Acquisitions & Divestitures (Tables)

6 Months Ended

Jun. 30, 2020

Summary of Assets Acquired and Liabilities Assumed

The statement of net assets acquired and the resulting bargain purchase gain recorded is presented in the following tables. As explained in the notes that accompany the following table, the purchased assets and assumed liabilities were recorded at the acquisition date fair value.


(Dollars in thousands)	As recorded by The First State Bank		Fair Value Adjustments			As recorded by MVB
Assets
Cash and cash equivalents	$	26,053	$	—		$	26,053
Investment securities - available for sale at fair value	10,964		—			10,964
Loans	83,514		(22,861)		(a)	60,653
OREO	22,610		(10,520)		(b)	12,090
Premises and equipment, net	1,582		(12)		(c)	1,570
Accrued interest receivable and other assets	2,234		211		(d)	2,445
Total Assets	$	146,957	$	(33,182)		$	113,775

Liabilities
Deposits - transaction accounts	$	70,931	$	—		$	70,931
Deposits - certificates of deposit	$	69,029	$	2,560	(e)	$	71,589
Total deposits	$	139,960	$	2,560		$	142,520
FHLB and other borrowings	5,800		—			5,800
Accrued interest payable and other liabilities	411		—			411
Total Liabilities	$	146,171	$	2,560		$	148,731

Net identifiable assets acquired over/(under) liabilities assumed	$	786	$	(35,742)		$	(34,956)

(a) Adjustment reflects the fair value adjustments based on the Company's evaluation of the acquired loan portfolio and excludes the allowance for loan losses recorded by First State.

(b) Adjustment reflects the fair value of OREO acquired.

(c) Adjustment reflects the fair value adjustments based on the Company's evaluation of the acquired premises and equipment.

(d) Adjustment reflects the recording of the core deposit intangible on the acquired deposit accounts and the fair value adjustment to other assets.

(e) Adjustment arises since the interest rates paid on interest-bearing deposits where higher than rates available in the market on similar deposits as of the acquisition date.

The following table summarizes the acquired assets and assumed liabilities in the First State acquisition as of the acquisition date, and the pre-tax bargain purchase gain of $4.7 million recognized on the transaction.


(Dollars in thousands)
Assets acquired at fair value:
Cash and cash equivalents	$	26,053
Investment securities - available for sale at fair value	10,964
Loans	60,653
OREO	12,090
Premises and equipment, net	1,570
Accrued interest receivable and other assets	2,445
Total fair value of assets acquired	$	113,775

Liabilities acquired at fair value:
Deposits	$	142,520
FHLB and other borrowings	5,800
Accrued interest payable and other liabilities	411
Total fair value of liabilities acquired	$	148,731

Net assets assumed at fair value			$	(34,956)
Transaction cash consideration received from the FDIC			39,627
Bargain purchase gain, before tax			$	4,671

Summary of Loans Acquired

Purchased credit impaired loans purchased during the three and six month periods ended June 30, 2020, for which it was probable at acquisition that all contractually required payments would not be collected are as follows:


(Dollars in thousands)	As of June 30, 2020
Contractually required payments receivable of loans purchased during the period:
Commercial	$	36,046
Residential	47,787
Home Equity	—
Consumer	2,990
Cash flows expected to be collected at acquisition	$	86,823
Fair value of loans acquired at acquisition	$	50,235

The following table outlines the contractually required payments receivable, cash flows the Company expects to receive, non-accretable credit adjustments, and the accretable yield for all First State loans as of the acquisition date:


(Dollars in thousands)	Contractually Required Payments Receivable		Non-Accretable Credit Adjustments		Cash Flows Expected to be Collected		Accretable FMV Adjustments		Carrying Value of Loans Receivable
Purchased credit impaired loans	$	86,823	$	24,842	$	61,981	$	11,746	$	50,235
Purchased performing loans	12,818		2,561		10,257		1,817		8,440
Other purchased loans	1,978		—		1,978		—		1,978
Total	$	101,620	$	27,403	$	74,217	$	13,563	$	60,653

Pro Forma Information

The actual results and pro forma information were as follows:


	Six Months Ended June 30,						Three Months Ended June 30,
(Dollars in thousands)	Revenue		Net Income		Revenue		Net Income
2020:
Actual First State results included in Consolidated Statements of Income since acquisition date	$	5,851	$	2,944	$	5,851	$	2,944
Supplemental consolidation pro forma as if First State had been acquired January 1, 2019	$	95,509	$	16,345	$	62,616	$	15,404

2019:
Supplemental consolidation pro forma as if First State had been acquired January 1, 2019	$	82,603	$	21,045	$	48,200	$	15,288