Borrowed Funds

9 Months Ended

Sep. 30, 2021

Debt Disclosure [Abstract]

Borrowed Funds

Note 7 – Borrowed Funds

The Bank is a member of the Federal Home Loan Bank ("FHLB") of Pittsburgh, Pennsylvania. As of September 30, 2021, the Bank's maximum borrowing capacity with the FHLB was $454.4 million and the remaining borrowing capacity was $443.0 million, with the difference being deposit letters of credit.

Short-term borrowings

As of September 30, 2021 and December 31, 2020, the Bank had no borrowings under Fed Funds purchased outstanding.

The following table presents information related to short-term borrowings as of and for the periods indicated:

(Dollars in thousands)	Nine Months Ended September 30, 2021			Year Ended December 31, 2020
Balance at end of period	$	—		$	—
Average balance during the period	33,914			68,407
Maximum month-end balance	130,047			154,248
Weighted-average rate during the period	0.36		%	0.58		%
Weighted-average rate at end of period	—		%	—		%

Long-term borrowings

As of September 30, 2021 and December 31, 2020, the Bank had no long-term borrowings with the FHLB or the Federal Reserve Bank.

Repurchase agreements

Along with traditional deposits, the Bank has access to securities sold under agreements to repurchase (“repurchase agreements”) with clients representing funds deposited by clients, on an overnight basis, that are collateralized by investment securities owned by us. All repurchase agreements are subject to terms and conditions of repurchase/security agreements between us and the client and are accounted for as secured borrowings. Our repurchase agreements reflected in liabilities consist of client accounts and securities which are pledged on an individual security basis.

We monitor the fair value of the underlying securities on a monthly basis. Repurchase agreements are reflected in the amount of cash received in connection with the transaction. The primary risk with our repurchase agreements is the market risk associated with the investments securing the transactions, as we may be required to provide additional collateral based on fair value changes of the underlying investments. Securities pledged as collateral under repurchase agreements are maintained with our safekeeping agents.

As of September 30, 2021 and December 31, 2020, all of our repurchase agreements were overnight agreements. These borrowings were collateralized with investment securities with a carrying value of $11.5 million and $10.7 million at September 30, 2021 and December 31, 2020, respectively, and were comprised of United States government agency securities and United States sponsored mortgage-backed securities. Declines in the value of the collateral would require us to increase the amounts of securities pledged.

The following table presents information related to repurchase agreements as of and for the periods shown:

(Dollars in thousands)	Nine Months Ended September 30, 2021			Year Ended December 31, 2020
Balance at end of period	$	11,139		$	10,266
Average balance during the period	10,677			9,856
Maximum month-end balance	11,361			10,505
Weighted-average rate during the period	0.14		%	0.23		%
Weighted-average rate at end of period	0.12		%	0.14		%

Subordinated debt

The following table presents information related to subordinated debt as of and for the periods shown:

(Dollars in thousands)	Nine Months Ended September 30, 2021			Year Ended December 31, 2020
Balance at end of period	$	72,966		$	43,407
Average balance during the period	43,786			7,568
Maximum month-end balance	72,966			43,524
Weighted-average rate during the period	0.17		%	3.45		%
Weighted-average rate at end of period	4.03		%	4.02		%

In September 2021, MVB completed the private placement of $30 million fixed-to-floating rate subordinated notes to certain qualified institutional investors. These notes are unsecured and have a ten-year term, maturing October 1, 2031, and will bear

interest at a fixed rate of 3.25%, payable semi-annually in arrears, for the first five years of the term. Thereafter, the interest rate will reset quarterly to an interest rate per annum equal to a benchmark rate, which is expected to be Three-Month Term SOFR, plus 254 basis points, payable quarterly in arrears. These notes have been structured to qualify as Tier 2 capital for regulatory capital purposes.

In November 2020, MVB completed the private placement of $40 million fixed-to-floating rate subordinated notes to certain qualified institutional investors. These notes are unsecured and have a ten-year term, maturing December 1, 2030, and will bear interest at a fixed rate of 4.25%, payable semi-annually in arrears, for the first five years of the term. Thereafter, the interest rate will reset quarterly to an interest rate per annum equal to a benchmark rate, which is expected to be Three-Month Term SOFR, plus 401 basis points, payable quarterly in arrears. These notes have been structured to qualify as Tier 2 capital for regulatory capital purposes. The weighted-average rate during the period of nine months ended September 30, 2021 exceeds the coupon rate of the 4.25% subordinated debt due to the impact of the amortization of the issuance costs to interest expense.

In March 2007, we completed the private placement of $4 million Floating Rate, Trust Preferred Securities through our subsidiary, MVB Financial Statutory Trust I (the “Trust”). We established the Trust for the sole purpose of issuing the Trust Preferred Securities pursuant to an Amended and Restated Declaration of Trust. The proceeds from the sale of the Trust Preferred Securities will be loaned to us under subordinated Debentures (the “Debentures”) issued to the Trust pursuant to an Indenture. The Debentures are the only asset of the Trust. The Trust Preferred Securities have been issued to a pooling vehicle that will use the distributions on the Trust Preferred Securities to securitize note obligations. The securities issued by the Trust are includable for regulatory purposes as a component of our Tier 1 capital. The Trust Preferred Securities and the Debentures mature in 2037 and have been redeemable by us since 2012. Interest payments are due in March, June, September and December and are adjusted at the interest due dates at a rate of 1.62% over the three-month LIBOR Rate. Our obligations with respect to the issuance of the trust preferred securities constitute a full and unconditional guarantee by us of the Trust’s obligations with respect to the trust preferred securities to the extent set forth in the related guarantees.