10-Q

United States

Securities and Exchange Commission

Washington, D.C. 20549

FORM 10-Q

(Mark One)

[  X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2015

OR

[     ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission File number 000-50567

MVB Financial Corp.

(Exact name of registrant as specified in its charter)

West Virginia	20-0034461
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

301 Virginia Avenue

Fairmont, West Virginia  26554-2777

(Address of principal executive offices)

304-363-4800

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address, and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant has (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes  [ X ]                         No  [    ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes  [ X ]                         No  [    ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.  (Check One):

Large accelerated filer

Accelerated filer    [ X ]

Non-accelerated filer 

Smaller reporting company

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.)

Yes  [     ]                         No  [ X ]

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

As of August 6, 2015, the number of shares outstanding of the issuer’s only class of common stock was 7,996,978.

MVB Financial Corp.

Table of Contents

Part I.	Financial Information
Item 1.	Financial Statements
	The unaudited interim consolidated financial statements of MVB Financial Corp. (“the Company” or “MVB”) and subsidiaries (“Subsidiaries”) including MVB Bank, Inc. (the “Bank” or “MVB Bank”) and its wholly-owned subsidiary Potomac Mortgage Group, Inc., which does business as  MVB Mortgage (“MVB Mortgage”) and MVB Insurance, LLC (“MVB Insurance”) listed below are included on pages 3-36 of this report.
	Consolidated Balance Sheets as of June 30, 2015 and December 31, 2014
	Consolidated Statements of Income for the Six Months and Three Months ended June 30, 2015 and 2014
	Consolidated Statements of Comprehensive Income for the Six Months and Three Months ended June 30, 2015 and 2014
	Consolidated Statements of Cash Flows for the Six Months ended June 30, 2015 and 2014
	Notes to Consolidated Financial Statements
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations
	Management’s Discussion and Analysis of Financial Condition and Results of Operations are included on pages 37-51 of this report.
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.
Item 4.	Controls and Procedures
Part II.	Other Information
Item 1.	Legal Proceedings
Item 1A.	Risk Factors
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.
Item 3.	Defaults Upon Senior Securities
Item 4.	Mine Safety Disclosures
Item 5.	Other Information
Item 6.	Exhibits

2

Part I. Financial Information

Item 1. Financial Statements

MVB Financial Corp. and Subsidiaries

Consolidated Balance Sheets  

(Dollars in thousands except per share data)

	June 30,		December 31,
	2015		2014
	(Unaudited)		(Note 1)
Assets
Cash and cash equivalents:
Cash and due from banks	$	11,944	$	13,403
Interest bearing balances		2,070		16,674
Total cash and cash equivalents		14,014		30,077
Certificates of deposits in other banks		11,659		11,907
Investment securities:
Securities available-for-sale		65,855		68,213
Securities held-to-maturity (fair value of $53,441 for 2015 and $55,871 for 2014)		53,141		54,538
Loans held for sale		116,307		69,527
Loans:		911,085		798,297
Less: Allowance for loan losses		(7,047)		(6,223)
Net loans		904,038		792,074
Bank premises, furniture and equipment		25,645		25,472
Bank owned life insurance		22,011		21,679
Accrued interest receivable and other assets		22,617		19,193
Goodwill		17,779		17,779
Total assets	$	1,253,066	$	1,110,459
Liabilities
Deposits
Non-interest bearing	$	76,666	$	67,066
Interest bearing		814,303		756,161
Total deposits		890,969		823,227
Accrued interest, taxes and other liabilities		10,791		10,310
Repurchase agreements		26,263		32,673
FHLB and other borrowings		178,245		101,287
Subordinated debt		33,524		33,524
Total liabilities		1,139,792		1,001,021
Stockholders’ equity
Preferred stock, par value $1,000;  20,783 authorized and 9,283 issued in 2015 and 2014, respectively		16,334		16,334
Common stock, par value $1;  20,000,000 shares authorized; 8,047,550 and 8,034,362issued; and 7,996,473 and 7,983,285 outstanding in 2015 and 2014, respectively		8,048		8,034
Additional paid-in capital		74,450		74,342
Retained earnings		17,858		14,454
Accumulated other comprehensive loss		(2,332)		(2,642)
Treasury stock, 51,077 shares, at cost		(1,084)		(1,084)
Total stockholders’ equity		113,274		109,438
Total liabilities and stockholders’ equity	$	1,253,066	$	1,110,459

See accompanying notes to unaudited financial statements.

3

MVB Financial Corp. and Subsidiaries

Consolidated Statements of Income

(Unaudited) (Dollars in thousands except per share data)

	Six months ended				Three months ended
	June 30,				June 30,
	2015		2014		2015		2014
Interest income
Interest and fees on loans	$	18,603	$	15,162	$	9,839	$	7,996
Interest on deposits with other banks		127		97		63		51
Interest on investment securities – taxable		461		769		222		358
Interest on tax exempt loans and securities		1,141		1,511		570		757
Total interest income		20,332		17,539		10,694		9,162
Interest expense
Deposits		2,889		2,796		1,522		1,691
Repurchase agreements		44		233		20		107
FHLB and other borrowings		334		273		177		143
Subordinated debt		1,092		45		549		26
Total interest expense		4,359		3,347		2,268		1,967
Net interest income		15,973		14,192		8,426		7,195
Provision for loan losses		1,220		1,408		561		889
Net interest income after provision for loan losses		14,753		12,784		7,865		6,306
Noninterest income
Service charges on deposit accounts		296		317		164		171
Income on bank owned life insurance		332		255		165		127
Visa debit card and interchange income		440		370		231		203
Mortgage fee income		14,926		7,543		8,617		4,333
Gain on sale of portfolio loans		800		1,333		454		658
Insurance and investment services income		2,663		1,836		965		820
Gain on sale of securities		126		125		5		125
Gain (loss) on derivatives		2,106		939		(143)		604
Other operating income		256		102		76		25
Total noninterest income		21,945		12,820		10,534		7,066
Noninterest expense
Salary and employee benefits		19,928		14,729		10,194		7,932
Occupancy expense		1,755		1,304		880		677
Equipment depreciation and maintenance		967		711		484		349
Data processing and communications		1,870		1,381		944		696
Mortgage processing		1,536		1,112		790		567
Marketing, contributions and sponsorships		696		535		359		290
Professional fees		1,281		878		619		380
Printing, postage and supplies		356		392		170		199
Insurance, tax and assessment expense		847		724		419		385
Travel, entertainment, dues and subscriptions		752		674		432		362
Other operating expenses		690		584		420		351
Total noninterest expense		30,678		23,024		15,711		12,188
Income before income taxes		6,020		2,580		2,688		1,184
Income tax expense		2,012		453		783		215
Net income	$	4,008	$	2,127	$	1,905	$	969
Preferred dividends		285		43		143		22
Net income available to common shareholders	$	3,723	$	2,084	$	1,762	$	947
Earnings per share – basic	$	0.47	$	0.27	$	0.22	$	0.12
Earnings per share – diluted	$	0.46	$	0.26	$	0.22	$	0.12
Weighted average shares outstanding - basic		7,985,320		7,778,152		7,987,333		7,897,242
Weighted average shares outstanding - diluted		8,672,228		7,991,701		8,674,241		8,110,791

See accompanying notes to unaudited financial statements.

4

MVB Financial Corp. and Subsidiaries

Consolidated Statements of Comprehensive Income

(Unaudited)(Dollars in thousands)

	Six months ended				Three months ended
	June 30,				June 30,
	2015		2014		2015		2014
Net Income	$	4,008	$	2,127	$	1,905	$	969
Other comprehensive income:
Unrealized holding gains during the year		114		1,646		(425)		1,109
Income tax effect		(44)		(658)		170		(443)
Reclassification adjustment for gain recognized in income		(126)		(125)		(5)		(125)
Income tax effect		50		50		2		50
Change in defined benefit pension plan		527		(315)		800		(315)
Income tax effect		(211)		126		(320)		126
Other comprehensive income		310		724		222		402
Comprehensive income	$	4,318	$	2,851	$	2,127	$	1,371

See accompanying notes to unaudited financial statements.

5

MVB Financial Corp. and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited) (Dollars in thousands)

	Six months ended
	June 30,		June 30,
	2015		2014
Operating activities
Net income	$	4,008	$	2,127
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Net amortization and accretion of investments		387		434
Net amortization of deferred loan fees		(4)		27
Provision for loan losses		1,220		1,408
Depreciation and amortization		932		587
Stock based compensation		203		129
Loans originated for sale		(708,970)		(381,190)
Proceeds of loans sold		677,116		408,709
Mortgage fee income		(14,926)		(7,543)
Gain on sale of investment securities		(126)		(125)
Income on bank owned life insurance		(332)		(255)
Deferred taxes		254		(936)
Other, net		(195)		150
Net cash (used in) provided by operating activities		(40,433)		23,522
Investing activities
Purchases of investment securities available-for-sale		(22,733)		(24,268)
Purchases of investment securities held-to-maturity		—		(250)
Maturities/paydowns of investment securities held-to-maturity		790		750
Maturities/paydowns of investment securities available-for-sale		13,521		4,759
Sales of investment securities available-for-sale		11,484		37,177
Sales of investment securities held-to-maturity		421		—
Purchases of premises and equipment		(1,105)		(4,962)
Net increase in loans		(113,180)		(112,078)
Purchases of restricted bank stock		(12,418)		(7,361)
Redemptions of restricted bank stock		9,498		5,937
Proceeds from sale of certificates of deposit with banks		248		76
Proceeds from sale of other real estate owned		239		—
Purchase of bank owned life insurance		—		(5,000)
Net cash used in investing activities		(113,235)		(105,220)
Financing activities
Net increase in deposits		67,742		51,232
Net (decrease) in repurchase agreements		(6,410)		(45,057)
Net change in short-term FHLB borrowings		77,041		22,202
Principal payments on FHLB borrowings		(83)		(1,080)
Proceeds from subordinated debt		—		29,313
Proceeds from stock offering		—		5,662
Preferred stock issuance		—		7,834
Dividend reinvestment plan proceeds		—		180
Common stock options exercised		(81)		48
Cash dividends paid on common stock		(319)		(317)
Cash dividends paid on preferred stock		(285)		(43)
Net cash provided by financing activities		137,605		69,974
(Decrease) in cash and cash equivalents		(16,063)		(11,724)
Cash and cash equivalents at beginning of period		30,077		39,843
Cash and cash equivalents at end of period	$	14,014	$	28,119
Supplemental disclosure of cash flow information
Loans transferred to other real estate owned	$	—	$	146
Cashless stock options exercised	$	169	$	—
Cash payments for:
Interest on deposits, repurchase agreements and borrowings	$	5,391		3,632
Income taxes	$	1,900		1,020

See accompanying notes to unaudited financial statements.

6

MVB Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 1 – Basis of Presentation

These consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with instructions to Form 10‑Q.  Accordingly, they do not include all the information and footnotes required by GAAP for annual year-end financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation, have been included and are of a normal, recurring nature. The consolidated balance sheet as of December 31, 2014 has been derived from audited financial statements included in the Company’s 2014 filing on Form 10-K.  Operating results for the six and three months ended June 30, 2015 are not necessarily indicative of the results that may be expected for the year ending December 31, 2015.

The accounting and reporting policies of MVB Financial Corp. (“the Company” or “MVB”) and its subsidiaries (“Subsidiaries”), including MVB Bank, Inc. (the “Bank”), the Bank’s subsidiary Potomac Mortgage Group, Inc., which does business as MVB Mortgage (“MVB Mortgage”) and MVB Insurance, LLC, conform to accounting principles generally accepted in the United States and practices in the banking industry. The preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Estimates, such as the allowance for loan losses, are based upon known facts and circumstances. Estimates are revised by management in the period such facts and circumstances change.  Actual results could differ from those estimates. All significant inter-company accounts and transactions have been eliminated in consolidation. 

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been omitted. These financial statements should be read in conjunction with the financial statements and notes thereto included in MVB’s December 31, 2014, Form 10-K filed with the Securities and Exchange Commission.

In certain instances, amounts reported in prior periods’ consolidated financial statements have been reclassified to conform to the current presentation. Specifically, a portion of the prior periods’ interest income and interest expense was classified as gain on loans held for sale and has been reclassified in the current presentation.

Information is presented in these notes with dollars expressed in thousands, unless otherwise noted or specified.

Note 2 – Recent Accounting Pronouncements

In June 2014, the FASB issued ASU No. 2014-11,"Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures."The new guidance aligns the accounting for repurchase-to-maturity transactions and repurchase agreements executed as repurchase financings with the accounting for other typical repurchase agreements. Going forward, these transactions would all be accounted for as secured borrowings. The guidance eliminates sale accounting for repurchase-to-maturity transactions and supersedes the guidance under which a transfer of a financial asset and a contemporaneous repurchase financing could be accounted for on a combined basis as a forward agreement, which has resulted in outcomes referred to as off-balance-sheet accounting. The amendments in the ASU require a new disclosure for transactions economically similar to repurchase agreements in which the transferor retains substantially all of the exposure to the economic return on the transferred financial assets throughout the term of the transaction. The amendments in the ASU also require expanded disclosures, effective for the current reporting period of June 30, 2015, about the nature of collateral pledged in repurchase agreements and similar transactions accounted for as secured borrowings (see Note 5 to the Consolidated Financial Statements). The Company adopted the amendments in this ASU effective January 1, 2015. As ofJune30, 2015, all of the Company's repurchase agreements were typical in nature (i.e., not repurchase-to-maturity transactions or repurchase agreements executed as a repurchase financing) and are accounted for as secured borrowings. As such, the adoption of ASU No. 2014-11 did not have a material impact on the Company's Consolidated Financial Statements but resulted in additional disclosures.

7

In February 2015, the FASB issued ASU No. 2015-02, Consolidation (Topic 810): “Amendments to the Consolidation Analysis.”  The amendments modify the evaluation reporting organizations must perform to determine if certain legal entities should be consolidated as VIEs. Specifically, the amendments: (1) Modify the evaluation of whether limited partnerships and similar legal entities are variable interest entities (“VIEs”) or voting interest entities; (2) Eliminate the presumption that a general partner should consolidate a limited partnership; (3) Affect the consolidation analysis of reporting entities that are involved with VIEs, particularly those that have fee arrangements and related party relationships; and (4) Provide a scope exception from consolidation guidance for reporting entities with interests in legal entities that are required to comply with or operate in accordance with requirements that are similar to those in Rule 2a-7 of the Investment Company Act of 1940 for registered money market funds. ASU No. 2015-02 is effective for interim and annual reporting periods beginning after December 15, 2015. The Company is currently evaluating the provisions of ASU No. 2015-02 to determine the potential impact the new standard will have on the Company's consolidated financial statements.

Note 3 – Investments

Amortized cost and fair values of investment securities held-to-maturity at June 30, 2015, including gross unrealized gains and losses, are summarized as follows:

	Amortized		Unrealized		Unrealized		Fair
(in thousands)	Cost		Gain		Loss		Value
Municipal securities	$	53,141	$	1,048	$	(748)	$	53,441
Total investment securities held-to-maturity	$	53,141	$	1,048	$	(748)	$	53,441

Amortized cost and fair values of investment securities held-to-maturity at December 31, 2014, including gross unrealized gains and losses, are summarized as follows:

	Amortized		Unrealized		Unrealized		Fair
(in thousands)	Cost		Gain		Loss		Value
Municipal securities	$	54,538	$	1,600	$	(267)	$	55,871
Total investment securities held–to-maturity	$	54,538	$	1,600	$	(267)	$	55,871

Amortized cost and fair values of investment securities available-for-sale at June 30, 2015 are summarized as follows:

	Amortized		Unrealized		Unrealized		Fair
(in thousands)	Cost		Gain		Loss		Value
U.S. Agency securities	$	30,847	$	13	$	(278)	$	30,582
U.S. Sponsored Mortgage-backed securities		35,026		17		(513)		34,530
Total debt securities		65,873		30		(791)		65,112
Equity and other securities		670		73		—		743
Total investment securities available-for-sale	$	66,543	$	103	$	(791)	$	65,855

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Amortized cost and fair values of investment securities available-for-sale at December 31, 2014 are summarized as follows:

	Amortized		Unrealized		Unrealized		Fair
(in thousands)	Cost		Gain		Loss		Value
U.S. Agency securities	$	37,926	$	73	$	(465)	$	37,534
U.S. Sponsored Mortgage-backed securities		30,293		58		(419)		29,932
Total debt securities		68,219		131		(884)		67,466
Equity and other securities		670		77		—		747
Total investment securities available-for-sale	$	68,889	$	208	$	(884)	$	68,213

The following tables summarize amortized cost and fair values of debt securities by maturity at June 30, 2015:

	Held to Maturity				Available for sale
	Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value
Within one year	$	—	$	—	$	—	$	—
After one year, but within five		4,758		4,870		23,112		22,962
After five years, but within ten		14,497		14,593		9,845		9,702
After ten years		33,886		33,978		32,916		32,448
Total	$	53,141	$	53,441	$	65,873	$	65,112

Investment securities with a carrying value of $114,838 at June 30, 2015, were pledged to secure public funds, repurchase agreements and potential borrowings at the Federal Reserve discount window.

The Company's investment portfolio includes securities that are in an unrealized loss position as of June 30, 2015, the details of which are included in the following table.  Although these securities, if sold at June 30, 2015 would result in a pretax loss of $1,539, the Company has no intent to sell the applicable securities at such market values, and maintains the Company has the ability to hold these securities until all principal has been recovered.  Declines in the market values of these securities can be traced to general market conditions which reflect the prospect for the economy as a whole.  When determining other-than-temporary impairment on securities, the Company considers such factors as adverse conditions specifically related to a certain security or to specific conditions in an industry or geographic area, the time frame securities have been in an unrealized loss position, the Company's ability to hold the security for a period of time sufficient to allow for anticipated recovery in value, whether or not the security has been downgraded by a rating agency, and whether or not the financial condition of the security issuer has severely deteriorated.  As of June 30, 2015, the Company considers all securities with unrealized loss positions to be temporarily impaired, and consequently, does not believe the Company will sustain any material realized losses as a result of the current temporary decline in market value.

The following table discloses investments in an unrealized loss position at June 30, 2015:

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Description and number of positions	Less than 12 months				12 months or more
(in thousands)	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
U.S. Agency securities (9)	$	13,102	$	(135)	$	13,964	$	(143)
U.S. Sponsored Mortgage-backed securities (15)		18,826		(168)		12,836		(345)
Municipal securities (60)		16,260		(349)		8,121		(399)
	$	48,188	$	(652)	$	34,921	$	(887)

The following table discloses investments in an unrealized loss position at December 31, 2014:

Description and number of positions	Less than 12 months				12 months or more
(in thousands)	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
U.S. Agency securities (9)	$	996	$	(3)	$	26,900	$	(462)
U.S. Sponsored Mortgage-backed securities (8)		678		(3)		14,824		(416)
Municipal securities (42)		528		(3)		16,489		(264)
	$	2,202	$	(9)	$	58,213	$	(1,142)

For the three month period ended June 30, 2015 and 2014, the Company sold investments available-for-sale of $0 and $37.2 million, respectively, resulting in gross gains of $0 and $214 and gross losses of $0 and $89.

For the six month period ended June 30, 2015 and 2014, the Company sold investments available-for-sale of $11.4 million and $37.2 million, respectively, resulting in gross gains of $121 and $214 and gross losses of $0 and $89.

For the three and six month periods ended June 30, 2015, the Company sold investments held-to-maturity of $421, resulting in gross gains of $5.  The held-to-maturity investment was sold due to a credit downgrade. The Company sold no held-to-maturity investments during 2014.

Note 4 – Loans and Allowance for Loan Losses

The following table summarizes the primary segments of the allowance for loan losses (“ALL”), segregated into the amount required for loans individually evaluated for impairment and the amount required for loans collectively evaluated for impairment as of June 30, 2015:

					Home
(in thousands)	Commercial		Residential		Equity		Consumer		Total
ALL balance March 31, 2015	$	4,647	$	957	$	680	$	197	$	6,481
Charge-offs		—		—		—		—		—
Recoveries		—		—		—		5		5
Provision		554		61		(48)		(6)		561
ALL balance June 30, 2015	$	5,201	$	1,018	$	632	$	196	$	7,047

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					Home
	Commercial		Residential		Equity		Consumer		Total
ALL balance December 31, 2014	$	4,363	$	962	$	691	$	207	$	6,223
Charge-offs		(409)		(14)		—		—		(423)
Recoveries		21		1		1		5		28
Provision		1,226		69		(60)		(16)		1,219
ALL balance June 30, 2015	$	5,201	$	1,018	$	632	$	196	$	7,047
Individually evaluated for impairment	$	605	$	303	$	28	$	7	$	943
Collectively evaluated for impairment	$	4,596	$	715	$	604	$	189	$	6,104

The following table summarizes the primary segments of the Company loan portfolio as of June 30, 2015:

(in thousands)	Commercial		Residential		Home Equity		Consumer		Total
Individually evaluated for impairment	$	12,627	$	1,008	$	28	$	11	$	13,674
Collectively evaluated for impairment		644,457		183,535		53,078		16,341		897,411
Total Loans	$	657,084	$	184,543	$	53,106	$	16,352	$	911,085

The following table summarizes the primary segments of the allowance for loan losses (“ALL”), segregated into the amount required for loans individually evaluated for impairment and the amount required for loans collectively evaluated for impairment as of June 30, 2014:

					Home
(in thousands)	Commercial		Residential		Equity		Consumer		Total
ALL balance March 31, 2014	$	3,902	$	746	$	555	$	248	$	5,451
Charge-offs		—		(103)		—		(1)		(104)
Recoveries		4		—		1		—		5
Provision		579		42		269		(1)		889
ALL balance June 30, 2014	$	4,485	$	685	$	825	$	246	$	6,241

					Home
	Commercial		Residential		Equity		Consumer		Total
ALL balance December 31, 2013	$	3,609	$	519	$	554	$	253	$	4,935
Charge-offs		—		(103)		—		(8)		(111)
Recoveries		4		—		2		3		9
Provision		872		269		269		(2)		1,408
ALL balance June 30, 2014	$	4,485	$	685	$	825	$	246	$	6,241
Individually evaluated for impairment	$	1,507	$	322	$	29	$	7	$	1,865
Collectively evaluated for impairment	$	2,978	$	363	$	796	$	239	$	4,376

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The following table summarizes the primary segments of the Company loan portfolio as of June 30, 2014:

(in thousands)	Commercial		Residential		Equity		Consumer		Total
Individually evaluated for impairment	$	6,726	$	873	$	29	$	14	$	7,642
Collectively evaluated for impairment		526,776		142,754		39,060		18,022		726,612
Total Loans	$	533,502	$	143,627	$	39,089	$	18,036	$	734,254

The allowance for loan losses is based on estimates, and actual losses will vary from current estimates.  Management believes that the granularity of the homogeneous pools and the related historical loss ratios and other qualitative factors, as well as the consistency in the application of assumptions, result in an ALL that is representative of the risk found in the components of the portfolio at any given date.

All loan origination fees and direct loan origination costs are deferred and recognized over the life of the loan. As of June 30, 2015 and 2014, net deferred fees and costs of $1,186 and $1,596, respectively, were included in the carrying value of loans.

During December 2013 the Bank purchased $74.3 million in performing commercial real estate secured loans in the northern Virginia area. At the time of acquisition, none of these loans were considered impaired. They were acquired at a premium of roughly 1.024 or $1.8 million, which is being amortized in accordance with ASC 310-20. These loans, with the exception of one, are collectively evaluated for impairment under ASC 450. The loans continue to be individually monitored for payoff activity, and any necessary adjustments to the premium are made accordingly. The loan that has been individually evaluated for impairment is discussed in further detail below in the discussion of impaired loans.

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The following table presents impaired loans by class, segregated by those for which a specific allowance was required and those for which a specific allowance was not necessary as of June 30, 2015 and December 31, 2014 (in thousands):

					Impaired
					Loans with
	Impaired Loans with				No Specific
	Specific Allowance				Allowance		Total Impaired Loans
									Unpaid
	Recorded		Related		Recorded		Recorded		Principal
June 30, 2015	Investment		Allowance		Investment		Investment		Balance
Commercial
Commercial Business	$	—	$	—	$	3,039	$	3,039	$	3,039
Commercial Real Estate		6,530		507		—		6,530		6,530
Acquisition & Development		271		98		2,787		3,058		4,433
Total Commercial		6,801		605		5,826		12,627		14,002
Residential		900		303		108		1,008		1,008
Home Equity		28		28		—		28		28
Consumer		7		7		4		11		1
Total impaired loans	$	7,736	$	943	$	5,938	$	13,674	$	15,039
December 31, 2014
Commercial
Commercial Business	$	—	$	—	$	3,606	$	3,606	$	3,606
Commercial Real Estate		1,527		260		5,021		6,548		6,548
Acquisition & Development		273		102		3,355		3,628		4,703
Total Commercial		1,800		362		11,982		13,782		14,857
Residential		969		298		—		969		969
Home Equity		28		28		—		28		28
Consumer		2		2		—		2		2
Total impaired loans	$	2,799	$	690	$	11,982	$	14,781	$	15,856

Impaired loans have decreased during 2015, primarily as the result of three loans, of which the recorded investment of each has decreased for various reasons. A loan that is dependent upon the condition of the coal industry, which had a balance of $3.6 million as of December 31, 2014, was reduced by principal payments totaling $567 and now represents a recorded investment of $3.0 million. Meanwhile, two unrelated acquisition and development loans with a total December 31, 2014 balance of $3.1 million were reduced as the result of a principal curtailment of a $268 and a $300 charge-off. These two loans now represent a total recorded investment of $2.5 million. Meanwhile, it is important to note that $8.1 million, or 59%, of the $13.7 million total recorded investment in impaired loans as of June 30, 2015 was concentrated in just two impaired loans. Furthermore, one of the two loans had a balance of $5.0 million and is a loan to finance a commercial real estate property in the Northern Virginia market, which had as primary tenants, government contractors that have vacated the premises as a result of losing significant contracts with the United States government. This loan was purchased from another financial institution in late 2013 but it is the Bank’s position that the “Loan Sales Agreement” has been breached by the selling institution and legal recourse is being pursued by the Bank.

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The following tables present the average recorded investment in impaired loans and related interest income recognized for the periods indicated (in thousands):

	Six months ended						Three months ended
	June 30, 2015						June 30, 2015
			Interest		Interest				Interest		Interest
	Average		Income		Income		Average		Income		Income
	Investment		Recognized		Recognized on		Investment		Recognized		Recognized
	in Impaired		on Accrual		Cash		in Impaired		on Accrual		on Cash
	Loans		Basis		Basis		Loans		Basis		Basis
Commercial
Commercial Business	$	3,369	$	78	$	75		3,228		39		39
Commercial Real Estate		6,538		30		25		6,533		15		12
Acquisition & Development		3,337		4		4		3,147		2		2
Total Commercial		13,244		112		104		12,908		56		53
Residential		948		10		2		946		5		—
Home Equity		28		1		1		28		—		—
Consumer		2		—		—		1		—		—
Total	$	14,222	$	123	$	107	$	13,883	$	61	$	53

	Six months ended						Three months ended
	June 30, 2014						June 30, 2014
	Average		Interest		Interest		Average		Interest		Interest
	Investment		Income		Income		Investment		Income		Income
	in Impaired		Recognized on		Recognized on		in Impaired		Recognized on		Recognized on
	Loans		Accrual Basis		Cash Basis		Loans		Accrual Basis		Cash Basis
Commercial
Commercial Business	$	—	$	—	$	—	$	—	$	—	$	—
Commercial Real Estate		1,911		30		35		1,907		15		15
Acquisition & Development		4,661		117		81		4,825		58		69
Total Commercial		6,572		147		116		6,732		73		84
Residential		734		10		8		884		5		5
Home Equity		28		1		—		29		—		—
Consumer		30		1		1		15		—		—
Total	$	7,364	$	159	$	125	$	7,660	$	78	$	89

As of June 30, 2015, the Bank did not hold any foreclosed residential real estate property. However, there were five consumer mortgage loans collateralized by residential real estate properties in the process of foreclosure. The total recorded investment in these loans was $420 as of June 30, 2015.

Bank management uses a nine point internal risk rating system to monitor the credit quality of the overall loan portfolio.  The first six categories are considered not criticized, and are aggregated as "Pass" rated.  The criticized rating categories utilized by Bank management generally follow bank regulatory definitions.  The Special Mention category includes assets that are currently protected but are potentially weak, resulting in an undue and unwarranted credit risk, but not to the point of justifying a Substandard classification.  Loans in the Substandard category have well-defined weaknesses that jeopardize the liquidation of the debt, and have a distinct possibility that some loss will be sustained if the weaknesses are not corrected.  All loans greater than 90 days past due are considered Substandard.  The portion of any

14

loan that represents a specific allocation of the allowance for loan losses is placed in the Doubtful category.  Any portion of a loan that has been charged off is placed in the Loss category.

To help ensure that risk ratings are accurate and reflect the present and future capacity of borrowers to repay a loan as agreed, the Bank has a structured loan rating process with several layers of internal and external oversight.  Generally, consumer and residential mortgage loans are included in the Pass categories unless a specific action, such as bankruptcy, repossession, or death occurs to raise awareness of a possible credit event.  The Bank's Chief Credit Officer is responsible for the timely and accurate risk rating of the loans in the portfolio at origination and on an ongoing basis.  The Credit Department ensures that a review of all commercial relationships of one million dollars or greater is performed annually.

Review of the appropriate risk grade is included in both the internal and external loan review process, and on an ongoing basis.  The Bank has an experienced Credit Department that continually reviews and assesses loans within the portfolio.  The Bank engages an external consultant to conduct loan reviews on at least an annual basis.  Generally, the external consultant reviews larger commercial relationships or criticized relationships.  The Bank’s Credit Department compiles detailed reviews, including plans for resolution, on loans classified as Substandard on a quarterly basis.  Loans in the Special Mention and Substandard categories that are collectively evaluated for impairment are given separate consideration in the determination of the allowance.

The following table represents the classes of the loan portfolio summarized by the aggregate Pass and the criticized categories of Special Mention, Substandard and Doubtful within the internal risk rating system as of June 30, 2015 and December 31, 2014 (in thousands):

			Special
June 30, 2015	Pass		Mention		Substandard		Doubtful		Total
Commercial
Commercial Business	$	307,156	$	3,385	$	3,185	$	—	$	313,726
Commercial Real Estate		249,488		11,072		7,272		—		267,832
Acquisition & Development		69,527		2,942		1,225		1,832		75,526
Total Commercial		626,171		17,399		11,682		1,832		657,084
Residential		181,412		2,051		996		84		184,543
Home Equity		52,724		354		28		—		53,106
Consumer		15,905		436		11		—		16,352
Total Loans	$	876,212	$	20,240	$	12,717	$	1,916	$	911,085

			Special
December 31, 2014	Pass		Mention		Substandard		Doubtful		Total
Commercial
Commercial Business	$	234,547	$	618	$	3,713	$	—	$	238,878
Commercial Real Estate		262,215		11,242		7,323		—		280,780
Acquisition & Development		34,391		3,075		1,496		2,132		41,094
Total Commercial		531,153		14,935		12,532		2,132		560,752
Residential		171,395		2,147		965		—		174,507
Home Equity		45,684		223		28		—		45,935
Consumer		16,477		624		2		—		17,103
Total Loans	$	764,709	$	17,929	$	13,527	$	2,132	$	798,297

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Management further monitors the performance and credit quality of the loan portfolio by analyzing the age of the portfolio as determined by the length of time a recorded payment is past due. 

A loan that has deteriorated and is in a collection process could warrant non-accrual status. A thorough review is to be presented to the Chief Credit Officer and or the Management Loan Committee ("MLC"), as required with respect to any loan which is in a collection process and to make a determination as to whether the loan should be placed on non-accrual status. The placement of loans on non-accrual status will be subject to applicable regulatory restrictions and guidelines. Generally, loans should be placed in non-accrual status when the loan approaches 90 days past due, when it becomes likely the borrower cannot or will not make scheduled principal or interest payments, when full repayment of principal and interest is not expected, or when the loan displays potential loss characteristics. Normally, all accrued interest should be charged off when a loan is placed in non-accrual status. Any payments subsequently received should be applied to principal. To remove a loan from non-accrual status, all principal and interest due must be paid up to date and the bank is reasonably sure of future satisfactory payment performance. Usually, this requires a six-month recent history of payments due. Removal of a loan from non-accrual status will require the approval of the Chief Credit Officer and or MLC.

The following table presents the classes of the loan portfolio summarized by the aging categories of performing loans and nonaccrual loans as of June 30, 2015 and December 31, 2014 (in thousands):

			30-59 Days		60-89 Days		90 Days +		Total				Non-		90+ Days
June 30, 2015	Current		Past Due		Past Due		Past Due		Past Due		Total Loans		Accrual		Still Accruing
Commercial
Commercial Business	$	310,523	$	3,107	$	—	$	96	$	3,203	$	313,726	$	146	$	10
Commercial Real Estate		257,298		28		4,837		5,669		10,534		267,832		5,020		649
Acquisition & Development		72,385		—		—		3,141		3,141		75,526		2,787		354
Total Commercial		640,206		3,135		4,837		8,906		16,878		657,084		7,953		1,013
Residential		183,834		—		119		590		709		184,543		457		133
Home Equity		52,927		143		—		36		179		53,106		36		—
Consumer		16,151		10		1		190		201		16,352		4		186
Total	$	893,118	$	3,288	$	4,957	$	9,722	$	17,967	$	911,085	$	8,450	$	1,332

			30-59 Days		60-89 Days		90 Days +		Total				Non-		90+ Days
December 31, 2014	Current		Past Due		Past Due		Past Due		Past Due		Total Loans		Accrual		Still Accruing
Commercial
Commercial Business	$	233,464	$	3,738	$	1,500	$	176	$	5,414	$	238,878	$	107	$	69
Commercial Real Estate		270,600		234		4,925		5,021		10,180		280,780		—		5,021
Acquisition & Development		37,739		—		—		3,355		3,355		41,094		3,355		—
Total Commercial		541,803		3,972		6,425		8,552		18,949		560,752		3,462		5,090
Residential		167,392		4,478		2,126		511		7,115		174,507		487		216
Home Equity		45,815		120		—		—		120		45,935		—		—
Consumer		16,692		411		—		—		411		17,103		—		—
Total	$	771,702	$	8,981	$	8,551	$	9,063	$	26,595	$	798,297	$	3,949	$	5,306

The ALL is maintained to absorb losses from the loan portfolio.  The ALL is based on the Bank management's continuing evaluation of the risk characteristics and credit quality of the loan portfolio, assessment of current economic

16

conditions, diversification and size of the portfolio, adequacy of collateral, past and anticipated loss experience, and the amount of non-performing loans.

The Bank's methodology for determining the ALL is based on the requirements of ASC Section 310-10-35 for loans individually evaluated for impairment (discussed above) and ASC Subtopic 450-20 for loans collectively evaluated for impairment, as well as the Interagency Policy Statements on the Allowance for Loan and Lease Losses and other bank regulatory guidance.  The total of the two components represents the Bank's ALL.

Loans that are collectively evaluated for impairment are analyzed with general allowances being made as appropriate.  For general allowances, historical loss trends are used in the estimation of losses in the current portfolio.  These historical loss amounts are modified by other qualified factors.

The segments described above, which are based on the Federal call code assigned to each loan, provide the starting point for the ALL analysis.  Company and Bank management track the historical net charge-off activity at the call code level.  A historical charge-off factor is calculated utilizing a defined number of consecutive historical quarters.  All pools currently utilize a rolling 12 quarters.

"Pass" rated credits are segregated from "Criticized" credits for the application of qualitative factors.    Loans in the criticized pools, which possess certain qualities or characteristics that may lead to collection and loss issues, are closely monitored by management and subject to additional qualitative factors.

Company and Bank management have identified a number of additional qualitative factors which it uses to supplement the historical charge-off factor because these factors are likely to cause estimated credit losses associated with the existing loan pools to differ from historical loss experience.  The additional factors that are evaluated quarterly and updated using information obtained from internal, regulatory, and governmental sources are:  national and local economic trends and conditions; levels of and trends in delinquency rates and non-accrual loans; trends in volume and terms of loans; effects of changes in lending policies; experience, ability, and depth of lending staff; value of underlying collateral; and concentrations of credit from a loan type, industry and/or geographic standpoint. The combination of historical charge-off and qualitative factors are then weighted for each risk grade. These weightings are determined internally based upon the likelihood of loss as a loan’s risk grading deteriorates.

Bank management reviews the loan portfolio on a quarterly basis using a defined, consistently applied process in order to make appropriate and timely adjustments to the ALL.  When information confirms all or part of specific loans to be uncollectible, these amounts are promptly charged off against the ALL.

To estimate the liability for off-balance sheet credit exposures, bank management analyzed the portfolios of letters of credit, non-revolving lines of credit, and revolving lines of credit, and based its calculation on the expectation of future advances of each loan category. Letters of credit were determined to be highly unlikely to advance since they are generally in place only to ensure various forms of performance of the borrowers. In the Bank’s history, there have been no letters of credit drawn upon. In addition, many of the letters of credit are cash secured and do not warrant an allocation. Non-revolving lines of credit were determined to be highly likely to advance as these are typically construction lines. Meanwhile, the likelihood of revolving lines of credit advancing varies with each individual borrower. Therefore, the future usage of each line was estimated based on the average line utilization of the revolving line of credit portfolio as a whole.

Once the estimated future advances were calculated, an allocation rate, which was derived from the Bank’s historical losses and qualitative environmental factors, was applied in the similar manner as those used for the allowance for loan loss calculation. The resulting estimated loss allocations were totaled to determine the off-balance sheet liability related to these loans.

Troubled Debt Restructurings

The restructuring of a loan is considered a troubled debt restructuring (“TDR”) if both (i) the borrower is experiencing financial difficulties and (ii) the creditor has granted a concession.  Concessions may include interest rate reductions or

17

below market interest rates, principal forgiveness, restructuring amortization schedules and other actions intended to minimize potential losses. No new TDR’s have defaulted. At June 30, 2015 and December 31, 2014, the Bank had specific reserve allocations for TDR’s of $619 and $582, respectively.

The following tables present details related to loans identified as TDR’s for the periods indicated (in thousands):

	New TDRs (1)
	For the Six months ended					For the Three months ended
	June 30, 2014					June 30, 2014
		Pre-Modification		Post-Modification			Pre-Modification		Post-Modification
		Outstanding		Outstanding			Outstanding		Outstanding
	Number of	Recorded		Recorded		Number of	Recorded		Recorded
	Contracts	Investment		Investment		Contracts	Investment		Investment
Commercial
Acquisition and development	1	$	496	$	492	—	$	—	$	—
Total Commercial	1		496		492	—		—		—
Residential Real Estate	1		389		388	—		—		—
Total	2	$	885	$	880	—	$	—	$	—

(1) The pre-modification and post-modification balances represent the balances outstanding immediately before and after modification of the loan.

There were no new TDR’s for the six and three months ended June 30, 2015.

NOTE 5 - BORROWED FUNDS

Short-term Borrowings

Along with traditional deposits, the Bank has access to short-term borrowings from FHLB to fund its operations and investments. Short-term borrowings from FHLB totaled $172.9 million at June 30, 2015, compared to $95.8 million at December31, 2014.  

Information related to short-term borrowings is summarized as follows:

	June 30,			December 31,
(Dollars in thousands)	2015			2014
Balance at end of period	$	172,871		$	95,829
Average balance during the three and twelve months ended		130,956			76,185
Maximum month-end balance during the three and twelve months ended		172,871			120,229
Weighted-average rate during the three and twelve months ended		0.32	%		0.27	%
Rate at end of period		0.34	%		0.32	%

Repurchase agreements:

Along with traditional deposits, the Bank has access to securities sold under agreements to repurchase “repurchase

18

agreements” with customers represent funds deposited by customers, on an overnight basis, that are collateralized by investment securities owned by the Company. Repurchase agreements with customers are included in borrowings section on the consolidated  balance sheets. All repurchase agreements are subject to terms and conditions of repurchase/security agreements between the Company and the client and are accounted for as secured borrowings. The Company's repurchase agreements reflected in liabilities consist of customer accounts and securities which are pledged on an individual security basis.

As of June 30, 2015 and December 31, 2014, the Bank had repurchase agreements of $26.3 million and $32.7 million, respectively. These borrowings were collateralized by investment securities and FHLB letters of credit with a carrying value of $116.2 million and $163.7 million at June30, 2015 and December31, 2014, respectively. Declines in the value of the collateral would require the Company to pledge additional securities. As of June30, 2015 and December31, 2014 the Company had $3.9 million and $5.6 million, respectively, of available unpledged securities.

Information related to repurchase agreements is summarized as follows:

	June 30,			December 31,
(Dollars in thousands)	2015			2014
Balance at end of period	$	26,263		$	32,673
Average balance during the three and twelve months ended		26,140			55,731
Maximum month-end balance during the three and twelve months ended		26,263			83,781
Weighted-average rate during the three and twelve months ended		0.29	%		0.52	%
Rate at end of period		0.30	%		0.35	%

Term notes from the FHLB were as follows:	June 30,		December 31,
(Dollars in thousands)	2015		2014
Fixed interest rate notes, originating between April 2002 and December 2007, due between July 2016 and April 2022, interest of between 4.50% and 5.90% payable monthly	$	4,544	$	4,618
Amortizing fixed interest rate note, originating February 2007, due February 2022, payable in monthly installments of $5, including interest of 5.22%		830		840
	$	5,374	$	5,458

Subordinated Debt

In March 2007, the Company completed the private placement of $4 million Floating Rate, Trust Preferred Securities through its MVB Financial Statutory Trust I subsidiary (the “Trust”).  The Company 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 were loaned to the Company 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 obligations of the Company with respect to the issuance of the trust preferred securities constitute a full and unconditional guarantee by the Company of the Trust’s obligations with respect to the trust preferred securities to the extent set forth in the related guarantees. The securities issued by the Trust are includable for regulatory purposes as a component of the Company’s Tier I capital.

The Trust Preferred Securities and the Debentures mature in 2037 and have been redeemable by the Company 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. The obligations of the Company with respect to the issuance of the trust

19

preferred securities constitute a full and unconditional guarantee by the Company of the Trust's obligations with respect to the trust preferred securities to the extent set forth in the related guarantees.

On June 30, 2014, MVB Financial Corp. (the “Company”) issued its Convertible Subordinated Promissory Notes Due 2024 (the “Notes”) to various investors in the aggregate principal amount of $29,400,000.  The Notes were issued in $100,000 increments per Note subject to a minimum investment of $1,000,000.  The Notes expire 10 years after the initial issuance date of the Notes (the “Maturity Date”). 

Interest on the Notes accrues on the unpaid principal amount of each Note (paid quarterly in arrears on January 1, April 1, July 1 and October 1 of each year) which rate shall be dependent upon the principal invested in the Notes and the holder’s ownership of common stock in the Company.  For investments of less than $3,000,000 in Notes, an ownership of Company common stock representing at least 30% of the principal of the Notes acquired, the interest rate on the Notes is 7% per annum.  For investments of $3,000,000 or greater in Notes and ownership of the Company’s common stock representing at least 30% of the principal of the Notes acquired, the interest rate on the Notes is 7.5% per annum.  For investments of $10,000,000 or greater, the interest rate on the Notes is 7% per annum, regardless of whether the holder owns or acquires MVB common stock.  The principal on the Notes shall be paid in full at the Maturity Date.  On the fifth anniversary of the issuance of the Notes, a holder may elect to continue to receive the stated fixed rate on the Notes or a floating rate determined by LIBOR plus 5% up to a maximum rate of 9%, adjusted quarterly.

The Notes are unsecured and subject to the terms and conditions of any senior debt and after consultation with the Board of Governors of the Federal Reserve System, the Company may, after the Notes have been outstanding for five years, and without premium or penalty, prepay all or a portion of the unpaid principal amount of any Note together with the unpaid interest accrued on such portion of the principal amount of such Note.  All such prepayments shall be made pro rata among the holders of all outstanding Notes. 

At the election of a holder, any or all of the Notes may be converted into shares of common stock during the 30-day period after the first, second, third, fourth, and fifth anniversaries of the issuance of the Notes or upon a notice to prepay by the Company.  The Notes will convert into common stock based on $16 per share of the Company’s common stock.  The conversion price will be subject to anti-dilution adjustments for certain events such as stock splits, reclassifications, non-cash distributions, extraordinary cash dividends, pro rata repurchases of common stock, and business combination transactions.  The Company must give 20 days’ notice to the holders of the Company’s intent to prepay the Notes, so that holders may execute the conversion right set forth above if a holder so desires. 

Repayment of the Notes is subordinated to the Company’s outstanding senior debt including (if any) without limitation, senior secured loans.  No payment will be made by the Company, directly or indirectly, on the Notes, unless and until all of the senior debt then due has been paid in full.  Notwithstanding the foregoing, so long as there exists no event of default under any senior debt, the Company would make, and a holder would receive and retain for the holder’s account, regularly scheduled payments of accrued interest and principal pursuant to the terms of the Notes.

The Company must obtain a consent of the holders of the Notes prior to issuing any new senior debt in excess of $15,000,000 after the date of issuance of the Notes and prior to the Maturity Date. 

An event of default will occur upon the Company’s bankruptcy or any failure to pay interest, principal, or other amounts owing on the Notes when due.   Upon the occurrence and during the continuance of an event of default (but subject to the subordination provisions of the Notes) the holders of a majority of the outstanding principal amount of the Notes may declare all or any portion of the outstanding principal amount of the Notes due and payable and demand immediate payment of such amount.

The Notes are redeemable, in whole or in part, at a redemption price equal to 100% of the principal amount of the Notes to be redeemed on any interest payment date after a date five years from the original issue date.

The Company reflects subordinated debt in the amount of $33.5 millionas of June 30, 2015 and December 31, 2014 and interest expense of $1,092 and $45 for the six months ended June 30, 2015 and 2014.

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A summary of maturities of borrowings and subordinated debt over the next five years is as follows:

(dollars in thousands)

Year	Amount
2015	$	172,956
2016		1,246
2017		1,470
2018		81
2019		85
Thereafter		35,931
	$	211,769

Note 6 – Fair Value of Financial Instruments

The following summarizes the methods and significant assumptions used by the Company in estimating its fair value disclosures for financial instruments.

Level I:    Quoted prices are available in active markets for identical assets or liabilities as of the reported date.

Level II:   Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reported date.  The nature of these assets and liabilities include items for which quoted prices are available but traded less frequently, and items that are fair valued using other financial instruments, the parameters of which can be directly observed.

Level III:    Assets and liabilities that have little to no pricing observability as of the reported date.  These items do not have two-way markets and are measured using management’s best estimate of fair value, where the inputs into the determination of fair value require significant management judgment or estimation.

Assets Measured on a Recurring Basis

As required by accounting standards, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.  The Company classified investments in government securities as Level 2 instruments and valued them using the market approach.  The following measurements are made on a recurring basis.

· Available-for-sale investment securities -  Available-for-sale investment securities are recorded at fair value on a recurring basis. Fair value measurement is based upon quoted prices, if available. If quoted prices are not available, fair values are measured using independent pricing models or other model-based valuation techniques such as the present value of future cash flows, adjusted for the security's credit rating, prepayment assumptions and other factors such as credit loss assumptions. Level 1 securities include those traded on an active exchange, such as the New York Stock Exchange, U.S. Treasury securities that are traded by dealers or brokers in active over-the-counter markets and money market funds. Level 2 securities include mortgage-backed securities issued by government sponsored entities and private label entities, municipal bonds and corporate debt securities. There have been no changes in valuation techniques for the year ended December 31, 2014. Valuation techniques are consistent with techniques used in prior periods.

21

· Loans held for sale — Loans held for sale are carried at fair value. These loans currently consist of one-to-four-family residential loans originated for sale in the secondary market. Fair value is based on the committed market rates or the price secondary markets are currently offering for similar loans using observable market data.

· Interest rate lock commitment - For mortgage interest rate locks, the fair value is based on either (i) the price of the underlying loans obtained from an investor for loans that will be delivered on a best efforts basis or (ii) the observable price for individual loans traded in the secondary market for loans that will be delivered on a mandatory basis less (iii) expected costs to deliver the interest rate locks, any expected “pull through rate” is applied to this calculation to estimate the derivative value. 

· Interest rate cap - The fair value of the interest rate cap is determined at the end of each quarter by using Bloomberg Finance which values the interest rate cap using observable inputs from forward and futures yield curves as well as standard market volatility.

· Forward sales commitments – Forward sales commitments are considered derivatives and are recorded at fair value, based on (i) committed sales prices from investors for commitments to sell mortgage loans or (ii) observable market data inputs for commitments to sell mortgage backed securities. A majority of the interest rate locks and loans held for sale are committed on a best efforts basis.

The following tables present the assets and liabilities reported on the consolidated statements of financial condition at their fair value on a recurring basis as of June 30, 2015 and December 31, 2014 by level within the fair value hierarchy. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

	June 30, 2015
(in thousands)	Level I		Level II		Level III		Total
Assets:
U.S. Government Agency Securities	$	—	$	30,582	$	—	$	30,582
U.S. Sponsored Mortgage backed securities		—		34,530		—		34,530
Equity and Other Securities		73		670		—		743
Loans held for sale		—		116,307		—		116,307
Interest rate lock commitment		—		—		1,653		1,653
Forward sales commitments				783				783
Interest rate cap		—		936		—		936

	December 31, 2014
(in thousands)	Level I		Level II		Level III		Total
Assets:
U.S. Government Agency Securities	$	—	$	37,534	$	—	$	37,534
U.S. Sponsored Mortgage backed securities		—		29,932		—		29,932
Equity and Other Securities		77		670		—		747
Loans held for sale		—		69,527		—		69,527
Interest rate lock commitment		—		—		1,020		1,020
Interest rate cap		—		1,423		—		1,423
Liability:
Forward sales commitments		—		431		—		431

22

The following table represents recurring level III assets:

	For the three months ended		For the three months ended		For the six months ended		For the six months ended
(in thousands)	June 30, 2015		June 30, 2014		June 30, 2015		June 30, 2014
Balance, beginning of period	$	1,790	$	2,607	$	1,020	$	2,271
Realized and unrealized gains (loss) included in earnings		(137)		603		633		939
Balance, end of period	$	1,653	$	3,210	$	1,653	$	3,210

Assets Measured on a Nonrecurring Basis

The Company may be required, from time to time, to measure certain financial assets, financial liabilities, non-financial assets and non-financial liabilities at fair value on a nonrecurring basis in accordance with U.S. generally accepted accounting principles. These include assets that are measured at the lower of cost or market value that were recognized at fair value below cost at the end of the period. Certain non-financial assets measured at fair value on a non-recurring basis include foreclosed assets (upon initial recognition or subsequent impairment), non-financial assets and non-financial liabilities measured at fair value in the second step of a goodwill impairment test, and intangible assets and other non-financial long-lived assets measured at fair value for impairment assessment. Non-financial assets measured at fair value on a nonrecurring basis during 2015 and 2014 include certain foreclosed assets which, upon initial recognition, were remeasured and reported at fair value through a charge-off to the allowance for possible loan losses and certain foreclosed assets which, subsequent to their initial recognition, were remeasured at fair value through a write-down included in other non-interest expense.

· Impaired Loans - Loans for which it is probable that payment of interest and principal will not be made in accordance with the contractual terms of the loan agreement are considered impaired. Once a loan is identified as individually impaired, management measures impairment using one of several methods, including collateral value, liquidation value and discounted cash flows. Those impaired loans not requiring an allowance represent loans for which the fair value of the expected repayments or collateral exceed the recorded investments in such loans. Collateral values are estimated using Level 2 inputs based on observable market data or Level 3 inputs based on customized discounting criteria. For a majority of impaired real estate related loans, the Company obtains a current external appraisal. Other valuation techniques are used as well, including internal valuations, comparable property analysis and contractual sales information.

· Other Real Estate owned — Other real estate owned, which is obtained through the Bank’s foreclosure process is valued utilizing the appraised collateral value. Collateral values are estimated using Level 2 inputs based on observable market data or Level 3 inputs based on customized discounting criteria. At the time, the foreclosure is completed, the Company obtains a current external appraisal.

· Mortgage Servicing Rights – Mortgage servicing rights (“MSRs”) do not trade in an active, open market with readily observable prices. While sales of MSRs do occur, the precise terms and conditions typically are not readily available.

23

Assets measured at fair value on a nonrecurring basis as of June 30, 2015 and December 31, 2014 are included in the tables below:

	June 30, 2015
(in thousands)	Level I		Level II		Level III		Total
Assets:
Impaired loans	$	—	$	—	$	12,731	$	12,731
Other real estate owned		—		—		375		375
Mortgage servicing rights		—		—		1,262		1,262

	December 31, 2014
(in thousands)	Level I		Level II		Level III		Total
Assets:
Impaired loans	$	—	$	—	$	14,091	$	14,091
Other real estate owned		—		—		575		575
Mortgage servicing rights		—		—		1,423		1,423

The following tables present quantitative information about the Level 3 significant unobservable inputs for assets measured at fair value on a nonrecurring basis atJune 30, 2015 and December 31, 2014.

	Quantitative Information about Level 3 Fair Value Measurements
			Valuation	Unobservable
(Dollars in thousands)	Fair Value		Technique	Input	Range
June 30, 2015:
Impaired loans	$	12,731	Appraisal of collateral (1)	Appraisal adjustments(2)	20% - 30%
				Liquidation expense (2)	5% - 10%
Other real estate owned	$	375	Appraisal of collateral (1)	Appraisal adjustments (2)	20% - 30%
				Liquidation expense (2)	5% - 10%
Mortgage servicing rights	$	1,262	Discounted cash flows	Constant prepayment rate	12%
				Cost of service	0.25%
				Discount rate	12%

	Quantitative Information about Level 3 Fair Value Measurements
			Valuation	Unobservable
(Dollars in thousands)	Fair Value		Technique	Input	Range
December 31, 2014:
Impaired loans	$	14,091	Appraisal of collateral (1)	Appraisal adjustments (2)	20% - 30%
				Liquidation expense (2)	5% - 10%
Other real estate owned	$	575	Appraisal of collateral (1)	Appraisal adjustments (2)	20% - 30%
				Liquidation expense (2)	5% - 10%
Mortgage servicing rights	$	1,423	Discounted cash flows	Constant prepayment rate	12%
				Cost of service	0.25%
				Discount rate	12%

(1) Fair value is generally determined through independent appraisals of the underlying collateral, which generally include various level 3 inputs which are not observable.

(2) Appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated liquidation expenses.  The range and weighted average of liquidation expenses and other appraisal adjustments are presented as a percent of the appraisal.

24

The following summarizes the methods and significant assumptions used by the Company in estimating its fair value disclosures for financial instruments.

Cash and cash equivalents: The carrying amounts for cash and cash equivalents approximate fair value because they have original maturities of 90 days or less and do not present unanticipated credit concerns.

Certificates of deposits: The fair values for certificates of deposits are computed based on scheduled future cash flows of principal and interest, discounted at interest rates currently offered for certificates of deposits with similar terms of investors.  No prepayments of principal are assumed.

Securities:  Fair values of securities are based on quoted market prices, where available.  If quoted market prices are not available, estimated fair values are based on quoted market prices of comparable securities.

Loans held for sale: Loans held for sale are reported at fair value. These loans currently consist of one-to-four-family residential loans originated for sale in the secondary market. Fair value is based on committed market rates or the price secondary markets are currently offering for similar loans using observable market data. (Level II)

Loans:  The fair values for loans are computed based on scheduled future cash flows of principal and interest, discounted at interest rates currently offered for loans with similar terms of borrowers of similar credit quality.  No prepayments of principal are assumed.

Mortgage servicing rights: The carrying value of mortgage servicing rights approximates their fair value.

Interest rate lock commitment: For mortgage interest rate locks, the fair value is based on either (i) the price of the underlying loans obtained from an investor for loans that will be delivered on a best efforts basis or (ii) the observable price for individual loans traded in the secondary market for loans that will be delivered on a mandatory basis less (iii) expected costs to deliver the interest rate locks, any expected “pull through rate” is applied to this calculation to estimate the derivative value.The “pull through rate”range from 78% – 80% and 77% - 81% as of June 30, 2015 and December 31, 2014.

Interest rate cap: The fair value of the interest rate cap is determined at the end of each quarter by using Bloomberg Finance which values the interest rate cap using observable inputs from forward and futures yield curves as well as standard market volatility.

Accrued interest receivable and payable and repurchase agreements:  The carrying values of accrued interest receivable and payable approximate their fair values.

Deposits:  The fair values of demand deposits (i.e., non-interest bearing checking, NOW and money market), savings accounts and other variable rate deposits approximate their carrying values.  Fair values of fixed maturity deposits are estimated using a discounted cash flow methodology at rates currently offered for deposits with similar remaining maturities.  Any intangible value of long-term relationships with depositors is not considered in estimating the fair values disclosed.

Forward Sales Commitments: Forward sales commitments are used to mitigate interest rate risk for residential mortgage loans held for sale and interest rate locks and manage expected funding percentages. These instruments are considered derivatives and are recorded at fair value, based on (i) committed sales prices from investors for commitments to sell mortgage loans or (ii) observable market data inputs for commitments to sell mortgage backed securities.

FHLB and other borrowings: The fair values for loans are computed based on scheduled future cash flows of principal and interest, discounted at interest rates currently offered for loans with similar terms of borrowers of similar credit quality.  No prepayments of principal are assumed.

25

Subordinated debt: The fair values for debt are computed based on scheduled future cash flows of principal and interest, discounted at interest rates currently offered for debt with similar terms of borrowers of similar credit quality.  No prepayments of principal are assumed.

Off-balance sheet instruments:  The fair values of commitments to extend credit and standby letters of credit are estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of agreements and the present credit standing of the counterparties.  The amounts of fees currently charged on commitments and standby letters of credit are deemed insignificant, and therefore, the estimated fair values and carrying values are not shown.

26

The carrying values and estimated fair values of the Company’s financial instruments are summarized as follows (in thousands):

Fair Value Measurements at:

					Quoted Prices in		Significant		Significant
					Active Markets For		Other		Unobservable
	Carrying		Estimated		Identical Assets		Observable		Inputs
	Value		Fair Value		(Level 1)		Inputs (Level 2)		(Level 3)
June 30, 2015:
Financial assets:
Cash and cash equivalents	$	14,014	$	14,014	$	14,014	$	—	$	—
Certificates of deposits with other banks		11,659		11,891		—		11,891		—
Securities available-for-sale		65,855		65,855		73		65,782		—
Securities held-to-maturity		53,141		53,441		—		53,441		—
Loans held for sale		116,307		116,307		—		116,307		—
Loans, net		904,038		912,331		—		—		912,331
Mortgage servicing rights		1,262		1,262		—		—		1,262
Interest rate lock commitment		1,653		1,653		—		—		1,653
Forward sales commitments		783		783		—		783		—
Interest rate cap		936		936		—		936		—
Accrued interest receivable		2,923		2,923		—		668		2,255
Financial liabilities:
Deposits	$	890,969	$	894,979	$	—	$	894,979	$	—
Repurchase agreements		26,263		26,263		—		26,263		—
FHLB and other borrowings		178,245		178,264		—		178,264		—
Accrued interest payable		437		437		—		437		—
Subordinated debt		33,524		31,172		—		31,172		—
December 31, 2014
Financial assets:
Cash and cash equivalents	$	30,077	$	30,077	$	30,077	$	—	$	—
Certificates of deposits with other banks		11,907		12,035		—		12,035		—
Securities available-for-sale		68,213		68,213		77		68,136		—
Securities held-to-maturity		54,538		55,871		—		55,871		—
Loans held for sale		69,527		69,527		—		69,527		—
Loans, net		792,074		803,036		—		—		803,036
Mortgage servicing rights		1,423		1,423		—		—		1,423
Interest rate lock commitment		1,020		1,020		—		—		1,020
Interest rate cap		1,423		1,423		—		1,423		—
Accrued interest receivable		2,387		2,387		—		728		1,659
Financial liabilities:
Deposits	$	823,227	$	824,078	$	—	$	824,078	$	—
Repurchase agreements		32,673		32,673		—		32,673		—
FHLB and other borrowings		101,287		101,338		—		101,338		—
Forward sales commitments		431		431		—		431		—
Accrued interest payable		376		376		—		376		—
Subordinated debt		33,524		31,172		—		31,172		—

27

Fair value estimates are made at a specific point in time, based on relevant market information about the financial instrument.  These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument.  Because no market exists for a significant portion of the Company’s financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments and other factors.  These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore, cannot be determined with precision.  Changes in assumptions could significantly affect the estimates.  Fair value estimates are based on existing on-and-off balance sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments.

Note 7 – Stock Offerings

On June 30, 2014, the Company filed Certificates of Designations for its Convertible Noncumulative Perpetual Preferred Stock, Series B (“Class B Preferred”) and its Convertible Noncumulative Perpetual Preferred Stock, Series C (“Class C Preferred”).  The Class B Preferred Certificate designated 400 shares of preferred stock as Class B Preferred shares.  The Class B Preferred shares carry an annual dividend rate of 6% and are convertible into shares of Company common stock within thirty days after the first, second, third, fourth and fifth anniversaries of the original issue date, based on a common stock price of $16 per share, as adjusted for future corporate activities.  The Class B Preferred shares are redeemable by the Company on or after the fifth anniversary of the original issue date for Liquidation Amount, as defined therein, plus declared and unpaid dividends.  Redemption is subject to any necessary regulatory approvals.  In the event of liquidation of the Company, shares of Class B Preferred stock shall be junior to creditors of the Company and to the shares of Senior Noncumulative Perpetual Preferred Stock, Series A.  Holders of Class B Preferred shares shall have no voting rights, except for authorization of senior shares of stock, amendment to the Class B Preferred shares, share exchanges, reclassifications or changes of control, or as required by law.

The Class C Preferred Certificate designated 383.4 shares of preferred stock as Class C Preferred shares.  The Class C Preferred shares carry an annual dividend rate of 6.5% and are convertible into shares of Company common stock within thirty days after the first, second, third, fourth and fifth anniversaries of the original issue date, based on a common stock price of $16 per share, as adjusted for future corporate activities.  The Class C Preferred shares are redeemable by the Company on or after the fifth anniversary of the original issue date for Liquidation Amount, as defined therein, plus declared and unpaid dividends.  Redemption is subject to any necessary regulatory approvals.  In the event of liquidation of the Company, shares of Class C Preferred stock shall be junior to creditors of the Company and to the shares of Senior Noncumulative Perpetual Preferred Stock, Series A and the Class B Preferred shares.  Holders of Class C Preferred shares shall have no voting rights, except for authorization of senior shares of stock, amendment to the Class C Preferred shares, share exchanges, reclassifications or changes of control, or as required by law.The proceeds of these preferred stock offerings will be used to support continued growth of the Company and its Subsidiaries.

On September 8, 2011 MVB received $8.5 million in Small Business Lending Fund (SBLF) capital.  MVB issued 8,500 shares of $1,000 per share preferred stock with dividends payable in arrears on January 1, April 1, July 1 and October 1 each year.  At December 31, 2014 and 2013, MVB's loan production qualified for the lowest dividend rate possible of 1%.  MVB may continue to utilize the SBLF capital through March 8, 2016 at the 1% dividend rate. After that time, if the SBLF is not retired, the dividend rate increases to 9%.

Note 8 – Net Income Per Common Share

The Company determines basic earnings per share by dividing net income by the weighted average number of common shares outstanding during the period. Diluted earnings per share is determined by dividing net income plus interest on convertible preferred stock by the weighted average number of shares outstanding increased by both the number of shares that would be issued assuming the exercise of stock options and convertible preferred stock. At June 30, 2015 and 2014, stock options to purchase 678,159 and 494,470shares at anaverage price of $10.53 and $9.09, respectively,were outstanding.  For the six and months ended June 30, 2015 and 2014, the dilutive effect of stock options was 197,283and 213,549 shares, respectively.  For the six and months ended June 30, 2015 and 2014, the dilutive effect of convertible preferred stock was 489,625and 0 shares, respectively. 

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Note 9 – Segment Reporting

During 2013, the Company identified three reportable segments: commercial and retail banking; mortgage banking; and insurance services. Revenue from commercial and retail banking activities consists primarily of interest earned on loans and investment securities and service charges on deposit accounts. In addition, the commercial and retail banking segment activity includes holding company revenue and expense items.  

Revenue from the mortgage banking activities is comprised of interest earned on loans and fees received as a result of the mortgage origination process. The mortgage banking services are conducted by MVB Mortgage. Revenue from insurance services is comprised mainly of commissions on the sale of insurance products.

Information about the reportable segments and reconciliation to the consolidated financial statements for the three and six month periods ended June 30, 2015 and 2014are as follows:

r
	Commercial &
Three months ended June 30, 2015	Retail		Mortgage				Intercompany
(in thousands)	Banking		Banking		Insurance		Eliminations		Consolidated
Revenues:
Interest income	$	9,719	$	1,137	$	—	$	(162)	$	10,694
Mortgage fee income		76		8,833		—		(292)		8,617
Insurance and investment services income		106		—		859		—		965
Other income		2,132		(88)		4		(1,096)		952
Total operating income		12,033		9,882		863		(1,550)		21,228
Expenses:
Interest expense		2,193		529		—		(454)		2,268
Provision for loan losses		561		—		—		—		561
Salaries and employee benefits		3,718		5,574		902		—		10,194
Other expense		4,485		1,888		240		(1,096)		5,517
Total operating expenses		10,957		7,991		1,142		(1,550)		18,540
Income (loss) before income taxes		1,076		1,891		(279)		—		2,688
Income tax expense (benefit)		165		723		(105)		—		783
Net income (loss)		911		1,168		(174)		—		1,905
Preferred stock dividends		143		—		—		—		143
Net income (loss) available to common shareholders	$	768	$	1,168	$	(174)	$	—	$	1,762
Capital expenditures for the three-month period ended June 30, 2015	$	638	$	71	$	2	$	-	$	711
Total assets as of June 30, 2015		1,390,957		139,767		4,321		(281,979)		1,253,066
Total assets as of December 31, 2014		1,189,746		101,791		4,031		(185,109)		1,110,459
Goodwill as of June 30, 2015		897		16,882		-		-		17,779
Goodwill as of December 31, 2014	$	897	$	16,882	$	-	$	-	$	17,779

29

	Commercial &
Three months ended June 30, 2014	Retail		Mortgage				Intercompany
(in thousands)	Banking		Banking		Insurance		Eliminations		Consolidated
Revenues:
Interest income	$	8,364	$	688	$	—	$	110	$	9,162
Mortgage fee income		25		4,649		—		(341)		4,333
Insurance and investment services income		71		—		749		—		820
Other income		2,746		604		—		(1,437)		1,913
Total operating income		11,206		5,941		749		(1,668)		16,228
Expenses:
Interest expense		1,931		278		—		(242)		1,967
Provision for loan losses		889		—		—		—		889
Salaries and employee benefits		3,331		3,655		946		—		7,932
Other expense		4,125		1,346		211		(1,426)		4,256
Total operating expenses		10,276		5,279		1,157		(1,668)		15,044
Income (loss) before income taxes		930		662		(408)		—		1,184
Income tax expense (benefit)		107		263		(155)		—		215
Net income (loss)		823		399		(253)		—		969
Preferred stock dividends		22		—		—		—		22
Net income (loss) available to common shareholders	$	801	$	399	$	(253)	$	—	$	947
Capital expenditures for the three-month period ended June 30, 2014	$	2,559	$	74		33	$	-	$	2,666
Total assets as of June 30, 2014		1,143,107		101,609		4,431		(186,526)		1,062,621
Total assets as of December 31, 2013		1,021,097		92,290		3,012		(129,339)		987,060
Goodwill as of June 30, 2014		897		16,882		-		-		17,779
Goodwill as of December 31, 2013	$	897	$	16,882	$	-	$	-	$	17,779

30

	Commercial &
Six months ended June 30, 2015	Retail		Mortgage				Intercompany
(in thousands)	Banking		Banking		Insurance		Eliminations		Consolidated
Revenues:
Interest income	$	18,622	$	1,966	$	—	$	(256)	$	20,332
Mortgage fee income		63		15,385		—		(522)		14,926
Insurance and investment services income		178		—		2,485		—		2,663
Other income		4,068		2,600		4		(2,316)		4,356
Total operating income		22,931		19,951		2,489		(3,094)		42,277
Expenses:
Interest expense		4,234		903		—		(778)		4,359
Provision for loan losses		1,220		—		—		—		1,220
Salaries and employee benefits		7,476		10,664		1,788		—		19,928
Other expense		9,059		3,581		426		(2,316)		10,750
Total operating expenses		21,989		15,148		2,214		(3,094)		36,257
Income before income taxes		942		4,803		275		—		6,020
Income tax expense		68		1,838		106		—		2,012
Net income		874		2,965		169		—		4,008
Preferred stock dividends		285		—		—		—		285
Net income available to common shareholders	$	589	$	2,965	$	169	$	—	$	3,723
Capital expenditures for the six-month period ended June 30, 2015	$	997	$	99	$	9	$	-	$	1,105
Total assets as of June 30, 2015		1,390,957		139,767		4,321		(281,979)		1,253,066
Total assets as of December 31, 2014		1,189,746		101,791		4,031		(185,109)		1,110,459
Goodwill as of June 30, 2015		897		16,882		-		-		17,779
Goodwill as of December 31, 2014	$	897	$	16,882	$	-	$	-	$	17,779

31

	Commercial &
Six months ended June 30, 2014	Retail		Mortgage				Intercompany
(in thousands)	Banking		Banking		Insurance		Eliminations		Consolidated
Revenues:
Interest income	$	16,123	$	1,235	$	—	$	181	$	17,539
Mortgage fee income		(8)		8,139		—		(588)		7,543
Insurance and investment services income		129		—		1,707		—		1,836
Other income		5,204		939		—		(2,702)		3,441
Total operating income		21,448		10,313		1,707		(3,109)		30,359
Expenses:
Interest expense		3,278		489		—		(420)		3,347
Provision for loan losses		1,408		—		—		—		1,408
Salaries and employee benefits		6,362		6,632		1,735		—		14,729
Other expense		7,996		2,595		393		(2,689)		8,295
Total operating expenses		19,044		9,716		2,128		(3,109)		27,779
Income (loss) before income taxes		2,404		597		(421)		—		2,580
Income tax expense (benefit)		375		238		(160)		—		453
Net income (loss)		2,029		359		(261)		—		2,127
Preferred stock dividends		43		—		—		—		43
Net income (loss) available to common shareholders	$	1,986	$	359	$	(261)	$	—	$	2,084
Capital expenditures for the six-month period ended June 30, 2014	$	4,428	$	191	$	343	$	-	$	4,962
Total assets as of June 30, 2014		1,143,107		101,609		4,431		(186,526)		1,062,621
Total assets as of December 31, 2013		1,021,097		92,290		3,012		(129,339)		987,060
Goodwill as of June 30, 2014		897		16,882		-		-		17,779
Goodwill as of December 31, 2013	$	897	$	16,882	$	-	$	-	$	17,779

Commercial & Retail Banking

For the three months ended June 30, 2015, the Commercial & Retail Banking segment earned$911 compared to $823 during the three months ended June 30, 2014. Net interest income increased by $1.1 million, mainly the result of average loan balances increasing by$173.0 million. In addition, average subordinated debt increased$29.1 million which led to a $262 increase in interest expense. Noninterest income decreased by $528,  largely the result of decreased gains on sales of portfolio loans of $204 and decreased gains on security sales of $121. The decreased gain on sales of portfolio loans was the result of an $8.1 million decrease in volume of portfolio loans sold. Noninterest expense increased by $747, mainly the result of the following:$387 increase in salaries expense and$300 increase in data processing and communications expense. Preferred stock dividends also increased by $121 as a result of new preferred stock issued by the Company on June 30, 2014.

For the six months ended June 30, 2015, the Commercial & Retail Banking segment earned  $874 compared to $2.0 million during the six months ended June 30, 2014. Net interest income increased by $1.5 million, mainly the result of average loan balances increasing by $171.8 million. In addition, average subordinated debt increased $29.2 million which led to a $956 increase in interest expense. Noninterest income decreased by $1.0 million, largely the result of

32

decreased gains on sales of portfolio loans of $533 and decrease of $494 in gain on derivative. The decreased gain on sales of portfolio loans was the result of an $8.1 million decrease in volume of portfolio loans sold. Noninterest expense increased by $2.2 million, mainly the result of the following: $1.1 million in salaries expense, $521 in occupancy and equipment expense, $599 in data processing and communications expense and$446 in professional fees. Preferred stock dividends also increased by $121 as a result of new preferred stock issued by the Company on June 30, 2014.

Mortgage Banking

For the three months ended June 30, 2015, the Mortgage Banking segment earned $1.2 million compared to$400during the three months ended June 30, 2014. Net interest income increased $198, noninterest income increased by $3.5million and noninterest expense increased by $2.5million. The $769 earnings increase is mainly due to a 69% increase in origination volume, which helped drive a $4.2 million increase in mortgage fee income.A  $9.5 million decrease in loans held for sale caused a $691decrease in gain on derivative. Personnel expense also increased by $1.9 million.

For the six months ended June 30, 2015, the Mortgage Banking segment earned $3.0 million compared to$359during the six months ended June 30, 2014. Net interest income increased $317, noninterest income increased by $8.9 million and noninterest expense increased by $5.0 million. The $2.6 million earnings increase is mainly due to a 94% increase in origination volume, which helped drive a $7.2 million increase in mortgage fee income as well as a  $1.7 million increase in gain on derivative. Personnel expense also increased by $4.0 million.

Insurance

For the three months ended June 30, 2015, the Insurance segment lost$174 compared to  a$253loss during the three months ended June 30, 2014. Noninterest income increased by $114 and noninterest expense decreased by $15.  Income tax benefit for the second quarter 2015 decreased by $50.

For the six months ended June 30, 2015, the Insurance segment earned$169 compared to  a$261 loss during the six months ended June 30, 2014. Noninterest income increased by $782 and noninterest expense increased by $86.  Income tax expense for the six months ended June 30, 2015 increased by $266.

Note 10 – Pension Plan

The Company participates in a trusteed pension plan known as the Allegheny Group Retirement Plan covering virtually all full-time employees.  Benefits are based on years of service and the employee's compensation.  Accruals under the Plan were frozen as of May 31, 2014. Freezing the plan resulted in a re-measurement of the pension obligations and plan assets as of the freeze date. The pension obligation was re-measured using the discount rate based on the Citigroup Above Median Pension Discount Curve in effect on May 31, 2014 of 4.46%.  

Information pertaining to the activity in the Company's defined benefit plan, using the latest available actuarial valuations for the three and six months ended June 30, 2015 and 2014 is as follows:

	For the three months ended		For the three months ended
(in thousands)	June 30, 2015		June 30, 2014
Service cost	$	-	$	138
Interest cost		78		77
Expected Return on Plan Assets		(79)		(79)
Amortization of Net Actuarial Loss		64		35
Amortization of Prior Service Cost		—		—
Net Periodic Benefit Cost	$	63	$	171
Contributions Paid	$	36	$	94

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	For the six months ended		For the six months ended
(in thousands)	June 30, 2015		June 30, 2014
Service cost	$	—	$	346
Interest cost		157		155
Expected Return on Plan Assets		(158)		(158)
Amortization of Net Actuarial Loss		128		70
Amortization of Prior Service Cost		—		—
Net Periodic Benefit Cost	$	127	$	413
Contributions Paid	$	72	$	188

Note 11 – Comprehensive Income

The following tables present the components of accumulated other comprehensive income (“AOCI”) for the three and sixmonths ended June 30, 2015 and 2014:

	For the three months ended		For the three months ended		For the six months ended		For the six months ended
	June 30, 2015		June 30, 2014		June 30, 2015		June 30, 2014
	Amount		Amount		Amount		Amount
(in thousands)	Reclassified		Reclassified		Reclassified		Reclassified		Affected line item in the Statement where net
Details about AOCI Components	from AOCI		from AOCI		from AOCI		from AOCI		income is presented
Available-for-sale securities
Unrealized holding gains	$	5	$	125	$	126	$	125	Gain on sale of securities
		5		125		126		125	Total before tax
		(2)		(50)		(50)		(50)	Income tax expense
		3		75		76		75	Net of tax
Defined benefit pension plan items
Amortization of net actuarial loss		(64)		(35)		(128)		(70)	Salaries and benefits
		(64)		(35)		(128)		(70)	Total before tax
		25		14		50		27	Income tax expense
		(39)		(21)		(78)		(43)	Net of tax
Total reclassifications	$	(36)	$	54	$	(2)	$	32

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	Unrealized
	gains (losses)
	on available-		Defined benefit
	for-sale		pension plan
(in thousands)	securities		items		Total
Balance at March 31, 2015	$	(154)	$	(2,400)	$	(2,554)
Other comprehensive income (loss) before reclassification		(255)		441		186
Amounts reclassified from AOCI		(3)		39		36
Net current period OCI		(258)		480		222
Balance at June 30, 2015	$	(412)	$	(1,920)	$	(2,332)
Balance at March 31, 2014	$	(1,154)	$	(1,485)	$	(2,639)
Other comprehensive income loss before reclassification		666		(210)		456
Amounts reclassified from AOCI		(75)		21		(54)
Net current period OCI		591		(189)		402
Balance at June 30, 2014	$	(563)	$	(1,674)	$	(2,237)
Balance at January 1, 2015	$	(406)	$	(2,236)	$	(2,642)
Other comprehensive income (loss) before reclassification		70		238		308
Amounts reclassified from AOCI		(76)		78		2
Net current period OCI		(6)		316		310
Balance at June 30, 2015	$	(412)	$	(1,920)	$	(2,332)
Balance at January 1, 2014	$	(1,476)	$	(1,485)	$	(2,961)
Other comprehensive income loss before reclassification		988		(232)		756
Amounts reclassified from AOCI		(75)		43		(32)
Net current period OCI		913		(189)		724
Balance at June 30, 2014	$	(563)	$	(1,674)	$	(2,237)

Note 12 – Mergers and Acquisitions

On July 29, 2014 the Company and its subsidiary, the Bank, had entered into an amended Purchase and Assumption Agreement (“Agreement”)with CFG Community Bank (“CFG Bank”) and its parent, Capital Funding Bancorp, Inc., and affiliates, Capital Finance, LLC and Capital Funding, LLC. The Agreement was subsequently terminated on October 31, 2014 by a Mutual Termination Agreement (“Mutual Termination Agreement”) among the parties. 

The Agreement and Agreement Amendment provided that the Bank, subject to regulatory approvals, would purchase certain assets and assume certain liabilities of CFG Bank and its subsidiaries for $30 million in consideration, consisting of $26 million in cash and $4 million in shares of Company common stock, subject to certain adjustments; however, under the Mutual Termination Agreement, the Company, CFG Bank, Capital Funding Bancorp, Inc. and the other affiliates of CFG Bank have mutually agreed to terminate the Agreement and Agreement Amendment without any future obligation or liability between or among the parties under the Agreement or Agreement Amendment.  The Bank and CFG Bank, as well as other CFG Bank affiliates, intend to continue a working relationship and may, from time to time, engage in loan transactions and, if applicable, servicing arrangements.

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On May 1, 2015, MVB Bank, Inc. (MVB Bank), a wholly-owned subsidiary of MVB Financial Corp. (MVB Financial or the Company), issued a joint news release with BB&T Corporation (BB&T) and Susquehanna Bancshares, Inc. (Susquehanna) announcing the signing of a definitive agreement, subject to customary closing conditions including regulatory approvals, through which MVB Bank will acquire two branch locations of Susquehanna Bank in Berkeley County, West Virginia and will assume approximately $69 million of deposits and $17 million of loans. The two Susquehanna Bank branch locations are slated for divestiture under BB&T’s agreement with the United States Department of Justice and commitments to the Board of Governors of the Federal Reserve System in connection with BB&T’s pending acquisition of Susquehanna. On July 22, 2015, regulatory approvals for the acquisition of the two Susquehanna Bank branch locations were received. The acquisition is expected to close August 28, 2015.

The following acquisition related costs are included in the consolidated statements of income for the three and six months ended June 30, 2015 and 2014:

	Three Months Ended		Three Months Ended
(in thousands)	June 30, 2015		June 30, 2014
Professional fees	$	12	$	3
Marketing		—		2
Printing, postage and supplies		3		1
Equipment depreciation and maintenance		—		1
Travel and entertainment		5		41
Total	$	20	$	48

	Six months ended		Six months ended
(in thousands)	June 30, 2015		June 30, 2014
Professional fees	$	12	$	72
Marketing		—		4
Printing, postage and supplies		3		8
Equipment depreciation and maintenance		—		6
Travel and entertainment		5		73
Total	$	20	$	163

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

FORWARD-LOOKING INFORMATION

Statements in this Quarterly Report on Form 10-Q that are based on other than historical data are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements provide current expectations or forecasts of future events and include, among others:

· statements with respect to the beliefs, plans, objectives, goals, guidelines, expectations, anticipations, and future financial condition, results of operations and performance of MVB  Financial Corp. (the “Company”) and its subsidiaries (collectively “we,” “our,” or “us), including MVB Bank, Inc. (the “Bank”);

· statements preceded by, followed by or that include the words “may,” “could,” “should,” “would,” “believe,” “anticipate,” “estimate,” “expect,” “intend,” “plan,” “projects,” or similar expressions.

These forward-looking statements are not guarantees of future performance, nor should they be relied upon as representing the Company’s or the Bank management’s views as of any subsequent date. Forward-looking statements involve significant risks and uncertainties and actual results may differ materially from those presented, either expressed or implied, including, but not limited to, those presented in this Management’s Discussion and Analysis section. Factors that might cause such differences include, but are not limited to:

· the ability of the Company, the Bank, MVB Mortgage, and MVB Insurance to successfully execute business plans, manage risks, and achieve objectives;

· changes in local, national and international political and economic conditions, including without limitation the political and economic effects of the recent economic crisis, delay of recovery from that crisis, economic conditions and fiscal imbalances in the United States and other countries, potential or actual downgrades in rating of sovereign debt issued by the United States and other countries, and other major developments, including wars, military actions, and terrorist attacks;

· changes in financial market conditions, either internationally, nationally or locally in areas in which the Company, the Bank,  MVB Mortgage, and MVB Insurance conduct operations, including without limitation, reduced rates of business formation and growth, commercial and residential real estate development and real estate prices;

· fluctuations in markets for equity, fixed-income, commercial paper and other securities, including availability, market liquidity levels, and pricing; changes in interest rates, the quality and composition of the loan and securities portfolios, demand for loan products, deposit flows and competition;

· the ability of the Company, the Bank, MVB Mortgage, and MVB Insurance to successfully conduct acquisitions and integrate acquired businesses;

· potential difficulties in expanding the businesses of the Company, the Bank, MVB Mortgage, and MVB Insurance in existing and new markets;

· increases in the levels of losses, customer bankruptcies, bank failures, claims, and assessments;

· changes in fiscal, monetary, regulatory, trade and tax policies and laws, and regulatory assessments and fees, including policies of the U.S. Department of Treasury, the Board of Governors of the Federal Reserve Board System, and the FDIC;

· the impact of executive compensation rules under the Dodd-Frank Act and banking regulations which may impact the ability of the Company, the Bank, MVB Mortgage, MVB Insurance, and other American financial 37

institutions to retain and recruit executives and other personnel necessary for their businesses and competitiveness;

· the impact of the Dodd-Frank Act and of new international standards known as Basel III, and rules and regulations thereunder, many of which have not yet been promulgated, on our required regulatory capital and liquidity levels, governmental assessments on us, the scope of business activities in which we may engage, the manner in which the Company, the Bank, MVB Mortgage, and MVB Insurance engage in such activities, the fees that the Bank, MVB Mortgage, and MVB Insurance may charge for certain products and services, and other matters affected by the Dodd-Frank Act and these international standards;

· continuing consolidation in the financial services industry; new legal claims against the Company, the Bank, MVB Mortgage, and MVB Insurance, including litigation, arbitration and proceedings brought by governmental or self-regulatory agencies, or changes in existing legal matters;

· success in gaining regulatory approvals, when required, including for proposed mergers or acquisitions;

· changes in consumer spending and savings habits;

· increased competitive challenges and expanding product and pricing pressures among financial institutions;

· inflation and deflation;

· technological changes and the implementation of new technologies by the Company, the Bank, MVB Mortgage, and MVB Insurance;

· the ability of the Company, the Bank, MVB Mortgage, and MVB Insurance to develop and maintain secure and reliable information technology systems;

· legislation or regulatory changes which adversely affect the operations or business of the Company, the Bank, MVB Mortgage, or MVB Insurance;

· the ability of the Company, the Bank, MVB Mortgage, and MVB Insurance to comply with applicable laws and regulations; changes in accounting policies or procedures as may be required by the Financial Accounting Standards Board or regulatory agencies; and,

· costs of deposit insurance and changes with respect to FDIC insurance coverage levels.

Except to the extent required by law, the Company specifically disclaims any obligation to update any factors or to publicly announce the result of revisions to any of the forward-looking statements included herein to reflect future events or developments.

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SUMMARY OF RESULTS OF OPERATIONS

At June 30, 2015 and 2014 and for the Six and Three Months Ended June 30, 2015 and 2014:

	Six months ended						Three months ended
	June 30,						June 30,
	2015			2014			2015			2014
Net income to:
Average assets (annualized)		0.70	%		0.42	%		0.64	%		0.37	%
Average stockholders’ equity (annualized)		7.25	%		4.40	%		6.84	%		3.93	%
Net interest margin		3.01	%		3.07	%		3.06	%		2.99	%
Average stockholders’ equity to average assets		9.59	%		9.54	%		9.35	%		9.42	%
Total loans to total deposits (end of period)		102.26	%		98.29	%		102.26	%		98.29	%
Allowance for loan losses to total loans (end of period)		0.77	%		0.85	%		0.77	%		0.85	%
Efficiency ratio		80.90	%		85.24	%		82.90	%		85.46	%
Bank Capital ratios:
Tier 1 capital ratio		12.25	%		15.20	%		12.25	%		15.20	%
Risk-based capital ratio		12.96	%		16.01	%		12.96	%		16.01	%
Leverage ratio		10.33	%		11.25	%		10.33	%		11.25	%
Common Equity Tier 1 capital ratio		12.25	%		N/A			12.25	%		N/A
Cash dividends on common stock as a percentage of net income		7.97	%		14.90	%		7.97	%		14.90	%
Per share data:
Book value per share (end of period)	$	12.05		$	11.60		$	12.05		$	11.60
Basic earnings per share	$	0.47		$	0.27		$	0.22		$	0.12
Diluted earnings per share	$	0.46		$	0.26		$	0.22		$	0.12

Introduction

MVB Financial Corp. (“the Company”) was formed on January 1, 2004, as a bank holding company and, effective December 19, 2012, became a financial holding company.  The Company features multiple subsidiaries and affiliated businesses, including MVB Bank, Inc. (the “Bank” or “MVB Bank”) and its wholly-owned subsidiary MVB Mortgage and MVB Insurance, LLC (“MVB Insurance”). On December 31, 2013, three Company subsidiaries, MVB-Central, Inc. (a second-tier level holding company), MVB-East, Inc. (a second tier holding company) and Bank Compliance Solutions, Inc. (an inactive subsidiary) were merged into the Company.

The Bank was formed on October 30, 1997 and chartered under the laws of the State of West Virginia.  The Bank commenced operations on January 4, 1999. In August of 2005, the Bank opened a full service office in neighboring Harrison County, West Virginia.  During October of 2005, the Bank purchased a branch office in Jefferson County, West Virginia, situated in West Virginia’s eastern panhandle.  During the third quarter of 2007, the Bank opened a full service office in the Martinsburg area of Berkeley County, West Virginia.  In the second quarter of 2011, the Bank opened a banking facility in the Cheat Lake area of Monongalia County, West Virginia.  The Bank opened its second Harrison County, West Virginia location, the downtown Clarksburg office in the historic Empire Building during the fourth quarter of 2012. 

Also during the fourth quarter of 2012, the Bank acquired Potomac Mortgage Group, Inc. (“PMG” which, following July 15, 2013, began doing business under the registered trade name “MVB Mortgage”), a mortgage company in the northern Virginia area, and fifty percent (50%) interest in a mortgage services company, Lender Service Provider, LLC (“LSP”).  In the third quarter of 2013, this fifty percent (50%) interest in LSP was reduced to a twenty-five percent (25%) interest through a sale of a partial interest.  This PMG acquisition provided the Company and the Bank the opportunity to make the mortgage banking operation a much more significant line of business to further diversify its net income stream.  

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MVB Mortgage has thirteen mortgage only offices, located in Virginia, Washington, DC, as well as North Carolina and South Carolina, and, in addition, has mortgage loan originators located at select Bank locations throughout West Virginia.

In the first quarter of 2013, the Bank opened its second Monongalia County location in the Sabraton area of Morgantown, West Virginia.  In the second quarter of 2013, the Bank opened its second full service office in Berkeley County, West Virginia, at Edwin Miller Boulevard. In addition, the Bank opened a loan production office at 184 Summers Street, Charleston, Kanawha County, West Virginia, which was subsequently moved to 400 Washington Street East, Charleston, West Virginia and later replaced during March 2015 by a full service branch at the same location. During the first quarter of 2014, the Company continued to focus on growth in the Harrison, Berkeley, Jefferson and Monongalia County areas, as well as the Kanawha county area, as the primary method for reaching performance goals. In addition, the Bank opened a loan production office in Reston, Fairfax County, Virginia, from which the Bank operates as MVB Commercial Lending Company. During January 2015, the Bank opened a location at 100 NASA Boulevard, Fairmont, Marion County, West Virginia, which replaced the 9789 Mall Loop, White Hall, Marion County, West Virginia location as the Technology Park location offers a drive-thru facility to better serve customers. During March 2015, the location at 9789 Mall Loop was closed.  Additionally during March 2015, the Bank opened a new full service location at 400 Washington Street East, Charleston, Kanawha County, West Virginia, replacing its loan production office at the same address.The Company continuously reviews key performance indicators to measure success.

Currently, the Bank operates ten full-service banking branches in West Virginia, which are located at:  301 Virginia Avenue in Fairmont, Marion County; 100 NASA Boulevard in Fairmont, Marion County; 1000 Johnson Avenue in Bridgeport, Harrison County; 406 West Main St. in Clarksburg, Harrison County; 88 Somerset Boulevard in Charles Town, Jefferson County; 651 Foxcroft Avenue in Martinsburg, Berkeley County; 2400 Cranberry Square in Cheat Lake, Monongalia County; 10  Sterling  Drive in Morgantown, Monongalia County; and 231 Aikens Center in Martinsburg, Berkeley County; 400 Washington Street East in Charleston, Kanawha Country. In addition, as noted, the Bank operates a loan production office as MVB Commercial Lending Company, at 1801 Reston Parkway, Suite 103, Reston, Fairfax County, Virginia.

In addition to MVB Mortgage, the Company has a wholly-owned subsidiary, MVB Insurance, LLC.  MVB Insurance was originally formed in 2000 and reinstated in 2005, as a Bank subsidiary.  Effective June 1, 2013, MVB Insurance became a direct subsidiary of the Company.  MVB Insurance offers select insurance products such as title insurance, individual insurance, commercial insurance, employee benefits insurance, and professional liability insurance.  MVB Insurance maintains its headquarters at 301 Virginia Avenue, Fairmont, West Virginia, and operates offices at: 48 Donley Street, Suite 703, Morgantown, West Virginia, 400 Washington Street East, Charleston, West Virginia,; and 300 Wharton Circle, Suite 260, Triadelphia, West Virginia.

The Company’s primary business activities, through its Subsidiaries, are currently community banking, mortgage banking, insurance services, and wealth management.  As a community banking entity, the Bank offers its customers a full range of products through various delivery channels.  Such products and services include checking accounts, NOW accounts, money market and savings accounts, time certificates of deposit, commercial, installment, commercial real estate and residential real estate mortgage loans, debit cards, and safe deposit rental facilities.  Services are provided through our walk-in offices, automated teller machines (“ATMs”), drive-in facilities, and internet and telephone banking. Additionally, the Bank offers non-deposit investment products through an association with a broker-dealer.  Since the opening date of January 4, 1999, the Bank, has experienced significant growth in assets, loans, and deposits due to overwhelming community and customer support in the Marion County, West Virginia and Harrison County, West Virginia markets, expansion into West Virginia’s eastern panhandle counties and, most recently, into Monongalia County, West Virginia.  With the acquisition of PMG, mortgage banking is now a much more significant focus, which has opened up increased market opportunities in the Washington, District of Columbia metropolitan region and added enough volume to better diversify the Company’s earnings stream.

This discussion and analysis should be read in conjunction with the prior year-end audited financial statements and footnotes thereto included in the Company’s filing on Form 10-K and the unaudited financial statements, ratios, statistics, and discussions contained elsewhere in this Form 10-Q. At June 30, 2015, the Company had 351 full-time

40

equivalent employees. The Company’s principal office is located at 301 Virginia Avenue, Fairmont, West Virginia 26554, and its telephone number is (304) 363-4800.  The Company’s Internet web site is www.mvbbanking.com.

Application of Critical Accounting Policies

The Company’s consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States and follow general practices within the banking industry.  Application of these principles requires management to make estimates, assumptions, and judgments that affect the amounts reported in the financial statements; accordingly, as this information changes, the financial statements could reflect different estimates, assumptions, and judgments.  Application of certain accounting policies inherently requires a greater reliance on the use of estimates, assumptions and judgments and as such, the probability of actual results being materially different from reported estimates is increased.  Estimates, assumptions, and judgments are necessary when assets and liabilities are required to be recorded at fair value, when a decline in the value of an asset not carried on the financial statements at fair value warrants an impairment write-down or valuation reserve to be established, or when an asset or liability needs to be recorded contingent upon a future event.  Carrying assets and liabilities at fair value inherently results in more financial statement volatility.  The fair values and the information used to record valuation adjustments for certain assets and liabilities are based either on quoted market prices or are provided by other third-party sources, when available. When third-party information is not available, valuation adjustments are estimated in good faith by management primarily through the use of internal forecasting techniques.

The most significant accounting policies followed by the Company are presented in Note 1 to the audited consolidated financial statements included in the Company’s 2014 Annual Report on Form 10-K. These policies, along with the disclosures presented in the other financial statement notes and in management’s discussion and analysis of operations, provide information on how significant assets and liabilities are valued in the financial statements and how those values are determined. Based on the valuation techniques used and the sensitivity of financial statement amounts to the methods, assumptions, and estimates underlying those amounts, management has identified the determination of the allowance for loan losses to be the accounting area that requires the most subjective or complex judgments, and as such could be most subject to revision as new information becomes available.

The allowance for loan losses represents management’s estimate of probable credit losses inherent in the loan portfolio.  Determining the amount of the allowance for loan losses is considered a critical accounting estimate because it requires significant judgment and the use of estimates related to the amount and timing of losses inherent in classifications of homogeneous loans based on historical loss experience of peer banks, and consideration of current economic trends and conditions, all of which may be susceptible to significant change.  Non-homogeneous loans are specifically evaluated due to the increased risks inherent in those loans.  The loan portfolio also represents the largest asset type in the consolidated balance sheet.  Note 1 to the consolidated financial statements in MVB’s 10-K describes the methodology used to determine the allowance for loan losses and a discussion of the factors driving changes in the amount of the allowance for loan losses is included in the Allowance for Loan Losses section of Management’s Discussion and Analysis in this quarterly report on Form 10-Q.

All dollars are expressed in thousands, unless as otherwise noted or specified.

Results of Operations

Overview of the Statements of Income

For the three months ended June 30, 2015, the Company earned $1.9 million compared to $1.0 million in the second quarter of 2014.  Net interest income increased by $1.2 million, noninterest income increased by $3.5 million and noninterest expenses increased by $3.5 million.  The increase in net interest income was driven mainly by the continued growth of the Company balance sheet, with $173.0 million in average loan growth and despite an increase in average interest bearing liabilities of $117.0 million and an increase in interest expense of $338.  The increase in average interest bearing liabilities generated the increase in interest expense of $338, $523 of the increase wasrelated to the issuance of subordinated debt in June 2014, which increased cost of funds on subordinated debt by 421 basis points.There was also a $498 decrease in NOW interest expense for the three months ended June 30, 2015. This decrease was related to the

41

subordinated debt in that the funds were held in escrow during the three months ended 2014 up until the subordinated debt was issued on June 30, 2014.

Loan loss provisions of $561 and $889 were made for the quarters ended June 30, 2015 and 2014, respectively. The decrease in loan loss provision is attributable to significantly less residential real estate loan growth, the decreasing nature of the historical loss rate within the home equity loan portfolio and lower historical levels of charge-offs. The provision for loan losses, which is a product of management’s formal quarterly analysis, is recorded in response to inherent risks in the loan portfolio.  The Company charged off no in loans during the second quarter of 2015 versus $104for the same time period in 2014.  

For the six months ended June 30, 2015, the Company earned $4.0 million compared to $2.1 million for the six months ended June 30, 2014.  Net interest income increased by $1.8 million, noninterest income increased by $9.1 million and noninterest expenses increased by $7.7 million.  The increase in net interest income was driven mainly by the continued growth of the Company balance sheet, with $171.8 million in average loan growth and despite an increase in average interest bearing liabilities of $113.3 million and an increase in interest expense of $1.1 million. The increase in average interest bearing liabilities generated the increase in interest expense of $1.1 million, $1.0 million which related to the issuance of subordinated debt in June 2014, which increased cost of funds on subordinated debt by 441 basis points. There was also a $401 decrease in NOW interest expense for the six months ended June 30, 2015. This decrease was related to the subordinated debt in that the funds were held in escrow during the six months ended 2014 up until the subordinated debt was issued on June 30, 2014.

Loan loss provisions of $1.2 million and $1.4 million were made for the six months ended June 30, 2015 and 2014, respectively. The decrease in loan loss provision is attributable to significantly lessresidential real estate loan growth, the decreasing nature of the historical loss rate within the home equity loan portfolio and lower historical levels of charge-offs. The provision for loan losses, which is a product of management’s formal quarterly analysis, is recorded in response to inherent risks in the loan portfolio.  The Company charged off $423 in loans during the six month period ended June 30, 2015 versus $111for the same time period in 2014.  

Interest Income and Expense

Net interest income is the amount by which interest income on earning assets exceeds interest expense on interest-bearing liabilities. Interest-earning assets include loans and investment securities. Interest-bearing liabilities include interest-bearing deposits and repurchase agreements, subordinated debt and Federal Home Loan Bank advances. Net interest income is a primary source of revenue for the bank. Changes in market interest rates, as well as changes in the mix and volume of interest-earning assets and interest-bearing liabilities impact net interest income. Net interest margin is calculated by dividing net interest income by average interest-earning assets. This ratio serves as a performance measurement of the net interest revenue stream generated by the Bank’s balance sheet.

The net interest margin for the three months ended June 30, 2015 and 2014 was 3.06% and 2.99% respectively.  The 7 basis point increase in the net interest margin for the quarter ended June 30, 2015 was the result of an8 basis point increase in yield, mainly the result of a 32 basis point increase in yield on real estate loans and loans held for sale. Interest expense related to the new subordinated debt that was issued on June 30, 2014 increased $523. The new subordinated debt earned an average rate of approximately 7% during the three month period ended June 30, 2015. This was offset by the decrease in interest expense on NOW deposits of $498, as discussed above. The continued low rate environment and increasing competition for quality credit continues to apply pressure upon the Bank’s loan portfolio yield. The Bank was able to grow average loan balances by $173.0 million, which enabled an increase in net interest income of $1.2 million. Additionally, investment securities average balance declined by $36.2 million through sales and maturities, and the resulting funds earned higher rates in the loan portfolio.  An increase in the Bank’s average non-interest bearing balances of $12.4 million led to a favorable increase in the impact of non-interest bearing funds on the margin by 1 basis point.

The net interest margin for the six months ended June 30, 2015 and 2014 was 3.01% and 3.07% respectively.  The 6 basis point decrease in the net interest margin for the six months ended June 30, 2015 was the result of a 12 basis point

42

increase in cost of funds and a 4 basis point increase in yield.The 12 basis point increase in cost of funds was mainly the result of the addition of new subordinated debt. Interest expense related to the new subordinated debt that was issued on June 30, 2014 increased $1.0 million. The 4 basis point increase in yield was mainly the result of a 19 basis point increase in yield on real estate loans and loans held for sale The continued low rate environment and increasing competition for quality credit continues to apply pressure upon the Bank’s loan portfolio yield. The Bank was able to grow average loan balances by $171.8 million, which enabled an increase in net interest income of $2.8 million. Additionally, investment securities average balance declined by $39.6 million through sales and maturities, and the resulting funds earned higher rates in the loan portfolio.  An increase in the Bank’s average non-interest bearing balances of $12.5 million led to a favorable increase in the impact of non-interest bearing funds on the margin by 2 basis point.

Company and Bank management continuously monitor the effects of net interest margin on the performance of the Bank and, thus, the Company. Growth and mix of the balance sheet will continue to impact net interest margin in future periods.

43

Average Balances and Interest Rates

(Unaudited)(Dollars in thousands)

	Three Months Ended						Three Months Ended
	June 30, 2015						June 30, 2014
			Interest						Interest
	Average		Income/		Yield/		Average		Income/		Yield/
	Balance		Expense		Cost		Balance		Expense		Cost
Assets
Interest-bearing deposits in banks	$	13,035	$	9	0.28	%	$	13,347	$	9	0.27	%
CD’s with other banks		11,659		54	1.85			9,427		42	1.78
Investment securities:
Taxable		53,396		222	1.66			97,470		358	1.47
Tax-exempt		64,172		382	2.38			56,304		407	2.89
Loans and loans held for sale:
Commercial		593,831		6,308	4.25			483,635		5,476	4.53
Tax exempt		21,179		188	3.55			38,226		350	3.66
Real estate		326,220		3,356	4.12			244,634		2,327	3.80
Consumer		16,743		175	4.18			18,479		193	4.18
Allowance for loan losses		(6,740)						(5,924)
Net loans		951,233		10,027	4.22			779,050		8,346	4.29
Total earning assets		1,100,235		10,694	3.89			961,522		9,162	3.81
Cash and due from banks		13,381						19,834
Other assets		83,404						72,937
Total assets	$	1,190,280					$	1,048,369
Liabilities
Deposits:
NOW	$	426,094	$	641	0.60	%	$	389,650	$	1,139	1.17	%
Money market checking		61,611		91	0.59			30,160		30	0.40
Savings		37,364		28	0.30			37,897		31	0.33
IRAs		10,765		33	1.23			9,609		26	1.08
CDs		276,272		729	1.06			219,094		465	0.85
Repurchase agreements & federal funds sold		26,140		20	0.31			78,699		107	0.54
FHLB and other borrowings		123,847		177	0.57			109,098		143	0.52
Subordinated debt		33,524		549	6.55			4,446		26	2.34
Total interest-bearing liabilities		995,617		2,268	0.91			878,653		1,967	0.90
Non-interest bearing demand deposits		75,338						62,904
Other liabilities		7,980						8,091
Total liabilities		1,078,935						949,648
Stockholders’ equity
Preferred stock		16,334						8,586
Common stock		8,038						7,954
Paid-in capital		74,447						72,203
Treasury stock		(1,084)						(1,084)
Retained earnings		16,162						13,698
Accumulated other comprehensive income		(2,552)						(2,636)
Total stockholders’ equity		111,345						98,721
Total liabilities and stockholders’ equity	$	1,190,280					$	1,048,369
Net interest spread					2.98						2.92
Impact of non-interest bearing funds on margin					0.08						0.07
Net interest income-margin			$	8,426	3.06	%			$	7,195	2.99	%

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	Six Months Ended						Six Months Ended
	June 30, 2015						June 30, 2014
			Interest						Interest
	Average		Income/		Yield/		Average		Income/		Yield/
	Balance		Expense		Cost		Balance		Expense		Cost
Assets
Interest-bearing deposits in banks	$	14,404	$	19	0.26	%	$	12,380	$	14	0.23	%
CD’s with other banks		11,723		108	1.84			9,427		83	1.76
Investment securities:
Taxable		53,846		461	1.71			101,675		769	1.51
Tax-exempt		64,758		770	2.38			56,525		820	2.90
Loans and loans held for sale:
Commercial		572,626		12,015	4.20			459,212		10,312	4.49
Tax exempt		21,016		371	3.53			37,719		691	3.66
Real estate		307,210		6,235	4.06			230,590		4,462	3.87
Consumer		17,027		353	4.15			18,539		388	4.19
Allowance for loan losses		(6,678)						(5,628)
Net loans		911,201		18,974	4.16			740,432		15,853	4.28
Total earning assets		1,062,610		20,332	3.83			926,067		17,539	3.79
Cash and due from banks		14,077						22,306
Other assets		83,105						71,895
Total assets	$	1,153,114					$	1,014,640
Liabilities
Deposits:
NOW	$	420,579	$	1,290	0.61	%	$	364,514	$	1,691	0.93	%
Money market checking		57,316		172	0.60			30,972		61	0.39
Savings		37,053		55	0.30			38,278		68	0.36
IRAs		10,305		62	1.20			9,607		56	1.17
CDs		260,163		1,310	1.01			225,960		920	0.81
Repurchase agreements & federal funds sold		28,050		44	0.31			77,007		233	0.61
FHLB and other borrowings		114,796		334	0.58			97,821		273	0.56
Subordinated debt		33,524		1,092	6.51			4,286		45	2.10
Total interest-bearing liabilities		961,786		4,359	0.91			848,445		3,347	0.79
Non-interest bearing demand deposits		73,815						61,319
Other liabilities		6,977						8,125
Total liabilities		1,042,578						917,889
Stockholders’ equity
Preferred stock		16,334						8,543
Common stock		8,036						7,826
Paid-in capital		74,415						70,383
Treasury stock		(1,084)						(1,084)
Retained earnings		15,431						13,879
Accumulated other comprehensive income		(2,596)						(2,796)
Total stockholders’ equity		110,536						96,751
Total liabilities and stockholders’ equity	$	1,153,114					$	1,014,640
Net interest spread					2.92						3.00
Impact of non-interest bearing funds on margin					0.09						0.07
Net interest income-margin			$	15,973	3.01	%			$	14,192	3.07	%

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Non-Interest Income

Mortgage fee income, insurance and investment services income and gain on derivatives generate the core of the Bank’s noninterest income. Also, gain on sale of portfolio loans continue to be part of the core of the Bank’s noninterest income.

For the three months ended June 30, 2015, noninterest income totaled $10.5 million compared to $7.1 million for the same time period in 2014.  The $3.5 million increase in noninterest income was mainly the result of an increase in mortgage fee income of $4.3 million and a decrease in gain on derivatives of $747. The increase in mortgage fee income was due to an increase in loan production and loan sale volume as a result of an expansion into new markets and a decrease in interest rates.The decrease in gain on derivatives was a result of a $9.5 million decrease in loans held for sale.  Further, the decrease in interest rates has increased the share of refinances from 18% during the second quarter of 2014 to 27% during the second quarter of 2015.

For the six months ended June 30, 2015, noninterest income totaled $21.9 million compared to $12.8 million for the same time period in 2014.  The $9.1 million increase in noninterest income was mainly the result of an increase in mortgage fee income of $7.4 million, an increase in gain on derivatives of $1.2 million and an increase in insurance and investment services income of $827.  Both the increase in mortgage fee income and gain on derivatives was due to an increase in loan production and loan sale volume as a result of an expansion into new markets and a decrease in interest rates. Further, the decrease in interest rates has increased the share of refinances from 19% during the six months ended June 30, 2014 to 41% during the same time period in 2015.

Non-Interest Expense

The Company had 351 full-time equivalent personnel at June 30, 2015, as noted, compared to 313 full-time equivalent personnel as of June 30, 2014.  Company and Bank management will continue to strive to find new ways of increasing efficiencies and leveraging its resources, while effectively optimizing customer service.

Salaries and employee benefits, occupancy and equipment,  data processing and communications, mortgage processing and professional fees generate the core of the Company’s noninterest expense. The Company’s efficiency ratio was 82.90% for the second  quarter of 2015 compared to 85.46% for the second quarter of 2014. This ratio measures the efficiency of noninterest expenses incurred in relationship to net interest income plus noninterest income.  The decreased efficiency ratio is the result of net interest income and noninterest income outpacing the growth in noninterest expense.

For the three months ended June 30, 2015,  noninterest expense totaled $15.7 million compared to $12.2 million for the same time period in 2014. The $3.5 million increase in noninterest expense was mainly the result of the following:

Salaries and employee benefits expense increased $2.3 million,  this increase related to: the addition of new bank and mortgage offices, increased commissions related to increased mortgage production, additional staffing related to organic growth and raises for existing staff.

Occupancy and equipment expense increased $338. This increase was mainly the result of the opening of multiple new bank and mortgage office locations, the completion of a new facility in Kanawha County, West Virginia and construction of a new facility in the West Virginia High Technology Park in Fairmont, Marion County, West Virginia.

Data processing and communication costs increased $248. This increase was largely driven by overall growth in terms of client base, personnel and office space, and the usage of new and enhanced products, services and providersto better serve the client base.

Mortgage processing costs increased $223. This increase was primarily the result of increase mortgage loan volume.

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Salaries and employee benefits, occupancy and equipment,  data processing and communications, mortgage processing and professional fees generate the core of the Company’s noninterest expense. The Company’s efficiency ratio was 80.90% for the six months ended June 30, 2015 compared to 85.24% for the same time period in 2014. This ratio measures the efficiency of noninterest expenses incurred in relationship to net interest income plus noninterest income.  The decreased efficiency ratio is the result of net interest income and noninterest income outpacing the growth in noninterest expense.

For the six months ended June 30, 2015, noninterest expense totaled $30.7 million compared to $23.0 million for the same time period in 2014. The $7.7 million increase in noninterest expense was mainly the result of the following:

Salaries and employee benefits expense increased $5.2 million, this increase related to: the addition of new bank and mortgage offices, increased commissions related to increased mortgage production, additional staffing related to organic growth and raises for existing staff.

Occupancy and equipment expense increased $707. This increase was mainly the result of the opening of multiple new bank and mortgage office locations, the completion of a new facility in Kanawha County, West Virginia and construction of a new facility in the West Virginia High Technology Park in Fairmont, Marion County, West Virginia.

Data processing and communication costs increased $489. This increase was largely driven by overall growth in terms of client base, personnel and office space, and the usage of new and enhanced products, services and providers to better serve the client base.

Mortgage processing costs increased $424. This increase was primarily the result of increase mortgage loan volume.

Return on Average Assets and Average Equity (Annualized)

Returns on average assets (ROA) and average equity (ROE) annualized were .64% and 6.84% for the second quarter of 2015 compared to .37% and 3.93% in the second quarter of 2014. The .27% increase in ROA is due to increased earnings of $936 and a $141.9 million increase in average assets for the second quarter of 2015 compared to the second quarter of 2014. The increase in average assets was primarily due to an increase in net loans due to continued loan growth. The 2.91% increase in ROE is also due to increased earnings of $936 and a $12.6 million increase in average equity for the second quarter of 2015 compared to the second quarter of 2014. The increase in average equity was mainly due to the issuance of additional preferred stock.

Overview of the Statement of Condition

The Company’s interest-earning assets, interest-bearing liabilities, and stockholders’ equity changed significantly during the second quarter of 2015 compared to June 30, 2014. The most significant areas of change between the quarters ended June 30, 2015 and June 30, 2014 were as follows: net loans increased to an average balance of $951.2 million from $779.1 million, investment securities declined by $36.2 million to an average of $117.6 million, interest-bearing liabilities grew to an average balance of $995.6 million from $878.7 million and stockholders’ equity grew by $12.6 million to an average of $111.3 million.  These trends reflect the continued growth of the Company and its subsidiariesin the loan, deposit and capital areas.

Total assets at June 30, 2015 were $1.3  billion or an increase of $142.6 million since December 31, 2014.  The greatest areas of increase were $112.0 million in net loan growth and $46.8 in loans held for sale.

Deposits totaled $891.0 million at June 30, 2015 or an increase of $67.7 million since December 31, 2014, mainly the result of an increase in savings, NOW and time deposits.  

Stockholders’ equity has increased approximately $3.8 million from December 31, 2014mainly due to earnings for the six months ended June 30, 2015 of $4.0 million.

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Cash and Cash Equivalents

Cash and cash equivalents totaled $14.0 million as of June 30, 2015 compared to $30.1 million as of December 31, 2014. 

Total cash and cash equivalents fluctuate on a daily basis due to transactions in process and other liquidity and performance demands.  Management believes the liquidity needs of the Company are satisfied by the current balance of cash and cash equivalents, readily available access to traditional and non-traditional funding sources, and the portions of the investment and loan portfolios that mature within one year.  These sources of funds should enable the Company and the Bank to meet cash obligations as they come due. 

Investment Securities

Investment securities totaled $119.0 million as of June 30, 2015 and $122.8 million as of December 31, 2014. The investment portfolio is fairly evenly balanced between government sponsored agency securities, mortgage-backed securities and municipal securities. 

During the three months ended June 30, 2015, the Bank sold a held-to-maturity investment security due to a credit downgrade. This type of sale is permissible in accordance with GAAP. Due to the significant deterioration in this issuer’s creditworthiness, we feel the sale does not taint our intentions in regards to the remainder of our held-to-maturity portfolio.

The Company and Bank management monitor the earnings performance and liquidity of the investment portfolio on a regular basis through Asset/Liability Committee meetings. The group also monitors net interest income and pricing guidelines, and manages interest rate risk for the bank. Through active balance sheet management and analysis of the investment securities portfolio, the bank maintains sufficient liquidity to satisfy depositor requirements and the various credit needs of its customers. The Company and Bank management believes the risk characteristics inherent in the investment portfolio are acceptable based on these parameters.

Loans

The Company’s loan portfolio totaled $911.1 million as of June 30, 2015 and $798.3 million as of December 31, 2014. The Bank’s lending is primarily focused in the Marion, Harrison, Jefferson, Berkeley, Monongalia, and Kanawha counties of West Virginia,as well as the northern Virginia area for the mortgage and commercial lending business. Its extended market is in the adjacent counties. The portfolio consists principally of commercial lending, retail lending, which includes single-family residential mortgages, and consumer lending. The growth in loans is primarily attributable to organic growth within the Bank’s primary lending areas and northern Virginia.

Loan Concentration

At June 30, 2015, commercial loans comprised the largest component of the loan portfolio.  The majority of commercial loans that are not secured by real estate are lines of credit secured by accounts receivable and equipment and obligations of states and political subdivisions. While the loan concentration is in commercial loans, the commercial portfolio is comprised of loans to many different borrowers, in numerous different industries but primarily located in our market areas. The loan portfolio mix as of June 30, 2015 remains consistent with the mix as of December 31, 2014.  

Allowance for Loan Losses

The allowance for loan losses was $7.0 million or 0.77% of total loans at June 30, 2015 compared to $6.2 million or 0.78% of total loans at December 31, 2014. The Bank management continually monitors the loan portfolio through review of the monthly delinquency reports and through the Bank Loan Review Committee.  The Bank Loan Review Committee is responsible for the determination of the adequacy of the allowance for loan losses.  Their analysis involves both experience of the portfolio to date and the makeup of the overall portfolio.  Specific loss estimates are derived for individual loans based on specific criteria such as current delinquency status, related deposit account activity, where applicable, local market rumors, which are generally based on some factual information, and changes in the local and

48

national economy.  While local market rumors are not measurable or perhaps not readily supportable, historically, this form of information can be an indication of a potential problem.  The allowance for loan losses is further based upon the internal risk rating assigned to the various loan types within the portfolio.

Capital Resources

The Company considers a number of alternatives, including but not limited to deposits, short-term borrowings and long-term borrowings when evaluating funding sources. Traditional deposits continue to be the most significant source of funds for the bank, reaching $891.0 million at June 30, 2015.

Non-interest bearing deposits remain a core funding source for the Bank and, thus, the Company.  At June 30, 2015, non-interest bearing deposits totaled $76.7 million compared to $67.1 million at December 31, 2014.  The Company and Bank management intend to continue to focus on finding ways to increase the base of non-interest bearing funding sources of the Bank and other Company subsidiaries. 

Interest-bearing deposits totaled $814.3 million at June 30, 2015 compared to $756.2 million at December 31, 2014. Average interest-bearing liabilities totaled $995.6 million during the second quarter of 2015 compared to $878.7 million for the second quarter of 2014.  This $117.0 million increase is the result of the following: $58.2 million increase in CDs, $36.4 million increase in NOW, $31.5 million increase in MMDA, $14.7 million increase in FHLB and other borrowings, $29.1 million in subordinated debt and $52.6 million decrease in repurchase agreements and federal funds sold.  Average non-interest bearing demand deposits totaled $75.3 million for the second quarter of 2015 compared to $62.9 million for the second quarter of 2014.  Management will continue to emphasize deposit gathering in 2015 by offering outstanding customer service and competitively priced products.  The Company and Bank management will also concentrate on balancing deposit growth with adequate net interest margin to meet the Company’s strategic goals.

Along with traditional deposits, the Bank has access to both repurchase agreements, which are corporate deposits secured by pledging securities from the investment portfolio, and Federal Home Loan Bank borrowings to fund its operations and investments.  At June 30, 2014, repurchase agreements totaled $26.3 million compared to $32.7 million at December 31, 2014.  In addition to the aforementioned funds alternatives, the Bank has access to more than $312.6 million through additional advances from the Federal Home Loan Bank of Pittsburgh and the ability to readily sell jumbo certificates of deposits to other banks as well as brokered deposit markets.

Liquidity

The Company recognizes the importance of liquidity in the day-to-day operations of the Bank, and believes it is critical to have a plan for addressing liquidity in times of crisis, as well as prudently managing levels to maximize earnings.  The Bank has historically recognized the need for funding sources that go beyond the most important source which is retail deposit business.  The Company and the Bank have created a funding program that identifies various wholesale funding sources that may be used whenever appropriate.  These sources include the following: FHLB advances, brokered deposits, CDARS, repurchase agreements, internet CDs through Qwickrate, the Federal Reserve discount window, State of West Virginia CD auctions, and federal funds purchased through the Federal Reserve.  Limits have been set as to how much MVB will utilize each identified source.  The Bank currently utilizes several of the above. This allows the Bank to lower funding costs slightly while documenting the availability of each.

Current Economic Conditions

The current economic climate in West Virginia, and, in particular, in the six counties in which the Company and the Bank focuses possess better economic climates than the general national climate.  Unemployment in the United States was 5.3% and 6.1% in 2015 and 2014, respectively.  The unemployment levels in the six West Virginia counties where MVB operates in were as follows for the periods indicated:

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	May 2015		May 2014
Berkeley County	5.1	%	5.4	%
Harrison County	6.7	%	5.0	%
Jefferson County	4.4	%	4.6	%
Marion County	7.0	%	5.9	%
Monongalia County	5.1	%	4.4	%
Kanawha County	6.2	%	5.9	%

Nonperforming loans to total loans were 1.07%  in June of 2015 versus 0.35% in June of 2014 and charge offs to total loans were 0.05% and 0.02% for each period respectively. The Company and the Bank continue to closely monitor economic and delinquency trends.

Capital/Stockholders’ Equity

The Company and the Bank have financed operations and growth over the years through the sale of equity.  These equity sales have resulted in an effective source of capital.

During 2013, the Company commenced a private offering to accredited investors under Rule 506 of Regulation D.  As of December 31, 2013, the Company had received subscriptions for 610,194 shares totaling $9.8 million in additional capital at December 31, 2013. 

During the six month period ended June 30, 2014 the Company received additional subscriptions for 361,865 shares totaling $5.8 million in additional capital. The proceeds of this offering are being used to support continued growth of the Company.

At June 30, 2015, accumulated other comprehensive loss totaled $(2,332) compared to $(2,642) at December 31, 2014. This change is primarily the result in the rise of the change in the value of the defined benefit pension plan.

Treasury stock shares totaled 51,077 shares.

The primary source of funds for dividends to be paid by the Company are dividends received by the Company from the Bank. Dividends paid by the Bank are subject to restrictions by banking regulations. The most restrictive provision requires regulatory approval if dividends declared in any year exceed that year’s retained net profits, as defined, plus the retained net profits, as defined, of the two preceding years.

Bank regulators have established “risk-based” capital requirements designed to measure capital adequacy.  Risk-based capital ratios reflect the relative risks of various assets banks hold in their portfolios.  A weight category of 0% (lowest risk assets), 20%, 50%, 100% or 150% (highest risk assets) is assigned to each asset on the balance sheet.  Detailed information concerning MVB’s risk-based capital ratios can be found in Note 14 of the Notes to the Consolidated Financial Statements of the Company’s 2014 Form 10-K. At June 30, 2015, the Company’s and the Bank’s risk-based capital ratios exceeded the minimum standards for a well capitalized financial institution.

Commitments

In the normal course of business, the Bank is party to financial instruments with off-balance sheet risk necessary to meet the financing needs of customers and to manage its own exposure to fluctuations in interest rates. These financial instruments include commitments to extend credit. The instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the balance sheets. The contract or notional amounts of these instruments express the extent of involvement the bank has in these financial instruments.

Loan commitments are made to accommodate the financial needs of the Bank’s customers.  The Bank uses the same underwriting standards in making commitments and conditional obligations as it does for on-balance sheet instruments.

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The amount of collateral obtained is based on management's credit evaluation of the customer. Collateral held varies, but may include accounts receivable, inventory, property, plant, and equipment, and income-producing commercial properties. The total amount of loan commitments outstanding at June  30, 2015 and December 31, 2014 was $215.0 million and $143.2 million, respectively.

Market Risk

There have been no material changes in market risks faced by the Company since December 31, 2014.  For information regarding the Company’s market risk, refer to the Company’s Annual Report to Shareholders for the year ended December 31, 2014.

Effects of Inflation on Financial Statements

Substantially all of the Bank’s assets relate to banking and are monetary in nature. Therefore, they are not impacted by inflation to the same degree as companies in capital-intensive industries in a replacement cost environment. During a period of rising prices, a net monetary asset position results in loss in purchasing power and conversely a net monetary liability position results in an increase in purchasing power. In the banking industry, typically monetary assets exceed monetary liabilities. Therefore as prices increase, financial institutions experience a decline in the purchasing power of their net assets.

Future Outlook

The Company’s results of operations in the second quarter of 2015increased significantly compared to the second quarter of 2014 mainly due to an increase in noninterest income in the mortgage banking segment.  The Company has invested in the infrastructure to support envisioned future growth in each key area, including personnel, technology and processes to meet the growing compliance requirements in the industry. Commercial and retail loan production remains strong and mortgage and insurance have added staff and locations to ramp up production and improve profitability. The Company believes it is well positioned in some of the finest markets in the states of West Virginia and Virginia and will focus on doing the things that have made it successful thus far through the following: margin improvement; leveraging capital; organic portfolio loan growth; and operating efficiency. The critical challenge for the Company in the future is to attract core deposits to fund growth in the new markets through continued delivery of the most outstanding customer service with the highest quality products and technology.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

No response required.

Item 4. Controls and Procedures

The Company, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer, along with the Company’s Chief Financial Officer (the Principal Financial Officer), has evaluated the effectiveness as of June 30, 2015, of the design and operation of the Company’s disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).  Based upon that evaluation, the Company’s Chief Executive Officer, along with the Company’s Principal Accounting Officer concluded that the Company’s disclosure controls and procedures were effective as of June 30, 2015.

There have been no material changes in the Company’s internal control over financial reporting during the second quarter of 2015 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

52

Part II. Other Information

Item 1. Legal Proceedings

From time to time in the ordinary course of business, the Company and its subsidiaries are subject to claims, asserted or unasserted, or named as a party to lawsuits or investigations.  Litigation, in general, and intellectual property and securities litigation in particular, can be expensive and disruptive to normal business operations.  Moreover, the results of legal proceedings cannot be predicted with any certainty and in the case of more complex legal proceedings, the results are difficult to predict at all.  The Company is not aware of any asserted or unasserted legal proceedings or claims that the Company believes would have a material adverse effect on the Company’s financial condition or results of the Company’s operations.

Item 1A. Risk Factors

No response required.

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds

During the first quarter of 2014, the Company began a private offering under Regulation D of the Securities Act of 1933, as amended (the “Securities Act”) of subordinated promissory notes and preferred stock.  During the six month period ended June 30, 2014, the Company received net proceeds related to subscriptions for subordinated promissory notes totaling $29.3 million.  In addition, during the same period, the Company received subscriptions for seven hundred eighty-three preferred stock shares totaling $7.8 million in additional capital.  The proceeds of these subordinated debt and preferred stock offerings will be used to support continued growth of the Company and its Subsidiaries.

During 2013, the Company commenced a private offering under Rule 506 of Regulation D of its common stock to accredited investors.  As of December 31, 2013, the Company had received subscriptions for 610,194 common stock shares totaling $9.8 million in additional capital.  During the six month period ended June 30, 2014, the Company received additional subscriptions for 361,865 common stock shares totaling $5.8 million in additional capital at September 30, 2014.  The proceeds of this offering are also being used to support continued growth of the Company and its Subsidiaries.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits

The following exhibits are filed herewith.

53

Exhibit 31.1	Certificate of principal executive officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Exhibit 31.2	Certificate of principal financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Exhibit 32.1	Certificate of principal executive officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Exhibit 32.2	Certificate of principal financial officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema
101.CAL	XBRL Taxonomy Extension Calculation Linkbase
101.DEF	XBRL Taxonomy Extension Definition Linkbase
101.LAB	XBRL Taxonomy Extension Label Linkbase
101.PRE	XBRL Taxonomy Extension Presentation Linkbase

54

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: August 6, 2015

MVB Financial Corp.
By:	/s/ Larry F. Mazza
	Larry F. Mazza
	Chief Executive Officer & President
By:	/s/ Bret S. Price
	Bret S. Price
	Senior Vice President & Chief Financial Officer

55

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I,Larry F. Mazza, certify that:  

1. I have reviewed this Form 10-Q of MVB Financial Corp.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted account principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of a an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:  August 6, 2015

/s/ Larry F. Mazza

Larry F. Mazza

Chief Executive Officer & President

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, Bret S. Price, certify that:

1. I have reviewed this Form 10-Q of MVB Financial Corp.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted account principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: August 6, 2015

/s/ Bret S. Price

Bret S. Price

Senior Vice President & Chief Financial Officer

EX-32.1

Exhibit 32.1

Certification Pursuant to

18 U. S. C. Section 1350

As Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

I, Larry F. Mazza, certify, as of the dates hereof, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 that the quarterly report of MVB Financial Corp. on Form 10-Q for the quarterly period ended June 30, 2015fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in such Form 10-Q fairly presents in all material respects the financial condition and results of operations of MVB Financial Corp. at the dates and for the periods indicated.

Date: August 6, 2015

/s/ Larry F. Mazza

Larry F. Mazza

Chief Executive Officer & President

A signed original of this written statement required by Section 906 has been provided to MVB Financial Corp. and will be retained by MVB Financial Corp. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

Certification Pursuant to

18 U. S. C. Section 1350

As Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

I, Bret S. Price, certify, as of the dates hereof, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 that the quarterly report of MVB Financial Corp. on Form 10-Q for the quarterly period ended June 30, 2015fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in such Form 10-Q fairly presents in all material respects the financial condition and results of operations of MVB Financial Corp. at the dates and for the periods indicated.

Date: August 6, 2015

/s/ Bret S. Price

Bret S. Price

Senior Vice President & Chief Financial Officer

A signed original of this written statement required by Section 906 has been provided to MVB Financial Corp. and will be retained by MVB Financial Corp. and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Borrowed Funds - Term notes from the FHLB (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2015	Dec. 31, 2014
Borrowed funds
Borrowings from the FHLB	$ 5,374	$ 5,458
Fixed interest rate note, originating between April 1999 and December 2007, due between April 2014 and April 2022
Borrowed funds
Borrowings from the FHLB	$ 4,544	$ 4,618
Fixed interest rate note, originating between April 1999 and December 2007, due between April 2014 and April 2022 | Minimum
Borrowed funds
Interest rate on debt security (as a percent)	4.50%	4.50%
Fixed interest rate note, originating between April 1999 and December 2007, due between April 2014 and April 2022 | Maximum
Borrowed funds
Interest rate on debt security (as a percent)	5.90%	5.90%
Amortizing fixed interest rate note, originating February 2007, due February 2022
Borrowed funds
Borrowings from the FHLB	$ 830	$ 840
Interest rate on debt security (as a percent)	5.22%	5.22%
Monthly installments	$ 5	$ 5

XML

Segment Reporting (Details) $ in Thousands	3 Months Ended			6 Months Ended		12 Months Ended
	Jun. 30, 2015 USD ($)	Jun. 30, 2014 USD ($)	Dec. 31, 2013 USD ($) item	Jun. 30, 2015 USD ($)	Jun. 30, 2014 USD ($)	Dec. 31, 2014 USD ($)
Information about the reportable segments and reconciliation to the consolidated financial statements
Number of Reportable Segments | item			3
Revenues:
Interest income	$ 10,694	$ 9,162		$ 20,332	$ 17,539
Gain on loans held for sale	8,617	4,333		14,926	7,543
Insurance and investment services income	965	820		2,663	1,836
Other income	952	1,913		4,356	3,441
Total operating income	21,228	16,228		42,277	30,359
Expenses:
Interest expense	2,268	1,967		4,359	3,347
Salary and employee benefits	10,194	7,932		19,928	14,729
Provision for loan losses	561	889		1,220	1,408
Other expense	5,517	4,256		10,750	8,295
Total operating expenses	18,540	15,044		36,257	27,779
Income before income taxes	2,688	1,184		6,020	2,580
Income tax expense (benefit)	783	215		2,012	453
Net Income	1,905	969		4,008	2,127
Preferred dividends	143	22		285	43
Net Income available to common shareholders	1,762	947		3,723	2,084
Capital expenditures	711	2,666		1,105	4,962
Total assets	1,253,066	1,062,621	$ 987,060	1,253,066	1,062,621	$ 1,110,459
Goodwill	17,779	17,779	17,779	17,779	17,779	17,779
Commercial & Retail Banking
Revenues:
Interest income				18,622	16,123
Gain on loans held for sale				63	(8)
Insurance and investment services income				178	129
Other income				4,068	5,204
Total operating income				22,931	21,448
Expenses:
Interest expense				4,234	3,278
Salary and employee benefits				7,476	6,362
Provision for loan losses				1,220	1,408
Other expense				9,059	7,996
Total operating expenses				21,989	19,044
Income before income taxes				942	2,404
Income tax expense (benefit)				68	375
Net Income	911			874	2,029
Preferred dividends				285	43
Net Income available to common shareholders				589	1,986
Capital expenditures				997	4,428
Total assets	1,390,957	1,143,107	1,021,097	1,390,957	1,143,107	1,189,746
Goodwill	897	897	897	897	897	897
Increase (decrease) in net interest income	1,100			1,500
Increase (decrease) in noninterest income	(528)			1,000
Increase (decrease) in noninterest expense	747,000			2,200
Increase (decrease) in interest exepense	262			956,000
Increase (decrease) in gain on derivative				494
Increase (decrease) in average subordinated debt	29,100			29,200
Increase (decrease) in volume of portfolio loans sold	(8,100)			(8,100)
Increase (decrease) in professional fees				446
Increase (decrease) in dividends on Preferred stock	121			121
Increase (decrease) in occupancy and equipment expense				521
Increase in data processing and communications expense	300			599
Increase (decrease) in average loan balances	173,000			171,800
Increase (decrease) in salaries expense	387			1,100
Increase (decrease) in income from portfolio loans held for sale	204			533
Decrease on gains for security sales	121
Mortgage Banking
Revenues:
Interest income				1,966	1,235
Gain on loans held for sale				15,385	8,139
Other income				2,600	939
Total operating income				19,951	10,313
Expenses:
Interest expense				903	489
Salary and employee benefits				10,664	6,632
Other expense				3,581	2,595
Total operating expenses				15,148	9,716
Income before income taxes				4,803	597
Income tax expense (benefit)				1,838	238
Net Income				2,965	359	400
Net Income available to common shareholders				2,965	359
Capital expenditures				99	191
Total assets	139,767	101,609	92,290	139,767	101,609	101,791
Goodwill	16,882	16,882	16,882	16,882	16,882	16,882
Increase (decrease) in net interest income	198			317,000
Increase (decrease) in noninterest income	3,500			8,900
Increase (decrease) in noninterest expense	2,500			5,000
Increase (decrease) in earnings	769,000			2,600
Increase (decrease) in mortgage fee income	4,200			7,200
Increase (decrease) in gain on derivative	$ 691,000			$ 1,700
Increase (decrease) loan origination volume (as a percent)	69.00%			94.00%
Increase (decrease) in personnel expense	$ 1,900			$ 4,000
Decrease in loans held for sale	9,500
Insurance
Revenues:
Insurance and investment services income				2,485	1,707
Other income				4
Total operating income				2,489	1,707
Expenses:
Salary and employee benefits				1,788	1,735
Other expense				426	393
Total operating expenses				2,214	2,128
Income before income taxes				275	(421)
Income tax expense (benefit)				106	(160)
Net Income	174	(253)		169	(261)
Net Income available to common shareholders				169	(261)
Capital expenditures				9	343
Total assets	4,321	4,431	3,012	4,321	4,431	4,031
Increase (decrease) in net interest income	114
Increase (decrease) in noninterest income				782
Increase (decrease) in noninterest expense	(15)			86
Increase (decrease) in income tax expense	50			266
Operating segments | Commercial & Retail Banking
Revenues:
Interest income	9,719	8,364
Gain on loans held for sale	76	25
Insurance and investment services income	106	71
Other income	2,132	2,746
Total operating income	12,033	11,206
Expenses:
Interest expense	2,193	1,931
Salary and employee benefits	3,718	3,331
Provision for loan losses	561	889
Other expense	4,485	4,125
Total operating expenses	10,957	10,276
Income before income taxes	1,076	930
Income tax expense (benefit)	165	107
Net Income	911	823
Preferred dividends	143	22
Net Income available to common shareholders	768	801
Capital expenditures	638	2,559
Total assets	1,390,957	1,143,107	1,021,097	1,390,957	1,143,107	1,189,746
Goodwill	897	897	897	897	897	897
Operating segments | Mortgage Banking
Revenues:
Interest income	1,137	688
Gain on loans held for sale	8,833	4,649
Other income	(88)	604
Total operating income	9,882	5,941
Expenses:
Interest expense	529	278
Salary and employee benefits	5,574	3,655
Other expense	1,888	1,346
Total operating expenses	7,991	5,279
Income before income taxes	1,891	662
Income tax expense (benefit)	723	263
Net Income	1,168	399
Net Income available to common shareholders	1,168	399
Capital expenditures	71	74
Total assets	139,767	101,609	92,290	139,767	101,609	101,791
Goodwill	16,882	16,882	16,882	16,882	16,882	16,882
Operating segments | Insurance
Revenues:
Insurance and investment services income	859	749
Other income	4
Total operating income	863	749
Expenses:
Salary and employee benefits	902	946
Other expense	240	211
Total operating expenses	1,142	1,157
Income before income taxes	(279)	(408)
Income tax expense (benefit)	(105)	(155)
Net Income	(174)	(253)
Net Income available to common shareholders	(174)	(253)
Capital expenditures	2	33
Total assets	4,321	4,431	3,012	4,321	4,431	4,031
Intercompany Eliminations
Revenues:
Interest income	(162)	110		(256)	181
Gain on loans held for sale	(292)	(341)		(522)	(588)
Other income	(1,096)	(1,437)		(2,316)	(2,702)
Total operating income	(1,550)	(1,668)		(3,094)	(3,109)
Expenses:
Interest expense	(454)	(242)		(778)	(420)
Other expense	(1,096)	(1,426)		(2,316)	(2,689)
Total operating expenses	(1,550)	(1,668)		(3,094)	(3,109)
Total assets	$ (281,979)	$ (186,526)	$ (129,339)	$ (281,979)	$ (186,526)	$ (185,109)

XML

Stock Offerings (Details) - USD ($) $ / shares in Units, $ in Thousands		3 Months Ended	6 Months Ended	12 Months Ended
	Sep. 08, 2011	Jun. 30, 2015	Jun. 30, 2014	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2014
Stock offering
Number of shares issued		9,283				9,283
SBLF capital received			$ 7,834
Preferred stock, par value (in dollars per share)		$ 1,000				$ 1,000
Series B Preferred Stock
Stock offering
Number of shares issued		400
Dividend rate (as a percent)		6.00%
Period from first, second, third, fourth, and fifth anniversary of original issue date that stock may be convertible		30 days
Conversion price (in dollars per share)		$ 16
Series C Preferred Stock
Stock offering
Number of shares issued		383.4
Dividend rate (as a percent)		6.50%
Period from first, second, third, fourth, and fifth anniversary of original issue date that stock may be convertible		30 days
Conversion price (in dollars per share)		$ 16
Preferred Class A
Stock offering
Dividend rate (as a percent)				1.00%	1.00%
Stock offering (in shares)	8,500
SBLF capital received	$ 8,500
Preferred stock, par value (in dollars per share)	$ 1,000
Preferred Class A | Through 8 March 2016
Stock offering
Dividend rate (as a percent)		1.00%
Preferred Class A | After 8 March 2016
Stock offering
Dividend rate (as a percent)		9.00%

XML

Loans and Allowance for Loan Losses - Impaired Loans (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015 USD ($) item	Jun. 30, 2014 USD ($)	Jun. 30, 2015 USD ($) item	Jun. 30, 2014 USD ($)	Dec. 31, 2014 USD ($)
Impaired loans by class
Impaired Loans with Specific Allowance, Recorded Investment	$ 7,736		$ 7,736		$ 2,799
Impaired Loans with Specific Allowance, Related Allowance	943		943		690
Impaired Loans with No Specific Allowance, Recorded Investment	5,938		5,938		11,982
Total Impaired Loans, Recorded Investment	13,674		13,674		14,781
Total Impaired Loans, Unpaid Principal Balance	15,039		$ 15,039		15,856
Impaired loans, additional information
Number of loans causing change in impaired loans | item			3
Financing Receivable, Allowance for Credit Losses, Write-downs		$ 104	$ 423	$ 111
Average recorded investment in impaired loans and related interest income recognized
Average investment in impaired loans	13,883	7,660	14,222	7,364
Interest income recognized on an accrual basis on impaired loans	61	78	123	159
Interest income recognized on a cash basis on impaired loans	53	89	107	125
Total Recorded Investment in Impaired Financing Receivables [Member] | Credit Concentration Risk [Member]
Impaired loans by class
Total Impaired Loans, Recorded Investment	8,100		$ 8,100
Impaired loans, additional information
Number of loans causing change in impaired loans | item			2
Concentration Risk, Percentage			59.00%
Total Recorded Investment in Impaired Financing Receivables [Member] | Government Contracts Concentration Risk [Member]
Impaired loans by class
Total Impaired Loans, Recorded Investment	5,000		$ 5,000
Impaired loans, additional information
Number of loans causing change in impaired loans | item			1
Commercial
Impaired loans by class
Impaired Loans with Specific Allowance, Recorded Investment	6,801		$ 6,801		1,800
Impaired Loans with Specific Allowance, Related Allowance	605		605		362
Impaired Loans with No Specific Allowance, Recorded Investment	5,826		5,826		11,982
Total Impaired Loans, Recorded Investment	12,627		12,627		13,782
Total Impaired Loans, Unpaid Principal Balance	14,002		14,002		14,857
Impaired loans, additional information
Financing Receivable, Allowance for Credit Losses, Write-downs			409
Average recorded investment in impaired loans and related interest income recognized
Average investment in impaired loans	12,908	6,732	13,244	6,572
Interest income recognized on an accrual basis on impaired loans	56	73	112	147
Interest income recognized on a cash basis on impaired loans	$ 53	84	$ 104	116
Number of loans, in process of foreclosure | item	5		5
Impaired loans, recorded investment, in process of foreclosure	$ 420		$ 420
Commercial Business
Impaired loans by class
Impaired Loans with No Specific Allowance, Recorded Investment	3,039		3,039		3,606
Total Impaired Loans, Recorded Investment	3,039		3,039		3,606
Total Impaired Loans, Unpaid Principal Balance	3,039		3,039		3,606
Impaired loans, additional information
Proceeds from Collection of Loans Receivable			567
Average recorded investment in impaired loans and related interest income recognized
Average investment in impaired loans	3,228		3,369
Interest income recognized on an accrual basis on impaired loans	39		78
Interest income recognized on a cash basis on impaired loans	39		75
Commercial Real Estate
Impaired loans by class
Impaired Loans with Specific Allowance, Recorded Investment	6,530		6,530		1,527
Impaired Loans with Specific Allowance, Related Allowance	507		507		260
Impaired Loans with No Specific Allowance, Recorded Investment					5,021
Total Impaired Loans, Recorded Investment	6,530		6,530		6,548
Total Impaired Loans, Unpaid Principal Balance	6,530		6,530		6,548
Average recorded investment in impaired loans and related interest income recognized
Average investment in impaired loans	6,533	1,907	6,538	1,911
Interest income recognized on an accrual basis on impaired loans	15	15	30	30
Interest income recognized on a cash basis on impaired loans	12	15	25	35
Acquisition & Development
Impaired loans by class
Impaired Loans with Specific Allowance, Recorded Investment	271		271		273
Impaired Loans with Specific Allowance, Related Allowance	98		98		102
Impaired Loans with No Specific Allowance, Recorded Investment	2,787		2,787		3,355
Total Impaired Loans, Recorded Investment	3,058		3,058		3,628
Total Impaired Loans, Unpaid Principal Balance	4,433		4,433		4,703
Average recorded investment in impaired loans and related interest income recognized
Average investment in impaired loans	3,147	4,825	3,337	4,661
Interest income recognized on an accrual basis on impaired loans	2	58	4	117
Interest income recognized on a cash basis on impaired loans	2	69	4	81
Two Unrelated Acquisition and Development Loans [Member]
Impaired loans by class
Total Impaired Loans, Recorded Investment	2,500		$ 2,500		3,100
Impaired loans, additional information
Number of loans causing change in impaired loans | item			2
Financing Receivable, Principal Curtailment			$ 268
Financing Receivable, Allowance for Credit Losses, Write-downs			300
Residential
Impaired loans by class
Impaired Loans with Specific Allowance, Recorded Investment	900		900		969
Impaired Loans with Specific Allowance, Related Allowance	303		303		298
Impaired Loans with No Specific Allowance, Recorded Investment	108		108
Total Impaired Loans, Recorded Investment	1,008		1,008		969
Total Impaired Loans, Unpaid Principal Balance	1,008		1,008		969
Impaired loans, additional information
Financing Receivable, Allowance for Credit Losses, Write-downs		103	14	103
Average recorded investment in impaired loans and related interest income recognized
Average investment in impaired loans	946	884	948	734
Interest income recognized on an accrual basis on impaired loans	5	5	10	10
Interest income recognized on a cash basis on impaired loans		5	2	8
Home Equity
Impaired loans by class
Impaired Loans with Specific Allowance, Recorded Investment	28		28		28
Impaired Loans with Specific Allowance, Related Allowance	28		28		28
Total Impaired Loans, Recorded Investment	28		28		28
Total Impaired Loans, Unpaid Principal Balance	28		28		28
Average recorded investment in impaired loans and related interest income recognized
Average investment in impaired loans	28	29	28	28
Interest income recognized on an accrual basis on impaired loans			1	1
Interest income recognized on a cash basis on impaired loans			1
Consumer
Impaired loans by class
Impaired Loans with Specific Allowance, Recorded Investment	7		7		2
Impaired Loans with Specific Allowance, Related Allowance	7		7		2
Impaired Loans with No Specific Allowance, Recorded Investment	4		4
Total Impaired Loans, Recorded Investment	11		11		2
Total Impaired Loans, Unpaid Principal Balance	1		1		$ 2
Impaired loans, additional information
Financing Receivable, Allowance for Credit Losses, Write-downs		1		8
Average recorded investment in impaired loans and related interest income recognized
Average investment in impaired loans	$ 1	$ 15	$ 2	30
Interest income recognized on an accrual basis on impaired loans				1
Interest income recognized on a cash basis on impaired loans				$ 1

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Comprehensive Income (Tables)

6 Months Ended

Jun. 30, 2015

COMPREHENSIVE INCOME

Schedule of reclassifications from other comprehensive income (AOCI) components

	For the three months ended		For the three months ended		For the six months ended		For the six months ended
	June 30, 2015		June 30, 2014		June 30, 2015		June 30, 2014
	Amount		Amount		Amount		Amount
(in thousands)	Reclassified		Reclassified		Reclassified		Reclassified		Affected line item in the Statement where net
Details about AOCI Components	from AOCI		from AOCI		from AOCI		from AOCI		income is presented
Available-for-sale securities
Unrealized holding gains	$	5	$	125	$	126	$	125	Gain on sale of securities
		5		125		126		125	Total before tax
		(2)		(50)		(50)		(50)	Income tax expense
		3		75		76		75	Net of tax
Defined benefit pension plan items
Amortization of net actuarial loss		(64)		(35)		(128)		(70)	Salaries and benefits
		(64)		(35)		(128)		(70)	Total before tax
		25		14		50		27	Income tax expense
		(39)		(21)		(78)		(43)	Net of tax
Total reclassifications	$	(36)	$	54	$	(2)	$	32

Schedule of the components of accumulated OCI

	Unrealized
	gains (losses)
	on available-		Defined benefit
	for-sale		pension plan
(in thousands)	securities		items		Total
Balance at March 31, 2015	$	(154)	$	(2,400)	$	(2,554)
Other comprehensive income (loss) before reclassification		(255)		441		186
Amounts reclassified from AOCI		(3)		39		36
Net current period OCI		(258)		480		222
Balance at June 30, 2015	$	(412)	$	(1,920)	$	(2,332)
Balance at March 31, 2014	$	(1,154)	$	(1,485)	$	(2,639)
Other comprehensive income loss before reclassification		666		(210)		456
Amounts reclassified from AOCI		(75)		21		(54)
Net current period OCI		591		(189)		402
Balance at June 30, 2014	$	(563)	$	(1,674)	$	(2,237)
Balance at January 1, 2015	$	(406)	$	(2,236)	$	(2,642)
Other comprehensive income (loss) before reclassification		70		238		308
Amounts reclassified from AOCI		(76)		78		2
Net current period OCI		(6)		316		310
Balance at June 30, 2015	$	(412)	$	(1,920)	$	(2,332)
Balance at January 1, 2014	$	(1,476)	$	(1,485)	$	(2,961)
Other comprehensive income loss before reclassification		988		(232)		756
Amounts reclassified from AOCI		(75)		43		(32)
Net current period OCI		913		(189)		724
Balance at June 30, 2014	$	(563)	$	(1,674)	$	(2,237)

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Comprehensive Income - Reclassifications (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Comprehensive Income
Gain on sale of securities	$ 5	$ 125	$ 126	$ 125
Salary and employee benefits	10,194	7,932	19,928	14,729
Income before income taxes	2,688	1,184	6,020	2,580
Income tax expense	(783)	(215)	(2,012)	(453)
Net Income	1,905	969	4,008	2,127
Amount Reclassified from AOCI
Comprehensive Income
Net Income	(36)	54	(2)	32
Available-for-sale securities, Unrealized holding gains | Amount Reclassified from AOCI
Comprehensive Income
Gain on sale of securities	5	125	126	125
Income before income taxes	5	125	126	125
Income tax expense	(2)	(50)	(50)	(50)
Net Income	3	75	76	75
Defined benefit pension plan items, Change in defined benefit pension plan | Amount Reclassified from AOCI
Comprehensive Income
Salary and employee benefits	(64)	(35)	(128)	(70)
Income before income taxes	(64)	(35)	(128)	(70)
Income tax expense	25	14	50	27
Net Income	$ (39)	$ (21)	$ (78)	$ (43)

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Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Financial assets:
Available-for-sale securities	$ 65,855	$ 68,213
Level I
Financial assets:
Available-for-sale securities	73	77
Level II
Financial assets:
Available-for-sale securities	65,782	68,136
Loans held for sale	116,307	69,527
Level III
Assets measured at fair value on a nonrecurring basis
Mortgage servicing rights	1,262	1,423
U.S. Agency securities
Financial assets:
Available-for-sale securities	30,582	37,534
U.S. Sponsored Mortgage backed securities
Financial assets:
Available-for-sale securities	34,530	29,932
Equity and other securities
Financial assets:
Available-for-sale securities	743	747
Recurring | Level II
Financial assets:
Loans held for sale	116,307	69,527
Recurring | Total
Financial assets:
Loans held for sale	116,307	69,527
Recurring | U.S. Agency securities | Level II
Financial assets:
Available-for-sale securities	30,582	37,534
Recurring | U.S. Agency securities | Total
Financial assets:
Available-for-sale securities	30,582	37,534
Recurring | U.S. Sponsored Mortgage backed securities | Level II
Financial assets:
Available-for-sale securities	34,530	29,932
Recurring | U.S. Sponsored Mortgage backed securities | Total
Financial assets:
Available-for-sale securities	34,530	29,932
Recurring | Equity and other securities | Level I
Financial assets:
Available-for-sale securities	73	77
Recurring | Equity and other securities | Level II
Financial assets:
Available-for-sale securities	670	670
Recurring | Equity and other securities | Total
Financial assets:
Available-for-sale securities	743	747
Non-recurring | Level III
Assets measured at fair value on a nonrecurring basis
Impaired loans	12,731	14,091
Other real estate owned	375	575
Mortgage servicing rights	1,262	1,423
Non-recurring | Total
Assets measured at fair value on a nonrecurring basis
Impaired loans	12,731	14,091
Other real estate owned	375	575
Mortgage servicing rights	1,262	1,423
Interest rate lock commitment | Level III
Financial assets:
Derivative asset	1,653	1,020
Interest rate lock commitment | Recurring | Level III
Financial assets:
Derivative asset	1,653	1,020
Interest rate lock commitment | Recurring | Total
Financial assets:
Derivative asset	1,653	1,020
Interest rate cap | Level II
Financial assets:
Derivative asset	936	1,423
Interest rate cap | Recurring | Level II
Financial assets:
Derivative asset	936	1,423
Interest rate cap | Recurring | Total
Financial assets:
Derivative asset	936	1,423
Forward sales commitments | Level II
Financial assets:
Derivative asset	783
Financial liabilities:
Derivative Liability		(431)
Forward sales commitments | Recurring | Level II
Financial assets:
Derivative asset	783
Financial liabilities:
Derivative Liability		431
Forward sales commitments | Recurring | Total
Financial assets:
Derivative asset	$ 783
Financial liabilities:
Derivative Liability		$ 431

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Loans and Allowance for Loan Losses - Troubled Debt Restructurings (Details) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2015 USD ($) contract	Jun. 30, 2015 USD ($) contract	Jun. 30, 2014 USD ($) contract	Dec. 31, 2014 USD ($)
Details related to loans identified as Troubled Debt Restructurings (TDRs):
Specific reserve allocations for TDR's	$ 619	$ 619		$ 582
Number of Contracts | contract	0	0	2
Pre-Modification Outstanding Recorded Investment			$ 885
Post-Modification Outstanding Recorded Investment			$ 880
Commercial
Details related to loans identified as Troubled Debt Restructurings (TDRs):
Number of Contracts | contract			1
Pre-Modification Outstanding Recorded Investment			$ 496
Post-Modification Outstanding Recorded Investment			$ 492
Acquisition & Development
Details related to loans identified as Troubled Debt Restructurings (TDRs):
Number of Contracts | contract			1
Pre-Modification Outstanding Recorded Investment			$ 496
Post-Modification Outstanding Recorded Investment			$ 492
Residential real estate
Details related to loans identified as Troubled Debt Restructurings (TDRs):
Number of Contracts | contract			1
Pre-Modification Outstanding Recorded Investment			$ 389
Post-Modification Outstanding Recorded Investment			$ 388

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Mergers and Acquisitions (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015 USD ($)	Jun. 30, 2014 USD ($)	Jun. 30, 2015 USD ($) store	Jun. 30, 2014 USD ($)
Mergers and acquisitions
Acquisition related costs included in consolidated statements of income	$ 20	$ 48	$ 20	$ 163
Consulting
Mergers and acquisitions
Acquisition related costs included in consolidated statements of income	12	3	12	72
Advertising
Mergers and acquisitions
Acquisition related costs included in consolidated statements of income		2		4
Printing, stationery and supplies
Mergers and acquisitions
Acquisition related costs included in consolidated statements of income	3	1	3	8
Equipment depreciation and maintenance
Mergers and acquisitions
Acquisition related costs included in consolidated statements of income		1		6
Travel
Mergers and acquisitions
Acquisition related costs included in consolidated statements of income	5	$ 41	5	$ 73
CFG | Bank
Mergers and acquisitions
Aggregate consideration			30,000
Consideration in cash			26,000
Consideration in shares of common stock			$ 4,000
Susquehanna Bank [Member]
Mergers and acquisitions
Number of branch locations acquired | store			2
Deposits acquired	69,000		$ 69,000
Loans acquired	$ 17,000		$ 17,000

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Net Income Per Common Share (Details) - $ / shares	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Earnings Per Share [Line Items]
Number of options outstanding (in shares)	678,159	494,470
Weighted average exercise price of options outstanding (in dollars per share)	$ 10.53	$ 9.09
Dilutive effect of stock (in shares)	197,283	213,549
Convertible Preferred Stock [Member]
Earnings Per Share [Line Items]
Dilutive effect of stock (in shares)	489,625	0

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Investments

6 Months Ended

Jun. 30, 2015

INVESTMENTS

INVESTMENTS

Note 3 – Investments

Amortized cost and fair values of investment securities held-to-maturity at June 30, 2015, including gross unrealized gains and losses, are summarized as follows:

	Amortized		Unrealized		Unrealized		Fair
(in thousands)	Cost		Gain		Loss		Value
Municipal securities	$	53,141	$	1,048	$	(748)	$	53,441
Total investment securities held-to-maturity	$	53,141	$	1,048	$	(748)	$	53,441

Amortized cost and fair values of investment securities held-to-maturity at December 31, 2014, including gross unrealized gains and losses, are summarized as follows:

	Amortized		Unrealized		Unrealized		Fair
(in thousands)	Cost		Gain		Loss		Value
Municipal securities	$	54,538	$	1,600	$	(267)	$	55,871
Total investment securities held–to-maturity	$	54,538	$	1,600	$	(267)	$	55,871

Amortized cost and fair values of investment securities available-for-sale at June 30, 2015 are summarized as follows:

	Amortized		Unrealized		Unrealized		Fair
(in thousands)	Cost		Gain		Loss		Value
U.S. Agency securities	$	30,847	$	13	$	(278)	$	30,582
U.S. Sponsored Mortgage-backed securities		35,026		17		(513)		34,530
Total debt securities		65,873		30		(791)		65,112
Equity and other securities		670		73		—		743
Total investment securities available-for-sale	$	66,543	$	103	$	(791)	$	65,855

Amortized cost and fair values of investment securities available-for-sale at December 31, 2014 are summarized as follows:

	Amortized		Unrealized		Unrealized		Fair
(in thousands)	Cost		Gain		Loss		Value
U.S. Agency securities	$	37,926	$	73	$	(465)	$	37,534
U.S. Sponsored Mortgage-backed securities		30,293		58		(419)		29,932
Total debt securities		68,219		131		(884)		67,466
Equity and other securities		670		77		—		747
Total investment securities available-for-sale	$	68,889	$	208	$	(884)	$	68,213

The following tables summarize amortized cost and fair values of debt securities by maturity at June 30, 2015:

	Held to Maturity				Available for sale
	Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value
Within one year	$	—	$	—	$	—	$	—
After one year, but within five		4,758		4,870		23,112		22,962
After five years, but within ten		14,497		14,593		9,845		9,702
After ten years		33,886		33,978		32,916		32,448
Total	$	53,141	$	53,441	$	65,873	$	65,112

Investment securities with a carrying value of $114,838 at June 30, 2015, were pledged to secure public funds, repurchase agreements and potential borrowings at the Federal Reserve discount window.

The Company's investment portfolio includes securities that are in an unrealized loss position as of June 30, 2015, the details of which are included in the following table.  Although these securities, if sold at June 30, 2015 would result in a pretax loss of $1,539, the Company has no intent to sell the applicable securities at such market values, and maintains the Company has the ability to hold these securities until all principal has been recovered.  Declines in the market values of these securities can be traced to general market conditions which reflect the prospect for the economy as a whole.  When determining other-than-temporary impairment on securities, the Company considers such factors as adverse conditions specifically related to a certain security or to specific conditions in an industry or geographic area, the time frame securities have been in an unrealized loss position, the Company's ability to hold the security for a period of time sufficient to allow for anticipated recovery in value, whether or not the security has been downgraded by a rating agency, and whether or not the financial condition of the security issuer has severely deteriorated.  As of June 30, 2015, the Company considers all securities with unrealized loss positions to be temporarily impaired, and consequently, does not believe the Company will sustain any material realized losses as a result of the current temporary decline in market value.

The following table discloses investments in an unrealized loss position at June 30, 2015:

Description and number of positions	Less than 12 months				12 months or more
(in thousands)	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
U.S. Agency securities (9)	$	13,102	$	(135)	$	13,964	$	(143)
U.S. Sponsored Mortgage-backed securities (15)		18,826		(168)		12,836		(345)
Municipal securities (60)		16,260		(349)		8,121		(399)
	$	48,188	$	(652)	$	34,921	$	(887)

The following table discloses investments in an unrealized loss position at December 31, 2014:

Description and number of positions	Less than 12 months				12 months or more
(in thousands)	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
U.S. Agency securities (9)	$	996	$	(3)	$	26,900	$	(462)
U.S. Sponsored Mortgage-backed securities (8)		678		(3)		14,824		(416)
Municipal securities (42)		528		(3)		16,489		(264)
	$	2,202	$	(9)	$	58,213	$	(1,142)

For the three month period ended June 30, 2015 and 2014, the Company sold investments available-for-sale of $0 and $37.2 million, respectively, resulting in gross gains of $0 and $214 and gross losses of $0 and $89.  

For the six month period ended June 30, 2015 and 2014, the Company sold investments available-for-sale of $11.4 million and $37.2 million, respectively, resulting in gross gains of $121 and $214 and gross losses of $0 and $89.

For the three and six month periods ended June 30, 2015, the Company sold investments held-to-maturity of $421, resulting in gross gains of $5. The held-to-maturity investment was sold due to a credit downgrade. The Company sold no held-to-maturity investments during 2014.

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Fair Value of Financial Instruments - Summary of recurring level III assets (Details) - Level III - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Balance, beginning of period	$ 1,790	$ 2,607	$ 1,020	$ 2,271
Realized and unrealized gains (loss) included in earnings	(137)	603	633	939
Balance, end of period	$ 1,653	$ 3,210	$ 1,653	$ 3,210

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Investments - Summary of maturities (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Held to Maturity, Amortized Cost
After one year, but within five	$ 4,758
After five years, but within ten	14,497
After ten Years	33,886
Total	53,141
Held to Maturity, Approximate Fair Value
After one year, but within five	4,870
After five years, but within ten	14,593
After ten Years	33,978
Total	53,441	$ 55,871
Available for sale, Amortized Cost
After one year, but within five	23,112
After five years, but within ten	9,845
After ten Years	32,916
Total	65,873
Available for sale, Fair Value
After one year, but within five	22,962
After five years, but within ten	9,702
After ten Years	32,448
Fair Value	65,112
Carrying value of investment securities pledged	$ 114,838

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Investments - Available-for-sale (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Amortized cost and fair values of investment securities available-for-sale
Amortized Cost	$ 66,543	$ 68,889
Unrealized Gain	103	208
Unrealized Loss	(791)	(884)
Fair Value	65,855	68,213
Debt Securities [Member]
Amortized cost and fair values of investment securities available-for-sale
Amortized Cost	65,873	68,219
Unrealized Gain	30	131
Unrealized Loss	(791)	(884)
Fair Value	65,112	67,466
U.S. Agency securities
Amortized cost and fair values of investment securities available-for-sale
Amortized Cost	30,847	37,926
Unrealized Gain	13	73
Unrealized Loss	(278)	(465)
Fair Value	30,582	37,534
U.S. Sponsored Mortgage backed securities
Amortized cost and fair values of investment securities available-for-sale
Amortized Cost	35,026	30,293
Unrealized Gain	17	58
Unrealized Loss	(513)	(419)
Fair Value	34,530	29,932
Equity and other securities
Amortized cost and fair values of investment securities available-for-sale
Amortized Cost	670	670
Unrealized Gain	73	77
Fair Value	$ 743	$ 747

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Fair Value of Financial Instruments - Assets measured at fair value on nonrecurring basis (Details) - Non-recurring - Level III - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Jun. 30, 2015	Dec. 31, 2014
Impaired loans
Quantitative information about assets measured at fair value on a non-recurring basis
Fair Value	$ 12,731	$ 14,091
Impaired loans | Appraisal of collateral | Minimum
Fair Value Inputs [Abstract]
Appraisal adjustments (as a percent)	20.00%	20.00%
Liquidation expenses (as a percent)	5.00%	5.00%
Impaired loans | Appraisal of collateral | Maximum
Fair Value Inputs [Abstract]
Appraisal adjustments (as a percent)	30.00%	30.00%
Liquidation expenses (as a percent)	10.00%	10.00%
Other real estate owned
Quantitative information about assets measured at fair value on a non-recurring basis
Fair Value	$ 375	$ 575
Other real estate owned | Appraisal of collateral | Minimum
Fair Value Inputs [Abstract]
Appraisal adjustments (as a percent)	20.00%	20.00%
Liquidation expenses (as a percent)	5.00%	5.00%
Other real estate owned | Appraisal of collateral | Maximum
Fair Value Inputs [Abstract]
Appraisal adjustments (as a percent)	30.00%	30.00%
Liquidation expenses (as a percent)	10.00%	10.00%
Mortgage servicing rights
Quantitative information about assets measured at fair value on a non-recurring basis
Fair Value	$ 1,262	$ 1,423
Mortgage servicing rights | Discounted cash flow
Fair Value Inputs [Abstract]
Prepayment rate (as a percent)	12.00%	12.00%
Cost of service (as a percent)	0.25%	0.25%
Discount rate (as a percent)	12.00%	12.00%

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Investments - Summary of unrealized loss positions (Details)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2015 USD ($) item	Jun. 30, 2014 USD ($)	Jun. 30, 2015 USD ($) item	Jun. 30, 2014 USD ($)	Dec. 31, 2014 USD ($) position
Investments in an unrealized loss position
Total temporary impairment	$ 1,539,000		$ 1,539,000
Fair Value, AFS
12 months or more, Fair Value					$ 26,900,000
Unrealized Loss, AFS
12 months or more, Unrealized Loss					(462,000)
Fair Value, AFS and HTM
Less than 12 months, Fair Value	48,188,000		48,188,000		2,202,000
12 months or more, Fair Value	34,921,000		34,921,000		58,213,000
Unrealized Loss, AFS and HTM
Less than 12 months, Unrealized Loss	(652,000)		(652,000)		(9,000)
12 months or more, Unrealized Loss	(887,000)		(887,000)		(1,142,000)
Available-for-sale Securities
Sales of investment securities available-for-sale	0	$ 37,200,000	11,484,000	$ 37,177,000
Gains on the sale of investments available-for-sale	0	214,000	121,000	214,000
Losses on the sale of investments available-for-sale	0	89,000	0	89,000
Held-to-maturity Securities [Abstract]
Proceeds from sale of held to maturity securities	421,000		421,000		$ 0
Gain on sale of securities	$ 5,000	$ 125,000	$ 126,000	$ 125,000
U.S. Agency securities
Description and number of positions
Number of investments in an unrealized loss position, AFS	9		9		9
Fair Value, AFS
Less than 12 months, Fair Value	$ 13,102,000		$ 13,102,000		$ 996,000
12 months or more, Fair Value	13,964,000		13,964,000
Unrealized Loss, AFS
Less than 12 months, Unrealized Loss	(135,000)		(135,000)		$ (3,000)
12 months or more, Unrealized Loss	$ (143,000)		$ (143,000)
U.S. Sponsored Mortgage backed securities
Description and number of positions
Number of investments in an unrealized loss position, AFS	15		15		8
Fair Value, AFS
Less than 12 months, Fair Value	$ 18,826,000		$ 18,826,000		$ 678,000
12 months or more, Fair Value	12,836,000		12,836,000		14,824,000
Unrealized Loss, AFS
Less than 12 months, Unrealized Loss	(168,000)		(168,000)		(3,000)
12 months or more, Unrealized Loss	$ (345,000)		$ (345,000)		$ (416,000)
Municipal securities
Description and number of positions
Number of investments in an unrealized loss position, AFS | position					42
Number of investments in an unrealized loss position, HTM | item	60		60
Fair Value, HTM
Less than 12 months, Fair Value	$ 16,260,000		$ 16,260,000		$ 528,000
12 months or more, Fair Value	8,121,000		8,121,000		16,489,000
Unrealized Loss, HTM
Less than 12 months, Unrealized Loss	(349,000)		(349,000)		(3,000)
12 months or more, Unrealized Loss	$ (399,000)		$ (399,000)		$ (264,000)

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Loans and Allowance for Loan Losses - Allowance (Details) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2015 USD ($)	Jun. 30, 2014 USD ($)	Jun. 30, 2015 USD ($)	Jun. 30, 2014 USD ($)	Dec. 31, 2013 USD ($)	Jun. 30, 2015 USD ($)	Jun. 30, 2014 USD ($)
Activity in the allowance for loan losses:
Balance at beginning of period	$ 6,481	$ 5,451	$ 6,223	$ 4,935
Charge-offs		(104)	(423)	(111)
Recoveries	5	5	28	9
Provision	561	889	1,219	1,408
Balance at end of period	6,481	5,451	6,223	4,935	$ 4,935	$ 7,047	$ 6,241
Individually evaluated for impairment						943	1,865
Collectively evaluated for impairment						6,104	4,376
Net deferred fees and costs						1,186	1,596
Loans acquired, purchase price					74,300
Commercial
Activity in the allowance for loan losses:
Balance at beginning of period	4,647	3,902	4,363	3,609
Charge-offs			(409)
Recoveries		4	21	4
Provision	554	579	1,226	872
Balance at end of period	4,647	3,902	4,363	3,609	$ 3,609	5,201	4,485
Individually evaluated for impairment						605	1,507
Collectively evaluated for impairment						4,596	2,978
Premium on loans acquired, ratio					1.024
Premium on loans acquired, premium amount					$ 1,800
Residential
Activity in the allowance for loan losses:
Balance at beginning of period	957	746	962	519
Charge-offs		(103)	(14)	(103)
Recoveries			1
Provision	61	42	69	269
Balance at end of period	957	746	962	519	519	1,018	685
Individually evaluated for impairment						303	322
Collectively evaluated for impairment						715	363
Home Equity
Activity in the allowance for loan losses:
Balance at beginning of period	680	555	691	554
Recoveries		1	1	2
Provision	(48)	269	(60)	269
Balance at end of period	680	555	691	554	554	632	825
Individually evaluated for impairment						28	29
Collectively evaluated for impairment						604	796
Consumer
Activity in the allowance for loan losses:
Balance at beginning of period	197	248	207	253
Charge-offs		(1)		(8)
Recoveries	5		5	3
Provision	(6)	(1)	(16)	(2)
Balance at end of period	$ 197	$ 248	$ 207	$ 253	$ 253	196	246
Individually evaluated for impairment						7	7
Collectively evaluated for impairment						$ 189	$ 239

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Recent Accounting Pronouncements

6 Months Ended

Jun. 30, 2015

Recent Accounting Pronouncements

Recent Accounting Pronouncements

Note 2 – Recent Accounting Pronouncements

In June 2014, the FASB issued ASU No. 2014-11,"Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures."The new guidance aligns the accounting for repurchase-to-maturity transactions and repurchase agreements executed as repurchase financings with the accounting for other typical repurchase agreements. Going forward, these transactions would all be accounted for as secured borrowings. The guidance eliminates sale accounting for repurchase-to-maturity transactions and supersedes the guidance under which a transfer of a financial asset and a contemporaneous repurchase financing could be accounted for on a combined basis as a forward agreement, which has resulted in outcomes referred to as off-balance-sheet accounting. The amendments in the ASU require a new disclosure for transactions economically similar to repurchase agreements in which the transferor retains substantially all of the exposure to the economic return on the transferred financial assets throughout the term of the transaction. The amendments in the ASU also require expanded disclosures, effective for the current reporting period of June 30, 2015, about the nature of collateral pledged in repurchase agreements and similar transactions accounted for as secured borrowings (see Note 5 to the Consolidated Financial Statements). The Company adopted the amendments in this ASU effective January 1, 2015. As ofJune30, 2015, all of the Company's repurchase agreements were typical in nature (i.e., not repurchase-to-maturity transactions or repurchase agreements executed as a repurchase financing) and are accounted for as secured borrowings. As such, the adoption of ASU No. 2014-11 did not have a material impact on the Company's Consolidated Financial Statements but resulted in additional disclosures.

In February 2015, the FASB issued ASU No. 2015-02, Consolidation (Topic 810): “Amendments to the Consolidation Analysis.”  The amendments modify the evaluation reporting organizations must perform to determine if certain legal entities should be consolidated as VIEs. Specifically, the amendments: (1) Modify the evaluation of whether limited partnerships and similar legal entities are variable interest entities (“VIEs”) or voting interest entities; (2) Eliminate the presumption that a general partner should consolidate a limited partnership; (3) Affect the consolidation analysis of reporting entities that are involved with VIEs, particularly those that have fee arrangements and related party relationships; and (4) Provide a scope exception from consolidation guidance for reporting entities with interests in legal entities that are required to comply with or operate in accordance with requirements that are similar to those in Rule 2a-7 of the Investment Company Act of 1940 for registered money market funds. ASU No. 2015-02 is effective for interim and annual reporting periods beginning after December 15, 2015. The Company is currently evaluating the provisions of ASU No. 2015-02 to determine the potential impact the new standard will have on the Company's consolidated financial statements.

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Loans and Allowance for Loan Losses - Primary Segments (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014	Jun. 30, 2014
Primary segments of the loan portfolio:
Individually evaluated for impairment	$ 13,674		$ 7,642
Collectively evaluated for impairment	897,411		726,612
Total Loans	911,085	$ 798,297	734,254
Commercial
Primary segments of the loan portfolio:
Individually evaluated for impairment	12,627		6,726
Collectively evaluated for impairment	644,457		526,776
Total Loans	657,084	560,752	533,502
Residential
Primary segments of the loan portfolio:
Individually evaluated for impairment	1,008		873
Collectively evaluated for impairment	183,535		142,754
Total Loans	184,543	174,507	143,627
Home Equity
Primary segments of the loan portfolio:
Individually evaluated for impairment	28		29
Collectively evaluated for impairment	53,078		39,060
Total Loans	53,106	45,935	39,089
Consumer
Primary segments of the loan portfolio:
Individually evaluated for impairment	11		14
Collectively evaluated for impairment	16,341		18,022
Total Loans	$ 16,352	$ 17,103	$ 18,036

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Borrowed Funds - Subordinated Debt (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014	Dec. 31, 2014	Mar. 31, 2007
Subordinated Debentures
Borrowed funds	$ 33,524,000		$ 33,524,000		$ 33,524,000
Interest expense on borrowed funds	$ 549,000	$ 26,000	$ 1,092,000	$ 45,000
Subordinated Debt | Subordinated Debentures
Subordinated Debentures
Face amount of debt issued						$ 4,000,000
Variable rate basis spread (as a percent)	1.62%
Debt instrument interest rate description	three month LIBOR Rate
Subordinated Debt | Convertible Subordinated Promissory Notes Due 2024
Subordinated Debentures
Face amount of debt issued		29,400,000		29,400,000
Debt Instrument Face Amount Of Incremental Issue		100,000		100,000
Debt Instrument Minimum Investment Required		$ 1,000,000		$ 1,000,000
Term of debt instrument	10 years
Debt Instrument Period From Issuance That Issuer May Prepay Debt	5 years
Debt Instrument Convertible Threshold Consecutive Trading Days After First Second Third Fourth And Fifth Anniversaries Of Issuance Or Prepayment Notice	30 days
Debt Instrument, Convertible, Conversion Price	$ 16		$ 16
Debt Instrument Convertible Notice Period Of Intent To Prepay	20 days
Debt Instrument Threshold Amount Of New Senior Debt Issuance That Issuer Must Obtain Holder Consent	$ 15,000,000		$ 15,000,000
Debt Instrument, Redemption Price, Percentage	100.00%
Debt Instrument Redemption Period From Issuance	5 years
Subordinated Debt | Convertible Subordinated Promissory Notes Due 2024 | LIBOR
Subordinated Debentures
Debt Instrument Basis Spread On Variable Rate After Fifth Anniversary	5.00%
Debt Instrument Maximum Interest Rate Stated Percentage After Fifth Anniversary	9.00%		9.00%
Subordinated Debt | Convertible Subordinated Promissory Notes Due 2024 | Debtholder Investments Less Than Three Million Dollars [Member]
Subordinated Debentures
Debt Instrument Investment Amount Of Holder	$ 3,000,000		$ 3,000,000
Debt Instrument Minimum Ownership Of Common Stock As Percentage Of Principal Acquired	30.00%		30.00%
Interest rate on debt security (as a percent)	7.00%		7.00%
Subordinated Debt | Convertible Subordinated Promissory Notes Due 2024 | Debtholder Investments Of Three Million Dollars Or Greater [Member]
Subordinated Debentures
Debt Instrument Investment Amount Of Holder	$ 3,000,000		$ 3,000,000
Debt Instrument Minimum Ownership Of Common Stock As Percentage Of Principal Acquired	30.00%		30.00%
Interest rate on debt security (as a percent)	7.50%		7.50%
Subordinated Debt | Convertible Subordinated Promissory Notes Due 2024 | Debtholder Investments Of Ten Million Dollars Or Greater [Member]
Subordinated Debentures
Debt Instrument Investment Amount Of Holder	$ 10,000,000		$ 10,000,000
Interest rate on debt security (as a percent)	7.00%		7.00%

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Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Cash and cash equivalents:
Cash and due from banks	$ 11,944	$ 13,403
Interest bearing balances	2,070	16,674
Total cash and cash equivalents	14,014	30,077
Certificates of deposit with other banks	11,659	11,907
Investment Securities:
Securities available-for-sale	65,855	68,213
Securities held-to-maturity (fair value of $53,441 for 2015 and $55,871 for 2014)	53,141	54,538
Loans held for sale	116,307	69,527
Loans:	911,085	798,297
Less: Allowance for loan losses	(7,047)	(6,223)
Net Loans	904,038	792,074
Bank premises, furniture and equipment	25,645	25,472
Bank owned life insurance	22,011	21,679
Accrued interest receivable and other assets	22,617	19,193
Goodwill	17,779	17,779
Total assets	1,253,066	1,110,459
Deposits:
Non-interest bearing	76,666	67,066
Interest bearing	814,303	756,161
Total Deposits	890,969	823,227
Accrued interest, taxes, and other liabilities	10,791	10,310
Repurchase agreements	26,263	32,673
FHLB and other borrowings	178,245	101,287
Subordinated debt	33,524	33,524
Total Liabilities	1,139,792	1,001,021
STOCKHOLDERS' EQUITY
Preferred stock, par value $1,000; 20,783 authorized and 9,283 issued in 2015 and 2014, respectively	16,334	16,334
Common stock, par value $1; 20,000,000 shares authorized; 8,047,550 and 8,034,362 issued; and 7,996,473 and 7,983,285 outstanding in 2015 and 2014, respectively	8,048	8,034
Additional paid-in capital	74,450	74,342
Retained earnings	17,858	14,454
Accumulated other comprehensive loss	(2,332)	(2,642)
Treasury Stock, 51,077 shares, at cost	(1,084)	(1,084)
Total Stockholders' Equity	113,274	109,438
Total liabilities and stockholders’ equity	$ 1,253,066	$ 1,110,459

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Fair Value of Financial Instruments - Carrying values and estimated fair values of financial instruments (Details) - USD ($) $ in Thousands	3 Months Ended
	Jun. 30, 2015	Dec. 31, 2014	Jun. 30, 2014	Dec. 31, 2013
Carrying values and estimated fair values of financial instruments:
Prepayments of principal amount of loans assumed	$ 0
Financial assets:
Cash and cash equivalents	14,014	$ 30,077	$ 28,119	$ 39,843
Certificates of deposit with other banks	11,659	11,907
Securities available-for-sale	65,855	68,213
Securities held-to-maturity	53,441	55,871
Financial liabilities:
FHLB and other borrowings	178,245	101,287
Level I
Financial assets:
Cash and cash equivalents	14,014	30,077
Securities available-for-sale	73	77
Level II
Financial assets:
Certificates of deposit with other banks	11,891	12,035
Securities available-for-sale	65,782	68,136
Securities held-to-maturity	53,441	55,871
Loans held for sale	116,307	69,527
Accrued interest receivable	668	728
Financial liabilities:
Deposits	894,979	824,078
Repurchase agreements	26,263	32,673
FHLB and other borrowings	178,264	101,338
Accrued interest payable	437	376
Subordinated debt	31,172	31,172
Level III
Financial assets:
Loans, net	912,331	803,036
Mortgage servicing rights	1,262	1,423
Accrued interest receivable	2,255	1,659
Carrying Value
Financial assets:
Cash and cash equivalents	14,014	30,077
Certificates of deposit with other banks	11,659	11,907
Securities available-for-sale	65,855	68,213
Securities held-to-maturity	53,141	54,538
Loans held for sale	116,307	69,527
Loans, net	904,038	792,074
Mortgage servicing rights	1,262	1,423
Accrued interest receivable	2,923	2,387
Financial liabilities:
Deposits	890,969	823,227
Repurchase agreements	26,263	32,673
FHLB and other borrowings	178,245	101,287
Accrued interest payable	437	376
Subordinated debt	33,524	33,524
Total
Financial assets:
Cash and cash equivalents	14,014	30,077
Certificates of deposit with other banks	11,891	12,035
Securities available-for-sale	65,855	68,213
Securities held-to-maturity	53,441	55,871
Loans held for sale	116,307	69,527
Loans, net	912,331	803,036
Mortgage servicing rights	1,262	1,423
Accrued interest receivable	2,923	2,387
Financial liabilities:
Deposits	894,979	824,078
Repurchase agreements	26,263	32,673
FHLB and other borrowings	178,264	101,338
Accrued interest payable	437	376
Subordinated debt	31,172	31,172
Interest rate lock commitment | Level III
Financial assets:
Derivative asset	1,653	1,020
Interest rate lock commitment | Carrying Value
Financial assets:
Derivative asset	1,653	1,020
Interest rate lock commitment | Total
Financial assets:
Derivative asset	1,653	1,020
Interest rate cap | Level II
Financial assets:
Derivative asset	936	1,423
Interest rate cap | Carrying Value
Financial assets:
Derivative asset	936	1,423
Interest rate cap | Total
Financial assets:
Derivative asset	936	1,423
Forward sales commitments | Level II
Financial assets:
Derivative asset	783
Financial liabilities:
Derivative Liability		431
Forward sales commitments | Carrying Value
Financial assets:
Derivative asset	783
Financial liabilities:
Derivative Liability		431
Forward sales commitments | Total
Financial assets:
Derivative asset	$ 783
Financial liabilities:
Derivative Liability		$ 431

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Consolidated Statements of Cash Flows - USD ($)	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Operating activities
Net Income	$ 4,008,000	$ 2,127,000
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Net amortization and accretion of investments	387,000	434,000
Net amortization of deferred loan fees	(4,000)	27,000
Provision for loan losses	1,220,000	1,408,000
Depreciation and amortization	932,000	587,000
Stock based compensation	203,000	129,000
Loans originated for sale	(708,970,000)	(381,190,000)
Proceeds of loans sold	677,116,000	408,709,000
Mortgage fee income	(14,926,000)	(7,543,000)
Gain on sale of investment securities	(126,000)	(125,000)
Income on bank owned life insurance	(332,000)	(255,000)
Deferred taxes	254,000	(936,000)
Other, net	(195,000)	150,000
Net cash (used in) provided by operating activities	(40,433,000)	23,522,000
Investing activities
Purchases of investment securities available-for-sale	(22,733,000)	(24,268,000)
Purchases of investment securities held-to-maturity		(250,000)
Maturities/paydowns of investment securities held-to-maturity	790,000	750,000
Maturities/paydowns of investment securities available-for-sale	13,521,000	4,759,000
Sales of investment securities available-for-sale	11,484,000	37,177,000
Sales of investment securities held-to-maturity	421,000
Purchases of premises and equipment	(1,105,000)	(4,962,000)
Net increase in loans	(113,180,000)	(112,078,000)
Purchases of restricted bank stock	(12,418,000)	(7,361,000)
Redemptions of restricted bank stock	9,498,000	5,937,000
Proceeds from sale of certificates of deposit with banks	248,000	76,000
Proceeds from sale of other real estate owned	239,000
Purchase of bank owned life insurance		(5,000,000)
Net cash used in investing activities	(113,235,000)	(105,220,000)
Financing activities
Net increase in deposits	67,742,000	51,232,000
Net (decrease) in repurchase agreements	(6,410,000)	(45,057,000)
Net change in short-term FHLB borrowings	77,041,000	22,202,000
Principal payments on FHLB borrowings	(83,000)	(1,080,000)
Proceeds from subordinated debt		29,313,000
Proceeds from stock offering		5,662,000
Preferred stock issuance		7,834,000
Dividend reinvestment plan proceeds		180,000
Common stock options exercised	(81,000)	48,000
Cash dividends paid on common stock	(319,000)	(317,000)
Cash dividends paid on preferred stock	(285,000)	(43,000)
Net cash provided by financing activities	137,605,000	69,974,000
(Decrease) increase in cash and cash equivalents	(16,063,000)	(11,724,000)
Cash and cash equivalents at beginning of period	30,077,000	39,843,000
Cash and cash equivalents at end of period	14,014,000	28,119,000
Supplemental disclosure of cash flow information
Loans transferred to other real estate owned		146,000
Cashless stock options exercised	169,000
Cash payments for:
Interest on deposits, repurchase agreements and borrowings	5,391,000	3,632,000
Income taxes	$ 1,900,000	$ 1,020,000

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Loans and Allowance for Loan Losses - Internal Risk Rating (Details) - USD ($) $ in Thousands	3 Months Ended
	Jun. 30, 2015	Dec. 31, 2014	Jun. 30, 2014
Classes of the loan portfolio summarized by credit quality indicators:
Minimum threshold for performing annual review of commercial relationship	$ 1,000
Total Loans	911,085	$ 798,297	$ 734,254
Pass
Classes of the loan portfolio summarized by credit quality indicators:
Total Loans	876,212	764,709
Special Mention
Classes of the loan portfolio summarized by credit quality indicators:
Total Loans	20,240	17,929
Substandard
Classes of the loan portfolio summarized by credit quality indicators:
Total Loans	12,717	13,527
Doubtful
Classes of the loan portfolio summarized by credit quality indicators:
Total Loans	1,916	2,132
Commercial
Classes of the loan portfolio summarized by credit quality indicators:
Total Loans	657,084	560,752	533,502
Commercial | Pass
Classes of the loan portfolio summarized by credit quality indicators:
Total Loans	626,171	531,153
Commercial | Special Mention
Classes of the loan portfolio summarized by credit quality indicators:
Total Loans	17,399	14,935
Commercial | Substandard
Classes of the loan portfolio summarized by credit quality indicators:
Total Loans	11,682	12,532
Commercial | Doubtful
Classes of the loan portfolio summarized by credit quality indicators:
Total Loans	1,832	2,132
Commercial Business
Classes of the loan portfolio summarized by credit quality indicators:
Total Loans	313,726	238,878
Commercial Business | Pass
Classes of the loan portfolio summarized by credit quality indicators:
Total Loans	307,156	234,547
Commercial Business | Special Mention
Classes of the loan portfolio summarized by credit quality indicators:
Total Loans	3,385	618
Commercial Business | Substandard
Classes of the loan portfolio summarized by credit quality indicators:
Total Loans	3,185	3,713
Commercial Real Estate
Classes of the loan portfolio summarized by credit quality indicators:
Total Loans	267,832	280,780
Commercial Real Estate | Pass
Classes of the loan portfolio summarized by credit quality indicators:
Total Loans	249,488	262,215
Commercial Real Estate | Special Mention
Classes of the loan portfolio summarized by credit quality indicators:
Total Loans	11,072	11,242
Commercial Real Estate | Substandard
Classes of the loan portfolio summarized by credit quality indicators:
Total Loans	7,272	7,323
Acquisition & Development
Classes of the loan portfolio summarized by credit quality indicators:
Total Loans	75,526	41,094
Acquisition & Development | Pass
Classes of the loan portfolio summarized by credit quality indicators:
Total Loans	69,527	34,391
Acquisition & Development | Special Mention
Classes of the loan portfolio summarized by credit quality indicators:
Total Loans	2,942	3,075
Acquisition & Development | Substandard
Classes of the loan portfolio summarized by credit quality indicators:
Total Loans	1,225	1,496
Acquisition & Development | Doubtful
Classes of the loan portfolio summarized by credit quality indicators:
Total Loans	1,832	2,132
Residential
Classes of the loan portfolio summarized by credit quality indicators:
Total Loans	184,543	174,507	143,627
Residential | Pass
Classes of the loan portfolio summarized by credit quality indicators:
Total Loans	181,412	171,395
Residential | Special Mention
Classes of the loan portfolio summarized by credit quality indicators:
Total Loans	2,051	2,147
Residential | Substandard
Classes of the loan portfolio summarized by credit quality indicators:
Total Loans	996	965
Residential | Doubtful
Classes of the loan portfolio summarized by credit quality indicators:
Total Loans	84
Home Equity
Classes of the loan portfolio summarized by credit quality indicators:
Total Loans	53,106	45,935	39,089
Home Equity | Pass
Classes of the loan portfolio summarized by credit quality indicators:
Total Loans	52,724	45,684
Home Equity | Special Mention
Classes of the loan portfolio summarized by credit quality indicators:
Total Loans	354	223
Home Equity | Substandard
Classes of the loan portfolio summarized by credit quality indicators:
Total Loans	28	28
Consumer
Classes of the loan portfolio summarized by credit quality indicators:
Total Loans	16,352	17,103	$ 18,036
Consumer | Pass
Classes of the loan portfolio summarized by credit quality indicators:
Total Loans	15,905	16,477
Consumer | Special Mention
Classes of the loan portfolio summarized by credit quality indicators:
Total Loans	436	624
Consumer | Substandard
Classes of the loan portfolio summarized by credit quality indicators:
Total Loans	$ 11	$ 2

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Fair Value of Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2015

Fair value of assets and liabilities

Schedule Of Recurring Level III Assets

	For the three months ended		For the three months ended		For the six months ended		For the six months ended
(in thousands)	June 30, 2015		June 30, 2014		June 30, 2015		June 30, 2014
Balance, beginning of period	$	1,790	$	2,607	$	1,020	$	2,271
Realized and unrealized gains (loss) included in earnings		(137)		603		633		939
Balance, end of period	$	1,653	$	3,210	$	1,653	$	3,210

Schedule of quantitative information about assets measured at fair value on a non-recurring basis

	Quantitative Information about Level 3 Fair Value Measurements
			Valuation	Unobservable
(Dollars in thousands)	Fair Value		Technique	Input	Range
June 30, 2015:
Impaired loans	$	12,731	Appraisal of collateral (1)	Appraisal adjustments(2)	20% - 30%
				Liquidation expense (2)	5% - 10%
Other real estate owned	$	375	Appraisal of collateral (1)	Appraisal adjustments (2)	20% - 30%
				Liquidation expense (2)	5% - 10%
Mortgage servicing rights	$	1,262	Discounted cash flows	Constant prepayment rate	12%
				Cost of service	0.25%
				Discount rate	12%

	Quantitative Information about Level 3 Fair Value Measurements
			Valuation	Unobservable
(Dollars in thousands)	Fair Value		Technique	Input	Range
December 31, 2014:
Impaired loans	$	14,091	Appraisal of collateral (1)	Appraisal adjustments (2)	20% - 30%
				Liquidation expense (2)	5% - 10%
Other real estate owned	$	575	Appraisal of collateral (1)	Appraisal adjustments (2)	20% - 30%
				Liquidation expense (2)	5% - 10%
Mortgage servicing rights	$	1,423	Discounted cash flows	Constant prepayment rate	12%
				Cost of service	0.25%
				Discount rate	12%

(1) Fair value is generally determined through independent appraisals of the underlying collateral, which generally include various level 3 inputs which are not observable.

(2) Appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated liquidation expenses.  The range and weighted average of liquidation expenses and other appraisal adjustments are presented as a percent of the appraisal.

Recurring

Fair value of assets and liabilities

Schedule of assets measured at fair value

	June 30, 2015
(in thousands)	Level I		Level II		Level III		Total
Assets:
U.S. Government Agency Securities	$	—	$	30,582	$	—	$	30,582
U.S. Sponsored Mortgage backed securities		—		34,530		—		34,530
Equity and Other Securities		73		670		—		743
Loans held for sale		—		116,307		—		116,307
Interest rate lock commitment		—		—		1,653		1,653
Forward sales commitments				783				783
Interest rate cap		—		936		—		936

	December 31, 2014
(in thousands)	Level I		Level II		Level III		Total
Assets:
U.S. Government Agency Securities	$	—	$	37,534	$	—	$	37,534
U.S. Sponsored Mortgage backed securities		—		29,932		—		29,932
Equity and Other Securities		77		670		—		747
Loans held for sale		—		69,527		—		69,527
Interest rate lock commitment		—		—		1,020		1,020
Interest rate cap		—		1,423		—		1,423
Liability:
Forward sales commitments		—		431		—		431

Non-recurring

Fair value of assets and liabilities

Schedule of assets measured at fair value

	June 30, 2015
(in thousands)	Level I		Level II		Level III		Total
Assets:
Impaired loans	$	—	$	—	$	12,731	$	12,731
Other real estate owned		—		—		375		375
Mortgage servicing rights		—		—		1,262		1,262

	December 31, 2014
(in thousands)	Level I		Level II		Level III		Total
Assets:
Impaired loans	$	—	$	—	$	14,091	$	14,091
Other real estate owned		—		—		575		575
Mortgage servicing rights		—		—		1,423		1,423

Schedule of carrying values and estimated fair values of the Company's financial instruments

The carrying values and estimated fair values of the Company’s financial instruments are summarized as follows (in thousands):

Fair Value Measurements at:

					Quoted Prices in		Significant		Significant
					Active Markets For		Other		Unobservable
	Carrying		Estimated		Identical Assets		Observable		Inputs
	Value		Fair Value		(Level 1)		Inputs (Level 2)		(Level 3)
June 30, 2015:
Financial assets:
Cash and cash equivalents	$	14,014	$	14,014	$	14,014	$	—	$	—
Certificates of deposits with other banks		11,659		11,891		—		11,891		—
Securities available-for-sale		65,855		65,855		73		65,782		—
Securities held-to-maturity		53,141		53,441		—		53,441		—
Loans held for sale		116,307		116,307		—		116,307		—
Loans, net		904,038		912,331		—		—		912,331
Mortgage servicing rights		1,262		1,262		—		—		1,262
Interest rate lock commitment		1,653		1,653		—		—		1,653
Forward sales commitments		783		783		—		783		—
Interest rate cap		936		936		—		936		—
Accrued interest receivable		2,923		2,923		—		668		2,255
Financial liabilities:
Deposits	$	890,969	$	894,979	$	—	$	894,979	$	—
Repurchase agreements		26,263		26,263		—		26,263		—
FHLB and other borrowings		178,245		178,264		—		178,264		—
Accrued interest payable		437		437		—		437		—
Subordinated debt		33,524		31,172		—		31,172		—
December 31, 2014
Financial assets:
Cash and cash equivalents	$	30,077	$	30,077	$	30,077	$	—	$	—
Certificates of deposits with other banks		11,907		12,035		—		12,035		—
Securities available-for-sale		68,213		68,213		77		68,136		—
Securities held-to-maturity		54,538		55,871		—		55,871		—
Loans held for sale		69,527		69,527		—		69,527		—
Loans, net		792,074		803,036		—		—		803,036
Mortgage servicing rights		1,423		1,423		—		—		1,423
Interest rate lock commitment		1,020		1,020		—		—		1,020
Interest rate cap		1,423		1,423		—		1,423		—
Accrued interest receivable		2,387		2,387		—		728		1,659
Financial liabilities:
Deposits	$	823,227	$	824,078	$	—	$	824,078	$	—
Repurchase agreements		32,673		32,673		—		32,673		—
FHLB and other borrowings		101,287		101,338		—		101,338		—
Forward sales commitments		431		431		—		431		—
Accrued interest payable		376		376		—		376		—
Subordinated debt		33,524		31,172		—		31,172		—

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Loans and Allowance for Loan Losses - Aging (Details) - USD ($) $ in Thousands	3 Months Ended
	Jun. 30, 2015	Dec. 31, 2014	Jun. 30, 2014
Aging categories of performing loans and nonaccrual loans
Current	$ 893,118	$ 771,702
30-59 Days Past Due	3,288	8,981
60-89 Days Past Due	4,957	8,551
90 Days + Past Due	9,722	9,063
Total Past Due	17,967	26,595
Total Loans	911,085	798,297	$ 734,254
Non-Accrual	8,450	3,949
90 Days+ Still Accruing	$ 1,332	5,306
Period loan is past due when placed on non-accrual status	90 days
Commercial
Aging categories of performing loans and nonaccrual loans
Current	$ 640,206	541,803
30-59 Days Past Due	3,135	3,972
60-89 Days Past Due	4,837	6,425
90 Days + Past Due	8,906	8,552
Total Past Due	16,878	18,949
Total Loans	657,084	560,752	533,502
Non-Accrual	7,953	3,462
90 Days+ Still Accruing	1,013	5,090
Commercial Business
Aging categories of performing loans and nonaccrual loans
Current	310,523	233,464
30-59 Days Past Due	3,107	3,738
60-89 Days Past Due		1,500
90 Days + Past Due	96	176
Total Past Due	3,203	5,414
Total Loans	313,726	238,878
Non-Accrual	146	107
90 Days+ Still Accruing	10	69
Commercial Real Estate
Aging categories of performing loans and nonaccrual loans
Current	257,298	270,600
30-59 Days Past Due	28	234
60-89 Days Past Due	4,837	4,925
90 Days + Past Due	5,669	5,021
Total Past Due	10,534	10,180
Total Loans	267,832	280,780
Non-Accrual	5,020
90 Days+ Still Accruing	649	5,021
Acquisition & Development
Aging categories of performing loans and nonaccrual loans
Current	72,385	37,739
90 Days + Past Due	3,141	3,355
Total Past Due	3,141	3,355
Total Loans	75,526	41,094
Non-Accrual	2,787	3,355
90 Days+ Still Accruing	354
Residential
Aging categories of performing loans and nonaccrual loans
Current	183,834	167,392
30-59 Days Past Due		4,478
60-89 Days Past Due	119	2,126
90 Days + Past Due	590	511
Total Past Due	709	7,115
Total Loans	184,543	174,507	143,627
Non-Accrual	457	487
90 Days+ Still Accruing	133	216
Home Equity
Aging categories of performing loans and nonaccrual loans
Current	52,927	45,815
30-59 Days Past Due	143	120
90 Days + Past Due	36
Total Past Due	179	120
Total Loans	53,106	45,935	39,089
Non-Accrual	36
Consumer
Aging categories of performing loans and nonaccrual loans
Current	16,151	16,692
30-59 Days Past Due	10	411
60-89 Days Past Due	1
90 Days + Past Due	190
Total Past Due	201	411
Total Loans	16,352	$ 17,103	$ 18,036
Non-Accrual	4
90 Days+ Still Accruing	$ 186

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Pension Plan (Tables)

6 Months Ended

Jun. 30, 2015

PENSION PLAN

Schedule of information pertaining to the activity in the Company's defined benefit plan

	For the three months ended		For the three months ended
(in thousands)	June 30, 2015		June 30, 2014
Service cost	$	-	$	138
Interest cost		78		77
Expected Return on Plan Assets		(79)		(79)
Amortization of Net Actuarial Loss		64		35
Amortization of Prior Service Cost		—		—
Net Periodic Benefit Cost	$	63	$	171
Contributions Paid	$	36	$	94

	For the six months ended		For the six months ended
(in thousands)	June 30, 2015		June 30, 2014
Service cost	$	—	$	346
Interest cost		157		155
Expected Return on Plan Assets		(158)		(158)
Amortization of Net Actuarial Loss		128		70
Amortization of Prior Service Cost		—		—
Net Periodic Benefit Cost	$	127	$	413
Contributions Paid	$	72	$	188

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Basis of Presentation

6 Months Ended

Jun. 30, 2015

Basis of Presentation

Basis of Presentation

MVB Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 1 – Basis of Presentation

These consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with instructions to Form 10‑Q.  Accordingly, they do not include all the information and footnotes required by GAAP for annual year-end financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation, have been included and are of a normal, recurring nature. The consolidated balance sheet as of December 31, 2014 has been derived from audited financial statements included in the Company’s 2014 filing on Form 10-K.  Operating results for the six and three months ended June 30, 2015 are not necessarily indicative of the results that may be expected for the year ending December 31, 2015.

The accounting and reporting policies of MVB Financial Corp. (“the Company” or “MVB”) and its subsidiaries (“Subsidiaries”), including MVB Bank, Inc. (the “Bank”), the Bank’s subsidiary Potomac Mortgage Group, Inc., which does business as MVB Mortgage (“MVB Mortgage”) and MVB Insurance, LLC, conform to accounting principles generally accepted in the United States and practices in the banking industry. The preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Estimates, such as the allowance for loan losses, are based upon known facts and circumstances. Estimates are revised by management in the period such facts and circumstances change.  Actual results could differ from those estimates. All significant inter-company accounts and transactions have been eliminated in consolidation. 

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been omitted. These financial statements should be read in conjunction with the financial statements and notes thereto included in MVB’s December 31, 2014, Form 10-K filed with the Securities and Exchange Commission.

In certain instances, amounts reported in prior periods’ consolidated financial statements have been reclassified to conform to the current presentation. Specifically, a portion of the prior periods’ interest income and interest expense was classified as gain on loans held for sale and has been reclassified in the current presentation.

Information is presented in these notes with dollars expressed in thousands, unless otherwise noted or specified.

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Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Consolidated Balance Sheets
Securities held-to-maturity, fair value	$ 53,441	$ 55,871
Preferred stock, par value (in dollars per share)	$ 1,000	$ 1,000
Preferred stock, shares authorized	20,783	20,783
Preferred stock, shares issued	9,283	9,283
Common stock, par value (in dollars per share)	$ 1	$ 1
Common stock, shares authorized	20,000,000	20,000,000
Common stock, shares issued	8,047,550	8,034,362
Common stock, shares outstanding	7,996,473	7,983,285
Treasury stock, shares	51,077	51,077

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Comprehensive Income

6 Months Ended

Jun. 30, 2015

COMPREHENSIVE INCOME

COMPREHENSIVE INCOME

Note 11 – Comprehensive Income

The following tables present the components of accumulated other comprehensive income (“AOCI”) for the three and six months ended June 30, 2015 and 2014:

	For the three months ended		For the three months ended		For the six months ended		For the six months ended
	June 30, 2015		June 30, 2014		June 30, 2015		June 30, 2014
	Amount		Amount		Amount		Amount
(in thousands)	Reclassified		Reclassified		Reclassified		Reclassified		Affected line item in the Statement where net
Details about AOCI Components	from AOCI		from AOCI		from AOCI		from AOCI		income is presented
Available-for-sale securities
Unrealized holding gains	$	5	$	125	$	126	$	125	Gain on sale of securities
		5		125		126		125	Total before tax
		(2)		(50)		(50)		(50)	Income tax expense
		3		75		76		75	Net of tax
Defined benefit pension plan items
Amortization of net actuarial loss		(64)		(35)		(128)		(70)	Salaries and benefits
		(64)		(35)		(128)		(70)	Total before tax
		25		14		50		27	Income tax expense
		(39)		(21)		(78)		(43)	Net of tax
Total reclassifications	$	(36)	$	54	$	(2)	$	32

	Unrealized
	gains (losses)
	on available-		Defined benefit
	for-sale		pension plan
(in thousands)	securities		items		Total
Balance at March 31, 2015	$	(154)	$	(2,400)	$	(2,554)
Other comprehensive income (loss) before reclassification		(255)		441		186
Amounts reclassified from AOCI		(3)		39		36
Net current period OCI		(258)		480		222
Balance at June 30, 2015	$	(412)	$	(1,920)	$	(2,332)
Balance at March 31, 2014	$	(1,154)	$	(1,485)	$	(2,639)
Other comprehensive income loss before reclassification		666		(210)		456
Amounts reclassified from AOCI		(75)		21		(54)
Net current period OCI		591		(189)		402
Balance at June 30, 2014	$	(563)	$	(1,674)	$	(2,237)
Balance at January 1, 2015	$	(406)	$	(2,236)	$	(2,642)
Other comprehensive income (loss) before reclassification		70		238		308
Amounts reclassified from AOCI		(76)		78		2
Net current period OCI		(6)		316		310
Balance at June 30, 2015	$	(412)	$	(1,920)	$	(2,332)
Balance at January 1, 2014	$	(1,476)	$	(1,485)	$	(2,961)
Other comprehensive income loss before reclassification		988		(232)		756
Amounts reclassified from AOCI		(75)		43		(32)
Net current period OCI		913		(189)		724
Balance at June 30, 2014	$	(563)	$	(1,674)	$	(2,237)

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Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2015	Aug. 06, 2015
Document and Entity Information [Abstract]
Entity Registrant Name	MVB FINANCIAL CORP
Entity Central Index Key	0001277902
Document Type	10-Q
Document Period End Date	Jun. 30, 2015
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2015
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		7,996,978

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Mergers and Acquisitions

6 Months Ended

Jun. 30, 2015

MERGERS AND ACQUISITIONS

MERGERS AND ACQUISITIONS

Note 12 – Mergers and Acquisitions

On July 29, 2014 the Company and its subsidiary, the Bank, had entered into an amended Purchase and Assumption Agreement (“Agreement”) with CFG Community Bank (“CFG Bank”) and its parent, Capital Funding Bancorp, Inc., and affiliates, Capital Finance, LLC and Capital Funding, LLC. The Agreement was subsequently terminated on October 31, 2014 by a Mutual Termination Agreement (“Mutual Termination Agreement”) among the parties. 

The Agreement and Agreement Amendment provided that the Bank, subject to regulatory approvals, would purchase certain assets and assume certain liabilities of CFG Bank and its subsidiaries for $30 million in consideration, consisting of $26 million in cash and $4 million in shares of Company common stock, subject to certain adjustments; however, under the Mutual Termination Agreement, the Company, CFG Bank, Capital Funding Bancorp, Inc. and the other affiliates of CFG Bank have mutually agreed to terminate the Agreement and Agreement Amendment without any future obligation or liability between or among the parties under the Agreement or Agreement Amendment.  The Bank and CFG Bank, as well as other CFG Bank affiliates, intend to continue a working relationship and may, from time to time, engage in loan transactions and, if applicable, servicing arrangements.

On May 1, 2015, MVB Bank, Inc. (MVB Bank), a wholly-owned subsidiary of MVB Financial Corp. (MVB Financial or the Company), issued a joint news release with BB&T Corporation (BB&T) and Susquehanna Bancshares, Inc. (Susquehanna) announcing the signing of a definitive agreement, subject to customary closing conditions including regulatory approvals, through which MVB Bank will acquire two branch locations of Susquehanna Bank in Berkeley County, West Virginia and will assume approximately $69 million of deposits and $17 million of loans. The two Susquehanna Bank branch locations are slated for divestiture under BB&T’s agreement with the United States Department of Justice and commitments to the Board of Governors of the Federal Reserve System in connection with BB&T’s pending acquisition of Susquehanna. On July 22, 2015, regulatory approvals for the acquisition of the two Susquehanna Bank branch locations were received. The acquisition is expected to close August 28, 2015.

The following acquisition related costs are included in the consolidated statements of income for the three and six months ended June 30, 2015 and 2014:

	Three Months Ended		Three Months Ended
(in thousands)	June 30, 2015		June 30, 2014
Professional fees	$	12	$	3
Marketing		—		2
Printing, postage and supplies		3		1
Equipment depreciation and maintenance		—		1
Travel and entertainment		5		41
Total	$	20	$	48

	Six months ended		Six months ended
(in thousands)	June 30, 2015		June 30, 2014
Professional fees	$	12	$	72
Marketing		—		4
Printing, postage and supplies		3		8
Equipment depreciation and maintenance		—		6
Travel and entertainment		5		73
Total	$	20	$	163

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Consolidated Statements of Income - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Interest income
Interest and fees on loans	$ 9,839	$ 7,996	$ 18,603	$ 15,162
Interest on deposits with other banks	63	51	127	97
Interest on investment securities - taxable	222	358	461	769
Interest on tax exempt loans and securities	570	757	1,141	1,511
Total interest income	10,694	9,162	20,332	17,539
Interest expense
Deposits	1,522	1,691	2,889	2,796
Repurchase agreements	20	107	44	233
FHLB and other borrowings	177	143	334	273
Subordinated debt	549	26	1,092	45
Total interest expense	2,268	1,967	4,359	3,347
Net interest income	8,426	7,195	15,973	14,192
Provision for loan losses	561	889	1,220	1,408
Net interest income after provision for loan losses	7,865	6,306	14,753	12,784
Noninterest income
Service charges on deposit accounts	164	171	296	317
Income on bank owned life insurance	165	127	332	255
Visa debit card and interchange income	231	203	440	370
Mortgage fee income	8,617	4,333	14,926	7,543
Gain on sale of portfolio loans	454	658	800	1,333
Insurance and investment services income	965	820	2,663	1,836
Gain on sale of securities	5	125	126	125
Gain (loss) on derivatives	(143)	604	2,106	939
Other operating income	76	25	256	102
Total noninterest income	10,534	7,066	21,945	12,820
Noninterest expense
Salary and employee benefits	10,194	7,932	19,928	14,729
Occupancy expense	880	677	1,755	1,304
Equipment depreciation and maintenance	484	349	967	711
Data processing and communications	944	696	1,870	1,381
Mortgage processing	790	567	1,536	1,112
Marketing, contributions and sponsorships	359	290	696	535
Professional fees	619	380	1,281	878
Printing, postage and supplies	170	199	356	392
Insurance, tax and assessment expense	419	385	847	724
Travel, entertainment, dues and subscriptions	432	362	752	674
Other operating expenses	420	351	690	584
Total noninterest expense	15,711	12,188	30,678	23,024
Income before income taxes	2,688	1,184	6,020	2,580
Income tax expense	783	215	2,012	453
Net Income	1,905	969	4,008	2,127
Preferred dividends	143	22	285	43
Net Income available to common shareholders	$ 1,762	$ 947	$ 3,723	$ 2,084
Earnings per share - basic (in dollars per share)	$ 0.22	$ 0.12	$ 0.47	$ 0.27
Earnings per share - diluted (in dollars per share)	$ 0.22	$ 0.12	$ 0.46	$ 0.26
Weighted average shares outstanding - basic (in shares)	7,987,333	7,897,242	7,985,320	7,778,152
Weighted average shares outstanding - diluted (in shares)	8,674,241	8,110,791	8,672,228	7,991,701

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Fair Value of Financial Instruments

6 Months Ended

Jun. 30, 2015

Fair Value of Financial Instruments

FAIR VALUE OF FINANCIAL INSTRUMENTS

Note 6 – Fair Value of Financial Instruments

The following summarizes the methods and significant assumptions used by the Company in estimating its fair value disclosures for financial instruments.

Level I:      Quoted prices are available in active markets for identical assets or liabilities as of the reported date.

Level II:     Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reported date.  The nature of these assets and liabilities include items for which quoted prices are available but traded less frequently, and items that are fair valued using other financial instruments, the parameters of which can be directly observed.

Level III:    Assets and liabilities that have little to no pricing observability as of the reported date.  These items do not have two-way markets and are measured using management’s best estimate of fair value, where the inputs into the determination of fair value require significant management judgment or estimation.

Assets Measured on a Recurring Basis

As required by accounting standards, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.  The Company classified investments in government securities as Level 2 instruments and valued them using the market approach.  The following measurements are made on a recurring basis.

· Available-for-sale investment securities -  Available-for-sale investment securities are recorded at fair value on a recurring basis. Fair value measurement is based upon quoted prices, if available. If quoted prices are not available, fair values are measured using independent pricing models or other model-based valuation techniques such as the present value of future cash flows, adjusted for the security's credit rating, prepayment assumptions and other factors such as credit loss assumptions. Level 1 securities include those traded on an active exchange, such as the New York Stock Exchange, U.S. Treasury securities that are traded by dealers or brokers in active over-the-counter markets and money market funds. Level 2 securities include mortgage-backed securities issued by government sponsored entities and private label entities, municipal bonds and corporate debt securities. There have been no changes in valuation techniques for the year ended December 31, 2014. Valuation techniques are consistent with techniques used in prior periods.

· Loans held for sale — Loans held for sale are carried at fair value. These loans currently consist of one-to-four-family residential loans originated for sale in the secondary market. Fair value is based on the committed market rates or the price secondary markets are currently offering for similar loans using observable market data.

· Interest rate lock commitment - For mortgage interest rate locks, the fair value is based on either (i) the price of the underlying loans obtained from an investor for loans that will be delivered on a best efforts basis or (ii) the observable price for individual loans traded in the secondary market for loans that will be delivered on a mandatory basis less (iii) expected costs to deliver the interest rate locks, any expected “pull through rate” is applied to this calculation to estimate the derivative value. 

· Interest rate cap - The fair value of the interest rate cap is determined at the end of each quarter by using Bloomberg Finance which values the interest rate cap using observable inputs from forward and futures yield curves as well as standard market volatility.

· Forward sales commitments – Forward sales commitments are considered derivatives and are recorded at fair value, based on (i) committed sales prices from investors for commitments to sell mortgage loans or (ii) observable market data inputs for commitments to sell mortgage backed securities. A majority of the interest rate locks and loans held for sale are committed on a best efforts basis.

The following tables present the assets and liabilities reported on the consolidated statements of financial condition at their fair value on a recurring basis as of June 30, 2015 and December 31, 2014 by level within the fair value hierarchy. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

	June 30, 2015
(in thousands)	Level I		Level II		Level III		Total
Assets:
U.S. Government Agency Securities	$	—	$	30,582	$	—	$	30,582
U.S. Sponsored Mortgage backed securities		—		34,530		—		34,530
Equity and Other Securities		73		670		—		743
Loans held for sale		—		116,307		—		116,307
Interest rate lock commitment		—		—		1,653		1,653
Forward sales commitments				783				783
Interest rate cap		—		936		—		936

	December 31, 2014
(in thousands)	Level I		Level II		Level III		Total
Assets:
U.S. Government Agency Securities	$	—	$	37,534	$	—	$	37,534
U.S. Sponsored Mortgage backed securities		—		29,932		—		29,932
Equity and Other Securities		77		670		—		747
Loans held for sale		—		69,527		—		69,527
Interest rate lock commitment		—		—		1,020		1,020
Interest rate cap		—		1,423		—		1,423
Liability:
Forward sales commitments		—		431		—		431

The following table represents recurring level III assets:

	For the three months ended		For the three months ended		For the six months ended		For the six months ended
(in thousands)	June 30, 2015		June 30, 2014		June 30, 2015		June 30, 2014
Balance, beginning of period	$	1,790	$	2,607	$	1,020	$	2,271
Realized and unrealized gains (loss) included in earnings		(137)		603		633		939
Balance, end of period	$	1,653	$	3,210	$	1,653	$	3,210

Assets Measured on a Nonrecurring Basis

The Company may be required, from time to time, to measure certain financial assets, financial liabilities, non-financial assets and non-financial liabilities at fair value on a nonrecurring basis in accordance with U.S. generally accepted accounting principles. These include assets that are measured at the lower of cost or market value that were recognized at fair value below cost at the end of the period. Certain non-financial assets measured at fair value on a non-recurring basis include foreclosed assets (upon initial recognition or subsequent impairment), non-financial assets and non-financial liabilities measured at fair value in the second step of a goodwill impairment test, and intangible assets and other non-financial long-lived assets measured at fair value for impairment assessment. Non-financial assets measured at fair value on a nonrecurring basis during 2015 and 2014 include certain foreclosed assets which, upon initial recognition, were remeasured and reported at fair value through a charge-off to the allowance for possible loan losses and certain foreclosed assets which, subsequent to their initial recognition, were remeasured at fair value through a write-down included in other non-interest expense.

· Impaired Loans - Loans for which it is probable that payment of interest and principal will not be made in accordance with the contractual terms of the loan agreement are considered impaired. Once a loan is identified as individually impaired, management measures impairment using one of several methods, including collateral value, liquidation value and discounted cash flows. Those impaired loans not requiring an allowance represent loans for which the fair value of the expected repayments or collateral exceed the recorded investments in such loans. Collateral values are estimated using Level 2 inputs based on observable market data or Level 3 inputs based on customized discounting criteria. For a majority of impaired real estate related loans, the Company obtains a current external appraisal. Other valuation techniques are used as well, including internal valuations, comparable property analysis and contractual sales information.

· Other Real Estate owned — Other real estate owned, which is obtained through the Bank’s foreclosure process is valued utilizing the appraised collateral value. Collateral values are estimated using Level 2 inputs based on observable market data or Level 3 inputs based on customized discounting criteria. At the time, the foreclosure is completed, the Company obtains a current external appraisal.

· Mortgage Servicing Rights – Mortgage servicing rights (“MSRs”) do not trade in an active, open market with readily observable prices. While sales of MSRs do occur, the precise terms and conditions typically are not readily available.

Assets measured at fair value on a nonrecurring basis as of June 30, 2015 and December 31, 2014 are included in the tables below:

	June 30, 2015
(in thousands)	Level I		Level II		Level III		Total
Assets:
Impaired loans	$	—	$	—	$	12,731	$	12,731
Other real estate owned		—		—		375		375
Mortgage servicing rights		—		—		1,262		1,262

	December 31, 2014
(in thousands)	Level I		Level II		Level III		Total
Assets:
Impaired loans	$	—	$	—	$	14,091	$	14,091
Other real estate owned		—		—		575		575
Mortgage servicing rights		—		—		1,423		1,423

The following tables present quantitative information about the Level 3 significant unobservable inputs for assets measured at fair value on a nonrecurring basis at June 30, 2015 and December 31, 2014.

	Quantitative Information about Level 3 Fair Value Measurements
			Valuation	Unobservable
(Dollars in thousands)	Fair Value		Technique	Input	Range
June 30, 2015:
Impaired loans	$	12,731	Appraisal of collateral (1)	Appraisal adjustments(2)	20% - 30%
				Liquidation expense (2)	5% - 10%
Other real estate owned	$	375	Appraisal of collateral (1)	Appraisal adjustments (2)	20% - 30%
				Liquidation expense (2)	5% - 10%
Mortgage servicing rights	$	1,262	Discounted cash flows	Constant prepayment rate	12%
				Cost of service	0.25%
				Discount rate	12%

	Quantitative Information about Level 3 Fair Value Measurements
			Valuation	Unobservable
(Dollars in thousands)	Fair Value		Technique	Input	Range
December 31, 2014:
Impaired loans	$	14,091	Appraisal of collateral (1)	Appraisal adjustments (2)	20% - 30%
				Liquidation expense (2)	5% - 10%
Other real estate owned	$	575	Appraisal of collateral (1)	Appraisal adjustments (2)	20% - 30%
				Liquidation expense (2)	5% - 10%
Mortgage servicing rights	$	1,423	Discounted cash flows	Constant prepayment rate	12%
				Cost of service	0.25%
				Discount rate	12%

(1) Fair value is generally determined through independent appraisals of the underlying collateral, which generally include various level 3 inputs which are not observable.

(2) Appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated liquidation expenses.  The range and weighted average of liquidation expenses and other appraisal adjustments are presented as a percent of the appraisal.

The following summarizes the methods and significant assumptions used by the Company in estimating its fair value disclosures for financial instruments.

Cash and cash equivalents: The carrying amounts for cash and cash equivalents approximate fair value because they have original maturities of 90 days or less and do not present unanticipated credit concerns.

Certificates of deposits: The fair values for certificates of deposits are computed based on scheduled future cash flows of principal and interest, discounted at interest rates currently offered for certificates of deposits with similar terms of investors.  No prepayments of principal are assumed.

Securities:  Fair values of securities are based on quoted market prices, where available.  If quoted market prices are not available, estimated fair values are based on quoted market prices of comparable securities.

Loans held for sale: Loans held for sale are reported at fair value. These loans currently consist of one-to-four-family residential loans originated for sale in the secondary market. Fair value is based on committed market rates or the price secondary markets are currently offering for similar loans using observable market data. (Level II)

Loans:  The fair values for loans are computed based on scheduled future cash flows of principal and interest, discounted at interest rates currently offered for loans with similar terms of borrowers of similar credit quality.  No prepayments of principal are assumed.

Mortgage servicing rights: The carrying value of mortgage servicing rights approximates their fair value.

Interest rate lock commitment: For mortgage interest rate locks, the fair value is based on either (i) the price of the underlying loans obtained from an investor for loans that will be delivered on a best efforts basis or (ii) the observable price for individual loans traded in the secondary market for loans that will be delivered on a mandatory basis less (iii) expected costs to deliver the interest rate locks, any expected “pull through rate” is applied to this calculation to estimate the derivative value.The “pull through rate” range from 78% – 80% and 77% - 81% as of June 30, 2015 and December 31, 2014.

Interest rate cap: The fair value of the interest rate cap is determined at the end of each quarter by using Bloomberg Finance which values the interest rate cap using observable inputs from forward and futures yield curves as well as standard market volatility.

Accrued interest receivable and payable and repurchase agreements:  The carrying values of accrued interest receivable and payable approximate their fair values.

Deposits:  The fair values of demand deposits (i.e., non-interest bearing checking, NOW and money market), savings accounts and other variable rate deposits approximate their carrying values.  Fair values of fixed maturity deposits are estimated using a discounted cash flow methodology at rates currently offered for deposits with similar remaining maturities.  Any intangible value of long-term relationships with depositors is not considered in estimating the fair values disclosed.

Forward Sales Commitments: Forward sales commitments are used to mitigate interest rate risk for residential mortgage loans held for sale and interest rate locks and manage expected funding percentages. These instruments are considered derivatives and are recorded at fair value, based on (i) committed sales prices from investors for commitments to sell mortgage loans or (ii) observable market data inputs for commitments to sell mortgage backed securities.

FHLB and other borrowings: The fair values for loans are computed based on scheduled future cash flows of principal and interest, discounted at interest rates currently offered for loans with similar terms of borrowers of similar credit quality.  No prepayments of principal are assumed.

Subordinated debt: The fair values for debt are computed based on scheduled future cash flows of principal and interest, discounted at interest rates currently offered for debt with similar terms of borrowers of similar credit quality.  No prepayments of principal are assumed.

Off-balance sheet instruments:  The fair values of commitments to extend credit and standby letters of credit are estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of agreements and the present credit standing of the counterparties.  The amounts of fees currently charged on commitments and standby letters of credit are deemed insignificant, and therefore, the estimated fair values and carrying values are not shown.

The carrying values and estimated fair values of the Company’s financial instruments are summarized as follows (in thousands):

Fair Value Measurements at:

					Quoted Prices in		Significant		Significant
					Active Markets For		Other		Unobservable
	Carrying		Estimated		Identical Assets		Observable		Inputs
	Value		Fair Value		(Level 1)		Inputs (Level 2)		(Level 3)
June 30, 2015:
Financial assets:
Cash and cash equivalents	$	14,014	$	14,014	$	14,014	$	—	$	—
Certificates of deposits with other banks		11,659		11,891		—		11,891		—
Securities available-for-sale		65,855		65,855		73		65,782		—
Securities held-to-maturity		53,141		53,441		—		53,441		—
Loans held for sale		116,307		116,307		—		116,307		—
Loans, net		904,038		912,331		—		—		912,331
Mortgage servicing rights		1,262		1,262		—		—		1,262
Interest rate lock commitment		1,653		1,653		—		—		1,653
Forward sales commitments		783		783		—		783		—
Interest rate cap		936		936		—		936		—
Accrued interest receivable		2,923		2,923		—		668		2,255
Financial liabilities:
Deposits	$	890,969	$	894,979	$	—	$	894,979	$	—
Repurchase agreements		26,263		26,263		—		26,263		—
FHLB and other borrowings		178,245		178,264		—		178,264		—
Accrued interest payable		437		437		—		437		—
Subordinated debt		33,524		31,172		—		31,172		—
December 31, 2014
Financial assets:
Cash and cash equivalents	$	30,077	$	30,077	$	30,077	$	—	$	—
Certificates of deposits with other banks		11,907		12,035		—		12,035		—
Securities available-for-sale		68,213		68,213		77		68,136		—
Securities held-to-maturity		54,538		55,871		—		55,871		—
Loans held for sale		69,527		69,527		—		69,527		—
Loans, net		792,074		803,036		—		—		803,036
Mortgage servicing rights		1,423		1,423		—		—		1,423
Interest rate lock commitment		1,020		1,020		—		—		1,020
Interest rate cap		1,423		1,423		—		1,423		—
Accrued interest receivable		2,387		2,387		—		728		1,659
Financial liabilities:
Deposits	$	823,227	$	824,078	$	—	$	824,078	$	—
Repurchase agreements		32,673		32,673		—		32,673		—
FHLB and other borrowings		101,287		101,338		—		101,338		—
Forward sales commitments		431		431		—		431		—
Accrued interest payable		376		376		—		376		—
Subordinated debt		33,524		31,172		—		31,172		—

Fair value estimates are made at a specific point in time, based on relevant market information about the financial instrument.  These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument.  Because no market exists for a significant portion of the Company’s financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments and other factors.  These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore, cannot be determined with precision.  Changes in assumptions could significantly affect the estimates.  Fair value estimates are based on existing on-and-off balance sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments.

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Borrowed Funds

6 Months Ended

Jun. 30, 2015

BORROWED FUNDS

BORROWED FUNDS

NOTE 5 - BORROWED FUNDS

Short-term Borrowings

Along with traditional deposits, the Bank has access to short-term borrowings from FHLB to fund its operations and investments. Short-term borrowings from FHLB totaled $172.9 million at June 30, 2015, compared to $95.8 million at December 31, 2014.

Information related to short-term borrowings is summarized as follows:

	June 30,			December 31,
(Dollars in thousands)	2015			2014
Balance at end of period	$	172,871		$	95,829
Average balance during the three and twelve months ended		130,956			76,185
Maximum month-end balance during the three and twelve months ended		172,871			120,229
Weighted-average rate during the three and twelve months ended		0.32	%		0.27	%
Rate at end of period		0.34	%		0.32	%

Repurchase agreements:

Along with traditional deposits, the Bank has access to securities sold under agreements to repurchase “repurchase agreements” with customers represent funds deposited by customers, on an overnight basis, that are collateralized by investment securities owned by the Company. Repurchase agreements with customers are included in borrowings section on the consolidated  balance sheets. All repurchase agreements are subject to terms and conditions of repurchase/security agreements between the Company and the client and are accounted for as secured borrowings. The Company's repurchase agreements reflected in liabilities consist of customer accounts and securities which are pledged on an individual security basis.

As of June 30, 2015 and December 31, 2014, the Bank had repurchase agreements of $26.3 million and $32.7 million, respectively. These borrowings were collateralized by investment securities and FHLB letters of credit with a carrying value of $116.2 million and $163.7 million at June30, 2015 and December31, 2014, respectively. Declines in the value of the collateral would require the Company to pledge additional securities. As of June30, 2015 and December31, 2014 the Company had $3.9 million and $5.6 million, respectively, of available unpledged securities.

Information related to repurchase agreements is summarized as follows:

	June 30,			December 31,
(Dollars in thousands)	2015			2014
Balance at end of period	$	26,263		$	32,673
Average balance during the three and twelve months ended		26,140			55,731
Maximum month-end balance during the three and twelve months ended		26,263			83,781
Weighted-average rate during the three and twelve months ended		0.29	%		0.52	%
Rate at end of period		0.30	%		0.35	%

Term notes from the FHLB were as follows:	June 30,		December 31,
(Dollars in thousands)	2015		2014
Fixed interest rate notes, originating between April 2002 and December 2007, due between July 2016 and April 2022, interest of between 4.50% and 5.90% payable monthly	$	4,544	$	4,618
Amortizing fixed interest rate note, originating February 2007, due February 2022, payable in monthly installments of $5, including interest of 5.22%		830		840
	$	5,374	$	5,458

Subordinated Debt

In March 2007, the Company completed the private placement of $4 million Floating Rate, Trust Preferred Securities through its MVB Financial Statutory Trust I subsidiary (the “Trust”).  The Company 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 were loaned to the Company 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 obligations of the Company with respect to the issuance of the trust preferred securities constitute a full and unconditional guarantee by the Company of the Trust’s obligations with respect to the trust preferred securities to the extent set forth in the related guarantees. The securities issued by the Trust are includable for regulatory purposes as a component of the Company’s Tier I capital.

The Trust Preferred Securities and the Debentures mature in 2037 and have been redeemable by the Company 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. The obligations of the Company with respect to the issuance of the trust preferred securities constitute a full and unconditional guarantee by the Company of the Trust's obligations with respect to the trust preferred securities to the extent set forth in the related guarantees.

On June 30, 2014, MVB Financial Corp. (the “Company”) issued its Convertible Subordinated Promissory Notes Due 2024 (the “Notes”) to various investors in the aggregate principal amount of $29,400,000.  The Notes were issued in $100,000 increments per Note subject to a minimum investment of $1,000,000.  The Notes expire 10 years after the initial issuance date of the Notes (the “Maturity Date”). 

Interest on the Notes accrues on the unpaid principal amount of each Note (paid quarterly in arrears on January 1, April 1, July 1 and October 1 of each year) which rate shall be dependent upon the principal invested in the Notes and the holder’s ownership of common stock in the Company.  For investments of less than $3,000,000 in Notes, an ownership of Company common stock representing at least 30% of the principal of the Notes acquired, the interest rate on the Notes is 7% per annum.  For investments of $3,000,000 or greater in Notes and ownership of the Company’s common stock representing at least 30% of the principal of the Notes acquired, the interest rate on the Notes is 7.5% per annum.  For investments of $10,000,000 or greater, the interest rate on the Notes is 7% per annum, regardless of whether the holder owns or acquires MVB common stock.  The principal on the Notes shall be paid in full at the Maturity Date.  On the fifth anniversary of the issuance of the Notes, a holder may elect to continue to receive the stated fixed rate on the Notes or a floating rate determined by LIBOR plus 5% up to a maximum rate of 9%, adjusted quarterly.

The Notes are unsecured and subject to the terms and conditions of any senior debt and after consultation with the Board of Governors of the Federal Reserve System, the Company may, after the Notes have been outstanding for five years, and without premium or penalty, prepay all or a portion of the unpaid principal amount of any Note together with the unpaid interest accrued on such portion of the principal amount of such Note.  All such prepayments shall be made pro rata among the holders of all outstanding Notes. 

At the election of a holder, any or all of the Notes may be converted into shares of common stock during the 30-day period after the first, second, third, fourth, and fifth anniversaries of the issuance of the Notes or upon a notice to prepay by the Company.  The Notes will convert into common stock based on $16 per share of the Company’s common stock.  The conversion price will be subject to anti-dilution adjustments for certain events such as stock splits, reclassifications, non-cash distributions, extraordinary cash dividends, pro rata repurchases of common stock, and business combination transactions.  The Company must give 20 days’ notice to the holders of the Company’s intent to prepay the Notes, so that holders may execute the conversion right set forth above if a holder so desires. 

Repayment of the Notes is subordinated to the Company’s outstanding senior debt including (if any) without limitation, senior secured loans.  No payment will be made by the Company, directly or indirectly, on the Notes, unless and until all of the senior debt then due has been paid in full.  Notwithstanding the foregoing, so long as there exists no event of default under any senior debt, the Company would make, and a holder would receive and retain for the holder’s account, regularly scheduled payments of accrued interest and principal pursuant to the terms of the Notes.

The Company must obtain a consent of the holders of the Notes prior to issuing any new senior debt in excess of $15,000,000 after the date of issuance of the Notes and prior to the Maturity Date. 

An event of default will occur upon the Company’s bankruptcy or any failure to pay interest, principal, or other amounts owing on the Notes when due.   Upon the occurrence and during the continuance of an event of default (but subject to the subordination provisions of the Notes) the holders of a majority of the outstanding principal amount of the Notes may declare all or any portion of the outstanding principal amount of the Notes due and payable and demand immediate payment of such amount.

The Notes are redeemable, in whole or in part, at a redemption price equal to 100% of the principal amount of the Notes to be redeemed on any interest payment date after a date five years from the original issue date.

The Company reflects subordinated debt in the amount of $33.5 million as of June 30, 2015 and December 31, 2014 and interest expense of $1,092 and $45 for the six months ended June 30, 2015 and 2014.

A summary of maturities of borrowings and subordinated debt over the next five years is as follows:

(dollars in thousands)

Year	Amount
2015	$	172,956
2016		1,246
2017		1,470
2018		81
2019		85
Thereafter		35,931
	$	211,769

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Segment Reporting (Tables)

6 Months Ended

Jun. 30, 2015

SEGMENT REPORTING

Schedule of information about the reportable segments and reconciliation to the consolidated financial statements

r
	Commercial &
Three months ended June 30, 2015	Retail		Mortgage				Intercompany
(in thousands)	Banking		Banking		Insurance		Eliminations		Consolidated
Revenues:
Interest income	$	9,719	$	1,137	$	—	$	(162)	$	10,694
Mortgage fee income		76		8,833		—		(292)		8,617
Insurance and investment services income		106		—		859		—		965
Other income		2,132		(88)		4		(1,096)		952
Total operating income		12,033		9,882		863		(1,550)		21,228
Expenses:
Interest expense		2,193		529		—		(454)		2,268
Provision for loan losses		561		—		—		—		561
Salaries and employee benefits		3,718		5,574		902		—		10,194
Other expense		4,485		1,888		240		(1,096)		5,517
Total operating expenses		10,957		7,991		1,142		(1,550)		18,540
Income (loss) before income taxes		1,076		1,891		(279)		—		2,688
Income tax expense (benefit)		165		723		(105)		—		783
Net income (loss)		911		1,168		(174)		—		1,905
Preferred stock dividends		143		—		—		—		143
Net income (loss) available to common shareholders	$	768	$	1,168	$	(174)	$	—	$	1,762
Capital expenditures for the three-month period ended June 30, 2015	$	638	$	71	$	2	$	-	$	711
Total assets as of June 30, 2015		1,390,957		139,767		4,321		(281,979)		1,253,066
Total assets as of December 31, 2014		1,189,746		101,791		4,031		(185,109)		1,110,459
Goodwill as of June 30, 2015		897		16,882		-		-		17,779
Goodwill as of December 31, 2014	$	897	$	16,882	$	-	$	-	$	17,779

	Commercial &
Three months ended June 30, 2014	Retail		Mortgage				Intercompany
(in thousands)	Banking		Banking		Insurance		Eliminations		Consolidated
Revenues:
Interest income	$	8,364	$	688	$	—	$	110	$	9,162
Mortgage fee income		25		4,649		—		(341)		4,333
Insurance and investment services income		71		—		749		—		820
Other income		2,746		604		—		(1,437)		1,913
Total operating income		11,206		5,941		749		(1,668)		16,228
Expenses:
Interest expense		1,931		278		—		(242)		1,967
Provision for loan losses		889		—		—		—		889
Salaries and employee benefits		3,331		3,655		946		—		7,932
Other expense		4,125		1,346		211		(1,426)		4,256
Total operating expenses		10,276		5,279		1,157		(1,668)		15,044
Income (loss) before income taxes		930		662		(408)		—		1,184
Income tax expense (benefit)		107		263		(155)		—		215
Net income (loss)		823		399		(253)		—		969
Preferred stock dividends		22		—		—		—		22
Net income (loss) available to common shareholders	$	801	$	399	$	(253)	$	—	$	947
Capital expenditures for the three-month period ended June 30, 2014	$	2,559	$	74		33	$	-	$	2,666
Total assets as of June 30, 2014		1,143,107		101,609		4,431		(186,526)		1,062,621
Total assets as of December 31, 2013		1,021,097		92,290		3,012		(129,339)		987,060
Goodwill as of June 30, 2014		897		16,882		-		-		17,779
Goodwill as of December 31, 2013	$	897	$	16,882	$	-	$	-	$	17,779

	Commercial &
Six months ended June 30, 2015	Retail		Mortgage				Intercompany
(in thousands)	Banking		Banking		Insurance		Eliminations		Consolidated
Revenues:
Interest income	$	18,622	$	1,966	$	—	$	(256)	$	20,332
Mortgage fee income		63		15,385		—		(522)		14,926
Insurance and investment services income		178		—		2,485		—		2,663
Other income		4,068		2,600		4		(2,316)		4,356
Total operating income		22,931		19,951		2,489		(3,094)		42,277
Expenses:
Interest expense		4,234		903		—		(778)		4,359
Provision for loan losses		1,220		—		—		—		1,220
Salaries and employee benefits		7,476		10,664		1,788		—		19,928
Other expense		9,059		3,581		426		(2,316)		10,750
Total operating expenses		21,989		15,148		2,214		(3,094)		36,257
Income before income taxes		942		4,803		275		—		6,020
Income tax expense		68		1,838		106		—		2,012
Net income		874		2,965		169		—		4,008
Preferred stock dividends		285		—		—		—		285
Net income available to common shareholders	$	589	$	2,965	$	169	$	—	$	3,723
Capital expenditures for the six-month period ended June 30, 2015	$	997	$	99	$	9	$	-	$	1,105
Total assets as of June 30, 2015		1,390,957		139,767		4,321		(281,979)		1,253,066
Total assets as of December 31, 2014		1,189,746		101,791		4,031		(185,109)		1,110,459
Goodwill as of June 30, 2015		897		16,882		-		-		17,779
Goodwill as of December 31, 2014	$	897	$	16,882	$	-	$	-	$	17,779

	Commercial &
Six months ended June 30, 2014	Retail		Mortgage				Intercompany
(in thousands)	Banking		Banking		Insurance		Eliminations		Consolidated
Revenues:
Interest income	$	16,123	$	1,235	$	—	$	181	$	17,539
Mortgage fee income		(8)		8,139		—		(588)		7,543
Insurance and investment services income		129		—		1,707		—		1,836
Other income		5,204		939		—		(2,702)		3,441
Total operating income		21,448		10,313		1,707		(3,109)		30,359
Expenses:
Interest expense		3,278		489		—		(420)		3,347
Provision for loan losses		1,408		—		—		—		1,408
Salaries and employee benefits		6,362		6,632		1,735		—		14,729
Other expense		7,996		2,595		393		(2,689)		8,295
Total operating expenses		19,044		9,716		2,128		(3,109)		27,779
Income (loss) before income taxes		2,404		597		(421)		—		2,580
Income tax expense (benefit)		375		238		(160)		—		453
Net income (loss)		2,029		359		(261)		—		2,127
Preferred stock dividends		43		—		—		—		43
Net income (loss) available to common shareholders	$	1,986	$	359	$	(261)	$	—	$	2,084
Capital expenditures for the six-month period ended June 30, 2014	$	4,428	$	191	$	343	$	-	$	4,962
Total assets as of June 30, 2014		1,143,107		101,609		4,431		(186,526)		1,062,621
Total assets as of December 31, 2013		1,021,097		92,290		3,012		(129,339)		987,060
Goodwill as of June 30, 2014		897		16,882		-		-		17,779
Goodwill as of December 31, 2013	$	897	$	16,882	$	-	$	-	$	17,779

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Investment (Tables)

6 Months Ended

Jun. 30, 2015

INVESTMENTS

Schedule of amortized cost and fair values of investment securities held-to-maturity

Amortized cost and fair values of investment securities held-to-maturity at June 30, 2015, including gross unrealized gains and losses, are summarized as follows:

	Amortized		Unrealized		Unrealized		Fair
(in thousands)	Cost		Gain		Loss		Value
Municipal securities	$	53,141	$	1,048	$	(748)	$	53,441
Total investment securities held-to-maturity	$	53,141	$	1,048	$	(748)	$	53,441

Amortized cost and fair values of investment securities held-to-maturity at December 31, 2014, including gross unrealized gains and losses, are summarized as follows:

	Amortized		Unrealized		Unrealized		Fair
(in thousands)	Cost		Gain		Loss		Value
Municipal securities	$	54,538	$	1,600	$	(267)	$	55,871
Total investment securities held–to-maturity	$	54,538	$	1,600	$	(267)	$	55,871

Schedule of amortized cost and fair values of investment securities available-for-sale

Amortized cost and fair values of investment securities available-for-sale at June 30, 2015 are summarized as follows:

	Amortized		Unrealized		Unrealized		Fair
(in thousands)	Cost		Gain		Loss		Value
U.S. Agency securities	$	30,847	$	13	$	(278)	$	30,582
U.S. Sponsored Mortgage-backed securities		35,026		17		(513)		34,530
Total debt securities		65,873		30		(791)		65,112
Equity and other securities		670		73		—		743
Total investment securities available-for-sale	$	66,543	$	103	$	(791)	$	65,855

Amortized cost and fair values of investment securities available-for-sale at December 31, 2014 are summarized as follows:

	Amortized		Unrealized		Unrealized		Fair
(in thousands)	Cost		Gain		Loss		Value
U.S. Agency securities	$	37,926	$	73	$	(465)	$	37,534
U.S. Sponsored Mortgage-backed securities		30,293		58		(419)		29,932
Total debt securities		68,219		131		(884)		67,466
Equity and other securities		670		77		—		747
Total investment securities available-for-sale	$	68,889	$	208	$	(884)	$	68,213

Schedule of amortized cost and fair values of debt securities by maturity

The following tables summarize amortized cost and fair values of debt securities by maturity at June 30, 2015:

	Held to Maturity				Available for sale
	Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value
Within one year	$	—	$	—	$	—	$	—
After one year, but within five		4,758		4,870		23,112		22,962
After five years, but within ten		14,497		14,593		9,845		9,702
After ten years		33,886		33,978		32,916		32,448
Total	$	53,141	$	53,441	$	65,873	$	65,112

Schedule of investments in an unrealized loss position

The following table discloses investments in an unrealized loss position at June 30, 2015:

Description and number of positions	Less than 12 months				12 months or more
(in thousands)	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
U.S. Agency securities (9)	$	13,102	$	(135)	$	13,964	$	(143)
U.S. Sponsored Mortgage-backed securities (15)		18,826		(168)		12,836		(345)
Municipal securities (60)		16,260		(349)		8,121		(399)
	$	48,188	$	(652)	$	34,921	$	(887)

The following table discloses investments in an unrealized loss position at December 31, 2014:

Description and number of positions	Less than 12 months				12 months or more
(in thousands)	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
U.S. Agency securities (9)	$	996	$	(3)	$	26,900	$	(462)
U.S. Sponsored Mortgage-backed securities (8)		678		(3)		14,824		(416)
Municipal securities (42)		528		(3)		16,489		(264)
	$	2,202	$	(9)	$	58,213	$	(1,142)

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Segement Reporting

6 Months Ended

Jun. 30, 2015

SEGMENT REPORTING

SEGMENT REPORTING

Note 9 – Segment Reporting

During 2013, the Company identified three reportable segments: commercial and retail banking; mortgage banking; and insurance services. Revenue from commercial and retail banking activities consists primarily of interest earned on loans and investment securities and service charges on deposit accounts. In addition, the commercial and retail banking segment activity includes holding company revenue and expense items.

Revenue from the mortgage banking activities is comprised of interest earned on loans and fees received as a result of the mortgage origination process. The mortgage banking services are conducted by MVB Mortgage. Revenue from insurance services is comprised mainly of commissions on the sale of insurance products.

Information about the reportable segments and reconciliation to the consolidated financial statements for the three and six month periods ended June 30, 2015 and 2014 are as follows:

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	Commercial &
Three months ended June 30, 2015	Retail		Mortgage				Intercompany
(in thousands)	Banking		Banking		Insurance		Eliminations		Consolidated
Revenues:
Interest income	$	9,719	$	1,137	$	—	$	(162)	$	10,694
Mortgage fee income		76		8,833		—		(292)		8,617
Insurance and investment services income		106		—		859		—		965
Other income		2,132		(88)		4		(1,096)		952
Total operating income		12,033		9,882		863		(1,550)		21,228
Expenses:
Interest expense		2,193		529		—		(454)		2,268
Provision for loan losses		561		—		—		—		561
Salaries and employee benefits		3,718		5,574		902		—		10,194
Other expense		4,485		1,888		240		(1,096)		5,517
Total operating expenses		10,957		7,991		1,142		(1,550)		18,540
Income (loss) before income taxes		1,076		1,891		(279)		—		2,688
Income tax expense (benefit)		165		723		(105)		—		783
Net income (loss)		911		1,168		(174)		—		1,905
Preferred stock dividends		143		—		—		—		143
Net income (loss) available to common shareholders	$	768	$	1,168	$	(174)	$	—	$	1,762
Capital expenditures for the three-month period ended June 30, 2015	$	638	$	71	$	2	$	-	$	711
Total assets as of June 30, 2015		1,390,957		139,767		4,321		(281,979)		1,253,066
Total assets as of December 31, 2014		1,189,746		101,791		4,031		(185,109)		1,110,459
Goodwill as of June 30, 2015		897		16,882		-		-		17,779
Goodwill as of December 31, 2014	$	897	$	16,882	$	-	$	-	$	17,779

	Commercial &
Three months ended June 30, 2014	Retail		Mortgage				Intercompany
(in thousands)	Banking		Banking		Insurance		Eliminations		Consolidated
Revenues:
Interest income	$	8,364	$	688	$	—	$	110	$	9,162
Mortgage fee income		25		4,649		—		(341)		4,333
Insurance and investment services income		71		—		749		—		820
Other income		2,746		604		—		(1,437)		1,913
Total operating income		11,206		5,941		749		(1,668)		16,228
Expenses:
Interest expense		1,931		278		—		(242)		1,967
Provision for loan losses		889		—		—		—		889
Salaries and employee benefits		3,331		3,655		946		—		7,932
Other expense		4,125		1,346		211		(1,426)		4,256
Total operating expenses		10,276		5,279		1,157		(1,668)		15,044
Income (loss) before income taxes		930		662		(408)		—		1,184
Income tax expense (benefit)		107		263		(155)		—		215
Net income (loss)		823		399		(253)		—		969
Preferred stock dividends		22		—		—		—		22
Net income (loss) available to common shareholders	$	801	$	399	$	(253)	$	—	$	947
Capital expenditures for the three-month period ended June 30, 2014	$	2,559	$	74		33	$	-	$	2,666
Total assets as of June 30, 2014		1,143,107		101,609		4,431		(186,526)		1,062,621
Total assets as of December 31, 2013		1,021,097		92,290		3,012		(129,339)		987,060
Goodwill as of June 30, 2014		897		16,882		-		-		17,779
Goodwill as of December 31, 2013	$	897	$	16,882	$	-	$	-	$	17,779

	Commercial &
Six months ended June 30, 2015	Retail		Mortgage				Intercompany
(in thousands)	Banking		Banking		Insurance		Eliminations		Consolidated
Revenues:
Interest income	$	18,622	$	1,966	$	—	$	(256)	$	20,332
Mortgage fee income		63		15,385		—		(522)		14,926
Insurance and investment services income		178		—		2,485		—		2,663
Other income		4,068		2,600		4		(2,316)		4,356
Total operating income		22,931		19,951		2,489		(3,094)		42,277
Expenses:
Interest expense		4,234		903		—		(778)		4,359
Provision for loan losses		1,220		—		—		—		1,220
Salaries and employee benefits		7,476		10,664		1,788		—		19,928
Other expense		9,059		3,581		426		(2,316)		10,750
Total operating expenses		21,989		15,148		2,214		(3,094)		36,257
Income before income taxes		942		4,803		275		—		6,020
Income tax expense		68		1,838		106		—		2,012
Net income		874		2,965		169		—		4,008
Preferred stock dividends		285		—		—		—		285
Net income available to common shareholders	$	589	$	2,965	$	169	$	—	$	3,723
Capital expenditures for the six-month period ended June 30, 2015	$	997	$	99	$	9	$	-	$	1,105
Total assets as of June 30, 2015		1,390,957		139,767		4,321		(281,979)		1,253,066
Total assets as of December 31, 2014		1,189,746		101,791		4,031		(185,109)		1,110,459
Goodwill as of June 30, 2015		897		16,882		-		-		17,779
Goodwill as of December 31, 2014	$	897	$	16,882	$	-	$	-	$	17,779

	Commercial &
Six months ended June 30, 2014	Retail		Mortgage				Intercompany
(in thousands)	Banking		Banking		Insurance		Eliminations		Consolidated
Revenues:
Interest income	$	16,123	$	1,235	$	—	$	181	$	17,539
Mortgage fee income		(8)		8,139		—		(588)		7,543
Insurance and investment services income		129		—		1,707		—		1,836
Other income		5,204		939		—		(2,702)		3,441
Total operating income		21,448		10,313		1,707		(3,109)		30,359
Expenses:
Interest expense		3,278		489		—		(420)		3,347
Provision for loan losses		1,408		—		—		—		1,408
Salaries and employee benefits		6,362		6,632		1,735		—		14,729
Other expense		7,996		2,595		393		(2,689)		8,295
Total operating expenses		19,044		9,716		2,128		(3,109)		27,779
Income (loss) before income taxes		2,404		597		(421)		—		2,580
Income tax expense (benefit)		375		238		(160)		—		453
Net income (loss)		2,029		359		(261)		—		2,127
Preferred stock dividends		43		—		—		—		43
Net income (loss) available to common shareholders	$	1,986	$	359	$	(261)	$	—	$	2,084
Capital expenditures for the six-month period ended June 30, 2014	$	4,428	$	191	$	343	$	-	$	4,962
Total assets as of June 30, 2014		1,143,107		101,609		4,431		(186,526)		1,062,621
Total assets as of December 31, 2013		1,021,097		92,290		3,012		(129,339)		987,060
Goodwill as of June 30, 2014		897		16,882		-		-		17,779
Goodwill as of December 31, 2013	$	897	$	16,882	$	-	$	-	$	17,779

Commercial & Retail Banking

For the three months ended June 30, 2015, the Commercial & Retail Banking segment earned$911 compared to $823 during the three months ended June 30, 2014. Net interest income increased by $1.1 million, mainly the result of average loan balances increasing by $173.0 million. In addition, average subordinated debt increased$29.1 million which led to a $262 increase in interest expense. Noninterest income decreased by $528, largely the result of decreased gains on sales of portfolio loans of $204 and decreased gains on security sales of $121. The decreased gain on sales of portfolio loans was the result of an $8.1 million decrease in volume of portfolio loans sold. Noninterest expense increased by $747, mainly the result of the following:$387 increase in salaries expense and $300 increase in data processing and communications expense. Preferred stock dividends also increased by $121 as a result of new preferred stock issued by the Company on June 30, 2014.

For the six months ended June 30, 2015, the Commercial & Retail Banking segment earned  $874 compared to $2.0 million during the six months ended June 30, 2014. Net interest income increased by $1.5 million, mainly the result of average loan balances increasing by $171.8 million. In addition, average subordinated debt increased $29.2 million which led to a $956 increase in interest expense. Noninterest income decreased by $1.0 million, largely the result of decreased gains on sales of portfolio loans of $533 and decrease of $494 in gain on derivative. The decreased gain on sales of portfolio loans was the result of an $8.1 million decrease in volume of portfolio loans sold. Noninterest expense increased by $2.2 million, mainly the result of the following: $1.1 million in salaries expense, $521 in occupancy and equipment expense, $599 in data processing and communications expense and $446 in professional fees. Preferred stock dividends also increased by $121 as a result of new preferred stock issued by the Company on June 30, 2014.

Mortgage Banking

For the three months ended June 30, 2015, the Mortgage Banking segment earned $1.2 million compared to$400 during the three months ended June 30, 2014. Net interest income increased $198, noninterest income increased by $3.5 million and noninterest expense increased by $2.5 million. The $769 earnings increase is mainly due to a 69% increase in origination volume, which helped drive a $4.2 million increase in mortgage fee income.A  $9.5 million decrease in loans held for sale caused a $691 decrease in gain on derivative. Personnel expense also increased by $1.9 million.

For the six months ended June 30, 2015, the Mortgage Banking segment earned $3.0 million compared to$359during the six months ended June 30, 2014. Net interest income increased $317, noninterest income increased by $8.9 million and noninterest expense increased by $5.0 million. The $2.6 million earnings increase is mainly due to a 94% increase in origination volume, which helped drive a $7.2 million increase in mortgage fee income as well as a  $1.7 million increase in gain on derivative. Personnel expense also increased by $4.0 million.

Insurance

For the three months ended June 30, 2015, the Insurance segment lost$174 compared to  a$253 loss during the three months ended June 30, 2014. Noninterest income increased by $114 and noninterest expense decreased by $15.  Income tax benefit for the second quarter 2015 decreased by $50.

For the six months ended June 30, 2015, the Insurance segment earned$169 compared to  a$261 loss during the six months ended June 30, 2014. Noninterest income increased by $782 and noninterest expense increased by $86.  Income tax expense for the six months ended June 30, 2015 increased by $266.

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Stock Offerings

6 Months Ended

Jun. 30, 2015

STOCK OFFERINGS

STOCK OFFERING

Note 7 – Stock Offerings

On June 30, 2014, the Company filed Certificates of Designations for its Convertible Noncumulative Perpetual Preferred Stock, Series B (“Class B Preferred”) and its Convertible Noncumulative Perpetual Preferred Stock, Series C (“Class C Preferred”).  The Class B Preferred Certificate designated 400 shares of preferred stock as Class B Preferred shares.  The Class B Preferred shares carry an annual dividend rate of 6% and are convertible into shares of Company common stock within thirty days after the first, second, third, fourth and fifth anniversaries of the original issue date, based on a common stock price of $16 per share, as adjusted for future corporate activities.  The Class B Preferred shares are redeemable by the Company on or after the fifth anniversary of the original issue date for Liquidation Amount, as defined therein, plus declared and unpaid dividends.  Redemption is subject to any necessary regulatory approvals.  In the event of liquidation of the Company, shares of Class B Preferred stock shall be junior to creditors of the Company and to the shares of Senior Noncumulative Perpetual Preferred Stock, Series A.  Holders of Class B Preferred shares shall have no voting rights, except for authorization of senior shares of stock, amendment to the Class B Preferred shares, share exchanges, reclassifications or changes of control, or as required by law.

The Class C Preferred Certificate designated 383.4 shares of preferred stock as Class C Preferred shares.  The Class C Preferred shares carry an annual dividend rate of 6.5% and are convertible into shares of Company common stock within thirty days after the first, second, third, fourth and fifth anniversaries of the original issue date, based on a common stock price of $16 per share, as adjusted for future corporate activities.  The Class C Preferred shares are redeemable by the Company on or after the fifth anniversary of the original issue date for Liquidation Amount, as defined therein, plus declared and unpaid dividends.  Redemption is subject to any necessary regulatory approvals.  In the event of liquidation of the Company, shares of Class C Preferred stock shall be junior to creditors of the Company and to the shares of Senior Noncumulative Perpetual Preferred Stock, Series A and the Class B Preferred shares.  Holders of Class C Preferred shares shall have no voting rights, except for authorization of senior shares of stock, amendment to the Class C Preferred shares, share exchanges, reclassifications or changes of control, or as required by law. The proceeds of these preferred stock offerings will be used to support continued growth of the Company and its Subsidiaries.

On September 8, 2011 MVB received $8.5 million in Small Business Lending Fund (SBLF) capital.  MVB issued 8,500 shares of $1,000 per share preferred stock with dividends payable in arrears on January 1, April 1, July 1 and October 1 each year.  At December 31, 2014 and 2013, MVB's loan production qualified for the lowest dividend rate possible of 1%.  MVB may continue to utilize the SBLF capital through March 8, 2016 at the 1% dividend rate. After that time, if the SBLF is not retired, the dividend rate increases to 9%.

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Net Income Per Common Share

6 Months Ended

Jun. 30, 2015

Net Income Per Common Share

Net Income Per Common Share

Note 8 – Net Income Per Common Share

The Company determines basic earnings per share by dividing net income by the weighted average number of common shares outstanding during the period. Diluted earnings per share is determined by dividing net income plus interest on convertible preferred stock by the weighted average number of shares outstanding increased by both the number of shares that would be issued assuming the exercise of stock options and convertible preferred stock. At June 30, 2015 and 2014, stock options to purchase 678,159 and 494,470shares at anaverage price of $10.53 and $9.09, respectively,were outstanding.  For the six and months ended June 30, 2015 and 2014, the dilutive effect of stock options was 197,283and 213,549 shares, respectively.  For the six and months ended June 30, 2015 and 2014, the dilutive effect of convertible preferred stock was 489,625and 0 shares, respectively. 

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Pension Plan

6 Months Ended

Jun. 30, 2015

PENSION PLAN

PENSION PLAN

Note 10 – Pension Plan

The Company participates in a trusteed pension plan known as the Allegheny Group Retirement Plan covering virtually all full-time employees.  Benefits are based on years of service and the employee's compensation.  Accruals under the Plan were frozen as of May 31, 2014. Freezing the plan resulted in a re-measurement of the pension obligations and plan assets as of the freeze date. The pension obligation was re-measured using the discount rate based on the Citigroup Above Median Pension Discount Curve in effect on May 31, 2014 of 4.46%.  

Information pertaining to the activity in the Company's defined benefit plan, using the latest available actuarial valuations for the three and six months ended June 30, 2015 and 2014 is as follows:

	For the three months ended		For the three months ended
(in thousands)	June 30, 2015		June 30, 2014
Service cost	$	-	$	138
Interest cost		78		77
Expected Return on Plan Assets		(79)		(79)
Amortization of Net Actuarial Loss		64		35
Amortization of Prior Service Cost		—		—
Net Periodic Benefit Cost	$	63	$	171
Contributions Paid	$	36	$	94

	For the six months ended		For the six months ended
(in thousands)	June 30, 2015		June 30, 2014
Service cost	$	—	$	346
Interest cost		157		155
Expected Return on Plan Assets		(158)		(158)
Amortization of Net Actuarial Loss		128		70
Amortization of Prior Service Cost		—		—
Net Periodic Benefit Cost	$	127	$	413
Contributions Paid	$	72	$	188

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Loans and Allowance for Loan Losses - Impaired Loans Additional Information (Details) - 3 months ended Jun. 30, 2015 - item	Total
LOANS AND ALLOWANCE FOR LOAN LOSSES
Number of points in internal risk rating system	9
Number of categories in internal risk rating system considered as not criticized	6
Maximum period above which loans past due are considered Substandard	90 days

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Comprehensive Income - Components of AOCI (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Accumulated other comprehensive income (loss)
Beginning balance	$ (2,554)	$ (2,639)	$ (2,642)	$ (2,961)
Other comprehensive loss before reclassification	186	456	308	756
Amounts reclassified from AOCI	36	(54)	2	(32)
Net current period OCI	222	402	310	724
Ending balance	(2,332)	(2,237)	(2,332)	(2,237)
Available-for-sale securities, Unrealized holding gains
Accumulated other comprehensive income (loss)
Beginning balance	(154)	(1,154)	(406)	(1,476)
Other comprehensive loss before reclassification	(255)	666	70	988
Amounts reclassified from AOCI	(3)	(75)	(76)	(75)
Net current period OCI	(258)	591	(6)	913
Ending balance	(412)	(563)	(412)	(563)
Defined benefit pension plan items, Change in defined benefit pension plan
Accumulated other comprehensive income (loss)
Beginning balance	(2,400)	(1,485)	(2,236)	(1,485)
Other comprehensive loss before reclassification	441	(210)	238	(232)
Amounts reclassified from AOCI	39	21	78	43
Net current period OCI	480	(189)	316	(189)
Ending balance	$ (1,920)	$ (1,674)	$ (1,920)	$ (1,674)

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Borrowed Funds (Tables)

6 Months Ended

Jun. 30, 2015

BORROWED FUNDS

Schedule of information related to short-term borrowings and repurchase agreements

Short-term Borrowings

	June 30,			December 31,
(Dollars in thousands)	2015			2014
Balance at end of period	$	172,871		$	95,829
Average balance during the three and twelve months ended		130,956			76,185
Maximum month-end balance during the three and twelve months ended		172,871			120,229
Weighted-average rate during the three and twelve months ended		0.32	%		0.27	%
Rate at end of period		0.34	%		0.32	%

Repurchase agreements:

	June 30,			December 31,
(Dollars in thousands)	2015			2014
Balance at end of period	$	26,263		$	32,673
Average balance during the three and twelve months ended		26,140			55,731
Maximum month-end balance during the three and twelve months ended		26,263			83,781
Weighted-average rate during the three and twelve months ended		0.29	%		0.52	%
Rate at end of period		0.30	%		0.35	%

Schedule of borrowings from the FHLB

Term notes from the FHLB were as follows:	June 30,		December 31,
(Dollars in thousands)	2015		2014
Fixed interest rate notes, originating between April 2002 and December 2007, due between July 2016 and April 2022, interest of between 4.50% and 5.90% payable monthly	$	4,544	$	4,618
Amortizing fixed interest rate note, originating February 2007, due February 2022, payable in monthly installments of $5, including interest of 5.22%		830		840
	$	5,374	$	5,458

Schedule of maturities of borrowings over the next five years

Year	Amount
2015	$	172,956
2016		1,246
2017		1,470
2018		81
2019		85
Thereafter		35,931
	$	211,769

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Mergers and Acquisitions (Tables)

6 Months Ended

Jun. 30, 2015

MERGERS AND ACQUISITIONS

Schedule of acquisition related costs included in consolidated statements of income

	Three Months Ended		Three Months Ended
(in thousands)	June 30, 2015		June 30, 2014
Professional fees	$	12	$	3
Marketing		—		2
Printing, postage and supplies		3		1
Equipment depreciation and maintenance		—		1
Travel and entertainment		5		41
Total	$	20	$	48

	Six months ended		Six months ended
(in thousands)	June 30, 2015		June 30, 2014
Professional fees	$	12	$	72
Marketing		—		4
Printing, postage and supplies		3		8
Equipment depreciation and maintenance		—		6
Travel and entertainment		5		73
Total	$	20	$	163

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Pension Plan (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014	May. 31, 2014
PENSION PLAN
Discount rate used to re-measure pension obligation (as a percent)					4.46%
Components of net periodic pension cost
Service cost		$ 138		$ 346
Interest cost	$ 78	77	$ 157	155
Expected return on plan assets	(79)	(79)	(158)	(158)
Amortization of loss	64	35	128	70
Net periodic pension cost	63	171	127	413
Contributions paid	$ 36	$ 94	$ 72	$ 188

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Borrowed Funds - Summary of Maturities (Details) $ in Thousands	Jun. 30, 2015 USD ($)
Maturities of borrowings over the next five years
2015	$ 172,956
2016	1,246
2017	1,470
2018	81
2019	85
Thereafter	35,931
Total	$ 211,769

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Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Consolidated Statements of Comprehensive Income
Net Income	$ 1,905	$ 969	$ 4,008	$ 2,127
Other comprehensive income:
Unrealized holding gains during the year	(425)	1,109	114	1,646
Income tax effect	170	(443)	(44)	(658)
Reclassification adjustment for gain recognized in income	(5)	(125)	(126)	(125)
Income tax effect	2	50	50	50
Change in defined benefit pension plan	800	(315)	527	(315)
Income tax effect	(320)	126	(211)	126
Other comprehensive income	222	402	310	724
Comprehensive income	$ 2,127	$ 1,371	$ 4,318	$ 2,851

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Loans and Allowance for Loan Losses

6 Months Ended

Jun. 30, 2015

LOANS AND ALLOWANCE FOR LOAN LOSSES

LOANS AND ALLOWANCE FOR LOAN LOSSES

Note 4 – Loans and Allowance for Loan Losses

The following table summarizes the primary segments of the allowance for loan losses (“ALL”), segregated into the amount required for loans individually evaluated for impairment and the amount required for loans collectively evaluated for impairment as of June 30, 2015:

					Home
(in thousands)	Commercial		Residential		Equity		Consumer		Total
ALL balance March 31, 2015	$	4,647	$	957	$	680	$	197	$	6,481
Charge-offs		—		—		—		—		—
Recoveries		—		—		—		5		5
Provision		554		61		(48)		(6)		561
ALL balance June 30, 2015	$	5,201	$	1,018	$	632	$	196	$	7,047

					Home
	Commercial		Residential		Equity		Consumer		Total
ALL balance December 31, 2014	$	4,363	$	962	$	691	$	207	$	6,223
Charge-offs		(409)		(14)		—		—		(423)
Recoveries		21		1		1		5		28
Provision		1,226		69		(60)		(16)		1,219
ALL balance June 30, 2015	$	5,201	$	1,018	$	632	$	196	$	7,047
Individually evaluated for impairment	$	605	$	303	$	28	$	7	$	943
Collectively evaluated for impairment	$	4,596	$	715	$	604	$	189	$	6,104

The following table summarizes the primary segments of the Company loan portfolio as of June 30, 2015:

(in thousands)	Commercial		Residential		Home Equity		Consumer		Total
Individually evaluated for impairment	$	12,627	$	1,008	$	28	$	11	$	13,674
Collectively evaluated for impairment		644,457		183,535		53,078		16,341		897,411
Total Loans	$	657,084	$	184,543	$	53,106	$	16,352	$	911,085

The following table summarizes the primary segments of the allowance for loan losses (“ALL”), segregated into the amount required for loans individually evaluated for impairment and the amount required for loans collectively evaluated for impairment as of June 30, 2014:

					Home
(in thousands)	Commercial		Residential		Equity		Consumer		Total
ALL balance March 31, 2014	$	3,902	$	746	$	555	$	248	$	5,451
Charge-offs		—		(103)		—		(1)		(104)
Recoveries		4		—		1		—		5
Provision		579		42		269		(1)		889
ALL balance June 30, 2014	$	4,485	$	685	$	825	$	246	$	6,241

					Home
	Commercial		Residential		Equity		Consumer		Total
ALL balance December 31, 2013	$	3,609	$	519	$	554	$	253	$	4,935
Charge-offs		—		(103)		—		(8)		(111)
Recoveries		4		—		2		3		9
Provision		872		269		269		(2)		1,408
ALL balance June 30, 2014	$	4,485	$	685	$	825	$	246	$	6,241
Individually evaluated for impairment	$	1,507	$	322	$	29	$	7	$	1,865
Collectively evaluated for impairment	$	2,978	$	363	$	796	$	239	$	4,376

The following table summarizes the primary segments of the Company loan portfolio as of June 30, 2014:

(in thousands)	Commercial		Residential		Equity		Consumer		Total
Individually evaluated for impairment	$	6,726	$	873	$	29	$	14	$	7,642
Collectively evaluated for impairment		526,776		142,754		39,060		18,022		726,612
Total Loans	$	533,502	$	143,627	$	39,089	$	18,036	$	734,254

The allowance for loan losses is based on estimates, and actual losses will vary from current estimates.  Management believes that the granularity of the homogeneous pools and the related historical loss ratios and other qualitative factors, as well as the consistency in the application of assumptions, result in an ALL that is representative of the risk found in the components of the portfolio at any given date.

All loan origination fees and direct loan origination costs are deferred and recognized over the life of the loan. As of June 30, 2015 and 2014, net deferred fees and costs of $1,186 and $1,596, respectively, were included in the carrying value of loans.

During December 2013 the Bank purchased $74.3 million in performing commercial real estate secured loans in the northern Virginia area. At the time of acquisition, none of these loans were considered impaired. They were acquired at a premium of roughly 1.024 or $1.8 million, which is being amortized in accordance with ASC 310-20. These loans, with the exception of one, are collectively evaluated for impairment under ASC 450. The loans continue to be individually monitored for payoff activity, and any necessary adjustments to the premium are made accordingly. The loan that has been individually evaluated for impairment is discussed in further detail below in the discussion of impaired loans.

The following table presents impaired loans by class, segregated by those for which a specific allowance was required and those for which a specific allowance was not necessary as of June 30, 2015 and December 31, 2014 (in thousands):

					Impaired
					Loans with
	Impaired Loans with				No Specific
	Specific Allowance				Allowance		Total Impaired Loans
									Unpaid
	Recorded		Related		Recorded		Recorded		Principal
June 30, 2015	Investment		Allowance		Investment		Investment		Balance
Commercial
Commercial Business	$	—	$	—	$	3,039	$	3,039	$	3,039
Commercial Real Estate		6,530		507		—		6,530		6,530
Acquisition & Development		271		98		2,787		3,058		4,433
Total Commercial		6,801		605		5,826		12,627		14,002
Residential		900		303		108		1,008		1,008
Home Equity		28		28		—		28		28
Consumer		7		7		4		11		1
Total impaired loans	$	7,736	$	943	$	5,938	$	13,674	$	15,039
December 31, 2014
Commercial
Commercial Business	$	—	$	—	$	3,606	$	3,606	$	3,606
Commercial Real Estate		1,527		260		5,021		6,548		6,548
Acquisition & Development		273		102		3,355		3,628		4,703
Total Commercial		1,800		362		11,982		13,782		14,857
Residential		969		298		—		969		969
Home Equity		28		28		—		28		28
Consumer		2		2		—		2		2
Total impaired loans	$	2,799	$	690	$	11,982	$	14,781	$	15,856

Impaired loans have decreased during 2015, primarily as the result of three loans, of which the recorded investment of each has decreased for various reasons. A loan that is dependent upon the condition of the coal industry, which had a balance of $3.6 million as of December 31, 2014, was reduced by principal payments totaling $567 and now represents a recorded investment of $3.0 million. Meanwhile, two unrelated acquisition and development loans with a total December 31, 2014 balance of $3.1 million were reduced as the result of a principal curtailment of a $268 and a $300 charge-off. These two loans now represent a total recorded investment of $2.5 million. Meanwhile, it is important to note that $8.1 million, or 59%, of the $13.7 million total recorded investment in impaired loans as of June 30, 2015 was concentrated in just two impaired loans. Furthermore, one of the two loans had a balance of $5.0 million and is a loan to finance a commercial real estate property in the Northern Virginia market, which had as primary tenants, government contractors that have vacated the premises as a result of losing significant contracts with the United States government. This loan was purchased from another financial institution in late 2013 but it is the Bank’s position that the “Loan Sales Agreement” has been breached by the selling institution and legal recourse is being pursued by the Bank.

The following tables present the average recorded investment in impaired loans and related interest income recognized for the periods indicated (in thousands):

	Six months ended						Three months ended
	June 30, 2015						June 30, 2015
			Interest		Interest				Interest		Interest
	Average		Income		Income		Average		Income		Income
	Investment		Recognized		Recognized on		Investment		Recognized		Recognized
	in Impaired		on Accrual		Cash		in Impaired		on Accrual		on Cash
	Loans		Basis		Basis		Loans		Basis		Basis
Commercial
Commercial Business	$	3,369	$	78	$	75		3,228		39		39
Commercial Real Estate		6,538		30		25		6,533		15		12
Acquisition & Development		3,337		4		4		3,147		2		2
Total Commercial		13,244		112		104		12,908		56		53
Residential		948		10		2		946		5		—
Home Equity		28		1		1		28		—		—
Consumer		2		—		—		1		—		—
Total	$	14,222	$	123	$	107	$	13,883	$	61	$	53

	Six months ended						Three months ended
	June 30, 2014						June 30, 2014
	Average		Interest		Interest		Average		Interest		Interest
	Investment		Income		Income		Investment		Income		Income
	in Impaired		Recognized on		Recognized on		in Impaired		Recognized on		Recognized on
	Loans		Accrual Basis		Cash Basis		Loans		Accrual Basis		Cash Basis
Commercial
Commercial Business	$	—	$	—	$	—	$	—	$	—	$	—
Commercial Real Estate		1,911		30		35		1,907		15		15
Acquisition & Development		4,661		117		81		4,825		58		69
Total Commercial		6,572		147		116		6,732		73		84
Residential		734		10		8		884		5		5
Home Equity		28		1		—		29		—		—
Consumer		30		1		1		15		—		—
Total	$	7,364	$	159	$	125	$	7,660	$	78	$	89

As of June 30, 2015, the Bank did not hold any foreclosed residential real estate property. However, there were five consumer mortgage loans collateralized by residential real estate properties in the process of foreclosure. The total recorded investment in these loans was $420 as of June 30, 2015.

Bank management uses a nine point internal risk rating system to monitor the credit quality of the overall loan portfolio.  The first six categories are considered not criticized, and are aggregated as "Pass" rated.  The criticized rating categories utilized by Bank management generally follow bank regulatory definitions.  The Special Mention category includes assets that are currently protected but are potentially weak, resulting in an undue and unwarranted credit risk, but not to the point of justifying a Substandard classification.  Loans in the Substandard category have well-defined weaknesses that jeopardize the liquidation of the debt, and have a distinct possibility that some loss will be sustained if the weaknesses are not corrected.  All loans greater than 90 days past due are considered Substandard.  The portion of any loan that represents a specific allocation of the allowance for loan losses is placed in the Doubtful category.  Any portion of a loan that has been charged off is placed in the Loss category.

To help ensure that risk ratings are accurate and reflect the present and future capacity of borrowers to repay a loan as agreed, the Bank has a structured loan rating process with several layers of internal and external oversight.  Generally, consumer and residential mortgage loans are included in the Pass categories unless a specific action, such as bankruptcy, repossession, or death occurs to raise awareness of a possible credit event.  The Bank's Chief Credit Officer is responsible for the timely and accurate risk rating of the loans in the portfolio at origination and on an ongoing basis.  The Credit Department ensures that a review of all commercial relationships of one million dollars or greater is performed annually.

Review of the appropriate risk grade is included in both the internal and external loan review process, and on an ongoing basis.  The Bank has an experienced Credit Department that continually reviews and assesses loans within the portfolio.  The Bank engages an external consultant to conduct loan reviews on at least an annual basis.  Generally, the external consultant reviews larger commercial relationships or criticized relationships.  The Bank’s Credit Department compiles detailed reviews, including plans for resolution, on loans classified as Substandard on a quarterly basis.  Loans in the Special Mention and Substandard categories that are collectively evaluated for impairment are given separate consideration in the determination of the allowance.

The following table represents the classes of the loan portfolio summarized by the aggregate Pass and the criticized categories of Special Mention, Substandard and Doubtful within the internal risk rating system as of June 30, 2015 and December 31, 2014 (in thousands):

			Special
June 30, 2015	Pass		Mention		Substandard		Doubtful		Total
Commercial
Commercial Business	$	307,156	$	3,385	$	3,185	$	—	$	313,726
Commercial Real Estate		249,488		11,072		7,272		—		267,832
Acquisition & Development		69,527		2,942		1,225		1,832		75,526
Total Commercial		626,171		17,399		11,682		1,832		657,084
Residential		181,412		2,051		996		84		184,543
Home Equity		52,724		354		28		—		53,106
Consumer		15,905		436		11		—		16,352
Total Loans	$	876,212	$	20,240	$	12,717	$	1,916	$	911,085

			Special
December 31, 2014	Pass		Mention		Substandard		Doubtful		Total
Commercial
Commercial Business	$	234,547	$	618	$	3,713	$	—	$	238,878
Commercial Real Estate		262,215		11,242		7,323		—		280,780
Acquisition & Development		34,391		3,075		1,496		2,132		41,094
Total Commercial		531,153		14,935		12,532		2,132		560,752
Residential		171,395		2,147		965		—		174,507
Home Equity		45,684		223		28		—		45,935
Consumer		16,477		624		2		—		17,103
Total Loans	$	764,709	$	17,929	$	13,527	$	2,132	$	798,297

Management further monitors the performance and credit quality of the loan portfolio by analyzing the age of the portfolio as determined by the length of time a recorded payment is past due. 

A loan that has deteriorated and is in a collection process could warrant non-accrual status. A thorough review is to be presented to the Chief Credit Officer and or the Management Loan Committee ("MLC"), as required with respect to any loan which is in a collection process and to make a determination as to whether the loan should be placed on non-accrual status. The placement of loans on non-accrual status will be subject to applicable regulatory restrictions and guidelines. Generally, loans should be placed in non-accrual status when the loan approaches 90 days past due, when it becomes likely the borrower cannot or will not make scheduled principal or interest payments, when full repayment of principal and interest is not expected, or when the loan displays potential loss characteristics. Normally, all accrued interest should be charged off when a loan is placed in non-accrual status. Any payments subsequently received should be applied to principal. To remove a loan from non-accrual status, all principal and interest due must be paid up to date and the bank is reasonably sure of future satisfactory payment performance. Usually, this requires a six-month recent history of payments due. Removal of a loan from non-accrual status will require the approval of the Chief Credit Officer and or MLC.

The following table presents the classes of the loan portfolio summarized by the aging categories of performing loans and nonaccrual loans as of June 30, 2015 and December 31, 2014 (in thousands):

			30-59 Days		60-89 Days		90 Days +		Total				Non-		90+ Days
June 30, 2015	Current		Past Due		Past Due		Past Due		Past Due		Total Loans		Accrual		Still Accruing
Commercial
Commercial Business	$	310,523	$	3,107	$	—	$	96	$	3,203	$	313,726	$	146	$	10
Commercial Real Estate		257,298		28		4,837		5,669		10,534		267,832		5,020		649
Acquisition & Development		72,385		—		—		3,141		3,141		75,526		2,787		354
Total Commercial		640,206		3,135		4,837		8,906		16,878		657,084		7,953		1,013
Residential		183,834		—		119		590		709		184,543		457		133
Home Equity		52,927		143		—		36		179		53,106		36		—
Consumer		16,151		10		1		190		201		16,352		4		186
Total	$	893,118	$	3,288	$	4,957	$	9,722	$	17,967	$	911,085	$	8,450	$	1,332

			30-59 Days		60-89 Days		90 Days +		Total				Non-		90+ Days
December 31, 2014	Current		Past Due		Past Due		Past Due		Past Due		Total Loans		Accrual		Still Accruing
Commercial
Commercial Business	$	233,464	$	3,738	$	1,500	$	176	$	5,414	$	238,878	$	107	$	69
Commercial Real Estate		270,600		234		4,925		5,021		10,180		280,780		—		5,021
Acquisition & Development		37,739		—		—		3,355		3,355		41,094		3,355		—
Total Commercial		541,803		3,972		6,425		8,552		18,949		560,752		3,462		5,090
Residential		167,392		4,478		2,126		511		7,115		174,507		487		216
Home Equity		45,815		120		—		—		120		45,935		—		—
Consumer		16,692		411		—		—		411		17,103		—		—
Total	$	771,702	$	8,981	$	8,551	$	9,063	$	26,595	$	798,297	$	3,949	$	5,306

The ALL is maintained to absorb losses from the loan portfolio.  The ALL is based on the Bank management's continuing evaluation of the risk characteristics and credit quality of the loan portfolio, assessment of current economic conditions, diversification and size of the portfolio, adequacy of collateral, past and anticipated loss experience, and the amount of non-performing loans.

The Bank's methodology for determining the ALL is based on the requirements of ASC Section 310-10-35 for loans individually evaluated for impairment (discussed above) and ASC Subtopic 450-20 for loans collectively evaluated for impairment, as well as the Interagency Policy Statements on the Allowance for Loan and Lease Losses and other bank regulatory guidance.  The total of the two components represents the Bank's ALL.

Loans that are collectively evaluated for impairment are analyzed with general allowances being made as appropriate.  For general allowances, historical loss trends are used in the estimation of losses in the current portfolio.  These historical loss amounts are modified by other qualified factors.

The segments described above, which are based on the Federal call code assigned to each loan, provide the starting point for the ALL analysis.  Company and Bank management track the historical net charge-off activity at the call code level.  A historical charge-off factor is calculated utilizing a defined number of consecutive historical quarters.  All pools currently utilize a rolling 12 quarters.

"Pass" rated credits are segregated from "Criticized" credits for the application of qualitative factors.    Loans in the criticized pools, which possess certain qualities or characteristics that may lead to collection and loss issues, are closely monitored by management and subject to additional qualitative factors.

Company and Bank management have identified a number of additional qualitative factors which it uses to supplement the historical charge-off factor because these factors are likely to cause estimated credit losses associated with the existing loan pools to differ from historical loss experience.  The additional factors that are evaluated quarterly and updated using information obtained from internal, regulatory, and governmental sources are:  national and local economic trends and conditions; levels of and trends in delinquency rates and non-accrual loans; trends in volume and terms of loans; effects of changes in lending policies; experience, ability, and depth of lending staff; value of underlying collateral; and concentrations of credit from a loan type, industry and/or geographic standpoint. The combination of historical charge-off and qualitative factors are then weighted for each risk grade. These weightings are determined internally based upon the likelihood of loss as a loan’s risk grading deteriorates.

Bank management reviews the loan portfolio on a quarterly basis using a defined, consistently applied process in order to make appropriate and timely adjustments to the ALL.  When information confirms all or part of specific loans to be uncollectible, these amounts are promptly charged off against the ALL.

To estimate the liability for off-balance sheet credit exposures, bank management analyzed the portfolios of letters of credit, non-revolving lines of credit, and revolving lines of credit, and based its calculation on the expectation of future advances of each loan category. Letters of credit were determined to be highly unlikely to advance since they are generally in place only to ensure various forms of performance of the borrowers. In the Bank’s history, there have been no letters of credit drawn upon. In addition, many of the letters of credit are cash secured and do not warrant an allocation. Non-revolving lines of credit were determined to be highly likely to advance as these are typically construction lines. Meanwhile, the likelihood of revolving lines of credit advancing varies with each individual borrower. Therefore, the future usage of each line was estimated based on the average line utilization of the revolving line of credit portfolio as a whole.

Once the estimated future advances were calculated, an allocation rate, which was derived from the Bank’s historical losses and qualitative environmental factors, was applied in the similar manner as those used for the allowance for loan loss calculation. The resulting estimated loss allocations were totaled to determine the off-balance sheet liability related to these loans.

Troubled Debt Restructurings

The restructuring of a loan is considered a troubled debt restructuring (“TDR”) if both (i) the borrower is experiencing financial difficulties and (ii) the creditor has granted a concession.  Concessions may include interest rate reductions or below market interest rates, principal forgiveness, restructuring amortization schedules and other actions intended to minimize potential losses. No new TDR’s have defaulted. At June 30, 2015 and December 31, 2014, the Bank had specific reserve allocations for TDR’s of $619 and $582, respectively.

The following tables present details related to loans identified as TDR’s for the periods indicated (in thousands):

	New TDRs (1)
	For the Six months ended					For the Three months ended
	June 30, 2014					June 30, 2014
		Pre-Modification		Post-Modification			Pre-Modification		Post-Modification
		Outstanding		Outstanding			Outstanding		Outstanding
	Number of	Recorded		Recorded		Number of	Recorded		Recorded
	Contracts	Investment		Investment		Contracts	Investment		Investment
Commercial
Acquisition and development	1	$	496	$	492	—	$	—	$	—
Total Commercial	1		496		492	—		—		—
Residential Real Estate	1		389		388	—		—		—
Total	2	$	885	$	880	—	$	—	$	—

(1) The pre-modification and post-modification balances represent the balances outstanding immediately before and after modification of the loan.

There were no new TDR’s for the six and three months ended June 30, 2015.

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Investments - Held-to-maturity (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Amortized cost and fair values of investment securities held-to-maturity
Amortized Cost	$ 53,141	$ 54,538
Unrealized Gain	1,048	1,600
Unrealized Loss	(748)	(267)
Securities held-to-maturity, fair value	53,441	55,871
Municipal securities
Amortized cost and fair values of investment securities held-to-maturity
Amortized Cost	53,141	54,538
Unrealized Gain	1,048	1,600
Unrealized Loss	(748)	(267)
Securities held-to-maturity, fair value	$ 53,441	$ 55,871

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Borrowed Funds - Short-term borrowings and Repurchase Agreements (Details) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Jun. 30, 2015	Dec. 31, 2014
Borrowed funds
Available Unpledged Securities	$ 3,900	$ 5,600
Federal Home Loan Bank and Other Borrowings	178,245	101,287
Short-term borrowings from FHLB
Short-term borrowings and Repurchase Agreements
Balance at end of year	172,871	95,829
Average balance during the year	130,956	76,185
Maximum month-end balance	$ 172,871	$ 120,229
Weighted-average rate during the year	0.32%	0.27%
Rate at the end of the period	0.34%	0.32%
Repurchase agreements
Short-term borrowings and Repurchase Agreements
Balance at end of year	$ 26,263	$ 32,673
Average balance during the year	26,140	55,731
Maximum month-end balance	$ 26,263	$ 83,781
Weighted-average rate during the year	0.29%	0.52%
Rate at the end of the period	0.30%	0.35%
Investment Securities And FHLB Letters Of Credit [Member]
Borrowed funds
Federal Home Loan Bank and Other Borrowings	$ 116,200	$ 163,700

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Loans and Allowance for Loan Losses (Tables)

6 Months Ended

Jun. 30, 2015

LOANS AND ALLOWANCE FOR LOAN LOSSES

Schedule of activity in the allowance

					Home
(in thousands)	Commercial		Residential		Equity		Consumer		Total
ALL balance March 31, 2015	$	4,647	$	957	$	680	$	197	$	6,481
Charge-offs		—		—		—		—		—
Recoveries		—		—		—		5		5
Provision		554		61		(48)		(6)		561
ALL balance June 30, 2015	$	5,201	$	1,018	$	632	$	196	$	7,047

					Home
	Commercial		Residential		Equity		Consumer		Total
ALL balance December 31, 2014	$	4,363	$	962	$	691	$	207	$	6,223
Charge-offs		(409)		(14)		—		—		(423)
Recoveries		21		1		1		5		28
Provision		1,226		69		(60)		(16)		1,219
ALL balance June 30, 2015	$	5,201	$	1,018	$	632	$	196	$	7,047
Individually evaluated for impairment	$	605	$	303	$	28	$	7	$	943
Collectively evaluated for impairment	$	4,596	$	715	$	604	$	189	$	6,104

					Home
(in thousands)	Commercial		Residential		Equity		Consumer		Total
ALL balance March 31, 2014	$	3,902	$	746	$	555	$	248	$	5,451
Charge-offs		—		(103)		—		(1)		(104)
Recoveries		4		—		1		—		5
Provision		579		42		269		(1)		889
ALL balance June 30, 2014	$	4,485	$	685	$	825	$	246	$	6,241

					Home
	Commercial		Residential		Equity		Consumer		Total
ALL balance December 31, 2013	$	3,609	$	519	$	554	$	253	$	4,935
Charge-offs		—		(103)		—		(8)		(111)
Recoveries		4		—		2		3		9
Provision		872		269		269		(2)		1,408
ALL balance June 30, 2014	$	4,485	$	685	$	825	$	246	$	6,241
Individually evaluated for impairment	$	1,507	$	322	$	29	$	7	$	1,865
Collectively evaluated for impairment	$	2,978	$	363	$	796	$	239	$	4,376

Summary of the primary segments of the loan portfolio

(in thousands)	Commercial		Residential		Home Equity		Consumer		Total
Individually evaluated for impairment	$	12,627	$	1,008	$	28	$	11	$	13,674
Collectively evaluated for impairment		644,457		183,535		53,078		16,341		897,411
Total Loans	$	657,084	$	184,543	$	53,106	$	16,352	$	911,085

(in thousands)	Commercial		Residential		Equity		Consumer		Total
Individually evaluated for impairment	$	6,726	$	873	$	29	$	14	$	7,642
Collectively evaluated for impairment		526,776		142,754		39,060		18,022		726,612
Total Loans	$	533,502	$	143,627	$	39,089	$	18,036	$	734,254

Schedule of impaired loans by class, segregated by those for which a specific allowance was required and those for which a specific allowance was not necessary

					Impaired
					Loans with
	Impaired Loans with				No Specific
	Specific Allowance				Allowance		Total Impaired Loans
									Unpaid
	Recorded		Related		Recorded		Recorded		Principal
June 30, 2015	Investment		Allowance		Investment		Investment		Balance
Commercial
Commercial Business	$	—	$	—	$	3,039	$	3,039	$	3,039
Commercial Real Estate		6,530		507		—		6,530		6,530
Acquisition & Development		271		98		2,787		3,058		4,433
Total Commercial		6,801		605		5,826		12,627		14,002
Residential		900		303		108		1,008		1,008
Home Equity		28		28		—		28		28
Consumer		7		7		4		11		1
Total impaired loans	$	7,736	$	943	$	5,938	$	13,674	$	15,039
December 31, 2014
Commercial
Commercial Business	$	—	$	—	$	3,606	$	3,606	$	3,606
Commercial Real Estate		1,527		260		5,021		6,548		6,548
Acquisition & Development		273		102		3,355		3,628		4,703
Total Commercial		1,800		362		11,982		13,782		14,857
Residential		969		298		—		969		969
Home Equity		28		28		—		28		28
Consumer		2		2		—		2		2
Total impaired loans	$	2,799	$	690	$	11,982	$	14,781	$	15,856

Schedule of the average recorded investment in impaired loans and related interest income recognized

The following tables present the average recorded investment in impaired loans and related interest income recognized for the periods indicated (in thousands):

	Six months ended						Three months ended
	June 30, 2015						June 30, 2015
			Interest		Interest				Interest		Interest
	Average		Income		Income		Average		Income		Income
	Investment		Recognized		Recognized on		Investment		Recognized		Recognized
	in Impaired		on Accrual		Cash		in Impaired		on Accrual		on Cash
	Loans		Basis		Basis		Loans		Basis		Basis
Commercial
Commercial Business	$	3,369	$	78	$	75		3,228		39		39
Commercial Real Estate		6,538		30		25		6,533		15		12
Acquisition & Development		3,337		4		4		3,147		2		2
Total Commercial		13,244		112		104		12,908		56		53
Residential		948		10		2		946		5		—
Home Equity		28		1		1		28		—		—
Consumer		2		—		—		1		—		—
Total	$	14,222	$	123	$	107	$	13,883	$	61	$	53

	Six months ended						Three months ended
	June 30, 2014						June 30, 2014
	Average		Interest		Interest		Average		Interest		Interest
	Investment		Income		Income		Investment		Income		Income
	in Impaired		Recognized on		Recognized on		in Impaired		Recognized on		Recognized on
	Loans		Accrual Basis		Cash Basis		Loans		Accrual Basis		Cash Basis
Commercial
Commercial Business	$	—	$	—	$	—	$	—	$	—	$	—
Commercial Real Estate		1,911		30		35		1,907		15		15
Acquisition & Development		4,661		117		81		4,825		58		69
Total Commercial		6,572		147		116		6,732		73		84
Residential		734		10		8		884		5		5
Home Equity		28		1		—		29		—		—
Consumer		30		1		1		15		—		—
Total	$	7,364	$	159	$	125	$	7,660	$	78	$	89

Schedule of loans, internal risk rating

The following table represents the classes of the loan portfolio summarized by the aggregate Pass and the criticized categories of Special Mention, Substandard and Doubtful within the internal risk rating system as of June 30, 2015 and December 31, 2014 (in thousands):

			Special
June 30, 2015	Pass		Mention		Substandard		Doubtful		Total
Commercial
Commercial Business	$	307,156	$	3,385	$	3,185	$	—	$	313,726
Commercial Real Estate		249,488		11,072		7,272		—		267,832
Acquisition & Development		69,527		2,942		1,225		1,832		75,526
Total Commercial		626,171		17,399		11,682		1,832		657,084
Residential		181,412		2,051		996		84		184,543
Home Equity		52,724		354		28		—		53,106
Consumer		15,905		436		11		—		16,352
Total Loans	$	876,212	$	20,240	$	12,717	$	1,916	$	911,085

			Special
December 31, 2014	Pass		Mention		Substandard		Doubtful		Total
Commercial
Commercial Business	$	234,547	$	618	$	3,713	$	—	$	238,878
Commercial Real Estate		262,215		11,242		7,323		—		280,780
Acquisition & Development		34,391		3,075		1,496		2,132		41,094
Total Commercial		531,153		14,935		12,532		2,132		560,752
Residential		171,395		2,147		965		—		174,507
Home Equity		45,684		223		28		—		45,935
Consumer		16,477		624		2		—		17,103
Total Loans	$	764,709	$	17,929	$	13,527	$	2,132	$	798,297

Schedule of classes of the loan portfolio summarized by the aging categories of performing loans and nonaccrual loans

			30-59 Days		60-89 Days		90 Days +		Total				Non-		90+ Days
June 30, 2015	Current		Past Due		Past Due		Past Due		Past Due		Total Loans		Accrual		Still Accruing
Commercial
Commercial Business	$	310,523	$	3,107	$	—	$	96	$	3,203	$	313,726	$	146	$	10
Commercial Real Estate		257,298		28		4,837		5,669		10,534		267,832		5,020		649
Acquisition & Development		72,385		—		—		3,141		3,141		75,526		2,787		354
Total Commercial		640,206		3,135		4,837		8,906		16,878		657,084		7,953		1,013
Residential		183,834		—		119		590		709		184,543		457		133
Home Equity		52,927		143		—		36		179		53,106		36		—
Consumer		16,151		10		1		190		201		16,352		4		186
Total	$	893,118	$	3,288	$	4,957	$	9,722	$	17,967	$	911,085	$	8,450	$	1,332

			30-59 Days		60-89 Days		90 Days +		Total				Non-		90+ Days
December 31, 2014	Current		Past Due		Past Due		Past Due		Past Due		Total Loans		Accrual		Still Accruing
Commercial
Commercial Business	$	233,464	$	3,738	$	1,500	$	176	$	5,414	$	238,878	$	107	$	69
Commercial Real Estate		270,600		234		4,925		5,021		10,180		280,780		—		5,021
Acquisition & Development		37,739		—		—		3,355		3,355		41,094		3,355		—
Total Commercial		541,803		3,972		6,425		8,552		18,949		560,752		3,462		5,090
Residential		167,392		4,478		2,126		511		7,115		174,507		487		216
Home Equity		45,815		120		—		—		120		45,935		—		—
Consumer		16,692		411		—		—		411		17,103		—		—
Total	$	771,702	$	8,981	$	8,551	$	9,063	$	26,595	$	798,297	$	3,949	$	5,306

Schedule of loans identified as Troubled Debt Restructurings

	New TDRs (1)
	For the Six months ended					For the Three months ended
	June 30, 2014					June 30, 2014
		Pre-Modification		Post-Modification			Pre-Modification		Post-Modification
		Outstanding		Outstanding			Outstanding		Outstanding
	Number of	Recorded		Recorded		Number of	Recorded		Recorded
	Contracts	Investment		Investment		Contracts	Investment		Investment
Commercial
Acquisition and development	1	$	496	$	492	—	$	—	$	—
Total Commercial	1		496		492	—		—		—
Residential Real Estate	1		389		388	—		—		—
Total	2	$	885	$	880	—	$	—	$	—

(1) The pre-modification and post-modification balances represent the balances outstanding immediately before and after modification of the loan.