paid in advance by the MVB; provided, however, that such payment shall only be made upon delivery to the Company of an undertaking that such person agrees to repay all advanced amounts if it is ultimately determined that such person is not entitled to indemnification under MVB’s articles of incorporation. | | | the defense of any proceedings against reasonable expenses incurred by him in connection with the proceeding. A corporation may advance expenses incurred by a director in defending a proceeding upon receipt of an undertaking by the director to repay such amount unless it shall ultimately be determined that he is entitled to be indemnified by the corporation against such expenses. A North Carolina corporation may purchase indemnity insurance for the benefit of its officers, directors, employees, and agents regardless of whether the corporation would have the power to indemnify against the liability covered by the policy. North Carolina law permits a North Carolina corporation to provide rights to indemnification beyond the scope of the permissible indemnification described above to the extent that such additional indemnification is authorized in the corporation’s articles of incorporation or bylaws, or by contract or resolution adopted by the corporation’s board of directors. Thus, if so authorized, rights to indemnification may be provided pursuant to agreements or bylaw provisions which make mandatory the permissive indemnification provided by North Carolina law. IFH’s articles of incorporation provide for the indemnification of current and former directors, officers, employees, or person who serve or served at IFH’s request as a director, officer, employee, partner or trustee of another corporation, partnership, joint venture, trust or other enterprise against all expenses actually and reasonably incurred (including attorneys’ fees but excluding amounts paid in settlement in connection with derivative suits) in the defense or settlement of an action or suit, whether derivative or otherwise, provided that the person subject to such action or suit is successful on the merits or otherwise or meets the aforementioned standard provided by North Carolina law and described in the first paragraph of this subsection. | ||||
| | | MVB | | | IFH | ||||
| | | A West Virginia corporation may purchase indemnity insurance for the benefit of its officers and director regardless of whether the corporation would have the power to indemnify against, or advance expenses in connection with, the liability covered by the policy. | | | |||||
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Appraisal or Dissenters’ Rights | | | Under West Virginia law, shareholders are entitled to appraisal rights with respect to corporate actions involving certain mergers, share exchanges, asset dispositions, and certain article amendments that reduce the shares of a shareholder to a fraction of a share where the corporation has an obligation to repurchase the share fraction. No appraisal rights exist in the case of a merger, however, if (i) the stock of the acquiring corporation is listed on the New York Stock Exchange or the American Stock Exchange or designated as a national market system security by the National Association of Securities Dealers, Inc., or (ii) the stock has at least 2,000 shareholders and the outstanding shares of a class or series has a market value of at least $20 million, exclusive of the value of the shares held by subsidiaries, senior executives, directors, and beneficial shareholders owning more than 10% of the shares. Appraisal rights will not be available to the shareholders of MVB in connection with the proposed merger of IFH into MVB because the stock of MVB is designated as a national market system security on an interdealer quotation system by the National Association of Securities Dealers, Inc. | | | Under North Carolina law, shareholders are generally entitled to object and receive the fair value of their stock in the event of certain corporate actions, as set forth in Section 55-13-02 of the NCBCA. Appraisal rights will be available to the shareholders of IFH in connection with the proposed merger of IFH into MVB. See the information provided in the section entitled “The Merger—Appraisal or Dissenters’ Rights in the Merger” beginning on page 111 for more information about such appraisal rights. A full copy of Article 13 of the NCBCA that governs appraisal rights under North Carolina law is included as Annex E to this joint proxy statement/prospectus. | |||
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Dividends | | | The MVB bylaws provide that the board of directors may, from time to time, declare and MVB may pay dividends on its outstanding shares in the manner and upon the terms and conditions provided by law and the MVB articles of incorporation. A West Virginia corporation generally may pay dividends in cash, property or its own shares except when the corporation is unable to pay its debts as they become due in the usual course of business or the corporation’s total assets would be less than the sum of its total liabilities plus the amount that would be needed, if the corporation were to be dissolved at the time of the dividend, to | | | The IFH bylaws provide that the Board of Directors may declare dividends on IFH’s outstanding capital stock, and such dividends may be paid in cash, property or in IFH’s own capital stock. Under North Carolina law, a corporation may not pay dividends if, after giving effect to such cash dividend or other distribution, a corporation would not be able to pay its debts as they become due in the usual course of business or the corporation’s total assets would be less than the sum of its liabilities plus the amount that would be needed to satisfy certain liquidation rights. | |||
| | | MVB | | | IFH | ||||
| | | satisfy any shareholders who have rights superior to those receiving the dividend. | | | |||||
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Amendments to Charter/Articles and Bylaws | | | Under West Virginia law, unless the articles of incorporation, or the board of directors requires a greater vote or a greater number of shares to be present, approval of an amendment to the articles of incorporation requires the approval of the shareholders at a meeting at which a quorum consisting of at least a majority of the votes entitled to be cast on the amendment exists. Except for any action to alter, amend or adopt any provision inconsistent with Article X (board of directors and bylaw amendments), which requires the affirmative vote of the holders of at least 75% of the voting power of all the shares of MVB entitled to vote generally in the election of directors, voting together as a single class, the MVB articles of incorporation do not specify a different number. West Virginia law provides that the bylaws may be amended or repealed by the board of directors unless: (1) the articles of incorporation or Section 31D-10-1021 of the West Virginia Business Corporation Act, which is related to increases in quorum or voting requirements for directors, reserves the power exclusively to the shareholders; or (2) the shareholders in amending, repealing or adopting a bylaw expressly provide that the board of directors may not amend, repeal or reinstate that bylaw. MVB’s articles of incorporation provide that Article III, Sections 2 (number, election and terms of directors), 9 (vacancies on the board) and 13 (removal of directors) and Article XII (amendments to the bylaws) of the MVB bylaws shall not be altered, amended or repealed and no provision inconsistent therewith shall be adopted without the affirmative vote of the holders of at least 75% of the voting power of all the shares of MVB entitled to vote generally in the election of directors, voting together as a single class. Except for the restrictions in the MVB articles above, the MVB bylaws allow the board of directors, by majority vote of those present at any meeting at which a quorum is present, to either amend the bylaws or enact such other bylaws as in their judgement may be advisable for the regulation of the conduct of the affairs of MVB. | | | Under North Carolina law, the IFH articles of incorporation generally may be amended if the proposed amendment is adopted by the IFH board of directors and such amendment is approved by a majority of the votes entitled to be cast on the amendment by any voting group with respect to which the amendment would create appraisal rights. Certain amendments to the articles of incorporation, such as a change in the corporate name, do not require shareholder approval. Additionally, as discussed above, certain amendments affecting the IFH non-voting common stock must be approved by a two-thirds vote of the outstanding shares of IFH’s non-voting common stock. The IFH bylaws provide that such bylaws may be repealed, altered, amended or rescinded by a vote of two-thirds of the outstanding shares of capital stock of IFH entitled to vote generally in the election of directors, cast at a meeting of the shareholders called for that purpose (and provided that notice of such proposed repeal, alteration, amendment or rescission is included in the notice of such meeting). IFH’s bylaws also provide that the Board of Directors may repeal, alter, amend or rescind the bylaws by a vote of two-thirds of the Board of Directors at a legal meeting. North Carolina law provides that a corporation’s shareholders may amend or repeal the corporation bylaws even though the bylaws may also be amended or repealed by its board of directors. | |||
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| | | MVB | | | IFH | ||||
Provisions Affecting Business Combinations | | | Under West Virginia law, a consolidation, merger, share exchange or transfer must be approved by the shareholders of the corporation at a meeting at which a quorum exists consisting of at least a majority of the votes entitled to be cast on the matter. Except as described below, the MVB articles of incorporation and the MVB bylaws do not provide for a different number. Under West Virginia law, no contract or transaction between a corporation and one or more of its directors or officers, or between a corporation and any other corporation in which one or more of its directors or officers are directors or officers, or have a financial interest, is void or voidable solely for this reason or solely because the director or officer participates is present or participates in a board meeting which authorizes the contract or transaction or solely because any director’s or officer’s votes are counted for the purpose if (i) the material facts as to the director’s or officer’s relationship or interest and as to the contract or transaction are disclosed to either (a) the board of directors or (b) the members entitled to vote on such contract or transaction and the contract is specifically approved in good faith by vote of the board or such members entitled to vote or (ii) the contract or transaction is fair to the corporation at the time it is authorized by the board of directors or the members. West Virginia law provides that interested directors may be counted in determining the presence of a quorum at the meeting which authorizes the contract or transaction. Unless approved by a majority of the disinterested directors of MVB or certain price and procedural requirements are fulfilled (as detailed in the MVB articles), the MVB articles require affirmative vote of the holders of at least 75% of the voting power of the then outstanding shares of capital stock of MVB entitled to vote, voting together as a single class for any of the following transactions: | | | Under North Carolina law, a merger or share exchange must be approved by each voting group entitled to vote separately on the merger of share exchange by a majority of all the votes entitled to be cast on the merger or share exchange by that voting group. The IFH articles of incorporation and the IFH bylaws do not provide for a different number. Notwithstanding that the IFH non-voting common stock is generally non-voting under the IFH articles of incorporation, North Carolina law provides the IFH non-voting common stock with voting rights on the merger and to vote as a separate voting group. The IFH articles of incorporation also provide that, in the event of a merger, consolidation or share exchange in which shares of IFH voting common stock are exchanged or changed into other stock or securities, cash, and/or any other property, each share of IFH non-voting common stock will at the same time be similarly exchanged or changed in an amount per whole share equal to the aggregate amount of stock, securities, and/or any other property (payable in kind), as the case may be, that each share of IFH voting common stock would be entitled to receive as a result of such transaction. | |||
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| | | | | • any merger or consolidation of MVB or any subsidiary with (a) any interested shareholder or (b) any other corporation (whether or not itself an interested shareholder) which is, or after such merger or consolidation would be, an affiliate of any interested shareholder; | | | |||
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| | | | | • any sale, lease, exchange, mortgage, pledge, transfer or other disposition (in | | | |||
| | | MVB | | | IFH | ||||
| | | | | one transaction or a series of transactions) to or with any interested shareholder or any affiliate of any interested shareholder of any assets of MVB or any subsidiary having an aggregate fair market value of $100,000 or more; | | | |||
| | | | | ||||||
| | | | | • the issuance or transfer by MVB or any subsidiary (in one transaction or a series of transactions) of any securities of MVB or any subsidiary to any interested shareholder or any affiliate of any interested shareholder in exchange for cash, securities or other property (or a combination thereof) having an aggregate fair market value of $100,000 or more; | | | |||
| | | | | ||||||
| | | | | • the adoption of any plan or proposal for the liquidation or dissolution of MVB proposed by or on behalf of an interested shareholder or any affiliate of any interested shareholder; or | | | |||
| | | | | ||||||
| | | | | • any reclassification of securities (including any reverse stock split), or recapitalization of MVB, or any merger or consolidation of MVB with any of its subsidiaries or any other transaction (whether or not with or into or otherwise involving an interested shareholder) which has the effect, directly or indirectly, of increasing the proportionate share of the outstanding shares of any class of equity or convertible securities of MVB or any subsidiary which is directly or indirectly owned by any interested shareholder or any affiliate of any interested shareholder. | | | |||
| | | | | ||||||
Action by Written Consent of the Shareholders | | | West Virginia law and MVB’s bylaws provide that action required or permitted by law to be taken at a shareholders’ meeting may be taken without a meeting and without prior notice, if a written consent which describes the action is signed by all of the shareholders entitled to vote on the matter and is filed with the records of the shareholder meeting. | | | The IFH bylaws provide that no action required to be taken or which may be taken at any annual or special meeting of IFH shareholders may be taken without a meeting, and the power of shareholders to consent in writing, without a meeting, to the taking of any action is specifically denied. | |||
| • | Our Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on March 10, 2022; |
| • | Our Quarterly Report on Form 10-Q for the quarter ended March 31, 2022, filed with the SEC on May 2, 2022; |
| • | Our Quarterly Report on Form 10-Q for the quarter ended June 30, 2022, filed with the SEC on August 8, 2022; |
| • | Our Current Reports on Form 8-K filed with the SEC on January 20, 2022, January 27, 2022, March 14, 2022, May 18, 2022, June 6, 2022, August 12, 2022, August 15, 2022, August 18, 2022, August 25, 2022, September 14, 2022, October 3, 2022, October 11, 2022 and October 19, 2022; and |
| • | The description of our common stock contained in our Registration Statement on Form 8-A, filed December 4, 2017, including any subsequent amendment or any report filed for the purpose of updating such description. |
| | | Page | |
Integrated Financial Holdings, Inc. — Unaudited Consolidated Financial Statements for the Six Months Ended June 30, 2022 and 2021 | | | |
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Integrated Financial Holdings, Inc. — Audited Consolidated Financial Statements for the Years Ended December 31, 2021 and 2020 | | | |
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(in thousands, except share data) | | | 2022 | | | 2021 |
| | | Unaudited | | | ||
Assets | | | | | ||
Cash and due from banks | | | $4,700 | | | $3,803 |
Interest-bearing deposits with other institutions | | | 21,981 | | | 79,910 |
Total cash and cash equivalents | | | 26,681 | | | 83,713 |
Interest-bearing time deposits | | | 1,499 | | | 1,746 |
Securities available for sale, at fair value | | | 19,038 | | | 20,671 |
Marketable equity securities | | | 17,982 | | | 11,988 |
Loans held for sale | | | 59,592 | | | 27,880 |
Loans held for investment | | | 266,259 | | | 259,625 |
Allowance for loan losses | | | (6,361) | | | (5,547) |
Loans held for investment, net | | | 259,898 | | | 254,078 |
Premises and equipment, net | | | 4,238 | | | 4,174 |
Foreclosed assets | | | — | | | 618 |
Loan servicing assets | | | 4,178 | | | 3,993 |
Bank owned life insurance | | | 5,304 | | | 5,246 |
Accrued interest receivable | | | 2,139 | | | 1,373 |
Goodwill | | | 13,161 | | | 13,161 |
Intangible assets | | | 6,014 | | | 6,399 |
Other assets | | | 15,764 | | | 17,833 |
Total assets | | | $435,488 | | | $452,873 |
Liabilities and shareholders’ equity | | | | | ||
Liabilities | | | | | ||
Deposits: | | | | | ||
Noninterest-bearing | | | $83,544 | | | $114,313 |
Interest-bearing | | | 250,026 | | | 233,843 |
Total deposits | | | 333,570 | | | 348,156 |
Borrowings | | | — | | | 7,500 |
Accrued interest payable | | | 308 | | | 326 |
Other liabilities | | | 9,939 | | | 9,111 |
Total liabilities | | | 343,817 | | | 365,093 |
Shareholders’ equity | | | | | ||
Common stock, voting, $1 par value, 8,000,000 shares authorized, 2,226,809 and 2,172,997 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively | | | 2,227 | | | 2,173 |
Common stock, non-voting, $1 par value, 1,000,000 shares authorized, 21,740 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively | | | 22 | | | 22 |
Additional paid-in capital | | | 24,498 | | | 23,666 |
Retained earnings | | | 67,781 | | | 62,810 |
Accumulated other comprehensive loss | | | (1,985) | | | (99) |
Total Integrated Financial Holdings, Inc. shareholders’ equity | | | 92,543 | | | 88,572 |
Noncontrolling interest | | | (872) | | | (792) |
Total shareholders' equity | | | 91,671 | | | 87,780 |
Total liabilities and shareholders' equity | | | $435,488 | | | $452,873 |
(in thousands except share and per share data) | | | 2022 | | | 2021 |
Interest income | | | | | ||
Interest and fees on loans | | | $11,114 | | | $9,128 |
Investment securities & deposits | | | 324 | | | 184 |
Total interest income | | | 11,438 | | | 9,312 |
Interest expense | | | | | ||
Interest on deposits | | | 1,045 | | | 1,369 |
Interest on borrowed funds | | | 24 | | | — |
Total interest expense | | | 1,069 | | | 1,369 |
Net interest income | | | 10,369 | | | 7,943 |
Provision for loan losses | | | 640 | | | 672 |
Net interest income after provision for loan losses | | | 9,729 | | | 7,271 |
Noninterest income | | | | | ||
Government loan servicing and processing revenue | | | 4,580 | | | 14,603 |
Changes in fair value in marketable equity securities | | | 5,994 | | | 1,998 |
Mortgage revenue | | | 1,239 | | | 3,479 |
Government lending revenue | | | 3,891 | | | 5,137 |
SBA documentation preparation fees | | | 272 | | | 675 |
Loan servicing rights | | | 185 | | | 480 |
Other noninterest income | | | 900 | | | 764 |
Total noninterest income | | | 17,061 | | | 27,136 |
Noninterest expense | | | | | ||
Compensation | | | 13,332 | | | 12,012 |
Occupancy and equipment | | | 598 | | | 603 |
Loan related expenses | | | 896 | | | 681 |
Data processing expense | | | 520 | | | 436 |
Advertising expense | | | 535 | | | 502 |
Insurance expense | | | 230 | | | 299 |
Professional fees | | | 1,042 | | | 1,240 |
Software | | | 851 | | | 4,915 |
Communications | | | 180 | | | 197 |
Foreclosed asset expense, net | | | 233 | | | 955 |
Directors fees | | | 351 | | | 195 |
Intangible amortization expense | | | 340 | | | 358 |
Other noninterest expense | | | 896 | | | 883 |
Total noninterest expense | | | 20,004 | | | 23,276 |
Income before income taxes | | | 6,786 | | | 11,131 |
Income tax expense | | | 1,895 | | | 2,902 |
Net income | | | 4,891 | | | 8,229 |
Net loss attributable to noncontrolling interest | | | 80 | | | 289 |
Net income available to Integrated Financial Holdings, Inc. | | | 4,971 | | | 8,518 |
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Basic earnings per common share | | | $2.29 | | | $3.93 |
Diluted earnings per common share | | | $2.22 | | | $3.82 |
Weighted average common shares outstanding | | | 2,166,953 | | | 2,165,888 |
Diluted average common shares outstanding | | | 2,242,687 | | | 2,229,396 |
(in thousands) | | | 2022 | | | 2021 |
Net income | | | $4,891 | | | $8,229 |
Other comprehensive loss: | | | | | ||
Unrealized loss during the period on available for sale securities, net of tax benefit of $502 and $67, respectively | | | (1,886) | | | (166) |
Other comprehensive loss: | | | (1,886) | | | (166) |
Comprehensive income | | | 3,005 | | | 8,063 |
Comprehensive loss attributable to noncontrolling interest | | | (80) | | | (289) |
Comprehensive income attributable to Integrated Financial Holdings, Inc. | | | $3,085 | | | $8,352 |
(in thousands) | | | Common Stock $1.00 par | | | Additional Paid-in Capital | | | Accumulated Other Comprehensive Loss | | | Retained Earnings | | | Noncontrolling Interest | | | Total Shareholders' Equity | |||
| | Voting | | | Non-voting | | ||||||||||||||||
Balance at December 31, 2020 | | | $2,181 | | | $22 | | | $24,331 | | | $271 | | | $50,079 | | | $(161) | | | $76,723 |
Net income | | | — | | | — | | | — | | | — | | | 8,518 | | | — | | | 8,518 |
Other comprehensive loss | | | — | | | — | | | — | | | (166) | | | — | | | — | | | (166) |
Stock based compensation | | | — | | | — | | | 56 | | | — | | | — | | | — | | | 56 |
Exercise of stock options | | | 24 | | | — | | | 339 | | | — | | | — | | | — | | | 363 |
Restricted stock issuance | | | 45 | | | — | | | 432 | | | — | | | — | | | — | | | 477 |
Noncontrolling interest | | | — | | | — | | | — | | | — | | | — | | | (289) | | | (289) |
Share repurchases and cancellations | | | (67) | | | — | | | (1,613) | | | — | | | — | | | — | | | (1,680) |
Balance at June 30, 2021 | | | $2,183 | | | $22 | | | $23,545 | | | $105 | | | $58,597 | | | $(450) | | | $84,002 |
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Balance at December 31, 2021 | | | $2,173 | | | $22 | | | $23,666 | | | $(99) | | | $62,810 | | | $(792) | | | $87,780 |
Net income | | | — | | | — | | | — | | | — | | | 4,971 | | | — | | | 4,971 |
Other comprehensive loss | | | — | | | — | | | — | | | (1,886) | | | — | | | — | | | (1,886) |
Stock based compensation | | | — | | | — | | | 61 | | | — | | | — | | | — | | | 61 |
Exercise of stock options | | | 14 | | | — | | | 285 | | | — | | | — | | | — | | | 299 |
Restricted stock issuance | | | 43 | | | — | | | 535 | | | — | | | — | | | — | | | 578 |
Noncontrolling interest | | | — | | | — | | | — | | | — | | | — | | | (80) | | | (80) |
Share repurchases and cancellations | | | (3) | | | — | | | (49) | | | — | | | — | | | — | | | (52) |
Balance at June 30, 2022 | | | $2,227 | | | $22 | | | $24,498 | | | $(1,985) | | | $67,781 | | | $(872) | | | $91,671 |
(in thousands) | | | 2022 | | | 2021 |
Cash flows from operating activities | | | | | ||
Net income | | | $4,891 | | | $8,229 |
Adjustments to reconcile net income to net cash from operating activities: | | | | | ||
Depreciation expense | | | 102 | | | 201 |
Provision for loan losses | | | 640 | | | 672 |
Amortization of premium on securities, net of accretion | | | 17 | | | 37 |
Amortization of intangible assets | | | 385 | | | 300 |
Accretion of discounts on loans | | | (976) | | | (739) |
Originations of loans held for sale | | | (127,904) | | | (115,918) |
Proceeds from sales of loans held for sale | | | 100,588 | | | 136,380 |
Net gains on sale of loans held for sale | | | (4,396) | | | (8,775) |
Net loss on sale of foreclosed assets | | | 91 | | | 944 |
Net loss on sale and disposal of property and equipment | | | 69 | | | — |
Stock-based compensation expense | | | 596 | | | 432 |
Earnings on bank-owned life insurance | | | (58) | | | (57) |
Revaluation of loan servicing rights | | | (185) | | | (480) |
Changes in fair value on marketable equity securities | | | (5,994) | | | (1,998) |
Changes in assets and liabilities: | | | | | ||
(Increase) decrease in other assets | | | 1,805 | | | (6,019) |
Increase (decrease) in other liabilities | | | 810 | | | (1,018) |
Net cash provided by (used in) operating activities | | | $(29,519) | | | $12,191 |
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Cash flows from investing activities | | | | | ||
Purchases of securities available-for-sale | | | $(1,971) | | | $(6,003) |
Proceeds from maturities and principal paydowns of securities available-for-sale | | | 1,199 | | | 2,514 |
Proceeds from maturities of interest-bearing time deposits | | | 247 | | | — |
Decrease (increase) in loans, net | | | (5,484) | | | 1,940 |
Proceeds from sale of foreclosed assets | | | 527 | | | 810 |
Purchases of premises and equipment | | | (235) | | | (142) |
Net cash used in investing activities | | | $(5,717) | | | $(881) |
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Cash flows from financing activities | | | | | ||
Increase (decrease) in deposits, net | | | $(14,586) | | | $36,505 |
Increase (decrease) in borrowings, net | | | (7,500) | | | 1,000 |
Stock option exercises and restricted stock vested | | | 342 | | | 434 |
Repurchase of common stock | | | (52) | | | (1,680) |
Net cash provided by (used in) financing activities | | | $(21,796) | | | $36,259 |
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Net change in cash and cash equivalents | | | $(57,032) | | | $47,569 |
Cash and cash equivalents, beginning | | | 83,713 | | | 32,925 |
Cash and cash equivalents, ending | | | $26,681 | | | $80,494 |
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Supplemental Disclosures of Cash Flow Information | | | | | ||
Cash paid during the period for interest | | | $1,087 | | | $1,408 |
Cash paid during the period for taxes | | | 647 | | | 1,456 |
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Supplemental Disclosures of Noncash Investing and Financing Activities | | | | | ||
Change in unrealized loss on securities avaiable for sale, net of tax | | | $(1,886) | | | $(166) |
| | | For the six months ended June 30, | ||||
(in thousands except share and per share data) | | | 2022 | | | 2021 |
Net income attributable to IFH, Inc. | | | $4,971 | | | $8,518 |
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Weighted average common shares – basic | | | 2,166,953 | | | 2,165,888 |
Add: Effect of dilutive stock options | | | 66,638 | | | 54,310 |
Add: Effect of dilutive restricted stock awards | | | 11,096 | | | 9,198 |
Weighted average common shares – dilutive | | | 2,244,687 | | | 2,229,396 |
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Basic earnings per common share | | | $2.29 | | | $3.93 |
Diluted earnings per common share | | | $2.22 | | | $3.82 |
| | | June 30, 2022 | ||||||||||
(in thousands) | | | Amortized Cost | | | Gross Unrealized Gains | | | Gross Unrealized Losses | | | Fair Value |
Investment securities available for sale: | | | | | | | | | ||||
SBA pooled securities | | | $187 | | | $3 | | | $— | | | $190 |
Government sponsored enterprises mortgage backed securities | | | 20,883 | | | 1 | | | 2,514 | | | 18,370 |
Government sponsored enterprises collateralized mortgage obligations | | | 481 | | | — | | | 3 | | | 478 |
Total investment securities available for sale | | | $21,551 | | | $4 | | | $2,517 | | | $19,038 |
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Investment in marketable equity securities | | | | | | | | | ||||
Marketable equity securities | | | $9,990 | | | $7,992 | | | $— | | | $17,982 |
| | | December 31, 2021 | ||||||||||
(in thousands) | | | Amortized Cost | | | Gross Unrealized Gains | | | Gross Unrealized Losses | | | Fair Value |
Investment securities available for sale: | | | | | | | | | ||||
SBA pooled securities | | | $243 | | | $3 | | | $— | | | $246 |
Government sponsored enterprises mortgage backed securities | | | 20,007 | | | 192 | | | 323 | | | $19,876 |
Government sponsored enterprises collateralized mortgage obligations | | | 546 | | | 3 | | | — | | | $549 |
Total investment securities available for sale | | | $20,796 | | | $198 | | | $323 | | | $20,671 |
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Investment in marketable equity securities | | | | | | | | | ||||
Marketable equity securities | | | $9,990 | | | $1,998 | | | $— | | | $11,988 |
(in thousands) | | | 2022 | | | 2021 |
Marketable equity securities gains | | | $5,994 | | | $1,998 |
| | | June 30, 2022 | ||||||||||||||||
| | | Less than twelve months | | | Twelve months or more | | | Total | ||||||||||
(in thousands) | | | Fair value | | | Unrealized losses | | | Fair value | | | Unrealized losses | | | Fair value | | | Unrealized losses |
Government sponsored enterprises mortgage backed securities | | | $14,777 | | | $1,793 | | | $3,539 | | | $721 | | | $18,316 | | | $2,514 |
Government sponsored collateralized mortgage obligations | | | 478 | | | 3 | | | — | | | — | | | 478 | | | 3 |
Total | | | $15,255 | | | $1,796 | | | $3,539 | | | $721 | | | $18,794 | | | $2,517 |
| | | December 31, 2021 | ||||||||||||||||
| | | Less than twelve months | | | Twelve months or more | | | Total | ||||||||||
(in thousands) | | | Fair value | | | Unrealized losses | | | Fair value | | | Unrealized losses | | | Fair value | | | Unrealized losses |
Government sponsored enterprises mortgage backed securities | | | $11,865 | | | $230 | | | $2,548 | | | $93 | | | $14,413 | | | $323 |
Total | | | $11,865 | | | $230 | | | $2,548 | | | $93 | | | $14,413 | | | $323 |
(in thousands) | | | Within 1 Year | | | After One Within Five Years | | | After Five Within Ten Years | | | After Ten Years | | | Total |
SBA pooled securities | | | $— | | | $3 | | | $— | | | $188 | | | $191 |
Government sponsored enterprises mortgage backed securities | | | — | | | — | | | 56 | | | 18,314 | | | 18,370 |
Government sponsored enterprises collateralized mortgage obligations | | | — | | | — | | | — | | | 477 | | | 477 |
| | | $— | | | $3 | | | $56 | | | $18,979 | | | $19,038 |
(in thousands) | | | June 30, 2022 | | | December 31, 2021 |
Commercial | | | $155,931 | | | $143,182 |
Real Estate: | | | | | ||
Commercial real estate | | | 75,709 | | | 79,394 |
Residential real estate | | | 32,855 | | | 35,066 |
Consumer | | | 57 | | | 74 |
Subtotal | | | 264,552 | | | 257,716 |
Net deferred loan costs | | | 1,707 | | | 1,909 |
Allowance for loan losses | | | (6,361) | | | (5,547) |
Loans held for investment, net | | | $259,898 | | | $254,078 |
| | | June 30, 2022 | ||||||||||||||||
(in thousands) | | | Commercial | | | Commercial Real Estate | | | Residential Real Estate | | | Consumer | | | Unallocated | | | Total |
Allowance for loan losses: | | | | | | | | | | | | | ||||||
Beginning balance | | | $3,023 | | | $2,219 | | | $274 | | | $3 | | | $28 | | | $5,547 |
Provision for loan losses | | | 1,067 | | | (475) | | | 71 | | | (1) | | | (22) | | | 640 |
Charge-offs | | | (402) | | | (49) | | | — | | | — | | | — | | | (451) |
Recoveries | | | 151 | | | 474 | | | — | | | — | | | — | | | 625 |
Ending Balance | | | $3,839 | | | $2,169 | | | $345 | | | $2 | | | $6 | | | $6,361 |
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Ending Balances: | | | | | | | | | | | | | ||||||
Individually evaluated for impairment | | | $439 | | | $57 | | | $— | | | $— | | | $— | | | $496 |
Collectively evaluated for impairment | | | $3,400 | | | $2,112 | | | $345 | | | $2 | | | $6 | | | $5,865 |
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Loans Held for Investment: | | | | | | | | | | | | | ||||||
Ending balance, total | | | $155,931 | | | $75,709 | | | $32,855 | | | $57 | | | $— | | | $264,552 |
Individually evaluated for impairment | | | $1,082 | | | $4,171 | | | $583 | | | $— | | | $— | | | $5,836 |
Collectively evaluated for impairment | | | $154,849 | | | $71,538 | | | $32,272 | | | $57 | | | $— | | | $258,716 |
| | | June 30, 2021 | ||||||||||||||||
(in thousands) | | | Commercial | | | Commercial Real Estate | | | Residential Real Estate | | | Consumer | | | Unallocated | | | Total |
Allowance for loan losses: | | | | | | | | | | | | | ||||||
Beginning balance | | | $2,337 | | | $2,371 | | | $338 | | | $94 | | | $4 | | | $5,144 |
Provision for loan losses | | | (134) | | | 756 | | | (64) | | | (90) | | | 204 | | | 672 |
Charge-offs | | | (12) | | | (179) | | | — | | | — | | | — | | | (191) |
Recoveries | | | — | | | — | | | 10 | | | — | | | — | | | 10 |
Ending Balance | | | $2,191 | | | $2,948 | | | $284 | | | $4 | | | $208 | | | $5,635 |
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Ending Balances: | | | | | | | | | | | | | ||||||
Individually evaluated for impairment | | | $— | | | $271 | | | $— | | | $— | | | $— | | | $271 |
Collectively evaluated for impairment | | | $2,191 | | | $2,677 | | | $284 | | | $4 | | | $208 | | | $5,364 |
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Loans Held for Investment: | | | | | | | | | | | | | ||||||
Ending balance, total | | | $131,856 | | | $100,353 | | | $32,102 | | | $91 | | | $— | | | $264,402 |
Individually evaluated for impairment | | | $828 | | | $6,258 | | | $678 | | | $— | | | $— | | | $7,764 |
Collectively evaluated for impairment | | | $131,028 | | | $94,095 | | | $31,424 | | | $91 | | | $— | | | $256,638 |
| | | December 31, 2021 | ||||||||||||||||
(in thousands) | | | Commercial | | | Commercial Real Estate | | | Residential Real Estate | | | Consumer | | | Unallocated | | | Total |
Allowance for loan losses: | | | | | | | | | | | | | ||||||
Beginning balance | | | $2,337 | | | $2,371 | | | $338 | | | $94 | | | $4 | | | $5,144 |
Provision for loan losses | | | 1,874 | | | 203 | | | (64) | | | (91) | | | 24 | | | 1,946 |
Charge-offs | | | (1,248) | | | (355) | | | — | | | — | | | — | | | (1,603) |
Recoveries | | | 60 | | | — | | | — | | | — | | | — | | | 60 |
Ending Balance | | | $3,023 | | | $2,219 | | | $274 | | | $3 | | | $28 | | | $5,547 |
| | | | | | | | | | | | | |||||||
Ending Balances: | | | | | | | | | | | | | ||||||
Individually evaluated for impairment | | | $234 | | | $— | | | $— | | | $— | | | $— | | | $234 |
Collectively evaluated for impairment | | | $2,789 | | | $2,219 | | | $274 | | | $3 | | | $28 | | | $5,313 |
| | | | | | | | | | | | | |||||||
Loans Held for Investment: | | | | | | | | | | | | | ||||||
Ending balance, total | | | $143,182 | | | $79,394 | | | $35,066 | | | $74 | | | $— | | | $257,716 |
Individually evaluated for impairment | | | $1,168 | | | $5,858 | | | $537 | | | $— | | | $— | | | $7,563 |
Collectively evaluated for impairment | | | $142,014 | | | $73,536 | | | $34,529 | | | $74 | | | $— | | | $250,153 |
(in thousands ) | | | Recorded Investment | | | Contractual Principal Balance | | | Allocated Allowance |
June 30, 2022 | | | | | | | |||
Loans without a specific valuation allowance: | | | | | | | |||
Commercial | | | $158 | | | $160 | | | $— |
Commercial real estate | | | 3,814 | | | 4,129 | | | — |
Residential real estate | | | 583 | | | 575 | | | — |
Loans with a specific valuation allowance: | | | | | | | |||
Commercial | | | 924 | | | 936 | | | 439 |
Commercial real estate | | | 357 | | | 449 | | | 57 |
Total | | | $5,836 | | | $6,249 | | | $496 |
(in thousands ) | | | Recorded Investment | | | Unpaid Contractual Principal Balance | | | Allocated Allowance |
December 31, 2021 | | | | | | | |||
Loans without a specific valuation allowance: | | | | | | | |||
Commercial | | | $517 | | | $502 | | | $— |
Commercial real estate | | | 5,858 | | | 5,861 | | | — |
Residential real estate | | | 537 | | | 537 | | | — |
Loans with a specific valuation allowance: | | | | | | | |||
Commercial | | | 651 | | | 651 | | | 234 |
Total | | | $7,563 | | | $7,551 | | | $234 |
(in thousands) | | | 30 - 59 Days Past Due | | | 60 - 89 Days Past Due | | | Greater than 90 Days Past Due | | | Non- Accrual | | | Total Past Due | | | Current | | | Total Loans |
June 30, 2022 | | | | | | | | | | | | | | | |||||||
Commercial | | | $— | | | $— | | | $— | | | $800 | | | $800 | | | $155,131 | | | $155,931 |
Commercial real estate | | | 479 | | | — | | | — | | | 3,319 | | | 3,798 | | | 71,911 | | | 75,709 |
Residential real estate | | | — | | | — | | | — | | | 537 | | | 537 | | | 32,318 | | | 32,855 |
Consumer | | | — | | | — | | | — | | | — | | | — | | | 57 | | | 57 |
Total | | | $479 | | | $— | | | $— | | | $4,656 | | | $5,135 | | | $259,417 | | | $264,552 |
(in thousands) | | | 30 - 59 Days Past Due | | | 60 - 89 Days Past Due | | | Greater than 90 Days Past Due | | | Non- Accrual | | | Total Past Due | | | Current | | | Total Loans |
December 31, 2021 | | | | | | | | | | | | | | | |||||||
Commercial | | | $19 | | | $— | | | $— | | | $1,170 | | | $1,189 | | | $141,993 | | | $143,182 |
Commercial real estate | | | — | | | — | | | — | | | 5,309 | | | 5,309 | | | 74,085 | | | 79,394 |
Residential real estate | | | 279 | | | 204 | | | — | | | 370 | | | 853 | | | 34,213 | | | 35,066 |
Consumer | | | — | | | — | | | — | | | — | | | — | | | 74 | | | 74 |
Total | | | $298 | | | $204 | | | $— | | | $6,849 | | | $7,351 | | | $250,365 | | | $257,716 |
(in thousands) | | | June 30, 2022 | | | December 31, 2021 |
Commercial | | | $456 | | | $— |
Real Estate: | | | | | ||
Commercial real estate | | | 242 | | | 961 |
Residential real estate | | | 416 | | | — |
| | | $1,114 | | | $961 |
| | | June 30, 2022 | |||||||||||||
(in thousands) | | | Commercial | | | Commercial Real Estate | | | Residential Real Estate | | | Consumer | | | Total |
Pass | | | $154,532 | | | $72,068 | | | $31,960 | | | $57 | | | $258,617 |
Special mention | | | 599 | | | 1,038 | | | 358 | | | — | | | 1,995 |
Substandard | | | 800 | | | 2,603 | | | 537 | | | — | | | 3,940 |
Doubtful | | | — | | | — | | | — | | | — | | | — |
Total | | | $155,931 | | | $75,709 | | | $32,855 | | | $57 | | | $264,552 |
| | | December 31, 2021 | |||||||||||||
(in thousands) | | | Commercial | | | Commercial Real Estate | | | Residential Real Estate | | | Consumer | | | Total |
Pass | | | $141,655 | | | $73,160 | | | $34,382 | | | $74 | | | $249,271 |
Special mention | | | 357 | | | 1,664 | | | 314 | | | — | | | 2,335 |
Substandard | | | 1,170 | | | 4,570 | | | 370 | | | — | | | 6,110 |
Doubtful | | | — | | | — | | | — | | | — | | | — |
Total | | | $143,182 | | | $79,394 | | | $35,066 | | | $74 | | | $257,716 |
(in thousands) | | | June 30, 2022 | | | December 31, 2021 |
Land | | | $809 | | | $875 |
Buildings | | | 3,909 | | | 3,894 |
Furniture, fixtures and equipment | | | 903 | | | 907 |
Software | | | 529 | | | 303 |
Total | | | 6,150 | | | 5,979 |
Accumulated depreciation | | | (1,912) | | | (1,805) |
Premises and equipment, net | | | $4,238 | | | $4,174 |
(in thousands) | | | June 30, 2022 | | | December 31, 2021 |
Operating lease expense | | | $263 | | | $210 |
(in thousands) | | | June 30, 2022 | | | December 31, 2021 |
Operating Leases | | | | | ||
Operating lease right-of-use assets | | | $1,922 | | | $1,434 |
Operating lease liabilities | | | $2,010 | | | $1,524 |
| | | | | |||
Weighted Average Remaining Lease Term: | | | | | ||
Operating leases | | | 4.3 Years | | | 4.4 Years |
| | | | | |||
Weighted Average Discount Rate: | | | | | ||
Operating leases | | | 1.20% | | | 0.89% |
2022 | | | $220 |
2023 | | | 430 |
2024 | | | 442 |
2025 | | | 454 |
2026 | | | 221 |
Thereafter | | | 243 |
Total | | | $2,010 |
(in thousands) | | | June 30, 2022 | | | December 31, 2021 |
Goodwill, beginning of year | | | $13,161 | | | $13,161 |
Acquired goodwill | | | — | | | — |
Impairment | | | — | | | — |
Goodwill, end of period | | | $13,161 | | | $13,161 |
(in thousands) | | | June 30, 2022 | | | December 31, 2021 | ||||||
| | | Gross Carrying Amount | | | Accumulated Amortization | | | Gross Carrying Amount | | | Accumulated Amortization | |
Amortized intangible assets: | | | | | | | | | ||||
Customer list intangible | | | $6,640 | | | $(2,767) | | | $6,640 | | | $(2,435) |
Noncompete intangible | | | — | | | — | | | 241 | | | (241) |
West Town Payments startup costs | | | — | | | — | | | 60 | | | (7) |
Total amortized intangible assets | | | $6,640 | | | $(2,767) | | | $6,941 | | | $(2,683) |
Indefinite life intangible assets: | | | | | | | | | ||||
Trade name intangible | | | $2,141 | | | $— | | | $2,141 | | | $— |
(in thousands) | | | |
2022 | | | $332 |
2023 | | | 664 |
2024 | | | 664 |
2025 | | | 664 |
2026 | | | 332 |
Thereafter | | | 1,217 |
Total | | | $3,873 |
(in thousands) | | | |
2022 | | | $86,208 |
2023 | | | 52,094 |
2024 | | | 25,056 |
2025 | | | 14,726 |
Thereafter | | | 1,459 |
| | | $179,543 |
(in thousands) | | | June 30, 2022 | | | December 31, 2021 |
Maturing in May 2022, at a fixed rate of 0.00% | | | $— | | | $5,000 |
Total | | | $ — | | | $5,000 |
| | | June 30, 2022 | | | December 31, 2021 | |
Commitments to make loans and unused lines of credit | | | $40,240 | | | $18,231 |
West Town Bank | | | June 30, 2022 | |||||||||||||||
Dollars in thousands | | | Actual | | | Basel III Fully Phased-In | | | To Be Well-Capitalized Under Prompt Corrective Action Provisions | |||||||||
| | | Amount | | | Ratio | | | Amount | | | Ratio | | | Amount | | | Ratio | |
Total risk based capital | | | $51,706 | | | 16.78% | | | $32,351 | | | 10.50% | | | $30,811 | | | 10.00% |
Tier 1 risk based capital | | | 47,824 | | | 15.52% | | | 26,189 | | | 8.50% | | | 24,648 | | | 8.00% |
Common equity tier 1 capital | | | 47,824 | | | 15.22% | | | 21,567 | | | 7.00% | | | 20,027 | | | 6.50% |
Tier 1 leverage capital | | | 47,824 | | | 12.19% | | | 15,688 | | | 4.00% | | | 19,610 | | | 5.00% |
West Town Bank | | | December 31, 2021 | |||||||||||||||
Dollars in thousands | | | Actual | | | Basel III Fully Phased-In | | | To Be Well-Capitalized Under Prompt Corrective Action Provisions | |||||||||
| | | Amount | | | Ratio | | | Amount | | | Ratio | | | Amount | | | Ratio | |
Total risk based capital | | | $49,418 | | | 17.17% | | | $30,221 | | | 10.50% | | | $28,782 | | | 10.00% |
Tier 1 risk based capital | | | 45,797 | | | 15.91% | | | 24,465 | | | 8.50% | | | 23,026 | | | 8.00% |
Common equity tier 1 capital | | | 45,797 | | | 15.91% | | | 20,147 | | | 7.00% | | | 18,708 | | | 6.50% |
Tier 1 leverage capital | | | 45,797 | | | 11.46% | | | 15,982 | | | 4.00% | | | 19,978 | | | 5.00% |
| • | Exercise professional judgment and maintain professional skepticism throughout the audit. |
| • | Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. |
| • | Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. Accordingly, no such opinion is expressed. |
| • | Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements. |
| • | Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern for a reasonable period of time. |
(in thousands, except share data) | | | 2021 | | | 2020 |
Assets | | | | | ||
Cash and due from banks | | | $3,803 | | | $4,268 |
Interest-bearing deposits with other institutions | | | 79,910 | | | 28,657 |
Total cash and cash equivalents | | | 83,713 | | | 32,925 |
Interest-bearing time deposits | | | 1,746 | | | 2,746 |
Securities available for sale, at fair value | | | 20,671 | | | 15,721 |
Marketable equity securities | | | 11,988 | | | 9,990 |
Loans held for sale | | | 27,880 | | | 17,492 |
Loans held for investment | | | 259,625 | | | 267,270 |
Allowance for loan losses | | | (5,547) | | | (5,144) |
Loans held for investment, net | | | 254,078 | | | 262,126 |
Premises and equipment, net | | | 4,174 | | | 4,658 |
Foreclosed assets | | | 618 | | | 2,372 |
Loan servicing assets | | | 3,993 | | | 3,456 |
Bank owned life insurance | | | 5,246 | | | 5,136 |
Accrued interest receivable | | | 1,373 | | | 1,556 |
Goodwill | | | 13,161 | | | 13,161 |
Intangible assets | | | 6,399 | | | 7,037 |
Other assets | | | 17,833 | | | 10,833 |
Total assets | | | $452,873 | | | $389,209 |
Liabilities and shareholders’ equity | | | | | ||
Liabilities | | | | | ||
Deposits: | | | | | ||
Noninterest-bearing | | | $114,313 | | | $80,854 |
Interest-bearing | | | 233,843 | | | 220,036 |
Total deposits | | | 348,156 | | | 300,890 |
Borrowings | | | 7,500 | | | 4,000 |
Accrued interest payable | | | 326 | | | 427 |
Other liabilities | | | 9,111 | | | 7,169 |
Total liabilities | | | 365,093 | | | 312,486 |
Shareholders’ equity | | | | | ||
Common stock, voting, $1 par value, 9,000,000 shares authorized, 2,118,688 and 2,147,277 shares issued and outstanding at December 31, 2021 and 2020, respectively | | | 2,119 | | | 2,147 |
Common stock, non-voting, $1 par value, 1,000,000 shares authorized, 21,740 shares issued and outstanding at December 31, 2021 and 2020 | | | 22 | | | 22 |
Additional paid-in capital | | | 23,720 | | | 24,365 |
Retained earnings | | | 62,810 | | | 50,079 |
Accumulated other comprehensive income (loss) | | | (99) | | | 271 |
Total Integrated Financial Holdings, Inc. shareholders’ equity | | | 88,572 | | | 76,884 |
Noncontrolling interest | | | (792) | | | (161) |
Total shareholders' equity | | | 87,780 | | | 76,723 |
Total liabilities and shareholders' equity | | | $452,873 | | | $389,209 |
(in thousands except share and per share data) | | | 2021 | | | 2020 |
Interest income | | | | | ||
Interest and fees on loans | | | $18,457 | | | $17,486 |
Investment securities & deposits | | | 456 | | | 468 |
Total interest income | | | 18,913 | | | 17,954 |
Interest expense | | | | | ||
Interest on deposits | | | 2,576 | | | 3,294 |
Interest on borrowed funds | | | 4 | | | 182 |
Total interest expense | | | 2,580 | | | 3,476 |
Net interest income | | | 16,333 | | | 14,478 |
Provision for loan losses | | | 1,946 | | | 4,460 |
Net interest income after provision for loan losses | | | 14,387 | | | 10,018 |
Noninterest income | | | | | ||
Government loan servicing and packaging revenue | | | 24,526 | | | 21,234 |
Mortgage revenue | | | 6,106 | | | 6,789 |
Government lending revenue | | | 7,937 | | | 3,178 |
SBA documentation preparation fees | | | 992 | | | 704 |
Loan servicing rights | | | 537 | | | 98 |
Other noninterest income | | | 1,031 | | | 1,503 |
Total noninterest income | | | 41,129 | | | 33,506 |
Noninterest expense | | | | | ||
Compensation | | | 23,652 | | | 19,016 |
Occupancy and equipment | | | 1,181 | | | 1,042 |
Loan related expenses | | | 1,430 | | �� | 926 |
Data processing expense | | | 899 | | | 696 |
Advertising expense | | | 1,428 | | | 507 |
Insurance expense | | | 519 | | | 434 |
Professional fees | | | 2,817 | | | 2,259 |
Software | | | 6,587 | | | 3,377 |
Communications | | | 396 | | | 348 |
Foreclosed asset expense, net | | | 822 | | | 1,800 |
Directors fees | | | 721 | | | 657 |
Intangible amortization expense | | | 698 | | | 745 |
Other noninterest expense | | | 1,399 | | | 1,491 |
Total noninterest expense | | | 42,549 | | | 33,298 |
Income before income taxes | | | 12,967 | | | 10,226 |
Income tax expense | | | 867 | | | 1,512 |
Net income | | | 12,100 | | | 8,714 |
Net loss attributable to noncontrolling interest | | | 631 | | | 162 |
Net income available to Integrated Financial Holdings, Inc. | | | 12,731 | | | 8,876 |
Basic earnings per common share | | | $5.91 | | | $4.07 |
Diluted earnings per common share | | | $5.71 | | | $4.01 |
Weighted average common shares outstanding | | | 2,153,700 | | | 2,178,653 |
Diluted average common shares outstanding | | | 2,228,663 | | | 2,213,389 |
(in thousands) | | | 2021 | | | 2020 |
Net income | | | $12,100 | | | $8,714 |
Other comprehensive income (loss): | | | | | ||
Unrealized gain (loss) during the period on available for sale securities, net of tax (benefit) expense of ($121) and $63, respectively | | | (370) | | | 182 |
Other comprehensive income (loss): | | | (370) | | | 182 |
Comprehensive income | | | 11,730 | | | 8,896 |
Comprehensive loss attributable to noncontrolling interest | | | (631) | | | (162) |
Comprehensive income attributable to Integrated Financial Holdings, Inc. | | | $12,361 | | | $9,058 |
| | | Common Stock $1.00 par | | | Additional Paid-in Capital | | | Accumulated Other Comprehensive Income (Loss) | | | Retained Earnings | | | Noncontrolling Interest | | | Total Shareholder’s Equity | ||||
(in thousands) | | | Voting | | | Non-voting | | ||||||||||||||
Balance at December 31, 2019 | | | $2,166 | | | $22 | | | $24,245 | | | $89 | | | $41,203 | | | $— | | | $67,725 |
Net income | | | — | | | — | | | — | | | — | | | 8,876 | | | (162) | | | 8,714 |
Other comprehensive income | | | — | | | — | | | — | | | 182 | | | — | | | — | | | 182 |
Stock based compensation | | | — | | | — | | | 704 | | | — | | | — | | | — | | | 704 |
Exercise of stock options | | | 9 | | | — | | | 41 | | | — | | | — | | | — | | | 50 |
Restricted stock vested | | | 13 | | | — | | | — | | | — | | | — | | | — | | | 13 |
Noncontrolling interest | | | — | | | — | | | — | | | — | | | — | | | 1 | | | 1 |
Share repurchases and cancellations | | | (41) | | | — | | | (625) | | | — | | | — | | | — | | | (666) |
Balance at December 31, 2020 | | | $2,147 | | | $22 | | | $24,365 | | | $271 | | | $50,079 | | | $(161) | | | $76,723 |
| | | | | | | | | | | | | | | ||||||||
Net income | | | — | | | — | | | — | | | — | | | 12,731 | | | (631) | | | 12,100 |
Other comprehensive loss | | | — | | | — | | | — | | | (370) | | | — | | | — | | | (370) |
Stock based compensation | | | — | | | — | | | 806 | | | — | | | — | | | — | | | 806 |
Exercise of stock options | | | 24 | | | — | | | 338 | | | — | | | — | | | — | | | 362 |
Restricted stock vested | | | 22 | | | — | | | — | | | — | | | — | | | — | | | 22 |
Share repurchases and cancellations | | | (74) | | | — | | | (1,789) | | | — | | | — | | | — | | | (1,863) |
Balance at December 31, 2021 | | | $2,119 | | | $22 | | | $23,720 | | | $(99) | | | $62,810 | | | $(792) | | | $87,780 |
(in thousands) | �� | | 2021 | | | 2020 |
Cash flows from operating activities | | | | | ||
Net income | | | $12,100 | | | $8,714 |
Adjustments to reconcile net income to net cash from operating activities: | | | | | ||
Depreciation expense | | | 357 | | | 237 |
Provision for loan losses | | | 1,946 | | | 4,460 |
Amortization of premium on securities, net of accretion | | | 64 | | | 78 |
Amortization of intangible assets | | | 698 | | | 745 |
Accretion of discounts on loans | | | (1,684) | | | (2,019) |
Originations of loans held for sale | | | (220,404) | | | (177,863) |
Proceeds from sales of loans held for sale | | | 224,059 | | | 182,906 |
Net gains on sale of loans held for sale | | | (14,043) | | | (9,967) |
Net loss on sale of foreclosed assets | | | 944 | | | 937 |
Net loss on sale and disposal of property and equipment | | | 94 | | | — |
Stock-based compensation expense | | | 806 | | | 704 |
Earnings on bank-owned life insurance | | | (110) | | | (115) |
Revaluation of loan servicing rights | | | (537) | | | (98) |
Changes in fair value on marketable equity securities | | | (1,998) | | | — |
Changes in assets and liabilities: | | | | | ||
Increase in other assets | | | (6,696) | | | (5,841) |
Increase in other liabilities | | | 1,841 | | | 167 |
Net cash provided by (used in) operating activities | | | $(2,563) | | | $3,045 |
| | | | | |||
Cash flows from investing activities | | | | | ||
Purchases of securities available-for-sale | | | $(10,325) | | | $(9,448) |
Proceeds from maturities and principal paydowns of securities available-for-sale | | | 4,820 | | | 4,991 |
Proceeds from maturities of interest-bearing time deposits | | | 1,000 | | | — |
Proceeds from sale of premises and equipment | | | 511 | | | — |
Decrease (increase) in loans, net | | | 7,786 | | | (47,622) |
Increase in FHLB stock, net | | | — | | | (777) |
Proceeds from sale of foreclosed assets | | | 810 | | | 2,749 |
Purchases of premises and equipment | | | (478) | | | (134) |
Capitalized start-up costs | | | (60) | | | — |
Net cash provided by (used in) investing activities | | | $4,064 | | | $(50,241) |
| | | | | |||
Cash flows from financing activities | | | | | ||
Increase in deposits, net | | | $47,266 | | | $80,448 |
Increase (decrease) in borrowings, net | | | 3,500 | | | (14,595) |
Stock option exercises and restricted stock vested | | | 384 | | | 63 |
Noncontrolling interest | | | — | | | 1 |
Repurchase of common stock | | | (1,863) | | | (666) |
Net cash provided by financing activities | | | $49,287 | | | $65,251 |
| | | | | |||
Net change in cash and cash equivalents | | | $50,788 | | | $18,055 |
Cash and cash equivalents, beginning | | | 32,925 | | | 14,870 |
Cash and cash equivalents, ending | | | $83,713 | | | $32,925 |
| | | | | |||
Supplemental Disclosures of Cash Flow Information | | | | | ||
Cash paid during the period for interest | | | $2,681 | | | $3,478 |
Cash paid during the period for taxes | | | 2,873 | | | 2,604 |
| | | | | |||
Supplemental Disclosure of Non-Cash Transactions | | | | | ||
Transfer of loans held for investment to foreclosed assets | | | $— | | | $2,688 |
| | | | | Deferred Loans | |||||||||||
| | | | | High Point | | | At 12/31/21 | ||||||||
(dollars in thousands) | | | Total Loans Outstanding | | | Balance | | | # of Loans Deferred | | | Balance | | | # of Loans Deferred |
Commercial | | | $143,182 | | | $26,831 | | | 52 | | | $1,575 | | | 6 |
Real Estate: | | | | | | | | | | | |||||
Commercial real estate | | | 79,394 | | | 38,250 | | | 56 | | | 1,158 | | | 2 |
Residential real estate | | | 35,066 | | | 6,939 | | | 34 | | | 850 | | | 4 |
Consumer | | | 74 | | | 4 | | | 1 | | | — | | | — |
Total | | | $257,716 | | | $72,024 | | | 143 | | | $3,583 | | | 12 |
| • | Commercial loans are dependent on the strength of the industries of the related borrowers and the success of their businesses. Commercial loans are advanced for equipment purchases or to provide working capital to meet other financing needs of the business. These loans may be secured by accounts receivable, inventory, equipment or other business assets. Financial information is obtained from the borrower to evaluate the debt service coverage and ability to repay the loans. |
| • | Commercial real estate loans are dependent on the industries tied to these loans as well as the local commercial real estate market, including available commercial real estate inventories, market demand and time to sell. The loans are secured by the real estate, and appraisals are obtained to support the loan amount. An evaluation of the entity’s cash flows is performed to evaluate the borrower’s ability to repay the loan. |
| • | Residential real estate and home equity loans are affected by the local residential real estate market, the local economy, and movement in interest rates. The Company evaluates the borrower’s repayment ability through a review of credit scores and debt to income ratios. Appraisals are obtained to support the loan amount. |
| • | Consumer loans are dependent on the local economy. Consumer loans are generally secured by consumer assets, but may be unsecured. The Company evaluates the borrower’s repayment ability through a review of credit scores and an evaluation of debt to income ratios. |
(in thousands except share and per share data) | | | 2021 | | | 2020 |
Net income attributable to IFH, Inc. | | | $12,731 | | | $8,876 |
| | | | | |||
Weighted average common shares – basic | | | 2,153,700 | | | 2,178,653 |
Add: Effect of dilutive stock options | | | 61,210 | | | 34,272 |
Add: Effect of dilutive restricted stock awards | | | 13,753 | | | 464 |
Weighted average common shares – dilutive | | | 2,228,663 | | | 2,213,389 |
| | | | | |||
Basic earnings per common share | | | $5.91 | | | $4.07 |
Diluted earnings per common share | | | $5.71 | | | $4.01 |
| | | December 31, 2021 | ||||||||||
(in thousands) | | | Amortized Cost | | | Gross Unrealized Gains | | | Gross Unrealized Losses | | | Fair Value |
Investment securities available for sale: | | | | | | | | | ||||
SBA pooled securities | | | $243 | | | $3 | | | $— | | | $246 |
Government sponsored enterprises mortgage backed securities | | | 20,007 | | | 192 | | | 323 | | | 19,876 |
Government sponsored enterprises collateralized mortgage obligations | | | 546 | | | 3 | | | — | | | 549 |
Total investment securities available for sale | | | $20,796 | | | $198 | | | $323 | | | $20,671 |
| | | | | | | | | |||||
Investment in marketable equity securities | | | | | | | | | ||||
Marketable equity securities | | | $9,990 | | | $1,998 | | | $— | | | $11,988 |
| | | December 31, 2020 | ||||||||||
(in thousands) | | | Amortized Cost | | | Gross Unrealized Gains | | | Gross Unrealized Losses | | | Fair Value |
Investment securities available for sale: | | | | | | | | | ||||
SBA pooled securities | | | $345 | | | $3 | | | $— | | | $348 |
Government sponsored enterprises mortgage backed securities | | | 14,157 | | | 384 | | | 23 | | | 14,518 |
Government sponsored enterprises collateralized mortgage obligations | | | 853 | | | 2 | | | — | | | 855 |
Total investment securities available for sale | | | $15,355 | | | $389 | | | $23 | | | $15,721 |
| | | | | | | | | |||||
Investment in marketable equity securities | | | | | | | | | ||||
Marketable equity securities | | | $9,990 | | | $— | | | $— | | | $9,990 |
(in thousands) | | | 2021 | | | 2020 |
Marketable equity security gains | | | $ 1,998 | | | $ — |
| | | December 31, 2021 | ||||||||||||||||
| | | Less than twelve months | | | Twelve months or more | | | Total | ||||||||||
(in thousands) | | | Fair value | | | Unrealized losses | | | Fair value | | | Unrealized losses | | | Fair value | | | Unrealized losses |
Government sponsored enterprises mortgage backed securities | | | $ 11,865 | | | $ 230 | | | $ 2,548 | | | $ 93 | | | $ 14,413 | | | $ 323 |
Total | | | $ 11,865 | | | $ 230 | | | $ 2,548 | | | $ 93 | | | $ 14,413 | | | $ 323 |
| | | December 31, 2020 | ||||||||||||||||
| | | Less than twelve months | | | Twelve months or more | | | Total | ||||||||||
(in thousands) | | | Fair value | | | Unrealized losses | | | Fair value | | | Unrealized losses | | | Fair value | | | Unrealized losses |
Government sponsored enterprises mortgage backed securities | | | $ 3,013 | | | $ 23 | | | $ — | | | $ — | | | $ 3,013 | | | 23 |
Total | | | $ 3,013 | | | $ 23 | | | $ — | | | $ — | | | $ 3,013 | | | 23 |
(in thousands) | | | Within 1 Year | | | After One Within Five Years | | | After Five Within Ten Years | | | After Ten Years | | | Total |
SBA pooled securities | | | $— | | | $54 | | | $— | | | $192 | | | $246 |
Government sponsored enterprises mortgage backed securities | | | — | | | — | | | 74 | | | 19,802 | | | 19,876 |
Government sponsored enterprises collateralized mortgage obligations | | | — | | | — | | | — | | | 549 | | | 549 |
| | | $— | | | $54 | | | $74 | | | $20,543 | | | $20,671 |
(in thousands) | | | 2021 | | | 2020 |
Commercial | | | $143,182 | | | $144,878 |
Real Estate: | | | | | ||
Commercial real estate | | | 79,394 | | | 81,591 |
Residential real estate | | | 35,066 | | | 38,913 |
Consumer | | | 74 | | | 159 |
Subtotal | | | 257,716 | | | 265,541 |
(in thousands) | | | 2021 | | | 2020 |
Net deferred loan costs | | | 1,909 | | | 1,729 |
Allowance for loan losses | | | (5,547) | | | (5,144) |
Loans held for investment, net | | | $254,078 | | | $262,126 |
| | | December 31, 2021 | ||||||||||||||||
(in thousands) | | | Commercial | | | Commercial Real Estate | | | Residential Real Estate | | | Consumer | | | Unallocated | | | Total |
Allowance for loan losses: | | | | | | | | | | | | | ||||||
Beginning balance | | | $2,337 | | | $2,371 | | | $338 | | | $94 | | | $4 | | | $5,144 |
Provision for loan losses | | | 1,874 | | | 203 | | | (64) | | | (91) | | | 24 | | | 1,946 |
Charge-offs | | | (1,248) | | | (355) | | | — | | | — | | | — | | | (1,603) |
Recoveries | | | 60 | | | — | | | — | | | — | | | — | | | 60 |
Ending Balance | | | $3,023 | | | $2,219 | | | $274 | | | $3 | | | $28 | | | $5,547 |
| | | | | | | | | | | | | |||||||
Ending Balances: | | | | | | | | | | | | | ||||||
Individually evaluated for impairment | | | $234 | | | $— | | | $— | | | $— | | | $— | | | $234 |
Collectively evaluated for impairment | | | $2,789 | | | $2,219 | | | $274 | | | $3 | | | $28 | | | $5,313 |
| | | | | | | | | | | | | |||||||
Loans Held for Investment: | | | | | | | | | | | | | ||||||
Ending balance, total | | | $143,182 | | | $79,394 | | | $35,066 | | | $74 | | | $— | | | $257,716 |
Individually evaluated for impairment | | | $1,168 | | | $5,858 | | | $537 | | | $— | | | $— | | | $7,563 |
Collectively evaluated for impairment | | | $142,014 | | | $73,536 | | | $34,529 | | | $74 | | | $— | | | $250,153 |
| | | December 31, 2020 | ||||||||||||||||
(in thousands) | | | Commercial | | | Commercial Real Estate | | | Residential Real Estate | | | Consumer | | | Unallocated | | | Total |
Allowance for loan losses: | | | | | | | | | | | | | ||||||
Beginning balance | | | $1,828 | | | $1,596 | | | $331 | | | $9 | | | $73 | | | $3,837 |
Provision for loan losses | | | 795 | | | 3,567 | | | 68 | | | 99 | | | (69) | | | 4,460 |
Charge-offs | | | (331) | | | (2,792) | | | (61) | | | (15) | | | — | | | (3,199) |
Recoveries | | | 45 | | | — | | | — | | | 1 | | | — | | | 46 |
Ending Balance | | | $2,337 | | | $2,371 | | | $338 | | | $94 | | | $4 | | | $5,144 |
| | | | | | | | | | | | | |||||||
Ending Balances: | | | | | | | | | | | | | ||||||
Individually evaluated for impairment | | | $87 | | | $282 | | | $— | | | $— | | | $— | | | $369 |
Collectively evaluated for impairment | | | $2,250 | | | $2,089 | | | $338 | | | $94 | | | $4 | | | $4,775 |
| | | | | | | | | | | | | |||||||
| | | December 31, 2020 | ||||||||||||||||
(in thousands) | | | Commercial | | | Commercial Real Estate | | | Residential Real Estate | | | Consumer | | | Unallocated | | | Total |
Loans Held for Investment: | | | | | | | | | | | | | ||||||
Ending balance, total | | | $144,878 | | | $81,591 | | | $38,913 | | | $159 | | | $— | | | $265,541 |
Individually evaluated for impairment | | | $847 | | | $7,850 | | | $770 | | | $— | | | $— | | | $9,467 |
Collectively evaluated for impairment | | | $144,031 | | | $73,741 | | | $38,143 | | | $159 | | | $— | | | $256,074 |
(in thousands) | | | Recorded Investment | | | Unpaid Contractual Principal Balance | | | Allocated Allowance |
December 31, 2021 | | | | | | | |||
Loans without a specific valuation allowance: | | | | | | | |||
Commercial | | | $517 | | | $502 | | | $— |
Commercial real estate | | | 5,858 | | | 5,861 | | | — |
Residential real estate | | | 537 | | | 537 | | | — |
Loans with a specific valuation allowance: | | | | | | | |||
Commercial | | | 651 | | | 651 | | | 234 |
Total | | | $7,563 | | | $7,551 | | | $234 |
(in thousands) | | | Recorded Investment | | | Unpaid Contractual Principal Balance | | | Allocated Allowance |
December 31, 2020 | | | | | | | |||
Loans without a specific valuation allowance: | | | | | | | |||
Commercial | | | $170 | | | $172 | | | $— |
Commercial real estate | | | 6,582 | | | 6,631 | | | — |
Residential real estate | | | 770 | | | 769 | | | — |
Loans with a specific valuation allowance: | | | | | | | |||
Commercial | | | 677 | | | 694 | | | 87 |
Commercial real estate | | | 1,268 | | | 1,268 | | | 282 |
Total | | | $9,467 | | | $9,534 | | | $369 |
(in thousands) | | | 30 – 59 Days Past Due | | | 60 – 89 Days Past Due | | | Greater than 90 Days Past Due | | | Non- Accrual | | | Total Past Due | | | Current | | | Total Loans |
December 31, 2021 | | | | | | | | | | | | | | | |||||||
Commercial | | | $19 | | | $— | | | $— | | | $1,170 | | | $1,189 | | | $141,993 | | | $143,182 |
Commercial real estate | | | — | | | — | | | — | | | 5,309 | | | 5,309 | | | 74,085 | | | 79,394 |
Residential real estate | | | 279 | | | 204 | | | — | | | 370 | | | 853 | | | 34,213 | | | 35,066 |
Consumer | | | — | | | — | | | — | | | — | | | — | | | 74 | | | 74 |
Total | | | $298 | | | $204 | | | $— | | | $6,849 | | | $7,351 | | | $250,365 | | | $257,716 |
(in thousands) | | | 30 – 59 Days Past Due | | | 60 – 89 Days Past Due | | | Greater than 90 Days Past Due | | | Non- Accrual | | | Total Past Due | | | Current | | | Total Loans |
December 31, 2020 | | | | | | | | | | | | | | | |||||||
Commercial | | | $27 | | | $— | | | $— | | | $694 | | | $721 | | | $144,157 | | | $144,878 |
Commercial real estate | | | — | | | — | | | — | | | 7,667 | | | 7,667 | | | 73,924 | | | 81,591 |
Residential real estate | | | — | | | 313 | | | — | | | 145 | | | 458 | | | 38,455 | | | 38,913 |
Consumer | | | — | | | — | | | — | | | — | | | — | | | 159 | | | 159 |
Total | | | $27 | | | $313 | | | $— | | | $8,506 | | | $8,846 | | | $256,695 | | | $265,541 |
| | | December 31, 2021 | |||||||||||||
(in thousands) | | | Commercial | | | Commercial Real Estate | | | Residential Real Estate | | | Consumer | | | Total |
Pass | | | $141,655 | | | $73,160 | | | $34,382 | | | $74 | | | $249,271 |
Special mention | | | 357 | | | 1664 | | | 314 | | | — | | | 2,335 |
Substandard | | | 1,170 | | | 4,570 | | | 370 | | | — | | | 6,110 |
Doubtful | | | — | | | — | | | — | | | — | | | — |
Total | | | $143,182 | | | $79,394 | | | $35,066 | | | $74 | | | $257,716 |
| | | December 31, 2020 | |||||||||||||
(in thousands) | | | Commercial | | | Commercial Real Estate | | | Residential Real Estate | | | Consumer | | | Total |
Pass | | | $143,384 | | | $72,010 | | | $38,197 | | | $159 | | | $253,750 |
Special mention | | | 430 | | | 2,091 | | | 404 | | | — | | | 2,925 |
Substandard | | | 1,064 | | | 7,490 | | | 312 | | | — | | | 8,866 |
Doubtful | | | — | | | — | | | — | | | — | | | — |
Total | | | $144,878 | | | $81,591 | | | $38,913 | | | $159 | | | $265,541 |
(in thousands) | | | 2021 | | | 2020 |
Land | | | $875 | | | $901 |
Buildings | | | 3,894 | | | 4,490 |
Furniture, fixtures and equipment | | | 907 | | | 1,262 |
Software | | | 303 | | | — |
Total | | | 5,979 | | | 6,653 |
Accumulated depreciation | | | (1,805) | | | (1,995) |
Premises and equipment, net | | | $4,174 | | | $4,658 |
(in thousands) | | | 2021 | | | 2020 |
Operating lease expense | | | $426 | | | $275 |
(in thousands) | | | 2021 | | | 2020 |
Operating Leases | | | | | ||
Operating lease right-of-use assets | | | $1,434 | | | $1,541 |
| | | | | |||
Operating lease liabilities | | | $1,524 | | | $1,598 |
| | | | | |||
Weighted Average Remaining Lease Term: | | | | | ||
Operating leases | | | 4.4 Years | | | 4.9 Years |
| | | | | |||
Weighted Average Discount Rate: | | | | | ||
Operating leases | | | 0.89% | | | 0.80% |
2022 | | | $366 |
2023 | | | 325 |
2024 | | | 334 |
2025 | | | 342 |
2026 | | | 197 |
Total | | | $1,564 |
(in thousands) | | | 2021 | | | 2020 |
Goodwill, beginning of year | | | $13,161 | | | $13,150 |
Acquired goodwill | | | — | | | 11 |
Impairment | | | — | | | — |
Goodwill, end of year | | | $13,161 | | | $13,161 |
(in thousands) | | | 2021 | | | 2020 | ||||||
| | Gross Carrying Amount | | | Accumulated Amortization | | | Gross Carrying Amount | | | Accumulated Amortization | ||
Amortized intangible assets: | | | | | | | | | ||||
Customer list intangible | | | $6,640 | | | $(2,435) | | | $6,640 | | | $(1,771) |
Noncompete intangible | | | 241 | | | (241) | | | 241 | | | (214) |
West Town Payments startup costs | | | 60 | | | (7) | | | — | | | — |
Total amortized intangible assets | | | $6,941 | | | $(2,683) | | | $6,881 | | | $(1,985) |
Indefinite life intangible assets: | | | | | | | | | ||||
Trade name intangible | | | $2,141 | | | $— | | | $2,141 | | | $— |
(in thousands) | | | |
2022 | | | $668 |
2023 | | | 668 |
2024 | | | 668 |
2025 | | | 668 |
2026 | | | 668 |
Thereafter | | | 918 |
Total | | | $4,258 |
(in thousands) | | | |
2022 | | | $86,002 |
2023 | | | 36,271 |
2024 | | | 22,292 |
2025 | | | 14,588 |
Thereafter | | | 1,071 |
| | | $160,224 |
(in thousands) | | | 2021 | | | 2020 |
Maturing in May 2022, at a fixed rate of 0.00% | | | $5,000 | | | $— |
Maturing in May 2021, at a fixed rate of 0.00% | | | — | | | 4,000 |
Total | | | $5,000 | | | $4,000 |
(in thousands) | | | 2021 | | | 2020 |
Current tax expense | | | $862 | | | $1,366 |
Deferred tax expense | | | 5 | | | 146 |
Total | | | $867 | | | $1,512 |
(in thousands) | | | 2021 | | | 2020 |
Income tax expense computed at the federal statutory rate | | | $2,723 | | | $2,147 |
State income tax, net of federal benefit | | | 762 | | | 660 |
Non-taxable bank owned life insurance | | | (23) | | | (24) |
Merger expenses | | | — | | | 4 |
Stock compensation | | | 68 | | | 23 |
Tax credit | | | (2,919) | | | (1,434) |
Other | | | 256 | | | 136 |
Total | | | $867 | | | $1,512 |
(in thousands) | | | 2021 | | | 2020 |
Deferred tax assets | | | | | ||
Allowance for loan losses | | | $965 | | | $834 |
Intangible amortization | | | 259 | | | 189 |
Deferred compensation | | | 156 | | | 121 |
Mark to market – Section 475 adjustment | | | 19 | | | 99 |
Stock options | | | 55 | | | 72 |
Unrealized loss on securities available-for-sale | | | 26 | | | — |
Other | | | 178 | | | 63 |
Subtotal | | | 1,658 | | | 1,378 |
Deferred tax liabilities | | | | | ||
Windsor fair value adjustment | | | 1,242 | | | 1,185 |
Loan servicing assets | | | 1,039 | | | 858 |
Deferred loan costs | | | 733 | | | 691 |
Prepaid expenses | | | 114 | | | 119 |
Unrealized gain on securities available-for-sale | | | — | | | 95 |
Premises and equipment | | | 60 | | | 87 |
Other | | | 49 | | | 39 |
Subtotal | | | 3,237 | | | 3,074 |
Net deferred tax liabilities | | | $1,579 | | | $1,696 |
| | | 2021 | | | 2020 | |
Commitments to make loans and unused lines of credit | | | $18,231 | | | $15,555 |
West Town Bank & Trust | | | December 31, 2021 | |||||||||||||||
Dollars in thousands | | | Actual | | | Basel III Fully Phased-In | | | To Be Well-Capitalized Under Prompt Corrective Action Provisions | |||||||||
| | | Amount | | | Ratio | | | Amount | | | Ratio | | | Amount | | | Ratio | |
Total risk based capital | | | $49,418 | | | 17.17% | | | $30,221 | | | 10.50% | | | $28,782 | | | 10.00% |
Tier 1 risk based capital | | | 45,797 | | | 15.91% | | | 24,465 | | | 8.50% | | | 23,026 | | | 8.00% |
Common equity tier 1 capital | | | 45,797 | | | 15.91% | | | 20,147 | | | 7.00% | | | 18,708 | | | 6.50% |
Tier 1 leverage capital | | | 45,797 | | | 11.46% | | | 15,982 | | | 4.00% | | | 19,978 | | | 5.00% |
West Town Bank & Trust | | | December 31, 2020 | |||||||||||||||
Dollars in thousands | | | Actual | | | Basel III Fully Phased-In | | | To Be Well-Capitalized Under Prompt Corrective Action Provisions | |||||||||
| | | Amount | | | Ratio | | | Amount | | | Ratio | | | Amount | | | Ratio | |
Total risk based capital | | | $37,888 | | | 13.30% | | | $29,912 | | | 10.50% | | | $28,488 | | | 10.00% |
Tier 1 risk based capital | | | 34,308 | | | 12.04% | | | 24,214 | | | 8.50% | | | 22,790 | | | 8.00% |
Common equity tier 1 capital | | | 34,308 | | | 12.04% | | | 19,941 | | | 7.00% | | | 18,517 | | | 6.50% |
Tier 1 leverage capital | | | 34,308 | | | 10.06% | | | 13,645 | | | 4.00% | | | 17,056 | | | 5.00% |
| | | | | | | | | Share remaining as of December 31, | |||||||
Plan Name | | | Plan Type | | | Expiration Date | | | Approved Shares | | | 2021 | | | 2020 |
2018 Omnibus Plan | | | Omnibus | | | 04/26/28 | | | 50,000 | | | 300 | | | 300 |
2019 Omnibus Plan | | | Omnibus | | | 03/28/29 | | | 177,176 | | | 64,980 | | | 130,408 |
| | | | | | | | | 65,280 | | | 130,708 | ||||
| | | Shares | | | Weighted Average Exercise Price | | | Weighted Average Remaining Contractual Term (years) | |
Outstanding at beginning of year | | | 179,143 | | | $16.82 | | | 5.28 |
Granted | | | 20,000 | | | 23.95 | | | |
Exercised | | | 24,270 | | | 15.77 | | | |
Forfeited or expired | | | 2,100 | | | 22.94 | | | |
Outstanding at end of year | | | 172,773 | | | 17.72 | | | 4.88 |
Outstanding, vested and expected to vest | | | 140,972 | | | $16.76 | | | 4.09 |
| | | | | | | ||||
Fully vested and exercisable at end of year | | | 172,773 | | | $17.72 | | | 4.88 |
(in thousands except fair value of options) | | | 2021 | | | 2020 |
Intrinsic value of options exercised | | | $258 | | | $91 |
Cash received from option exercises | | | 362 | | | 50 |
Tax benefit realized from option exercises | | | 83 | | | 19 |
Weighted average fair value of options granted | | | 4.65 | | | 3.43 |
| | | 2021 | | | 2020 | |||||||
| | | Shares | | | Weighted Average Price | | | Shares | | | Weighted Average Price | |
Nonvested, beginning of year | | | 35,187 | | | $23.31 | | | 12,807 | | | $28.65 |
Granted | | | 45,428 | | | 23.95 | | | 35,274 | | | 21.60 |
Vested | | | 22,435 | | | 23.94 | | | 12,894 | | | 23.93 |
Unvested shares forfeited | | | 2,800 | | | 22.94 | | | — | | | — |
Nonvested, end of year | | | 55,380 | | | $23.60 | | | 35,187 | | | $23.31 |
(in thousands) | | ||
Loans to directors and officers as a group at December 31, 2020 | | | $85 |
New loans | | | — |
Loan repayments | | | 85 |
Loans to directors and officers as a group at December 31, 2021 | | | $— |
(amounts in thousands) | | | December 31, 2021 | |||||||||
| | | Carrying Amount | | | Quoted Prices in Active Markets for Identical Assets (Level 1) | | | Significant Other Observable Inputs (Level 2) | | | Significant Unobservable Inputs (Level 3) | |
Debt securities | | | | | | | | | ||||
SBA pooled securities | | | $246 | | | $— | | | $246 | | | $— |
Government sponsored enterprises mortgage backed securities | | | 19,876 | | | — | | | 19,876 | | | — |
Government sponsored enterprises collateralized mortgage obigations | | | 549 | | | — | | | 549 | | | — |
Total debt securities available for sale | | | $20,671 | | | $— | | | $20,671 | | | $— |
| | | | | | | | | |||||
Marketable equity securities | | | 11,988 | | | 11,988 | | | — | | | — |
Total investment securities | | | $32,659 | | | $11,988 | | | $20,671 | | | $— |
Mortgage-banking derivative | | | $1,065 | | | $— | | | $1,065 | | | $— |
Loan servicing assets | | | $3,993 | | | $— | | | $3,993 | | | $— |
| | | December 31, 2020 | ||||||||||
| | | Carrying Amount | | | Quoted Prices in Active Markets for Identical Assets (Level 1) | | | Significant Other Observable Inputs (Level 2) | | | Significant Unobservable Inputs (Level 3) | |
Debt securities | | | | | | | | | ||||
SBA pooled securities | | | $348 | | | $— | | | $348 | | | $— |
Government sponsored enterprises mortgage backed securities | | | 14,518 | | | — | | | 14,518 | | | — |
Government sponsored enterprises collateralized mortgage obigations | | | 855 | | | — | | | 855 | | | — |
Total debt securities available for sale | | | $15,721 | | | $— | | | $15,721 | | | $— |
| | | | | | | | | |||||
Marketable equity securities | | | 9,990 | | | 9,990 | | | — | | | — |
Total investment securities | | | $25,711 | | | $9,990 | | | $15,721 | | | $— |
Mortgage-banking derivative | | | $702 | | | $— | | | $702 | | | $— |
Loan servicing assets | | | $3,456 | | | $— | | | $3,456 | | | $— |
| | | December 31, 2021 | ||||||||||
(in thousands) | | | Carrying Amount | | | Quoted Prices in Active Markets for Identical Assets Level 1 | | | Significant Other Observable Inputs Level 2 | | | Significant Unobservable Inputs Level 3 |
Impaired loans | | | $417 | | | $— | | | $— | | | $417 |
Foreclosed assets | | | 618 | | | — | | | — | | | 618 |
| | | December 31, 2020 | ||||||||||
(in thousands) | | | Carrying Amount | | | Quoted Prices in Active Markets for Identical Assets | | | Significant Other Observable Inputs Level 2 | | | Significant Unobservable Inputs Level 3 |
Impaired loans | | | $1,576 | | | $— | | | $— | | | $1,576 |
Foreclosed assets | | | 2,372 | | | — | | | — | | | 2,372 |
(in thousands) | | | December 31, 2021 | |||||||||
| | | Fair Value | | | Technique | | | Unobservable Input(s) | | | Range in Appraised Weighted Average | |
Impaired loans | | | $417 | | | Market Comparable | | | A discount percentage is applied based on age of independent appraisals, selling costs, current market conditions, and experience within the local market | | | 10% - 15% |
Foreclosed assets | | | $618 | | | Market Comparables | | | A discount percentage is applied based on age of independent appraisals, selling costs, current market conditions, and experience within the local market | | | 10% - 15% |
(in thousands) | | | December 31, 2020 | |||||||||
| | | Fair Value | | | Technique | | | Unobservable Input(s) | | | Range in Appraised Weighted Average | |
Impaired loans | | | $1,576 | | | Market Comparables | | | A discount percentage is applied based on age of independent appraisals, selling costs, current market conditions, and experience within the local market | | | 10% - 15% |
(in thousands) | | | December 31, 2020 | |||||||||
| | | Fair Value | | | Technique | | | Unobservable Input(s) | | | Range in Appraised Weighted Average | |
Foreclosed assets | | | $2,372 | | | Market Comparables | | | A discount percentage is applied based on age of independent appraisals, selling costs, current market conditions, and experience within the local market | | | 10% - 15% |
| | | December 31, 2021 | |||||||||||||
| | | Carrying Amount | | | Fair Value | | | Quoted Prices in Active Markets for Identical Assets (Level 1) | | | Significant Other Observable Inputs (Level 2) | | | Significant Unobservable Inputs (Level 3) | |
Financial Assets: | | | | | | | | | | | |||||
Cash and cash equivalents | | | $83,713 | | | $83,713 | | | $83,713 | | | $— | | | $— |
Interest-bearing time deposits | | | 1,746 | | | 1,746 | | | 1,746 | | | — | | | — |
Loans held for sale | | | 27,880 | | | 27,880 | | | — | | | 27,880 | | | — |
Loans held for investment, net | | | 254,078 | | | 254,022 | | | — | | | 253,605 | | | 417 |
Accrued interest receivable | | | 1,373 | | | 1,373 | | | 1,373 | | | — | | | — |
Financial Liabilities: | | | | | | | | | | | |||||
Deposits | | | 348,156 | | | 348,665 | | | — | | | 348,665 | | | — |
Borrowings | | | 7,500 | | | 7,498 | | | — | | | 7,498 | | | — |
Accrued interest payable | | | 326 | | | 326 | | | 326 | | | — | | | — |
| | | December 31, 2020 | |||||||||||||
| | | Carrying Amount | | | Fair Value | | | Quoted Prices in Active Markets for Identical (Level 1) | | | Significant Other Observable Inputs (Level 2) | | | Significant Unobservable Inputs (Level 3) | |
Financial Assets: | | | | | | | | | | | |||||
Cash and cash equivalents | | | $32,925 | | | $32,925 | | | $32,925 | | | $— | | | $— |
Interest-bearing time deposits | | | 2,746 | | | 2,746 | | | 2,746 | | | — | | | — |
Loans held for sale | | | 17,492 | | | 17,492 | | | — | | | 17,492 | | | — |
Loans held for investment, net | | | 262,126 | | | 265,843 | | | — | | | 264,267 | | | 1,576 |
Accrued interest receivable | | | 1,556 | | | 1,556 | | | 1,556 | | | — | | | — |
| | | December 31, 2020 | |||||||||||||
| | | Carrying Amount | | | Fair Value | | | Quoted Prices in Active Markets for Identical (Level 1) | | | Significant Other Observable Inputs (Level 2) | | | Significant Unobservable Inputs (Level 3) | |
Financial Liabilities: | | | | | | | | | | | |||||
Deposits | | | 300,890 | | | 301,658 | | | — | | | 301,658 | | | — |
Borrowings | | | 4,000 | | | 3,998 | | | — | | | 3,998 | | | — |
Accrued interest payable | | | 427 | | | 427 | | | 427 | | | — | | | — |
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| | | (a) | | | if to Company, to: | |||||||
| | | | | | | | | |||||
| | | | | | | Integrated Financial Holdings, Inc. | ||||||
| | | | | | | 8450 Falls of Neuse Road | ||||||
| | | | | | | Suite 202 | ||||||
| | | | | | | Raleigh, NC 27615 | ||||||
| | | | | | | Attention: | | | Eric J. Bergevin | |||
| | | | | | | | ||||||
| | | | | With a required copy (which shall not constitute notice) to: | ||||||||
| | | | | | | | ||||||
| | | | | | | Wyrick Robbins Yates & Ponton LLP | ||||||
| | | | | | | 4101 Lake Boone Trail | ||||||
| | | | | | | Suite 300 | ||||||
| | | | | | | Raleigh, NC 27607 | ||||||
| | | | | | | Attention: | | | Stuart M. Rigot; Todd H. Eveson | |||
| | | | | | | | ||||||
| | | | | and | ||||||||
| | | | | | | | | |||||
| | | (b) | | | if to Purchaser, to: | |||||||
| | | | | | | | | |||||
| | | | | | | MVB Financial Corp. | ||||||
| | | | | | | 301 Virginia Avenue | ||||||
| | | | | | | Fairmont, West Virginia 26554 | ||||||
| | | | | | | Attention: | | | Donald T. Robinson | |||
| | | | | | | | | |||||
| | | | | With a required copy (which shall not constitute notice) to: | ||||||||
| | | | | | | | ||||||
| | | | | | | Squire Patton Boggs (US) LLP | ||||||
| | | | | | | 201 E. Fourth St., Suite 1900 | ||||||
| | | | | | | Cincinnati, Ohio 45202 | ||||||
| | | | | | | Attention: James J. Barresi | ||||||
| | | MVB Financial Corp. | ||||
| | | | | |||
| | | By: | | | /s/ Donald T. Robinson | |
| | | | | Name: Donald T. Robinson | ||
| | | | | Title: President and Chief Financial Officer | ||
| | | Integrated Financial Holdings, Inc. | ||||
| | | | ||||
| | | By: | | | /s/ Eric J. Bergevin | |
| | | | | Name: Eric J. Bergevin | ||
| | | | | Title: President and Chief Executive Officer | ||
| | | If to Purchaser: | ||||
| | | MVB Financial Corp. | ||||
| | | 301 Virginia Avenue | ||||
| | | Fairmont, West Virginia 26554 | ||||
| | | Attn: Donald T. Robinson; Michael De Tommaso | ||||
| | | Tel: (304) 363-4800 | ||||
| | | |||||
| | | with a copy (which shall not constitute notice) to: | ||||
| | | |||||
| | | Squire Patton Boggs (US) LLP | ||||
| | | 201 E. Fourth Street, Suite 1900 | ||||
| | | Cincinnati, Ohio 45202 | ||||
| | | Attn: James J. Barresi | ||||
| | | Tel: 513-361-1260 | ||||
| | | Fax: 513-361-1201 | ||||
| | | |||||
| | | If to the Shareholder: | ||||
| | | To the respective addresses and fax numbers shown on the signature pages for each Shareholder. | ||||
| | | MVB FINANCIAL CORP. | ||||
| | | By: | | | ||
| | | Name: Donald T. Robinson | ||||
| | | Title: President and Chief Financial Officer | ||||
| | | SHAREHOLDER: | | |||
| | | | ||||
| | | [SHAREHOLDER NAME] | | |||
| | ||||||
| | | By: | | |
| | | Address: | |
| | | ||
| | | ||
| | | ||
| | | Shares beneficially owned: | |
| | | ||
| | | shares of Voting Common Stock, including shares of restricted stock | |
| | | ||
| | | shares of Non-Voting Common Stock | |
| | | ||
| | | shares of Company Common Stock issuable upon exercise of outstanding options or warrants |
| | | MVB FINANCIAL CORP. | ||||
| | | | | |||
| | | By: | | | ||
| | | | | [Name and Title] | ||
| (i) | reviewed certain publicly available financial statements and reports regarding the Company and the Counterparty; |
| (ii) | reviewed certain audited financial statements regarding the Company and the Counterparty; |
| (iii) | reviewed certain internal financial statements, management reports and other financial and operating data concerning the Company and the Counterparty prepared by management of the Company and management of the Counterparty, respectively; |
| (iv) | reviewed, on a pro forma basis, in reliance upon consensus research estimates and upon financial projections and other information and assumptions concerning the Company and the Counterparty provided by management of the Company and management of the Counterparty, respectively, the effect of the Transaction on the balance sheet, capitalization ratios, earnings and tangible book value both in the aggregate and, where applicable, on a per share basis of the Company; |
| (v) | reviewed the reported prices and trading activity for the common stock of the Company and the Counterparty; |
| (vi) | compared the financial performance of the Company and the Counterparty with that of certain other publicly-traded companies and their securities that we deemed relevant to our analysis of the Transaction; |
| (vii) | reviewed the financial terms, to the extent publicly available, of certain merger or acquisition transactions that we deemed relevant to our analysis of the Transaction; |
| (viii) | reviewed the most recent draft of the Agreement and related documents provided to us by the Company; |
| (ix) | discussed with management of the Company and management of the Counterparty the operations of and future business prospects for the Company and the Counterparty and the anticipated financial consequences of the Transaction to the Company and the Counterparty; |
| (x) | assisted in your deliberations regarding the material terms of the Transaction and your negotiations with the Counterparty; and |
| (xi) | performed such other analyses and provided such other services as we have deemed appropriate. |
| (i) | the Transaction and any related transactions will be consummated on the terms of the latest draft of the Agreement provided to us, without material waiver or modification; |
| (ii) | the representations and warranties of each party in the Agreement and in all related documents and instruments referred to in the Agreement are true and correct; |
| (iii) | each party to the Agreement and all related documents will perform all of the covenants and agreements required to be performed by such party under such documents; |
| (iv) | all conditions to the completion of the Transaction will be satisfied within the time frames contemplated by the Agreement without any waivers; |
| (v) | that in the course of obtaining the necessary regulatory, lending or other consents or approvals (contractual or otherwise) for the Transaction and any related transactions, no restrictions, including any divestiture requirements or amendments or modifications, will be imposed that would have a material adverse effect on the contemplated benefits of the Transaction to the Company; |
| (vi) | there has been no material change in the assets, liabilities, financial condition, results of operations, business or prospects of the Company or the Counterparty since the date of the most recent financial statements made available to us, and that no legal, political, economic, regulatory or other development has occurred that will adversely impact the Company or the Counterparty; and |
| (vii) | the Transaction will be consummated in a manner that complies with applicable law and regulations. |
| 1. | reviewed the financial terms and conditions as stated in the draft of the Agreement and Plan of Merger and Reorganization dated as of August 9, 2022 (the “Agreement”); |
| 2. | reviewed certain information related to the historical condition and prospects of the Company and MVB Financial, as made available to Raymond James by or on behalf of the Company, including, but not limited to, (a) financial projections for each of the Company and MVB Financial certified by the management of the Company (together the “Projections”) and (b) certain forecasts and estimates of potential cost savings, operating efficiencies, revenue effects, and other pro forma financial adjustments expected to result from the Merger, which were authorized and reviewed by management of the Company (the “Pro Forma Financial Adjustments”); |
| 3. | reviewed the Company’s and MVB Financial’s (a) audited consolidated financial statements for years ended December 31, 2021, December 31, 2020 and December 31, 2019; and (b) unaudited consolidated financial statements for the three-month periods ended March 31, 2022 and June 30, 2022; |
| 4. | reviewed the Company’s and MVB Financial’s recent public filings and certain other publicly available information regarding the Company and MVB Financial; |
| 5. | reviewed the financial and operating performance of the Company and MVB Financial and those of other selected public companies that we deem to be relevant; |
| 6. | considered certain publicly available financial terms of certain transactions we deem to be relevant; |
| 7. | reviewed the current and historical market prices and trading volume for Integrated Common Shares and for MVB Financial’s common stock, and the current market prices of the publicly traded securities of certain other companies that we deemed to be relevant; |
| 8. | compared the relative contributions of the Company and MVB Financial to certain financial statistics of the combined company on a pro forma basis; |
| 9. | conducted such other financial studies, analyses and inquiries and considered such other information and factors as we deemed appropriate; |
| 10. | received a certificate addressed to Raymond James from a member of senior management of the Company regarding, among other things, the accuracy of the information, data and other materials (financial or otherwise) provided to, or discussed with, Raymond James by or on behalf of the Company; and |
| 11. | discussed with members of the senior management of the Company and MVB Financial certain information relating to the aforementioned and any other matters which we have deemed relevant to our inquiry including, but not limited to, the past and current business operations of the Company and MVB Financial, respectively, and the financial condition and future prospects and operations of the Company and MVB Financial, respectively. |
| (1) | Affiliate. – A person that directly, or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with another person or is a senior executive thereof. For purposes of G.S. 55-13-01(7), a person is deemed to be an affiliate of its senior executives. |
| (2) | Beneficial shareholder. – A person who is the beneficial owner of shares held in a voting trust or by a nominee on the beneficial owner’s behalf. |
| (3) | Corporation. – The issuer of the shares held by a shareholder demanding appraisal and, for matters covered in G.S. 55-13-22 through G.S. 55-13-31, the term includes the surviving entity in a merger. |
| (4) | Expenses. – Reasonable expenses of every kind that are incurred in connection with a matter, including counsel fees. |
| (5) | Fair value. – The value of the corporation’s shares (i) immediately before the effectuation of the corporate action as to which the shareholder asserts appraisal rights, excluding any appreciation or depreciation in anticipation of the corporate action unless exclusion would be inequitable, (ii) using customary and current valuation concepts and techniques generally employed for similar business in the context of the transaction requiring appraisal, and (iii) without discounting for lack of marketability or minority status except, if appropriate, for amendments to the articles pursuant to G.S. 55-13-02(a)(5). |
| (6) | Interest. – Interest from the effective date of the corporate action until the date of payment, at the rate of interest on judgments in this State on the effective date of the corporate action. |
| (7) | Interested transaction. – A corporate action described in G.S. 55-13-02(a), other than a merger pursuant to G.S. 55-11-04 or G.S. 55-11-12, involving an interested person and in which any of the shares or assets of the corporation are being acquired or converted. As used in this definition, the following definitions apply: |
| a. | Interested person. – A person, or an affiliate of a person, who at any time during the one-year period immediately preceding approval by the board of directors of the corporate action met any of the following conditions: |
| 1. | Was the beneficial owner of twenty percent (20%) or more of the voting power of the corporation, other than as owner of excluded shares. |
| 2. | Had the power, contractually or otherwise, other than as owner of excluded shares, to cause the appointment or election of twenty-five percent (25%) or more of the directors to the board of directors of the corporation. |
| 3. | Was a senior executive or director of the corporation or a senior executive of any affiliate thereof, and that senior executive or director will receive, as a result of the corporate action, a financial benefit not generally available to other shareholders as such, other than any of the following: |
| I. | Employment, consulting, retirement, or similar benefits established separately and not as part of or in contemplation of the corporate action. |
| II. | Employment, consulting, retirement, or similar benefits established in contemplation of, or as part of, the corporate action that are not more favorable than those existing before the corporate action or, if more favorable, that have been approved on behalf of the corporation in the same manner as is provided in G.S. 55-8-31(a)(1) and (c). |
| III. | In the case of a director of the corporation who will, in the corporate action, become a director of the acquiring entity, or one of its affiliates, rights and benefits as a director that are provided on the same basis as those afforded by the acquiring entity generally to other directors of the acquiring entity or such affiliate of the acquiring entity. |
| b. | Beneficial owner. – Any person who, directly or indirectly, through any contract, arrangement, or understanding, other than a revocable proxy, has or shares the power to vote, or to direct the voting of, shares. If a member of a national securities exchange is precluded by the rules of the exchange from voting without instruction on contested matters or matters that may affect substantially the rights or privileges of the holders of the securities to be voted, then that member of a national securities exchange shall not be deemed a “beneficial owner” of any securities held directly or indirectly by the member on behalf of another person solely because the member is the record holder of the securities. When two or more persons agree to act together for the purpose of voting their shares of the corporation, each member of the group formed thereby is deemed to have acquired beneficial ownership, as of the date of the agreement, of all voting shares of the corporation beneficially owned by any member of the group. |
| c. | Excluded shares. – Shares acquired pursuant to an offer for all shares having voting power if the offer was made within one year prior to the corporate action for consideration of the same kind and of a value equal to or less than that paid in connection with the corporate action. |
| (8) | Preferred shares. – A class or series of shares the holders of which have preference over any other class or series with respect to distributions. |
| (9) | Record shareholder. – The person in whose name shares are registered in the records of the corporation or the beneficial owner of shares to the extent of the rights granted by a nominee certificate on file with the corporation. |
| (10) | Senior executive. – The chief executive officer, chief operating officer, chief financial officer, or anyone in charge of a principal business unit or function. |
| (11) | Shareholder. – Both a record shareholder and a beneficial shareholder. (1925, c. 77, s. 1; 1943, c. 270; G.S., s. 55-167; 1955, c. 1371, s. 1; 1969, c. 751, s. 39; 1973, c. 469, ss. 36, 37; 1989, c. 265, s. 1; 2011-347, s. 1; 2018-45, s. 24.) |
| (1) | Consummation of a merger to which the corporation is a party if either (i) shareholder approval is required for the merger by G.S. 55-11-03 or would be required but for the provisions of G.S. 55-11-03(j), except that appraisal rights shall not be available to any shareholder of the corporation with respect to shares of any class or series that remain outstanding after consummation of the merger or (ii) the corporation is a subsidiary and the merger is governed by G.S. 55-11-04 or G.S. 55-11-12. |
| (2) | Consummation of a share exchange to which the corporation is a party as the corporation whose shares will be acquired, except that appraisal rights shall not be available to any shareholder of the corporation with respect to any class or series of shares of the corporation that is not exchanged. |
| (3) | Consummation of a disposition of assets pursuant to G.S. 55-12-02. |
| (4) | An amendment of the articles of incorporation (i) with respect to a class or series of shares that reduces the number of shares of a class or series owned by the shareholder to a fraction of a share if the corporation has an obligation or right to repurchase the fractional share so created or (ii) changes the corporation into a nonprofit corporation or cooperative organization. |
| (5) | Any other amendment to the articles of incorporation, merger, share exchange, or disposition of assets to the extent provided by the articles of incorporation, bylaws, or a resolution of the board of directors. |
| (6) | Consummation of a conversion to a foreign corporation pursuant to Part 2 of Article 11A of this Chapter if the shareholder does not receive shares in the foreign corporation resulting from the conversion that (i) have terms as favorable to the shareholder in all material respects and (ii) represent at least the same percentage interest of the total voting rights of the outstanding shares of the corporation as the shares held by the shareholder before the conversion. |
| (7) | Consummation of a conversion of the corporation to nonprofit status pursuant to Part 2 of Article 11A of this Chapter. |
| (8) | Consummation of a conversion of the corporation to an unincorporated entity pursuant to Part 2 of Article 11A of this Chapter. |
| (1) | Appraisal rights shall not be available for the holders of shares of any class or series of shares that are any of the following: |
| a. | A covered security under section 18(b)(1)(A) or (B) of the Securities Act of 1933, as amended. |
| b. | Traded in an organized market and has at least 2,000 shareholders and a market value of at least twenty million dollars ($20,000,000)(exclusive of the value of shares held by the corporation’s subsidiaries, senior executives, directors, and beneficial shareholders owning more than ten percent (10%) of such shares). |
| c. | Issued by an open-end management investment company registered with the Securities and Exchange Commission under the Investment Company Act of 1940, as amended, and may be redeemed at the option of the holder at net asset value. |
| (2) | The applicability of subdivision (1) of this subsection shall be determined as of (i) the record date fixed to determine the shareholders entitled to receive notice of, and to vote at, the meeting of shareholders to act upon the corporate action requiring appraisal rights or, in the case of an offer made pursuant to G.S. 55-11-03(j), the date of the offer, or (ii) the day before the effective date of the corporate action if there is no meeting of shareholders and no offer made pursuant to G.S. 55-11-03(j). |
| (3) | Subdivision (1) of this subsection shall not be applicable and appraisal rights shall be available pursuant to subsection (a) of this section for the holders of any class or series of shares who are required by the terms of the corporate action requiring appraisal rights to accept for such shares anything other than cash or shares of any class or any series of shares of any corporation, or any other proprietary interest of any other entity, that satisfies the standards set forth in subdivision (1) of this subsection at the time the corporate action becomes effective. |
| (4) | Subdivision (1) of this subsection shall not be applicable and appraisal rights shall be available pursuant to subsection (a) of this section for the holders of any class or series of shares where the corporate action is an interested transaction. |
| (1) | Submits to the corporation the record shareholder’s written consent to the assertion of rights no later than the date referred to in G.S. 55-13-22(b)(2)b. |
| (2) | Submits written consent under subdivision (1) of this subsection with respect to all shares of the class or series that are beneficially owned by the beneficial shareholder. (1925, c. 77, s. 1; 1943, c. 270; G.S., s. 55-167; 1955, c. 1371, s. 1; 1969, c. 751, s. 39; 1973, c. 469, ss. 36, 37; 1989, c. 265, s. 1; 2011-347, s. 1.) |
| (1) | Written notice that appraisal rights are, are not, or may be available shall be given to each record shareholder from whom a consent is solicited at the time consent of each shareholder is first solicited and, if the corporation has concluded that appraisal rights are or may be available, shall be accompanied by a copy of this Article. |
| (2) | Written notice that appraisal rights are, are not, or may be available shall be delivered together with the notice to the applicable shareholders required by subsections (d) and (e) of G.S. 55-7-04, may include the materials described in G.S. 55-13-22, and, if the corporation has concluded that appraisal rights are or may be available, shall be accompanied by a copy of this Article. |
| (1) | Annual financial statements as described in G.S. 55-16-20(a) of the corporation that issued the shares to be appraised. The date of the financial statements shall not be more than 16 months before the date of the notice. If annual financial statements that meet the requirements of this subdivision are not reasonably available, then the corporation shall provide reasonably equivalent financial information and in any case shall provide a balance sheet as of the end of a fiscal year ending not more than 16 months before the date of the notice, an income statement for that year, and a cash flow statement for that year. |
| (2) | The latest interim financial statements of the corporation, if any. |
| (1) | Deliver to the corporation, before the vote is taken, written notice of the shareholder’s intent to demand payment if the proposed action is effectuated. |
| (2) | Not vote, or cause or permit to be voted, any shares of any class or series in favor of the proposed action. |
| (1) | The shareholder must deliver to the corporation, before the proposed action becomes effective, written notice of the shareholder's intent to demand payment if the proposed action is effectuated, except that the written notice is not required if the notice required by G.S. 55-13-20(c) is given less than 25 days prior to the date the proposed action is effectuated. |
| (2) | The shareholder must not execute a consent in favor of the proposed action with respect to that class or series of shares. |
| (1) | The shareholder must deliver to the corporation, before the shares are purchased pursuant to the offer made consistent with subdivision (2) of subsection (j) of G.S. 55-11-03, written notice of the shareholder's intent to demand payment if the proposed action is effectuated. |
| (2) | The shareholder must not tender, or cause or permit to be tendered, any shares of the class or series in response to the offer. |
| (1) | A form that specifies the first date of any announcement to shareholders, made prior to the date the corporate action became effective, of the principal terms of the proposed corporate action. If such an announcement was made, the form shall require a shareholder asserting appraisal rights to certify whether beneficial ownership of those shares for which appraisal rights are asserted was acquired before that date. The form shall require a shareholder asserting appraisal rights to certify that the shareholder did not vote for or consent to the transaction. |
| (2) | Disclosure of the following: |
| a. | Where the form must be sent and where certificates for certificated shares must be deposited, as well as the date by which those certificates must be deposited. The certificate deposit date must not be earlier than the date for receiving the required form under sub-subdivision b. of this subdivision. |
| b. | A date by which the corporation must receive the payment demand, which date may not be fewer than 40 nor more than 60 days after the date the appraisal notice required under subsection (a) of this section and form are sent. The form shall also state that the shareholder shall have waived the right to demand appraisal with respect to the shares unless the form is received by the corporation by the specified date. |
| c. | The corporation’s estimate of the fair value of the shares. |
| d. | That, if requested in writing, the corporation will provide, to the shareholder so requesting, within 10 days after the date specified in sub-subdivision b. of this subdivision, the number of shareholders who return the forms by the specified date and the total number of shares owned by them. |
| e. | The date by which the notice to withdraw under G.S. 55-13-23 must be received, which date must be within 20 days after the date specified in sub-subdivision b. of this subdivision. |
| (3) | Be accompanied by a copy of this Article. (1925, c. 77, s. 1; 1943, c. 270; G.S., s. 55-167; 1955, c. 1371, s. 1; 1969, c. 751, s. 39; 1973, c. 469, ss. 36, 37; 1989, c. 265, s. 1; 1997-485, s. 4; 2001-387, s. 27; 2002-58, s. 3; 2011-347, s. 1; 2018-45, s. 28.) |
| (1) | The following financial information: |
| a. | Annual financial statements as described in G.S. 55-16-20(a) of the corporation that issued the shares to be appraised. The date of the financial statements shall not be more than 16 months before the date of payment. If annual financial statements that meet the requirements of this sub-subdivision are not reasonably available, the corporation shall provide reasonably equivalent financial information and in any case shall provide a balance sheet as of the end of a fiscal year ending not more than 16 months before the date of payment, an income statement for that year, and a cash flow statement for that year. |
| b. | The latest interim financial statements, if any. |
| (2) | A statement of the corporation’s estimate of the fair value of the shares. The estimate shall equal or exceed the corporation’s estimate given pursuant to G.S. 55-13-22(b)(2)c. |
| (3) | A statement that the shareholders described in subsection (a) of this section have the right to demand further payment under G.S. 55-13-28 and that if a shareholder does not do so within the time period specified in G.S. 55-13-28, then the shareholder shall be deemed to have accepted payment in full satisfaction of the corporation’s obligations under this Article. (1925, c. 77, s. 1; 1943, c. 270; G.S., s. 55-167; 1955, c. 1371, s. 1; 1969, c. 751, s. 39; 1973, c. 469, ss. 36, 37; 1989, c. 265, s. 1; c. 770, s. 69; 1997-202, s. 2; 2011-347, s. 1; 2021-106, s. 6(h).) |
| (1) | The information required by G.S. 55-13-25(b)(1). |
| (2) | The corporation’s estimate of fair value pursuant to G.S. 55-13-25(b)(2). |
| (3) | That they may accept the corporation’s estimate of fair value, plus interest, in full satisfaction of their demands or demand appraisal under G.S. 55-13-28. |
| (4) | That those shareholders who wish to accept such offer must so notify the corporation of their acceptance of the corporation’s offer within 30 days after receiving the offer. |
| (5) | That those shareholders who do not satisfy the requirements for demanding appraisal under G.S. 55-13-28 shall be deemed to have accepted the corporation’s offer. |
| (1) | Against the corporation and in favor of any or all shareholders demanding appraisal if the court finds the corporation did not substantially comply with the requirements of G.S. 55-13-20, 55-13-22, 55-13-25, or 55-13-27. |
| (2) | Against either the corporation or a shareholder demanding appraisal, in favor of any other party, if the court finds that the party against whom expenses are assessed acted arbitrarily, vexatiously, or not in good faith with respect to the rights provided by this Article. |
| (1) | Was not authorized and approved in accordance with the applicable provisions of any of the following: |
| a. | Article 9, 9A, 10, 11, 11A, or 12 of this Chapter. |
| b. | The articles of incorporation or bylaws. |
| c. | The resolution of the board of directors authorizing the corporate action. |
| (2) | Was procured as a result of fraud, a material misrepresentation, or an omission of a material fact necessary to make statements made, in light of the circumstances in which they were made, not misleading. |
| (3) | Constitutes an interested transaction, unless it has been authorized, approved, or ratified by either (i) the board of directors or a committee of the board or (ii) the shareholders, in the same manner as is provided in G.S. 55-8-31(a)(1) and (c) or in G.S. 55-8-31(a)(2) and (d), as if the interested transaction were a director’s conflict of interest transaction. |
| (4) | Was approved by less than unanimous consent of the voting shareholders pursuant to G.S. 55-7-04, provided that both of the following are true: |
| a. | The challenge to the corporate action is brought by a shareholder who did not consent and as to whom notice of the approval of the corporate action was not effective at least 10 days before the corporate action was effected. |
| b. | The proceeding challenging the corporate action is commenced within 10 days after notice of the approval of the corporate action is effective as to the shareholder bringing the proceeding. (2011-347, s. 1.) |
| Item 20. | Indemnification of Directors and Officers |
| Item 21. | Exhibits and Financial Statement Schedules |
| (a) | The following exhibits are filled herewith or incorporated herein by reference: |
Exhibit No. | | | Description |
| | | Agreement and Plan of Merger and Reorganization, dated as of August 12, 2022, by and between MVB Financial Corp. and Integrated Financial Holdings, Inc. (attached as Annex A to the joint proxy statement/prospectus forming a part of this Registration Statement). | |
| | | Articles of Incorporation of MVB Financial Corp. and amendments thereto (incorporated by reference to Exhibit 3.1 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2014, filed March 16, 2015). | |
| | | Form of Articles of Amendment to the MVB Articles of Incorporation (attached as Annex B to the joint proxy statement/prospectus forming a part of this Registration Statement). | |
| | | Bylaws of MVB Financial Corp., as amended (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K, filed June 22, 2018). | |
| | | Specimen of stock certificate representing MVB Financial Corp. common stock. | |
5.1 | | | Opinion of Squire Patton Boggs (US) LLP as to validity of the securities being registered* |
8.1 | | | Opinion of Squire Patton Boggs (US) LLP regarding certain U.S. income tax aspects of the merger* |
8.2 | | | Opinion of Wyrick Robbins Yates & Ponton LLP regarding certain U.S. income tax aspects of the merger* |
| | | Subsidiaries of MVB Financial Corp. (incorporated by reference to Exhibit 21 of the Company’s Annual Report on Form 10-K filed on March 10, 2022). | |
| | | Consent of FORVIS, LLP (formerly Dixon Hughes Goodman LLP) | |
| | | Consent of Elliott Davis, PLLC | |
23.3 | | | Consent of Squire Patton Boggs (US) LLP (included as part of its opinion filed as Exhibit 5.1)* |
23.4 | | | Consent of Squire Patton Boggs (US) LLP (included as part of its opinion filed as Exhibit 8.1)* |
23.5 | | | Consent of Wyrick Robbins Yates & Ponton LLP (included as part of its opinion filed as Exhibit 8.2)* |
| | | Power of Attorney (included on signature page hereto) | |
99.1 | | | Form of Proxy of MVB* |
99.2 | | | Form of Proxy of IFH.* |
| | | Consent of Stephens Inc. | |
| | | Consent of Raymond James & Associates, Inc. | |
| | | Filing Fee Table |
| * | to be filed by amendment. |
| Item 22. | Undertakings |
| (1) | To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: |
| (i) | to include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; |
| (ii) | to reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement; notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a twenty percent (20%) change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and |
| (iii) | to include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement. |
| (2) | That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. |
| (3) | To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. |
| (4) | That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of securities, in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser: (i) any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424; (ii) any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant; (iii) the portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and (iv) any other communication that is an offer in the offering made by the undersigned registrant to the purchaser. |
| (5) | That, for purposes of determining any liability under the Securities Act of 1933, each filing of the Registrant’s annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in this registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. |
| (6) | That prior to any public reoffering of the securities registered hereunder through use of a prospectus which is a part of this registration statement, by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c), the issuer undertakes that such reoffering prospectus will contain the information called for by the applicable registration form with respect to reofferings by persons who may be deemed underwriters, in addition to the information called for by the other items of the applicable form. |
| (7) | That every prospectus (i) that is filed pursuant to paragraph (5) immediately preceding, or (ii) that purports to meet the requirements of Section 10(a)(3) of the Securities Act of 1933 and is used in |
| (8) | To respond to requests for information that is incorporated by reference into this prospectus pursuant to Items 4, 10(b), 11, or 13 of this form, within one (1) business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means; this includes information contained in documents filed subsequent to the effective date of this registration statement through the date of responding to the request. |
| (9) | To supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in this registration statement when it became effective. |
| (10) | Insofar as indemnification for liabilities under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is therefore unenforceable. In the event a claim of indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in a successful defense of any action, suit or proceeding) is asserted by such director, officer, or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue. |
| | | MVB FINANCIAL CORP. | ||||
| | | (Registrant) | ||||
| | | | | |||
| | | By: | | | /s/ Larry F. Mazza | |
| | | Chief Executive Officer | ||||
| | | (Principal Executive Officer) | ||||
Signature | | | Title | | | Date |
| | | | | |||
/s/ Larry F. Mazza | | | Chief Executive Officer and Director (Principal Executive Officer) | | | November 1, 2022 |
Larry F. Mazza | | |||||
| | | | | |||
/s/ Donald T. Robinson | | | President and Chief Financial Officer (Principal Financial and Accounting Officer) | | | November 1, 2022 |
Donald T. Robinson | | |||||
| | | | | |||
/s/ W. Marston Becker | | | Chairman of the Board | | | November 1, 2022 |
W. Marston Becker | | | | | ||
| | | | | |||
/s/ John W. Ebert | | | Director | | | November 1, 2022 |
John W. Ebert | | |||||
| | | | | |||
/s/ Daniel W. Holt | | | Director | | | November 1, 2022 |
Daniel W. Holt | | |||||
| | | | | |||
/s/ Gary A. LeDonne | | | Director | | | November 1, 2022 |
Gary A. LeDonne | | |||||
| | | | | |||
/s/ Kelly R. Nelson | | | Director | | | November 1, 2022 |
Kelly R. Nelson | | |||||
| | | | | |||
/s/ Lindsay A. Slader | | | Director | | | November 1, 2022 |
Lindsay A. Slader | | |||||
| | | | | |||
/s/ Cheryl D. Spielman | | | Director | | | November 1, 2022 |
Cheryl D. Spielman | | | | |||
| | | | | |||
/s/ Jan L. Owen | | | Director | | | November 1, 2022 |
Jan L. Owen | | | |
