Conference Transcript - MVBF 2026-04-14

Operator

Thank you all for joining us. Well, we've got quite a few questions to roll through, a nice conversation in 25 minutes, so we'll get started here. Larry, why don't we just kind of set the foundation? Give us a little on your background, a little on MVB.

Larry F. Mazza, CEO

My background started in the Big Four, KPMG. Started out in accounting, did both tax and audit, and then from there, I went into banking, became a CFO. From there, eventually landed with one of my former clients at KPMG who started MVB Bank in 2000. I joined in 2005 and have been in 2009, became CEO and have been CEO since 2009.

Operator

And a little bit on MVB.

Larry F. Mazza, CEO

MVB started out in West Virginia. We're now in 40 different states. We have employees in 40 different states and clients in 40 different states. We focus on FinTech, but we do have legacy bank. So we have two verticals that we focus on. On the legacy bank, we have traditional deposit gathering. We're branch light, seven branches. As far as lending, we do the traditional CRE, CNI in our region, which would be northern Virginia, West Virginia. On the FinTech side, we focus on payments. We work with the big guys like Fiserv and WorldPay and larger organizations like that, Nuve, Global, et cetera, and that's where we get our deposits, non-interest income. It's a great niche for us. The payment business is a multi-trillion-dollar business, and we like to play in that space. It's a specialty. It takes a lot of compliance. It takes a lot of tech, and we've decided to focus in that area. But additionally, we do gaming. We were one of the first banks, actually the first bank in gaming. When I'm talking about gaming, I'm talking about DraftKings, FanDuel, BetMGM. We have 43 digital gaming clients. It's been a great niche for us. We not only do operating accounts and things like that, but if you, for example, place a bet at DraftKings, that money will go into MVB. We set up the structure. We have learned secrets since 2008. We were the first bank in. And so it's been a good run for us. and it continues to grow. There are 38 states that legalized sports betting, but what's changed dramatically is predictive markets, and that has, even though those states that have not gone illegal on sports betting, predictive markets has opened up in those states, which it's not a bet, it's a prediction. So there is a dramatic difference as far as the law goes. That has been tested. 30 states have lawsuits against the predictive markets, Couchy and PolyMarkets in particular, and the predictive markets have won those first two cases. But the Supreme Court will decide that. But we are banking that as well, and it's been very positive as far as our growth. And the last piece of FinTech is banking as a service. We have our largest clients, Credit Karma, into it. We have 6 million clients. We work with them on 66 million tax refunds a year, and, you know, it gives us a lot of scale. We stay below $10 billion so that when we work with clients like Credit Karma slash Intuit, we have the Durbin Act, which gets them a higher fee on their transaction processing. They like banks like MVB. It's been a six-year relationship. We have three years left on our contract, and we expect to continue to develop that relationship and get deeper into what we would call specialty lending, that fintech lending. And that's the last thing we do is specialty lending and fintech lending on the fintech side, where we do everything from litigation finance to working with insurance companies, et cetera. But that's MVB.

Operator

It's an incredibly dynamic story. Kind of a lot going on, a lot of changes. But as investors take a look at the business, they're always interested in, you know, what's the earnings generating capacity? What do the next few years hold? Where do you see MVB headed over the next few years?

Larry F. Mazza, CEO

You know, Patrick, we're pretty excited. You know, the world has changed, I think, as we all know, since January of 2025. The regulatory environment has changed dramatically. FinTech banks have a large regulatory commitment. But we have committed dramatically to AI. And what I mean by that is, for example, to be able to handle clients that are Fortune 500, Fortune 100 clients, you have to have the capacity. And we use AI to do that. For example, we had 160 people in compliance and risk. Now with AI and what we call digis, digis are what we call digital workers. Some would call them bots. We now have 32 digital workers, and we've taken that 160 in compliance and risk down to 90, and we're even a much better organization with less people. So on the operating side, we have operating leverage, so our expenses are staying flat. We have dramatic growth. When you see us on the deposit side, you'll see excellent growth coming from the payment side. We have 52 clients in our fintech pipeline for payments, et cetera, And that will help us grow both non-interest income and it will help us to grow deposits. Lastly, the last catalyst is what we call specialty lending. We continue to grow in that area. That's another large pipeline. You'll continue to see excellent growth on the lending side for us. And that specialty lending, we believe, even though it yields higher, it has lower risk based on loan deposit ratios, based on underwriting. It's what I would call the underserved commercial market that has – it's more complicated, so it does take a specialty, and we have that specialty that helps us do it. But those are the catalysts, you know, from the non-interest income driving to the non-interest-bearing deposits. We have 40 percent non-interest-bearing deposits, which is – in our peer group, it's normally around 20 percent. So those are what's driving the catalyst for EPS, which is our North Star, growth over the next several years. So a good place to be.

Operator

And when you talk about the peer group, I mean, some of the partnerships you have, the names you're bringing up from the FISERs to the Calsies and Normus organizations. On the branching side, more like a community bank, I think this is very atypical. Would that be true? Like, who is the peer set?

Larry F. Mazza, CEO

So our peer set, we would look at the Bancorp. You know, they're a big payment bank. But, of course, they're a one-branch bank. The other one would be, like, Pathward. You know, they're another organization. They're a one-branch bank. But those are the Coastal Bank out of Washington State would be another peer. Those are the kind of specialty organizations that focus on banking as a service, that focus on payments. It's not so much we do honor the legacy side, and it's important to us, but the fintech side is where we're seeing the massive growth.

Operator

And so with that, what are the key metrics you judge yourself by?

Larry F. Mazza, CEO

Our key metrics are what we call the North Star. It's our earnings per share. We focus on earnings per share. There's three pieces of earnings per share that we really look at. And if you look at the trend, I'll call it the trend is our friend, Patrick. If you look at net interest margin, you'll see an excellent trend, and we expect the trend on net interest margin to continue. We're seeing lower deposit costs and higher loan yields. When you look at non-interest income, I told you about the FinTech pipeline, we see non-interest income growing every month, and we see that to continue for the next several years based on that pipeline. And then the third measure is non-interest expense. We see non-interest expense staying flat, even though we have leverage. So those four metrics, one, earnings per share, net interest margin drives earnings per share, non-interest income drives earnings per share, and non-interest expense drive that. So that's what we really follow.

Operator

Got it. And when you're looking at future partnerships, when you're bringing people on, I assume you're looking at how those are going to impact those metrics. And what are some case studies of some recent partnerships and how those have helped drive it?

Larry F. Mazza, CEO

Yeah, so we have something called REVO. REVO is the way we will measure a client relationship. REVO is looking at risk. It's looking at opportunity cost. It's looking at the value of this client. And if you look at that, we have, for example, we work with FISA very closely with a client like NAPA. NAPA will do $21 billion worth of payment volume. They'll have 8,000 stores. We work closely with them on onboarding, so it's a nice deposit play for us, as well as a non-interest income play, and it really helps both the client and our partner, Fiserv. So those are some of the examples there. On the tech side example that we're really excited about and happened, to show you the MVB innovation, we have a subsidiary called Edge Ventures. The reason we call it Edge Ventures is that we want it on the edge of the bank. Reason being, bankers are traditionally ultra-conservative. So when we put it on the edge of the bank, we don't want the bank to screw it up. And I say that nicely, and I say that with respect. We want it to operate as a venture capital company. So one of our first investments was four and a half years ago into a company called Victor. Victor's focus was on APIs and also on ledgering as well as some compliance. Well, this started on the back of a napkin four and a half years ago. We continued to grow it. We hired 17 developers. It really started to go well for us, and it started to differentiate us in the payment space. We needed to have tech to compete with the bank corps of the world, the pathords of the world, the coastals, the cross rivers. And we developed this as our own tech. and it really made a difference, and it really made a difference, too. If you would talk to the CFO of DraftKings, the first thing he would pull up is something called Webhooks that came out of Victor. It was his first software choice in his company to monitor all the APIs because they were live numbers constantly. So it was his measurement. But anyway, we got approached by our processor, Jack Henry, who, like Fiserv, et cetera, wanted to improve their payment processing side. And they made us an offer for Victor that we couldn't refuse. So after four and a half years, we monetized that investment, but stayed closely in contact with Jack Henry. We still use 100% of Victor, but we now went from 17 developers to their 2,000 developers, and we'll take Victor to the next level. And we'll continue to use that with our client base, but have a partnership, a shared revenue with Jack Henry on where we work. And I think it really is a case study of innovation of how we play in the space.

Operator

That's tremendous. And a nice segue as you look at all the things you're doing internally, maybe a little bit about the culture of the bank and how you think about it.

Larry F. Mazza, CEO

Yeah, culture is extremely important to us. The first thing that we talk about on every all-hands call, every meeting that we have with clients, meetings we have with investors. In our first meeting with ICR, I went off on this and they said, oh, okay. And it was a little different, I think. And the different thing is our purpose. Our purpose is to be trusted partners on the financial frontier committed to your success. We talk about that every day. And there's three pieces to that piece. One, it's trusted partnerships. Two, it's the financial frontier, which is FinTech. And three, you're looking at commitment to success. Those are the three things. So that's great, Larry, right? You have that. It sounds like this big vision and purpose that you have, how do you validate that? How do you live that? How does your team be able to execute it? Well, we have five values that tie to those three pieces of our purpose segment. The first one, to be a trusted partner. To be a trusted partner. And everyone in this room has a trusted partner. It may be your spouse. It may be your work people, work partners. It may be a good friend, right? So trusted partnerships have three pieces. So when you're looking at three pieces in a culture and three pieces in a relationship which are valuable. They have, and I'm going to use the L word, it has love, trust, and commitment. Now I'm not talking about love that you have with your spouse or your kids or something like that. I'm talking about something called agape love, which is that caring, that relationship, etc. So you have love, trust, and commitment. Do you care about me? Can I trust you? Are you committed? That's what everybody wants in a trusted partnership. That's what we have with our teammates. That's what our teammates have with us. That's what we have with our clients, that's what our clients have with us. That's what you have with your spouse, and that's what you want back. If you do not have that, you may have a partnership, but you don't have a trusted partnership, and I think that's critical in every relationship, and that's what we want to have, and that's what we work and strive hard to have inside our culture. The second one is the financial frontier. The financial frontier is changing dramatically. FinTech is changing every day, every second. It's changing the world of finance, and if you look at AI, et cetera, if you're not on that, if you don't have our fourth value, love, trust, and commitment, the first three, the fourth value ties to the financial frontier, and that's adaptivity. If you're not adaptive, you won't survive on the financial frontier. Adaptivity, Charles Darwin, like him or not, said it best. And what he said was, it's not the smartest or the strongest of the species that survive. It's the most adaptable. So we have adapted tremendously, and especially, I'm telling you. To continue to grow people with the clients that we had wasn't going to work. Our operating leverage would have been lost, and our expenses would have went crazy. So that is our fourth value. Our fifth value is teamwork. And so commitment to success takes a team. Just take a village to raise a child. It takes a team for you to be successful with your client base, with your teammates, with your communities, with your shareholders. And so we have teamwork that we work together to make that happen. So that's our culture. We take it very seriously. We talk about that every time we're together. We have all-hands meetings. Even though we're a virtual company, you know, we're, like I said, we have employees in 40 different states. We have clients in 40 different states. We do come together several times a year as the whole company. We meet in Dallas, Texas. We meet in Dulles, Virginia, you know, Reston area. We meet in West Virginia, and we talk about this stuff, and we have a monthly all-hands meeting. We talk about it. So culture is very, very important, Patrick. Thanks for asking the question. But that's a big differentiator for us as well.

Operator

One final question I have or opportunity for you, and then maybe we'll open it up for questions from the crowd. But I'm sold. You've got me excited. But maybe you could synthesize for the group, you know, these people are sitting in on a lot of different presentations today. Why you and not one of the other presentations? What makes it an exciting investment opportunity?

Larry F. Mazza, CEO

Patrick, what I look for, and I think a lot of the people in the audience probably look for, are catalysts. What I want to see is what's this company's earnings catalyst? We know where they are today, but where are they going? And I think if you look at our big three, you look at our margins, okay, our net interest margin, you're seeing that trend continue to grow. And it's growing because we're able to reprice deposits down, a lot of non-interest-bearing deposits. And then just where interest rates are, we're able to reprice deposits down. But we're also able to get better yields on our loan side because we're willing to do specialty lending, which is making a commitment. You know, we brought in, you know, a person like John Medea who leads specialty lending for us. He comes out of an iBank. He comes out of an insurance specialty, and he knows that area, and he nails it. So it's a lower risk but a higher yield for us. So that's a big catalyst. The second catalyst is what I talked about on the FinTech pipeline. We have 52 clients in that pipeline. As we bring those over, you continually see deposits grow, and you'll see non-interest income grow. And then you see our AI commitment. When you see a company able to reduce expenses, and it's a four-year journey to get to where we are today, and you have to have a great, clean data lake, which it took us a year and a half to do, and that's why a lot of banks aren't there yet because they haven't put their data lakes in because garbage in is garbage out. But we've been able to flatten out our expenses and keep them at a level where we have growth. So to me, when you're looking at the drivers of earnings per share, I think MVB has a wonderful future. We're excited about it, and I think we're in a niche that can really drive shareholder value. And we're a screaming buy. Of course, that's coming from your CEO, who's one of the largest shareholders. But the screaming buy is that we're a little under book value. And I think when you look at companies that we talked about in our peer group, like a PathWord, a Coastal, a Bancorp, they're three times book. So that's where I see there's a ton of value for MVB.

Operator

Nice arbitrage. Questions?

Larry F. Mazza, CEO

Absolutely. So the digis come from, one, financial analysis. What we do, we have an AI product that we use, software that we use, that's very similar to Waymo. So every teammate has this product on their desktops. So when you go in there, they'll come through like Waymo does. You'll have the driver drive, and Waymo, you know, the technology predicts what it's going to do, and then records what it's going to do to eventually where there's not a driver, right, and you have it all technology. So we're going through that process now. We've only been through the first phase of that, and that's where the 32 digis came. We believe there's a lot more digis that will be created based on this process. It's very widely accepted in our company. We're not intimidated. We don't believe, we always want a human in the middle in a lot of this. It won't be just, you know, human-less. We believe that we currently have 450 teammates. We don't believe that, you know, we'll have some reduction, but we'll be at a level where we're able to grow and not have to add people. And I think that's the critical part of the digies. The 32 is just the start. Right, right, right. So what we see is our next phase of edge ventures. We had a successful exit of Victor, as you said. Our next phase will be what we're creating in AI. We have a lot of peers that are looking at what we are doing, and we think that we can go ahead and sell that into the market. We'll be very particular on which ones we plan to sell into the market, and we're working with some AI companies as well that will help us sell into the market. That's our next phase of Edge Ventures, is working with AI and helping banks using our model that has been successful of how they can reduce their cost and risk, compliance, operations, et cetera. So more to come from that side of Edge Ventures. We're excited about it.

Operator

Investor Event Transcript

Conference Transcript - MVBF 2026-04-14