MVB Financial Corp. Stock

Greetings. Welcome to MVB Financial Corp. Second Quarter 2026 Earnings Call. [Operator Instructions] Please note, this conference is being recorded.

I will now turn the conference over to Amy Baker, Vice President, Corporate Communications and Marketing. Thank you. You may begin.

Thank you, operator. Good afternoon, and thank you all for joining us today for MVB's Second Quarter 2026 Earnings Conference Call. The company issued its earnings press release earlier this afternoon, and it is available on the company's website at ir.mvbbanking.com. In addition, the company has included a slide presentation that you can refer to during the call, which is also available on the website.

Participating on this call today are MVB's President and CEO, Larry F. Mazza; and CFO, Mike Sumbs. Larry will provide high-level second quarter results and commentary, and Mike will discuss the quarter's financial results in more detail, after which we will open the call for your questions. Before we begin, I would like to remind you that this conference call contains forward-looking statements with respect to the future performance and financial condition of MVB Financial that involves risks and uncertainties. Various factors could cause actual results to be materially different from any future results expressed or implied by such forward-looking statements. These factors are discussed in the company's SEC filings, which are available on the company's website. The company disclaims any obligation to update any forward-looking statements made during the call.

Additionally, management may refer to non-GAAP measures, which are intended to supplement, but not substitute for the most directly comparable GAAP measures. The press release available on the website contains the financial and other quantitative information to be discussed today as well as the reconciliation of GAAP to non-GAAP measures.

With that, I'd like to turn the call over to MVB's President and CEO, Larry F. Mazza.

Good afternoon, everyone, and thank you for joining us. We delivered strong second quarter results with net income of $12.3 million or $0.93 per diluted share, up significantly from both the first quarter of 2026 and the second quarter of last year. The broad-based outperformance was driven by continued expansion of our net interest margin, disciplined loan and deposit growth, cost management and momentum across our payment platform and fintech business. These results demonstrate the progress we're making in building a stronger, more diversified company with increasing earnings power.

Before I discuss the quarter, I'd like to briefly welcome those who may be joining one of our earnings calls for the first time. MVB is a fintech-enabled bank that combines a core banking franchise with scaled fintech capabilities across payments, Banking-as-a-Service and gaming. This business model provides diversified sources of revenue and deposits while creating opportunities for growth, innovation and improved operating efficiency.

Turning to the quarter. We delivered another quarter of strong loan growth, up 12% quarter-over-quarter on an annualized basis, representing the fifth consecutive quarter of net loan growth driven by continued momentum across several of our specialty lending businesses. That growth, combined with disciplined balance sheet management, contributed to another quarter of meaningful net interest margin expansion of 43 basis points sequentially and continued growth in net interest income. We're also encouraged by the improving trends in our underlying earnings trajectory. While reported earnings benefited from the gain recognized during the quarter, we continue to see increasing earnings power across our core businesses as margins expand, loan growth accelerates and our diversified sources of revenue continue to grow.

Credit quality remained another area of strength. As Mike will discuss in more detail, the overall loan book continues to perform well and in line with our expectations. The higher provision this quarter was not driven by a deterioration in our broad asset quality, but by a couple of isolated and limited loan portfolios that we're diligently working to resolve. Our successful resolution of the largest nonperforming loan during the quarter through full repayment and no loss gives us confidence in our ability to detect potential problem loans early and resolve timely on a favorable term.

Within our fintech business, we continue to see encouraging momentum. During the second quarter, we successfully launched 3 new fintech partners and products across issuing and money movement. Year-to-date, we have launched 5 fintech partners compared to 5 new partnerships that closed all of last year. Those launches will contribute to the long-term strong growth in payments-related deposits and fee income and demonstrates our ability to continue executing against what we believe is one of the industry's strongest fintech pipelines. It is also worth noting that the second quarter has historically been a seasonally softer period for deposit growth within other areas of our fintech business, making this quarter's performance particularly encouraging. Just as importantly, we continue to maintain a robust pipeline of opportunities, providing confidence in our ability to sustain that momentum going forward.

In addition to the strong growth within the fintech banking platform, we see encouraging long-term growth opportunities within our specialty lending business, including the recent addition to John Madia as Head of Specialty Lending. We're excited about the growth trajectory of this business over the next several quarters. Alongside the strong earnings growth, we're also continuing to invest in the next phase of the business. That includes expanding our payment capabilities, advancing our AI and automation initiatives and continuing to build the infrastructure and talent needed to support our sponsorship banking strategy and overall business. These investments are intended to improve how we operate, enhance the solutions we provide to clients, further strengthen our long-term competitive position and strengthen our operational efficiencies.

At the same time, we're seeing the benefit of investments we've made over the past several years in our people, technology, risk management and operating infrastructure. Those investments created the foundation that support our business today, and we believe they're increasingly being reflected in our financial performance through stronger operating leverage and increasing earnings power. As an example, our risk management staffing declined sequentially from 123 to 116 during the quarter, and we see further opportunity to streamline the operations.

Finally, I'd like to briefly touch on another aspect of our fintech strategy. As previously disclosed, we recognized the gain during the quarter related to our existing fintech investment. Together with the successful monetization of our internally incubated Victor Technologies platform last year, these transactions demonstrate our ability to both incubate and invest in innovative fintech businesses. Beyond the financial impact, they also reflect another way they're creating shareholder value while generating capital that can be reinvested to support the continued growth across the company.

To summarize, there are 4 things we'd want you to take away from this quarter. First, our core earnings power continues to build with net income and returns improving meaningfully, both sequentially and year-over-year. Second, our 2-engine model is working as designed. Core banking is growing loans and deposits at a healthy pace while continuing to lower our cost of funds, and our fintech banking platform is scaling fee income and adding new partners. Third, our credit profile improved this quarter with the resolution of our largest nonperforming loan even as we took a prudent forward-looking approach to provisioning. And fourth, we continue to invest in specialty lending, fintech sponsorship, technology and in the regulatory infrastructure that lets us scale safely, all while returning capital to shareholders through our buyback program.

Overall, we're very pleased with our performance during the quarter and the momentum in the business. And worth noting, our team is very hungry for continued improvements throughout the year and beyond. We're excited and confident in the long-term opportunities ahead and the business is well positioned to drive sustained shareholder value. I believe the best is still in front of us.

With that, I'll turn the call over to Mike Sumbs to discuss our financial results in more detail.

Thank you, Larry, and good afternoon, everyone. I'll spend a few minutes providing some additional detail on the quarter before we open the line for questions.

Net interest income increased to $32.3 million during the quarter, a 13% increase from the prior quarter. Net interest margin on a fully tax equivalent basis expanded 43 basis points to 4.16% from 3.73% in the prior quarter. There was approximately $2.3 million of nonrecurring net interest income in the quarter, primarily associated with the payoff of our largest nonperforming loan. On a core basis, net interest income increased approximately 5.5% from the first quarter, while core net interest margin on a fully tax equivalent basis expanded 14 basis points to 3.87%, reflecting continued loan growth, improvement in our funding profile and further optimization of our balance sheet. We expect continued core net interest margin expansion over the remainder of 2026, albeit at a slower pace.

Turning to the balance sheet. Loans increased 3% from the prior quarter or 12% annualized, representing our fifth consecutive quarter of loan growth. We expect loan growth to follow a similar pace in the second half of the year. Deposits increased 7.4%, including 5.7% growth in noninterest-bearing deposits, driven primarily by payments-related deposit growth. The balance sheet ended the quarter in a very strong liquidity position with a loan-to-deposit ratio of just under 80%. Noninterest-bearing deposits represented 34.4% of total deposit balances, further highlighting the quality of MVB's low-cost funding base.

Noninterest income increased to $18.8 million, reflecting the previously announced $10 million pretax gain on an existing fintech investment. Excluding that gain, our core fee businesses was up 7%, led by growth in payment card and service charge income. Payment card and service charge income increased 18% from the first quarter and 29% from the second quarter of 2025, demonstrating positive momentum as we continue to convert on our pipeline of new fintech partners.

While we expect noninterest revenue to grow in the long-term due to the strong pipeline, note that the third quarter is typically seasonally softer relative to the second quarter. On the expense side, expenses were up a little more than $2 million from the first quarter, of which approximately $600,000 was nonrecurring. The increase in expenses was driven by a combination of annual salary adjustments, higher incentive compensation, reflecting stronger financial performance, investment in revenue-generating personnel as well as continued investment in fintech client onboarding efficiency, technology and AI initiatives.

Turning to credit. The successful payoff of our largest nonperforming loan contributed to improvement across several of our key credit quality metrics during the quarter. Nonperforming loans decreased $5.5 million in the quarter to $29.2 million. The decrease reflected the resolution of an approximately $12 million nonperforming loan, which was offset by several smaller credits moving into nonperforming status. The migration into nonperforming was comprised primarily of smaller credits within our commercial and SBA portfolios as well as a portion of a tax refund portfolio that has experienced delays in repayment due to various factors impacting the timing of tax refunds.

Criticized loans and classified loans both declined from the first quarter, demonstrating improvement in early-stage credit quality indicators. Net charge-offs were 23 basis points annualized, down 3 basis points from the prior quarter. Provision expense increased to $4.7 million in the quarter, driven by 3 factors. First, we continue to grow the loan portfolio and reserve accordingly for that new growth. Second, we established specific reserves on a small number of credits in the quarter. And third, we updated certain qualitative factors within our allowance model based on recent economic conditions, which reflect higher interest rates and inflationary pressures from geopolitical events taking place at the time of the model update. Those 3 factors drove the increase in provision despite the overall improvement we saw in our underlying credit metrics during the quarter.

Our capital position remained strong during the quarter. Tangible book value per share increased to $26.52, while tangible common equity ratio remained steady at 9.7%. During the quarter, we also repurchased approximately 48,000 shares under our existing authorization. In addition, the gain recognized during the quarter further strengthened an already solid capital position, providing us with increased financial flexibility, both now and as we look ahead.

With that, operator, we're ready to open the line for questions.

[Operator Instructions] Our first question is from Brett Rabatin with StoneX Group.

I wanted just to start on -- you mentioned -- and Mike, my line was breaking up a little bit towards the end of your prepared comments. But I heard you indicate that you expect the pace of loan growth in the back half of the year to be similar. Does that mean kind of low double digit? And then how much of that might come from specialty lines of business? And any thoughts on commercial versus consumer?

Brett, yes, great question. So as I mentioned, we expect the loan growth to continue at roughly a similar pace to what we saw in the first and second quarter, so $60 million to $70 million per quarter. And we're really excited about the specialty line of business that we mentioned in the prepared remarks. So it's hard to predict exactly how much of the growth will come from that business, given it's new, but it has a really strong pipeline. So we could see a really solid chunk of that prospective growth as soon as the third quarter coming from our specialty lending vertical.

Okay. That's helpful. And then on just the build-out of tech and AI, just what that does to expenses from here? Any thoughts on the expense outlook? And then just -- I know you guys are on the front leading edge, so to speak, of bots and AI relative to many banks. Just any thoughts on how you see that improving your operational tasks or anything you could share with us on AI developments?

Brett, Larry, thanks again for joining the call. On the AI side, we feel really confident on where it's going. We see that we call our digis, which we're using some call bots, really coming on strong. We now have 31 digis that they're either built or being built. It's helped a ton, especially in our risk and compliance area. And we have some really good news coming from that in the third quarter as we continue to implement the AI models and move forward there.

I'll let Mike address the expense side.

Yes. So I really think about AI in 2 ways. One, it's really revolutionizing how we work and how efficient we are with the workforce that we have and then the second part is how does that translate into the expense side. And that's really the part where we're taking a very crawl, walk, run approach with rationalizing expenses using AI. We want to certainly have human in the loop on all we do and really be deliberate about how we phase that in. But overall, I'd say we've made the investments, the heavy expense related to AI is sort of baked in. So we see a lot of future upside from an operating leverage and cost management perspective going forward given where we're at in our AI journey.

Okay. With all that said, Mike, what do you think about an expense base from here relative to 2Q?

Yes. So the increase, as I mentioned, Brett, was primarily driven by annual increases to salaries and incentive accruals that took place in the second quarter. So overall, I'd say going forward, we feel good about maintaining or being slightly below where we're at in the second quarter for the foreseeable few quarters.

Our next question is from Joe Yanchunis with Raymond James.

So in the investor deck, you highlighted 10 fintech launches since the second quarter of '25 that have generated about $2 million of revenue and $158 million of low-cost deposits. Do you have a sense for what percentage of those partners have reached their expected run rate today? And how much revenue remains to be realized as those programs mature? Just trying to get a sense for how much juice is left in the lemon?

Joe, I like the lemon squeeze, but we actually see this like a winery. So we're talking about grapes here instead of lemons. What I mean -- we're going with the fruit being banks. But what I mean by that is each one of these fintech clients are like barrel of fine wine. They are in the process, as you noted, of maturating. And it's going to take time for them to come on, as you point out. I would say right now, we're probably at 25% of their -- what we plan them to contribute to the onboarded earnings going forward.

The good news is, as you noted, all of last year, we onboarded 5 new fintech clients. looking at the first half of this year, already, we have onboarded 5 in the first 6 months. But the good news is the second half of the year will potentially look at another 15, which would mean in 2026, we will have onboarded approximately 20 new fintech clients with a good trajectory for both deposits and fee income. We expect those clients to come on, again, slowly, it's again a maturation process. It's like, again, the example of using the wine barrels. But we're very excited about it, and the team has improved greatly on onboarding and getting clients up and running. It's been very, very positive. We're excited about the future there.

That's encouraging to hear.

Just to add a little more on that, Joe. So you mentioned the $2 million of net new fee revenue year-to-date. About 60% of that came in the second quarter, so about $800,000 in the first quarter, $1.2 million in the second quarter. So -- and that's just from new clients. So you can see there's still a ramp-up in what those new clients are delivering to us. We expect that to grow going forward.

So if you got $6 million more of wine coming out of this cohort, are we drinking that in '27? Or are we drinking that in the back half of the year?

Yes, it's a good question. I would say late '26 to early '27 is when we expect to really start to see the full benefit of clients that have been launched on the platform starting in Q4 of last year and Q1 of this year. So -- but keep in mind, I mean, this is going to be a rolling harvest of grapes as we continue to add new clients into the launch platform and they continue to mature on the platform.

That was very helpful. I have to abandon the fruit theme. I can't keep up. But just kind of -- moving to capital. So following both the Victor monetization, the recent fintech investment gain, how are you thinking about capital deployment? I mean, should we think that this gets deployed towards buybacks, additional fintech investments? Obviously, you're still building out the AI capabilities, acquisitions or just kind of for that organic growth that's kind of on the come?

Yes. So clearly, we're continuing to grow the balance sheet. So that's organic growth of the existing balance sheet is sort of first and foremost. And then we were active in our share repurchase this quarter. We bought back about $1.2 million of stock. So we'll continue to be opportunistic. It's going to be price driven on the share buyback. But really, the focus is continuing to grow the platform, the balance sheet and continue to invest in what we see as high return business lines.

Okay. That makes sense. And then lastly for me, you characterized the higher provision as being driven by a couple of isolated portfolios rather than being anything broad-based. Can you provide any more details on some of those portfolios that drove the higher provision?

Yes. So we had about $3.3 million of the provision related to specific reserves. And that was split between our legacy SBA portfolio, which was largely originated in the 2021, early '22 time frame. And we have not been originating new SBA credits for quite some time. And then the balance was across a couple of smaller commercial loans. So generally, isolated and idiosyncratic loans is where we saw the majority of the specific reserve take place in the quarter.

And then as we mentioned, we had some updates to our allowance model taking into account the recent developments, particularly the Middle East with higher inflation -- expected higher inflation and higher interest rates. So that drove some of our general allocations to a higher level.

That makes sense. And actually, I do have one more, if that's all right. So you had talked about potentially another 15 partners that you could onboard in the back half of the year. Is there any limiting constraints to the onboarding process?

Joe, it's very -- we'll keep with the fruit theme. It's very much like a gourmet restaurant. It's not like a fast food type McDonald's thing. Each client has a determining need that you have to really cater to what they have for their product set and what we need to do. That's probably the biggest limiting piece of it. Our capacity has grown from the AI perspective, from a process improvement perspective. Our tech overall has been excellent, but it's really dependent on the client base that we're onboarding. We do prioritize based on something we call REVO, it's R-E-V-O. That stands for risk and then it stands for the effort, the level of effort it will take to onboard, V is value, which is the profitability and the O is the opportunity cost. If you do something, you have to give up something else to be able to do that. So we prioritize based on that Revo, and we push clients through by that. We do see a very strong pipeline of fintech clients.

There's actually continues to be -- last time we talked, there were over 50 in the pipeline. There continues to be over 50, even though we have pushed some through, as we noted earlier. So it continues to be very robust, and I think one of the best in the industry as far as fintech pipelines. So as far as limiting factors, again, it's going to depend on the clients we're bringing on. It's going to be the biggest limiting factor, their needs.

[Operator Instructions] Our next question is from Janet Lee with TD Cowen.

Just going back on credit and provision, is there any more work out to be done on any parts of the portfolio that would have an upward bias to your allowance for loan loss reserve ratio of 1.14% in the second quarter? Should we expect more of these to come for any reason?

Janet, thanks for the question. So clearly, we had a nice build in our allowance level this quarter going from 94 basis points to 1.14%. At this point, we feel like the portfolio is appropriately reserved. But of course, we'll continue to monitor it and make updates to our model as needed.

Okay. Got it. What -- could you explain a little bit around -- you talked about how your NIM should be expanding in the back half of 2026, albeit at a more moderating pace. So are you saying that NIM will increase off of the 3.87% level in the second quarter? And what do you expect for your funding costs to do in the back half of '26?

Yes. So we had a great quarter of NIM expansion, about 14 basis points on a core basis. We do see continued opportunity for expansion of that level. I think more of it's on the asset mix and repositioning into higher-yielding loans and also just the mix shift of our earning assets into more loans. So we really benefited from 3 things in the quarter from a NIM perspective, that was decreasing our funding cost by about 4 basis points, shifting more of our earning assets into loans and carrying less cash on the balance sheet.

So I think from where we're at from a rate standpoint, higher for longer, we still have some opportunity on the funding side, but I think it's going to be relatively modest in terms of decreasing funding costs. We added -- we've added about $150 million of net new fintech deposits, which tend to be net lower than our cost of funding. So help pull that cost of funding down as we reposition some of our CDs and higher cost funding into lower cost fintech deposits. So I think we still have opportunity on the funding side. And really, the other lever that we're continuing to push on is positioning more of our earning assets into loans and higher-yielding specialty loans.

Okay. Got it. Could you give us a refresh on your asset sensitivity profile? Does your NIM benefit if there is a rate hike?

Yes. So we are asset sensitive. I mean a couple of drivers there are having roughly 35% of our deposits in noninterest-bearing status and then carrying a healthy balance of cash, which literally benefits immediately from a rate hike as well as a fairly short portfolio in terms of repricing and a healthy amount of variable. So balance sheet is overall asset sensitive. So would benefit from a rate hike, although it will take a little bit of time for that to flow into the margin numbers.

There are no further questions in the queue. This will conclude the question-and-answer session. I would like to hand the conference back over to Larry for closing remarks.

Thank you, operator, and thank you all again for your time and continued interest in MVB Financial. We're energized by the opportunities in front of us and look forward to updating you on our progress in the next quarter. Have a great evening.

Thank you. This will conclude today's conference. You may disconnect at this time, and thank you for your participation.

Hello, and welcome to the 2026 Annual Meeting of Shareholders of MVB Financial Corp. Please note that today's meeting is being recorded. It is my pleasure to turn today's meeting over to Dr. Kelly Nelson, Chairman of MVB Financial Corp.'s Board of Directors. Chairman Nelson, you may begin.

Good morning, everyone. Thank you for joining us today. It is my pleasure on behalf of the Board of Directors of MVB Financial Corp. to welcome you to the Annual Shareholders Meeting. As Chairman of MVB Financial Corp., I am pleased to be presiding at today's meeting. Members of our Board of Directors and management team are attending the meeting virtually today. As you may know, Marty Becker recently retired as Chair and I was elected to chair. We certainly will miss Marty's intellect, his gentle demeanor, his patience, his leadership and his mentorship. Even more special is that we get to keep his friendship and the lessons we learned from him.

Marty, from the entire Board and management team, a sincere thank you for your years of service. If you are a registered shareholder and have logged on to this meeting with a valid control number, you will be able to vote and ask questions about the proposals during the meeting. You may submit questions by entering your question into the designated field on the web portal. I will address questions if there are any about the proposals after they are presented. I have a copy of the notice of this annual meeting and an affidavit of Computershare, the registrar and transfer agent for our common stock, as to the notice of the meeting, which states that on April 17, 2026, a notice of this meeting and notice of Internet availability of proxy materials was mailed to all shareholders of record as of the close of business on March 25, 2026, the record date for this annual meeting.

This affidavit is available if any shareholder wishes to examine it, and it will be filed with the minutes of this annual meeting. Unless there is a request, we will dispense with the reading of this notice of this meeting. There being no request, the reading of the notice of the meeting is dispensed with. Lisa McCormick, the company's Corporate Secretary, has been appointed to serve as Inspector of Election for this meeting. She has signed an oath to act as inspector of election, and this oath will be filed with the minutes of this meeting. The inspector has the alphabetical list of registered shareholders of the company as of March 25, 2026, the record date for the meeting, which shows the registered shareholders, their respective addresses and the number of shares held by each shareholder.

This list was available prior to and will remain available via the virtual meeting web portal during this annual meeting for inspection by shareholders. Secretary McCormick advised me shortly before this meeting began that a quorum is present. So I declare the meeting duly and lawfully convened. I direct the Secretary to file copies of the notice of this meeting, together with the proxy statement, form of proxy and the affidavit of Computershare with the minutes of this meeting. I will now call this annual meeting to order. This meeting will be conducted in accordance with the agenda and the rules of conduct, which you can find on the virtual meeting portal. You can also find a link to the annual proxy statement/prospectus on the portal. You have an opportunity to vote when the polls are open later in the meeting.

Although if you have already submitted your vote via proxy, you need not vote again. There are 4 proposals being considered today. Our Board of Directors has unanimously recommended that the shareholders approve each of the 4 proposals being presented. The first item to be voted on today is the election of 4 director nominees. The proxy statement made available to you earlier listed the company's nominees for director. A plurality of votes cast is required for the election of directors. Three directors have been nominated for a 3-year term expiring in 2029. They are Richard J. Cordella, Jr., Larry F. Mazza and Cheryl D. Spielman. One Director, Adam F. Famularo, has been nominated for a 2-year term, which would expire in 2028.

The second proposal to be voted on at today's meeting is the approval on a nonbinding advisory basis of the compensation of our named executive officers. The company's executive compensation is addressed in the proxy statement that was made available to you earlier. Approval of this proposal requires the number of votes cast favoring the proposal exceeds the votes cast opposing the proposal. The third proposal is the approval to amend the MVB Financial Corp. 2022 stock incentive plan to increase the number of shares authorized for issuance under the plan. The last proposal to be voted on at today's meeting is to ratify the appointment of Forivs as the independent registered public accounting firm for 2026. The appointment of Forvis is discussed in the proxy statement that was made available to you earlier. Approval of this proposal requires that the number of votes cast favoring the proposal exceeds the votes cast opposing the proposal.

Jeremy Goss of Forvis is in attendance at today's meeting and would be pleased to respond to appropriate questions submitted by shareholders, which may be submitted at this time through the online portal. The meeting is now open for any questions that may have been submitted by our shareholders through the web portal. Seeing that we have not received any questions related to the proposals and having presented all matters to be voted on by shareholders, I declare the polls now open for voting on the proposals. We will take a few moments to ensure all of the online ballots have been properly submitted for the proposals being voted on today.

[Voting]

The voting has been completed, so I declare the polls for voting are now closed at this time. While we finish tabulating the votes, I want to take a minute to express my sincere thanks to all of our shareholders who have taken the time to attend this annual meeting virtually and vote their shares. I have been advised by Secretary McCormick that each of the proposals presented today has been preliminarily approved by the MVB shareholders with the directors standing for election having been duly elected for the respective terms as described in the proxy statement. The final results of the meeting will appear in a current report on Form 8-K that the company will file within 4 business days of this meeting.

Having concluded the business as set forth in the annual proxy statement, I hereby adjourn the formal portion of this Annual Meeting of Shareholders. I would now like to introduce CEO, Larry Mazza, who will deliver his CEO presentation.

Thank you, Chairman Nelson. To our shareholders, teammates, Board members, Chairman Nelson and former Chairman Becker. I, as well as all of our teammates are very grateful for your continued support and hard work and commitment you've given Team MVB and you have our sincere commitment to continue to work hard and create and deliver extraordinary value for our shareholders, team and communities. Presentation today will be a brief presentation of where we stand and where we're going. The first slide is our strategy on the page, what we fondly call SOAP. Key thing here is our purpose. Our purpose is to be trusted partners on the financial frontier committed to your success. We support that purpose with 5 values. Our first 3 values of love, trust and commitment validate trusted partnerships. You have to have those 3 values to be a trusted partner.

And to be on the financial frontier, our fourth value of adaptivity is critical. And then commitment to our success -- and to your success -- commitment to your success takes teamwork. Just like it takes a village to raise a child. It takes a team for our 4 constituencies, which are our shareholders, our teammates, our communities and everyone is involved there is what we want to be successful. We look at our growth vehicles, we have Banking as a Service, our FinTech sponsorship lending, our gaming, payments and our core lending and deposits. Our next slide, which is up now is our AI slide and where we are going with this.

This has been a 4-year journey for us altogether. But we have started with cleaning up our database to have a clean database. From there, we implemented Risk Canvas. From Risk Canvas, we worked diligently with a company out of New York called WorkFusion to help us with AI digis, which we are now using in our compliance and risk areas to help us create efficiency, better compliance, and a very good start into our AI journey. Additionally, our team who we have 6 AI teammates that are committed to this area as well as the rest of our team. We work with Claude as our AI software and we have now created 26 digis of our own in-house that will be all rolled out by the end of this year, creating, again, efficiency, better client service and improved risk management.

And going forward, we continue to look at expansion in that area from that. 2025 was a very good year for Team MVB. When you look at our growth in payments, we've had excellent growth of 46% CAGR with the deposit side. And then with the payment revenue side, we had 102% compounded annual growth, which we're very happy with and believe that will continue into the '26 and beyond. When we look at the remix, we see great opportunity, we see CD balances in a good place. And more importantly, we see broker deposits rolling off in a large amount that we'll be able to reprice at a much lower rate and continue to grow our margin in addition to our loan growth, as shown on the next slide. So with a decrease in our deposit cost, an increase in our returns on our loan asset side, you can see we have compounded annual growth rate of 12% on the loan side for 2025, which we're very pleased with, and that team continues to grow.

But not only do we grow, we have grown with quality. When you look at our asset quality, it remains very good. And looking forward, it continues to remain strong. This is part of the biggest and most important thing, asset quality through those cycles. With that, I'll turn it back over to Chairman Nelson.

Thank you, Mr. Mazza. Certainly great news for the bank in the days ahead. I encourage you to reach out to Secretary McCormick, Corporate Secretary and Head of Investor Relations, or Marcie Lipscomb, Investor Relations at 844 MVB Bank. That number again, is 844 MVB Bank, if you have any other questions. Thank you for your support, and thank you for your investment in MVB Financial Corp.

This concludes the meeting. You may now disconnect.

Greetings, and welcome to the MVB Financial Corp. First Quarter 2026 Earnings Call. [Operator Instructions] It is now my pleasure to introduce your host, Amy Baker. Thank you. You may begin.

Thank you, operator. Good afternoon, and thank you all for joining us today for MVB's First Quarter 2026 Earnings Conference Call and our first ever earnings call as a public company. The company issued its earnings press release earlier this afternoon, and it is available on the company's website at ir.mvbbanking.com. In addition, the company has included a slide presentation that you can refer to during the call, which is also available on the website.

Participating on this call today are MVB's President and CEO, Larry F. Mazza; and CFO, Mike Sumbs. Larry will provide high-level first quarter results, followed by a business overview, and Mike will discuss the quarter's financial results in more detail, after which we will open the call for your questions.

Before we begin, I would like to remind you that this conference call contains forward-looking statements with respect to the future performance and financial condition of MVB Financial that involves risks and uncertainties. Various factors could cause actual results to be materially different from any future results expressed or implied by such forward-looking statements. These factors are discussed in the company's SEC filings, which are available on the company's website. The company disclaims any obligation to update any forward-looking statements made during the call.

Additionally, management may refer to non-GAAP measures, which are intended to supplement, but not substitute for the most directly comparable GAAP measures. The press release available on the website contains the financial and other quantitative information to be discussed today as well as the reconciliation of GAAP to non-GAAP measures.

With that, I'd like to turn the call over to MVB's President and CEO, Larry F. Mazza.

Thank you, Amy, and good afternoon, everyone. We appreciate you joining us today for our first ever earnings call. As Amy mentioned, we've included a slide presentation to support today's call, which provides additional details to our business and the quarter, and I'll reference a few of those slides as we go.

We are pleased to kick off the year with strong first quarter results with net income up 45% year-over-year, demonstrating a meaningful progress in our core earnings power. We successfully executed across with our CoRe banking activities and Fintech platform, achieving solid performance on our key metrics, including growth in loans, deposits, noninterest income while also reducing expenses.

As this is our first ever earnings call, I'll provide a brief overview of our business model and our value proposition. As you can see on Slide 3, MVB is a Fintech-enabled bank, combining traditional banking foundation with scaled Fintech capabilities in payments, banking-as-a-service and digital gaming. Today, we operate with approximately $3.3 billion in assets, $2.9 billion in deposits and payment platform processing approximately $48 billion annually. Our dual engine business model produces diversified revenue streams, including net interest income and growing base of fee-driven revenue.

Our differentiation lies in the complementary nature of our business segments. We generate deposits on a national basis through our Fintech-related activities while maintaining a strong core regional banking franchise. This combination allows us to support both traditional lending activities as well as Fintech sponsorship lending and a growing set of payments and Fintech-driven revenue streams within a single platform.

Our business operates across 4 complementary lanes as outlined on Slide 5 of the presentation. First, in our CoRe banking platform, which is our legacy bank that operates branch-light and is increasingly technology-enabled, supporting lending and deposit activities across our regional markets, primarily in commercial real estate, C&I and specialty lending. This is also the backbone of our Fintech platform that provides risk and compliance capabilities and capital to fuel growth.

Second, we serve as a banking partner to Fintech companies across payments, banking-as-a-service and gaming, serving over 40 gaming clients. We work with Fortune 100 and 500 companies in the space, including Fiserv, Worldpay, Intuit-Credit Karma, Global Payments, FanDuel, DraftKings and BetMGM to mention a few.

Third, we are builders of Fintech solutions, where we develop technology capabilities internally as demonstrated with Victor Technology, a payments platform, which we incubated and successfully sold last year for a gain of $34 million.

And fourth, we invest in Fintech businesses that align with our vision, similar to the investment gains we recorded subsequent to quarter end that I will touch on in a minute.

Turning to the quarter's performance by segment. Our CoRe banking business continued its growth trajectory with loans up 2.6% or 10% on an annualized basis from the prior quarter, marking the fourth consecutive quarter of expansion. The growth reflects increased demand as well as improving market conditions. Our deposit base remains a key strength. Noninterest-bearing deposits represented 35% of total deposits at quarter end, supporting our low 2.17% cost of funds and strong 3.71% net interest margin.

In our Fintech platform, we continue to see solid progress across several fronts. Payment card and service charge income increased 13.5% sequentially, benefiting from seasonal factors and partner activity.

As outlined in Slide 10, we launched 2 new Fintech partners during the first quarter, and we continue to see a strong pipeline of Fintech partnership opportunities across multiple stages.

Another highlight of the quarter was our enhanced operational efficiency. Noninterest expense was down 2% year-over-year, while revenues were up 8.8%, delivering positive operating leverage. This positive operating leverage is the result of our ongoing efforts to streamline operations through strategic investments. A key component of that effort has been our investment in automation, data infrastructure and artificial intelligence capabilities.

As outlined in Slide 11, we have built a data and AI infrastructure that supports automation across risk, compliance and operational workflows.

As shown on Slide 12, we're beginning to see the benefit of those investments in our financial results. Over the past several quarters, we've reduced the number of personnel supporting risk and compliance functions from approximately 160 at the peak in the second quarter of 2024 to 111 during the fourth quarter of 2025 with further reductions underway. Importantly, those changes reflect increased efficiency through automation and process improvement while maintaining the strength of our risk and compliance framework.

At the same time, we are continuing to invest in our business to support long-term growth, particularly through our technology and Fintech-related initiatives. During the quarter, we aligned our technology and operations functions under unified leadership with Michael Giorgio now serving as both Chief Information Officer and Chief Operating Officer. This reflects how closely integrated these areas have become within the organization.

In addition, we strengthened our Board with the addition of Adam Famularo, whose deep experience in Fintech and artificial intelligence align well with the capabilities we are continuing to build.

Finally, subsequent to quarter end, we recognized a pretax gain of approximately $10 million related to an existing Fintech investment that will be reported in the second quarter, validating our history of both building and investing in Fintech businesses, including the monetization of our Victor investment last year.

Over the past several years, MVB has evolved from a small community bank to a leading national Fintech banking platform with a diversified business model.

Our balance sheet has grown at a compounded annual growth rate of 10% over the past 9 years from $1.5 billion to $3.3 billion in assets.

We also successfully overcame a challenging regulatory environment and built a resilient and dynamic business that is well positioned to outperform through the cycle.

Looking forward, we are excited about the growth opportunities ahead of us, and we're well positioned for continued profitable growth.

Our first quarter results demonstrated strong execution across our platforms with 45% earnings growth year-over-year, continued loan growth, margin expansion and improved efficiency.

Our Fintech platform is gaining traction with our new partner launches and a robust pipeline. Combined with operational efficiency gains, expanding Fintech partnerships and loan growth, we expect continued momentum in profitability and shareholder value creation.

With that, I'll turn the call over to Michael Sumbs to walk through the financial results for the quarter in more detail.

Thanks, Larry, and good afternoon, everyone. I'll provide a few additional details to help frame the quarter and some of the underlying drivers in the results.

We delivered solid first quarter results with net income of $5.2 million, up 25% year-over-year and diluted earnings per share of $0.39, up 44% year-over-year. This performance was driven by strong revenue growth with net interest income and noninterest income, both up 7% and 17% year-over-year, respectively, while managing costs efficiently with noninterest expense down 2% year-over-year.

Net interest margin for the quarter was 3.71%, up 8 basis points over the prior year period, primarily driven by favorable changes in the balance sheet mix, partially offset by lower earning asset yields.

In addition, we executed on balance sheet optimization actions, including the repayment of $40 million of higher cost subordinated debt. This is expected to reduce funding costs and enhance net interest income with estimated annual savings of approximately $1.8 million starting in the second quarter of 2026.

Noninterest income for the quarter was $8.2 million, up 17% over the prior year period, reflecting higher payment card volume and service charge income. While we continue to see robust growth opportunities in our payments-related business, fee revenue from new partners can be impacted by seasonal patterns and typically builds over time as partners onboard and scale. In addition, the conversion of the pipeline opportunities into revenue can vary from quarter-to-quarter, which may result in some variability in the near term.

Noninterest expense of $28.1 million for the quarter was down 2% over the prior year period and down 11% sequentially, resulting in improved efficiency. While we expect continued efficiency gains from streamlined operations, we expect these savings to be offset by ongoing investments in technology and platform capabilities that position MVB for long-term growth.

Turning to credit, Slide 24. Asset quality remained broadly stable during the quarter with net charge-offs and provision both down sequentially. Nonperforming assets increased slightly from the prior quarter, primarily driven by a small number of commercial and single-family residential loans. The increase in nonperforming loans does not reflect any material industry concentrations, and we believe the exposures are well secured. Approximately 1/3 of total nonperforming assets as of the first -- end of the first quarter or approximately $12.2 million relates to a single credit that we have discussed previously, which we expect to resolve over time with no loss. Overall, we view the underlying credit profile of the portfolio is stable.

Turning to the balance sheet. Total loans reached $2.4 billion, up 10% on an annualized basis from the prior quarter. It is worth noting that a significant portion of the growth occurred for the end of the quarter, primarily in March. As a result, we recognized the associated provision for that growth during the quarter, while the full benefit to net interest income was not reflected in the first quarter results. Loan pipelines also remain strong heading into the second quarter.

Tangible book value per share for the quarter was $25.98, down slightly sequentially, primarily driven by an increase in unrealized losses in our securities portfolio and a higher share count as a result of option exercises in the quarter. As Larry mentioned, subsequent to quarter end, we recognized a pretax gain of approximately $10 million related to a Fintech investment, which is expected to increase tangible book value per share by approximately $0.59.

Moving to capital and liquidity, as shown on Slide 14. We continue to maintain a strong position with capital ratios well above regulatory requirements, offering support for growth and flexibility in capital allocation.

Additionally, as shown on Slide 16, we continue to return capital to shareholders through dividends and share buybacks. Since the first quarter of last year, we have repurchased $10 million worth of shares or approximately 4% of the outstanding shares, and we announced a new $10 million share repurchase program in October of 2025. We will remain disciplined and opportunistic in deploying capital to generate the highest value for our shareholders.

In summary, our quarter results demonstrated solid momentum and execution across our business and MVB is well positioned for continued strong growth.

With that, operator, we're ready to take questions.

[Operator Instructions] Our first question comes from the line of Catherine Mealor with KBW.

[Technical Difficulty]

Yes. Loud and clear, Catherine. Welcome and thank you for joining...

So my first question is just on deposits. I know you've got some seasonality to your deposit flows for some of your Fintech and BaaS businesses. I wanted to see if you could talk a little bit about that and give us some insight into how you're thinking about that going into the second quarter. And then maybe tying that conversation with your expectations for deposit costs. I know you've mentioned in your slide that you've got some big CD maturities coming in the next couple of quarters. And so just curious how you think that could impact your deposit costs and maybe your overall margin.

Thank you, Catherine. I'm going to let Michael take that question.

Catherine, thanks for the question. So I'll explain a little bit about the seasonality that we experienced and you alluded to. So there's really 2 seasons for MVB. The first season relates to our gaming business, and we see the balances in that portfolio swell in the fourth quarter with NFL season and then persist into the first half of the first quarter with the Super Bowl and March Madness and then decline towards the end of the first quarter and trail off over the summer months.

The second season is related to our banking-as-a-service business and specifically the relationship we have with Credit Karma. We see an uptick in deposits in the first quarter related to tax season. And so over the course of the first quarter, the average balance of deposits was up, reflecting that seasonal strength in our banking-as-a-service relationship. Overall, our deposits were up about $60 million point-to-point in the quarter, and that's with running off about $90 million of CDs and a lot of that CD maturity and repricing and runoff happened in March. So we grew deposits by about $60 million net of those CD runoff that we had.

So overall, heading into the second quarter, I think a lot of the seasonality is behind us and reflected in the period end number in March. We do have a lot of CDs coming up about $117 million in the first quarter. And so we'll look to run off and reprice that down which should help support reducing the cost of funds and continuing to grow the margin.

Okay. Great. And then maybe if you could provide just an outlook on your fee income businesses. I know that you've got some new partnerships that are coming on, and it takes a while for you to see the revenue coming through. But maybe you can give us an insight into maybe a growth rate or how you're thinking that kind of payments and service charge line income should trend over the next -- through the back half of this year?

Michael?

Yes. So we've been actively launching new partners. As Larry mentioned, we launched 2 new partners in the first quarter and then a few new partners in the back half of last year. So you'll see that continue to provide both deposits and fee income as we move through '26.

The timing of the ramp for those partners can be choppy and hard to predict. But you should see incremental improvement in growth in the payment card and service charge income line item, and it was up year-over-year slightly. So you'll continue to see that growth as we expand the customers or the clients that we've onboarded and onboard new clients throughout the course of '26.

Okay. Great. And then maybe my last question, if I may, is just big picture profitability outlook. You've made some great progress in improving your ROA this quarter. Any kind of near-term targets or how you kind of think about the path for your ROA and ROE as we move through the year?

Michael, do you want to go ahead and take that?

Yes. Certainly focused on continuing to grow core earnings. That's the North Star of the business and what we're focused on. And I think you can see in the first quarter, we made substantial progress in improving the core profitability of the bank, and we'll continue to do so over the course of the year, both through growing net interest income, driven by loan growth. And as I mentioned, improvement on the cost of deposits as well as the benefit of the Fintech partners that we've launched in the fee income side. So that's really the path we're on, Catherine, continuing to grow core earnings and driving up the ROA and ROE.

I think we started off the year really, really strong in the first quarter. I think it was a continuation of the first quarter -- or the fourth quarter of 2025. I would call it the trend is our friend right now, and we're looking for a very strong 2026.

Core -- even though -- yes, we announced the subsequent event in the second quarter to be reported. The second quarter is going to be strong based on that as well as core earnings growth.

[Operator Instructions] Our next question comes from the line of Janet Lee with TD Cowen.

I have a question about the digital worker growth. Obviously, you're increasing the number of digital workers from 10 to 26 by the end of this year. I would imagine the cost of adding a new digital worker could be diminishing or gets lower over time. I know you said you'll be reinvesting some of those efficiency gains. But as we move through the year towards 2027, do you think there is room for your efficiency ratio to improve just on the expense side? Or how should we think about that overall in terms of where expenses are headed with your AI initiatives?

Janet, this is Larry. Thank you for the question. This is one of our favorite questions is our foray into AI. So with our digis, by year-end, we'll actually end up with 32 digis. We have 6 on board now with several that are coming on board, plus the 26. That's -- the total is 26 that we're building throughout 2026. There's a lot of 26s here and then the additional 6 that are already on board. So we'll have a total of 32 digis by the end of this year.

You're exactly right on cost. The first 6 digis were I wouldn't call them extremely expensive, but they were costly in a way to get them up and going in our learning experience. The new digis will be about 1/3 of the cost of the first 6. So that is a big savings there.

What has happened, our first 6 digis were really focused on risk and compliance. That was an area that had a large population of what we call outsourced employees. We used Dominion RightSource. We used AML companies, et cetera, to help us, especially with our seasonality.

As Michael said, there's 2 seasons for MVB, football season and tax season, and we have to bring in extra workers. The digis have now taken care of the extra workers in that a human can process anywhere between 10 and 30 transactions. Our new digi named Evelyn can do 1 million transactions a day. So she gives us a ton of scalability in what we call our operational leverage. And so that will be very cost efficient.

We show in our -- one of our last pages on the deck, the numbers. We were -- we peaked at 160 people at one point in risk and compliance. In the fourth quarter, we ended with 111. We had some seasonality in the first quarter, but that will drop immediately in the second quarter down and eventually, we will get that closer to 90 people -- from 160 down to 90 based on these digital workers.

So again, that first focus was on risk and compliance. The second focus where these next 26 digis were going. The first 26 went to risk and compliance. The second 26 are going throughout the bank. And when I mean throughout the bank, we have digis in accounting. They're helping with reconciliations and other accounting functions. We have digis helping in our loan processing. For example, one digi has taken off 5 hours of loan input per loan. So that was an amazing growth there. And digis even to the teller line that are helping us with balancing, et cetera.

We don't see -- so I think it makes it clear to our team even though we had that large reduction in force from 160 down to 111, eventually down to 90, we don't see us reduce -- having a giant reduction in force. We will have humans in the loop with all our AI digis and working teams.

But additionally, what we see us being able to do is having our teams stay stable. So we have approximately a little over 400 people today. We hope to stay stable with that 400 people, but grow what I'd call pretty strong growth dramatically over the next several years and keeping that team pretty flat. That's our goal of AI and where we're going with this. The team will stay stable, but you'll see good growth. So the revenue per employee per our teammate will continue to grow, and that will be a measure that we look closely to.

For loan growth, in terms of your loan growth outlook for the rest of 2026, do you think this double-digit pace of loan growth is sustainable? And also on the deposit side, if you consider the seasonality factor in the second quarter, should we expect the deposit growth overall in 2026 to be comparable to your loan growth expectations?

Yes, Janet. We have strong pipelines on both deposits and loans. Our loan team has been working extremely hard. They will have a very good first half of the year. That momentum that we had in the first quarter will continue into the second quarter, a very positive loan growth there. And we expect -- as long as there's no geopolitical activities that would stall this, we would expect loan growth to be very positive.

On the deposit side, we see both on our -- what we call our CoRe, our legacy side as well as our Fintech side, very strong pipelines as well. So we see good deposit growth to pace well with the loan growth. And we're excited about both of those sides, the Fintech side and the CoRe side.

Got it. And the last one for me. I believe there are some -- a lot of volatilities within certain fee income line items. Was the equity method investment income for the quarter and card acquiring income, are they just -- is it seasonality that was impacting the first quarter? Or how should we think about the trajectory of those line items over the near term?

Janet, thanks for the question. I'm going to let Michael take that one.

Yes. The equity method investment is related to the 2 mortgage companies that we hold a minority interest position in, Janet. So that's really tied to -- you could think about that as being tied more towards the mortgage market.

And then the card acquiring income, there is some seasonality strength in that line item with some of our gaming partners. But that's a line item that we continue to onboard new clients in, which should support continued growth in that line item.

And we have reached the end of the question-and-answer session. Therefore, I'd like to turn the floor back over to CEO, Larry Mazza, for closing remarks.

Thank you. Thank you again to everybody for your time today and your continued interest in MVB Financial. Our entire team is energized by the opportunities ahead of us, and we're excited to continue to move forward with our -- growing our Fintech platform while strengthening our core banking foundation.

We appreciate your support and look forward to updating you on our progress in the quarters to come. If you have any questions, please feel free to contact our Investor Relations with anything that we can help with. Thank you, and hope you have a nice evening. Good night.

Thank you. And this concludes today's conference, and you may disconnect your lines at this time. We thank you for your participation.