20549-0408
December 30, 2004
James R. Martin
President
MVB Financial Corp.
301 Virginia Avenue
Fairmont, West Virginia 26554-2777
Re: MVB Financial Corp.
Form SB-2, filed December 2, 2004
File No. 333-120931
Dear Mr. Martin:
We have examined the above referenced filing and the 1934
Act
filings of your company and have the following comments. Where
indicated, we think you should revise these filings in response to
these comments. If you disagree, we will consider your
explanation
as to why our comment is inapplicable or a revision is
unnecessary.
Please be as detailed as necessary in your explanation. In some
of
our comments, we may ask you to provide us with supplemental
information so we may better understand your disclosure. After
reviewing this information, we may have additional comments.
The purpose of our review process is to assist you in your
compliance with the applicable disclosure requirements and to
enhance
the overall disclosure in your filing. We look forward to working
with you in these respects. We welcome any questions you may have
about our comments or on any other aspect of our review. Feel
free
to call us at the telephone numbers listed at the end of this
letter.
Prospectus Cover Page
1. Provide the information required by Item 501(a) (9) (iii) of
Regulation S-B regarding the offering termination date, minimum
purchase level and escrow arrangements.
2. We do not find any disclosure of expected purchase amounts by
officers and directors. Please confirm supplementally that you do
not have this information or include it in the filing.
3. Throughout the filing make sure that the text size is easily
readable. The footnote reference numbers you use are very small.
4. You reference "consultants" in the footnote, but you do not do
this on page 38. If retained, identify these parties and
supplementally advise us how they come within the limitations set
out
in Rule 3a4-1 of the Exchange Act.
Special Cautionary Note... - page ii
5. As required by the plain English rules, move this legend to a
location after the end of the risk factors. Note Item 421 of
Regulation C and Securities Act Release number 33-7497.
MVB Financial - page 1
6. Expand the summary to include the most important information
about
the formation of the two "second-tier" companies. For example,
explain why you plan to do this and disclose the consequences for
officer and director positions at MVB Financial and MVB. Consider
adding a reference to the location in the prospectus where this is
fully discussed. Note our related comments at Future Outlook -
page
29.
MVB - page 1
7. Describe both of your current banking offices.
8. Describe the principal lending focus of MVB.
9. Revise the amount of shareholders` equity at September 30, 2004
to
be consistent with the amount presented in the consolidated
balance
sheet appearing on page F-17.
Use of Proceeds - page 1
10. If correct, clarify that the principal reason for this
offering
is to fund the new bank location in Harrison County. Disclose how
much this will cost and quantify any other significant uses of
proceeds.
11. Because this is a best efforts offering, disclose how you will
fund the expansion if you do not raise the required amount. If
you
do not know, you need to disclose this. Also provide this
information on page 5, quantify each use of the proceeds and
describe
the expected use of proceeds if less than the maximum is raised.
Note Item 504 of Regulation S-B.
Future Outlook - page 1
12. Clarify, if correct, that it is management`s opinion that MVB
has
"enjoyed a strong growth."
Selected Financial Data - page 2
13. Revise the consolidated balance sheet as of September 30, 2004
(unaudited) and December 31, 2003 appearing on page F-17 to state
the
amount of securities available-for-sale.
14. Revise the Tier 1 Capital ratio for the period ended September
30, 2004 to be 11.23% both here and on page 14 to be consistent
with
the amount appearing on page 11.
15. Tell us how you determined the amount of net income to average
stockholders` equity and the amount of book value at the end of
the
period for the period ending September 30, 2003 here and on page
14
or revise the disclosure as applicable.
16. Consider expanding the information presented to include
interest
rate spread, net interest margin and asset quality ratios.
Risk Factors - page 3
17. Some of your risk factors use language like "we cannot assure
you." The real risk is the situation being described, not your
inability to assure. Please revise.
The bank has limited control over its profitability... - page 4
18. Please use a consistent subheading style.
19. Please revise the second paragraph so that it is easily
understood by an ordinary investor.
20. Information in the filing such as this should typically be at
least as current as the most recent financial information
provided.
You only give information for June 4, 2004. Consider whether you
can
provide this information as of December 31. Note also for fourth
quarter trading information on page 6.
The bank`s success depends on... - page 4
21. Identify the key persons.
Market Price and Dividend Data - page 5
22. Disclose whether or not you plan to issue dividends in the
future.
23. Disclose the source of the trading price information you give
in
the trading price table on page 6.
24. Consider providing the footnote information in one explanatory
statement. It seems as if the information will be easier to use
without the numerous "+" signs.
25. Provide the narrative compensation plan disclosure required by
Item 201(d) (3) or confirm supplementally that it is not required.
Banking Services - page 7
26. Identify each of your principal types of lending and disclose
their relative importance. Better describe the risk associated
with
each and describe how you attempt to limit this risk. We note the
disclosure about this in the fifth paragraph.
27. Here and throughout the filing where appropriate consider the
need to disclose comparable information for both the current
operations and the expected operations in Harrison County. This
seems to be material information for an investor in this offering.
For example, at this heading disclose whether the Harrison county
lending will be similar to that in Marion. Describe any expected
differences. At Employees, page 9, describe the expected employee
requirements for the Harrison county bank and the second tier
companies. Note other related comments that follow.
Properties - page 7
28. Confirm supplementally that the construction of your Harrison
county facility does not involve any transactions with an
affiliated
party. Otherwise, describe these relationships here and on page
34.
We note your statement regarding the leaseholder.
Market Area - page 8
29. Please provide a more thorough description of the geographic
and
economic aspects of your current and expected market areas in
Marion
and Harrison counties for a reader who is not familiar with them.
Identify any principal employers and give population and average
income information. Explain the reason for any material trends or
changes in trends.
30. We see that your most recent Marion county population
information
is for 2000. Update this if more recent information is available.
If it is not available, indicate this in the filing.
Competition - page 9
31. Revise the amount of years that the commercial bank has been
open
so that the amount presented here is consistent with the amount
presented on page 3.
32. In the second paragraph, indicate that the $875 figure is in
millions. Also indicate, if correct, that these deposits are in
Marion, not Harrison County.
Legal Proceedings - page 9
33. Expand the disclosure to state that the effects of legal
proceedings on the results of operations and liquidity of the
company
would be immaterial, if true.
Capital Requirements - page 10
34. Discuss the consequences of the offering on your capital
position. Consider including quantification assuming half of the
shares are sold and assuming they are all sold.
Federal and State Laws - page 11
35. State the company`s latest CRA rating.
Statistical Financial Information Regarding MVB Financial - page
14
36. Revise the amounts of average total deposits for the year
ended
December 31, 2003 and 2002 to be consistent with the information
presented in the average balances and analysis of net interest
income
tables appearing on page 16.
Monongahela Valley Bank - Average Balances and Analysis of Net
Interest Income - page 15
37. Revise to include Note 4 to the table.
Interest Income and Expense - page 20
38. Revise the amount of net interest income at December 31, 2002
to
be consistent with the amount appearing on the statement of income
for the year ended December 31, 2002 appearing on page F-4.
39. State that total interest expense decreased by $149,000 from
2002
to 2003 consistent with the information presented in the table of
average balances and analysis of net interest income appearing on
page 16.
40. Tell us how you determined that the cost of interest-bearing
liabilities decreased to 2.17% in 2003 from 2.67% in 2002 or
revise
the disclosure as applicable.
Non-Interest Income - page 21
41. Revise the discussion of service charges on deposit accounts
in
2002 and 2003 to refer to the amounts appearing in the Statements
of
Income appearing on page F-4.
Funding Sources - page 26
42. Revise the discussion to refer to interest-bearing deposits of
$58.8 million at December 31, 2002.
43. Expand the maturities of certificates of deposit $100,000 or
more
table to state the amount outstanding of time certificates of
deposit
in amount of $100,000 or more and other time deposits of $100,000
or
more issued by domestic offices by time remaining until maturity
of 3
to 6 months and over 6 to 12 months.
44. If applicable, provide the short-term borrowing disclosure
pursuant to Item VII of Guide III.
Year to Date 2004 - page 29
45. Revise the discussion of the change in other expenses for the
first nine months of 2004 to reflect the information presented on
page F-18.
Future Outlook - page 29
46. Consider placing the dividend information with your principal
dividend disclosure and moving the remainder of this text to the
Description of Business section that begins on page 6. The
information here seems integral to those sections.
47. Where you discuss the second tier companies, disclose the
extent
to which this arrangement is normally found. We note your
statement
that it is "somewhat different." Also address the following
related
comments.
48. Explain why you are creating this arrangement and when you
plan
to have it in place.
49. Disclose the percentage ownership of MVB to be held by each
second-tier company.
50. Identify who will serve as the President and CEO of MVB
Harrison,
if known, and provide information about this person comparable to
that provided for the current President and CEO of MVB,
51. Given the unusual dual control of MVB identify the person who
will have ultimate responsibility for management of the bank`s
day-
to-day operations.
52. Disclose whether any persons will be added to the board of MVB
Financial, identify them if known, or state that you have not
identified them. Consider the consent required by Rule 438 of
Regulation C of the Securities Act.
53. You quantify expected net income figures for MVB Harrison.
Also
quantify the impact of the new Harrison County operations on MVB
Financial. Consider including this information as a risk factor.
Directors and Executive Officers - page 31
54. In the filing you mostly use MVB to identify the bank. Here
you
use both MVB and Monongahela Valley Bank, Inc. Consider using
only
the familiar form you have already established in order to avoid
confusion.
55. Be sure that the business nature of each employer is clear.
Note, for example, for Mr. Patel and Mr. Warash.
Executive Compensation - page 32
56. Clarify, if correct, that the compensation listed for Mr.
Martin
is from MVB.
57. Item 402 requires compensation disclosure as of the last
completed fiscal year. Prior to effectiveness you will need to
update this information.
Certain Transactions with Directors... - page 34
58. Reconcile the reference to Mr. Patel, in the first paragraph,
and
Mr. Toothman, in the table.
59. Please describe each of these loans in the filing, with
quantification. We note the opinion in the footnote that the
collateral of one loan "far exceeds" the loan balance. Where
disclosure is warranted it generally needs to be quantified.
60. Please revise the information in the second paragraph to give
the
aggregate dollar and percentage amounts for each period end and as
of
the highest level during each period, also include the date of
each.
Consider providing this information in a tabular format to make it
easier to use.
61. There seem to be significant movements of funds involved in
this
lending. Disclose the nature of this lending and the risk
involved.
62. The loan to equity capital levels that you describe seem
unusually high. Please disclose the maximum allowable loan to
equity
capital level permitted by the bank`s regulators. As warranted,
discuss the regulatory consequences of surpassing this level.
63. Disclose the bank`s lending policy related to these levels.
Ownership of Securities... - page 35
64. Include an aggregate percentage ownership figure at the bottom
of
the second column.
Plan of Distribution - page 38
65. Confirm supplementally, if correct, that the company will rely
on
Rule 3a4-1 of the Exchange Act. Also, confirm that each selling
party has been informed of their responsibilities under this rule.
Financial Statements
Monongahela Valley Bank, Inc.
Note 1: Summary Of Significant Accounting Policies
Loans and Allowance For Loan Losses - page F-7
66. Expand the accounting policy to disclose the time period after
which loans and accrued interest are charged off. Industry
practice
is to cease the accrual of interest on loans 90 days or more past
due
unless the loans are well collateralized or in the process of
collection. In your revision, please specifically disclose your
policy for consumer and non-consumer loans, if different. You
disclose on page 25 that all loans to date have been from the
consumer portfolio.
Loan Origination Fees and Costs - page F-7
67. Revise the financial statements to recognize loan origination
fees net of direct loan origination costs over the contractual
life
of the loan as an adjustment of yield using the interest method in
accordance with SFAS No. 91.
Bank Premises, Furniture and Equipment - page F-7
68. Expand the note to state the range of useful lives for bank
premises, furniture and equipment.
Foreclosed Assets Held For Resale - page F-7
69. Revise the note to state that assets are initially recorded at
the lower of cost or fair value less estimated selling costs at
the
time of foreclosure, with any valuation adjustments changed to the
allowance for loan losses. State that subsequent operating
results,
including unrealized losses and realized gains and losses on sale
are
recorded in other non-interest expense.
MVB Financial Corp.
Consolidated Balance Sheet as of September 30, 2004 and December
31,
2003 - page F-17
70. State the amount of common stock issued and outstanding at
12/31/03.
Note A - Basis Of Presentation - page F-21
71. File MVB`s 2003 Form 10-KSB. We note in your proxy filed
April
27, 2004 that you simultaneously provide a copy of MVB`s 2003
annual
report to shareholders by reference and that you include an
address
to request a copy of the bank`s 2003 Annual Report of Form 10-KSB
which we assume is the Form 10-KSB Annual Report To The FDIC.
Item 23. Changes In and Disagreements With Accountants on
Accounting
and Financial Disclosure
72. We note the 8-K filed on December 27, 2004 and your prior
disclosure appearing in the proxy filed April 27, 2004. Expand the
filing to provide the disclosures required by Item 304 of
Regulation
S-B.
Exhibit 5
73. You can limit reliance with regard to purpose, but not person.
Please revise.
74. Either remove the sentence about your not updating the
opinion,
or refile the opinion shortly before you request effectiveness.
* * * * *
Closing Comments
As appropriate, please amend your registration statement in
response to these comments. You may wish to provide us with
marked
copies of the amendment to expedite our review. Please furnish a
cover letter with your amendment that keys your responses to our
comments and provides any requested supplemental information.
Detailed cover letters greatly facilitate our review. Please
understand that we may have additional comments after reviewing
your
amendment and responses to our comments.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filings reviewed by the staff to
be
certain that they have provided all information investors require
for
an informed decision. Since the company and its management are in
possession of all facts relating to a company`s disclosure, they
are
responsible for the accuracy and adequacy of the disclosures they
have made.
Notwithstanding our comments, in the event the company
requests
acceleration of the effective date of the pending registration
statement, it should furnish a letter, at the time of such
request,
acknowledging that
* should the Commission or the staff, acting pursuant to delegated
authority, declare the filing effective, it does not foreclose the
Commission from taking any action with respect to the filing;
* the action of the Commission or the staff, acting pursuant to
delegated authority, in declaring the filing effective, does not
relieve the company from its full responsibility for the adequacy
and
accuracy of the disclosure in the filing; and
* the company may not assert this action as defense in any
proceeding
initiated by the Commission or any person under the federal
securities laws of the United States.
In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in connection with our review of
your
filing or in response to our comments on your filing.
We will consider a written request for acceleration of the
effective date of the registration statement as a confirmation of
the
fact that those requesting acceleration are aware of their
respective responsibilities under the Securities Act of 1933 and
the
Securities Exchange Act of 1934 as they relate to the proposed
public
offering of the securities specified in the above registration
statement. We will act on the request and, pursuant to delegated
authority, grant acceleration of the effective date.
We direct your attention to Rules 460 and 461 regarding
requesting acceleration of a registration statement. Please allow
adequate time after the filing of any amendment for further review
before submitting a request for acceleration. Please provide this
request at least two business days in advance of the requested
effective date.
Direct any questions on accounting matters to Chris Harley
202-
942-1926 or to John P. Nolan, Accounting Branch Chief, at 202-942-
1783. Please direct any other questions to David Lyon at 202-942-
1796, or to me at 202-942-1874.
Sincerely,
Mark Webb
Legal Branch Chief
By fax: Elizabeth Lord
Fax number 304-340-1080
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MVB Financial Corp.
page 12