Mvb Financial Q3 Earnings Call Highlights

Key Points

• Third-quarter net income fell to approximately $438,000, or $0.03 per diluted share, as a higher credit-loss provision and the absence of a prior-quarter investment gain weighed on results.
• Underlying banking trends improved: core net interest margin expanded to 4.02%, loans grew 7.2% on an annualized basis, funding costs declined, and fintech payment deposits rose 28% sequentially to $766 million.
• Credit costs increased sharply, with the provision for credit losses reaching $9.9 million and nonperforming loans rising to $46.8 million, largely due to a single land loan requiring a $4.6 million specific reserve.

Mvb Financial NASDAQ: MVBF reported third-quarter net income of approximately $438,000, or $0.03 per diluted share, as a higher provision for credit losses and the absence of a prior-quarter investment gain weighed on reported results.

The company said its underlying banking trends improved during the quarter, including growth in net interest income, expansion in core net interest margin, lower funding costs and continued growth in fintech-related deposits. President and CEO Larry F. Mazza said the company’s reported earnings did not fully reflect operating progress because of the elevated credit-loss provision.

Margin Expansion and Fintech Deposit Growth

Fully tax-equivalent net interest income rose to $32.7 million from $32.4 million in the second quarter, despite the prior quarter including approximately $2.3 million of nonrecurring interest income tied to a loan payoff, CFO Mike Sumbs said.

Reported fully tax-equivalent net interest margin was 4.02%, compared with 4.16% in the prior quarter. However, excluding the prior quarter’s nonrecurring interest income, core net interest margin expanded 15 basis points sequentially from 3.87% to 4.02%.

Management attributed the improvement to loan growth, lower funding costs and balance-sheet optimization. Total loans increased about $44 million during the quarter, or 7.2% on an annualized basis, reaching $2.52 billion. The company said the third quarter marked its sixth consecutive quarter of loan growth.

Fintech payment deposits rose 28% sequentially to $766 million, representing about 25% of total deposits at Sept. 30, compared with about 19% at the end of the second quarter. The deposits were nearly 55% higher than a year earlier, Mazza said.

Total deposits were approximately $3.09 billion, down $24 million from the prior quarter, primarily reflecting a seasonal decline in noninterest-bearing deposits that was partly offset by interest-bearing deposit growth. Still, average noninterest-bearing deposits increased approximately $71 million from the second quarter.

The growing fintech deposit base enabled the company to reduce higher-cost deposit balances, helping lower total funding costs by 6 basis points sequentially to 2.07%, Sumbs said. MVB ended the quarter with an 81.6% loan-to-deposit ratio.

Mazza said the company onboarded nine fintech partners during the first nine months of 2026, compared with five for all of 2025. During the question-and-answer session, he said MVB had nearly 50 prospective fintech clients in its pipeline and expected its fintech deposit business to continue growing because it operates nationally, while its traditional banking franchise is concentrated in West Virginia and Northern Virginia.

Credit Provision Drives Earnings Decline

The provision for credit losses totaled $9.9 million, compared with $4.7 million in the second quarter. The increased provision included a $4.6 million specific reserve on a single acquisition and development land credit, as well as a $3.2 million specific reserve on a small group of loans in the company’s legacy SBA and associated commercial-and-industrial portfolio.

Nonperforming loans increased to $46.8 million at Sept. 30 from $29.2 million at June 30. Of the $17.6 million increase, $13.1 million was related to the single land loan, according to Sumbs.

Mazza said the land loan involved borrower- and property-specific circumstances and that the company was investigating potential misrepresentations and a lack of transparency in the loan’s due diligence and appraisal process. Sumbs said an updated appraisal ordered as the loan approached maturity came in materially below the value used at origination, with much of the difference related to property entitlements considered during underwriting.

The company engaged a forensic appraisal firm and said it was evaluating available remedies. Management said the $4.6 million reserve reduced the loan to current appraised value less estimated selling costs and that it believed the loan was adequately reserved as of Sept. 30.

Outside of the identified loan, management said it had not seen broader credit deterioration. Criticized loans declined to approximately $74 million, or 3% of total loans, from approximately $77 million, or 3.1%, at June 30. Since March 2025, criticized loans have declined about 45% from $135 million, management said.

The allowance for credit losses increased to $36.2 million, or 1.44% of total loans, from $28.2 million, or 1.14%, in the prior quarter. Net charge-offs were $2.5 million, or 41 basis points annualized on average loans, compared with $1.4 million, or 23 basis points annualized, in the second quarter.

In response to an analyst question, Sumbs said charge-offs could remain at a similar level in the fourth quarter as the company works through loans that have moved into nonperforming status. He said the timing of resolution for the larger land loan remained uncertain.

Fee Income, Costs and Capital

Noninterest income was $7.8 million, down from $18.8 million in the second quarter, which included a $10 million pretax gain on an existing fintech investment. Excluding that gain, noninterest income declined 10.5% sequentially, due to seasonal payment-related revenue trends and lower contributions from the company’s mortgage-related equity-method investment.

Payment card and service charge income totaled $5.2 million, down about 13% from the second quarter because of normal seasonality in gaming-related activity. The revenue line was nearly 40% higher than in the third quarter of 2025 and up approximately 22% through the first nine months of 2026.

Noninterest expense declined to $29.8 million from $30.4 million in the second quarter and $33.3 million a year earlier. Mazza said the company has been using artificial intelligence and automation to improve workflows, with more than 100 digital assistants either operating or in development. He said MVB had 14 trained and certified Claude engineers through its relationship with Anthropic.

The company’s tangible common equity ratio was 9.3% at Sept. 30, down from 9.7% at June 30. Tangible book value per share declined to $25.26 from $26.52, primarily because of increased unrealized losses in the securities portfolio recorded through accumulated other comprehensive loss.

Looking toward 2027, Mazza identified three priorities: increasing loan yields through “margin optimization,” prioritizing more established fintech partners that can contribute revenue more quickly, and maintaining expense discipline through further technology and automation initiatives.

About Mvb Financial (NASDAQ:MVBF)

MVB Financial Corp. is a financial holding company headquartered in Fairmont, West Virginia. Its principal subsidiary, MVB Bank, provides banking and financial services to individuals, businesses and organizations through locations and digital channels.

MVB Bank offers personal and business deposit accounts, commercial and consumer lending, mortgage banking, treasury management and wealth-management services. The bank also focuses on serving technology-oriented companies, including businesses in the financial technology, payments and gaming industries, with specialized banking and financial solutions.

Founded in 1997, MVB has expanded beyond its West Virginia roots to serve customers across the Mid-Atlantic region and clients in select industries on a broader geographic basis.

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