KBRA Affirms Ratings for MVB Financial Corp.

KBRA affirms the senior unsecured debt rating of BBB, the subordinated debt rating of BBB-, and the short-term debt rating of K3 for Fairmont, WV-based MVB Financial Corp. (NASDAQ: MVBF) ("the company"). Additionally, KBRA affirms the deposit and senior unsecured debt ratings of BBB+, the subordinated debt rating of BBB, and the short-term deposit and debt ratings of K2 for lead subsidiary, MVB Bank, Inc ("the bank"). The Outlook for all long-term ratings is Stable.

Key Credit Considerations

The ratings are supported by MVBF’s unique business model, which is driven by its payments and gaming segments, as the Fintech platform continues to mature despite recent profitability headwinds. MVBF's payments segment (with a reported 40% YoY growth in 2024) provides the company meaningful fee income (approximately $10 million, or 27% of total noninterest income in 2024), giving MVBF a more diversified revenue mix with noninterest income representing ~25% of total revenues in recent years. Moreover, MVBF reported a 100 bp increase in capital ratios in 2024, with its TCE and leverage ratios tracking above the rated peer average at 9.6% and 10.3%, respectively at 4Q24 (we note, MVBF is a CBLR bank and does not publicly report risk-based capital ratios).

Below average earnings have largely been driven by elevated operating expenses (3.7% of average assets) related to the build-out of its fintech banking and other business lines. However, earnings should benefit from anticipated cost reductions, particularly in personnel related expenses combined with NIM expansion stemming from improved funding costs with $482 million in maturing CDs expected to reprice at lower rates in 2025. Furthermore, funding costs should continue to benefit from its growing payments and gaming segments, which provide durable, lower-cost deposits.

We note that the NPA ratio has increased to 1.30% due to one large idiosyncratic credit ($13.5 million Multifamily) which is currently in the workout process with no loss expected full resolution in 2Q25. Despite weakening credit trends, MVBF has reported manageable loss content given its proactive risk management. Additionally, the bank has moved to deemphasize its SBA loan group which has been a driver of historical credit stress. The company’s CRE and C&D concentration levels are considered average at approximately 222% and 39% of risk-based capital at 4Q24.

Rating Sensitivities

An improved and sustainable earnings profile combined with solid core deposit balances, conservative capital management, additional diversification in both geography and revenue with no material increase in credit costs related to credit degradation could result in positive rating momentum over time. Profitability challenges from weakening credit quality beyond expectations impacting capital levels combined with NIM compression from unfavorable funding dynamics could result in rating pressure.

To access ratings and relevant documents, click here.

Methodologies