Thank you for attending the three-part advisors' ideas conference on CME marketing. The next step is MVB Financial Corp. Carried on the NASDAQ, took our MVB guest. And today we have Larry Mazza with his president, CEO, and Mike Sumbs, and he's a CFO. I'll let Larry take it away.
Thank you, Sandy.
Good afternoon. I'm Larry Mazza, as she said, from MVB. I'm CEO. Quick background on myself: started out at KPMG as a CPA, worked there for several years, audited mostly banks and oil and gas, and then from there went to a smaller community bank that was eventually acquired by BB&T, now Truist. Spent 10 years there total. From there, I was attracted to MVB. One of my audit clients was the founder and wanted a succession plan. So five years into it, he was a $100 million bank. I was a regional president, had assets of $3 billion. He was trying to attract me to a $100 million bank, and I said, "Dick, you're nuts. I'm not going to leave. I'm in a great place." We kept talking and talking, and this was a six-month trip, you know, conversation.
Finally, I said—he was a good friend—I said, "Fine, I'm going to give you an offer. If you accept it, then I'm interested." The offer was, "I will take all my retirement funds from BB&T then and invest them in MVB, and you'll match me with stock options." The best deal I ever made. That $100 million bank is now a $3.5 billion NASDAQ-traded bank. We're in 40 states. We have clients in 40 different states. We have employees in 40 different states. We're completely virtual as we go. We have Fortune 500, Fortune 200 clients. We specialize in the payments business. We specialize in gaming. We do fintech lending as well as traditional lending in markets. That now has made me, with all my stock options, etc., nearly a 10% owner in the bank. That's important to me. It's my most valuable asset, most important asset.
I have four kids, but this is one of my big babies. It is important. Let me give you—that's about myself. Mike will talk about himself in a second. Let me give you our strategy on a page. This is our soap. If you see me on the elevator, this is what I'm going to tell you right off the bat. I think really important to me is culture. I'm going to hit the culture piece, our purpose and our values. Our purpose is to be trusted partners on the financial frontier, committed to your success. There are three pieces to that purpose statement: trusted partnerships, the financial frontier, and commitment to success. Okay? Let's talk about trusted partnerships first and how our four values tie to that. Yeah. How our five values tie into our purpose statement. First, trusted partners.
The first three values that are up here talk about trusted partnerships. When I came up here, not to psychoanalyze you, but you asked yourself three questions about myself and Mike. You guys are running portfolios. You're making investments. You need to know these three questions. These three questions are: Can I trust this guy? Is he committed? Does he care? Those are our first three values: love, trust, and commitment. Do you care? Can I trust you? Are you committed? You can validate that by a relationship you no longer have. If you have a business partner that's no longer a business partner or a spouse or just a friend that's no longer a friend, one of those three values broke. You couldn't trust them. They couldn't trust you. You weren't committed. They weren't committed. You didn't care. They didn't care. Thus, the relationship likely ended.
Now, you can still have partnerships and not have all three values, but they're not trusted partnerships. That's what we have, and that's what our culture believes in, and that's what we'll run through a wall with. That's the differentiation point with the first part of our purpose statement of trusted partnerships. The next one's the financial frontier. The financial frontier is critical to us because the world is changing. We're not wanting to be on the bleeding edge, but we don't want to let financial technology pass us by. That's fintech. What we have is our fourth value. I told you our first three were love, trust, and commitment that tie to trusted partnerships. The next one's adaptivity. That ties to the financial frontier. Charles Darwin said it best, if you like him or not.
Charles Darwin said, "It's not the strongest or the smartest of the species that survive. It's the most adaptable." That is why MVB has gone from a $100 million bank to a $4.5 billion bank, traded on NASDAQ. In 2025, we are the top six performing banks in the country for shareholder return. We believe that will continue on into 2026 and 2027 as well. That is how we have been adaptive to the environment we are in. That is our fourth value, adaptivity. Our last value ties to the commitment to success. Just like it takes a village for a child to raise a child, it takes teamwork for us to have our constituencies successful. We have four constituencies. We have our shareholders. We have our teammates. We have our clients, and we have our communities.
Those are the four we want to see successful, and that's who we are committed to with trusted partnerships. That is our purpose. That's our values. That's why we exist. We have four lanes that we play in. The first lane is banking that's tech-forward. That's basically our legacy bank. We still have seven branches in Virginia and West Virginia that we do commercial lending in. We do mortgage lending. The second piece is the bankers of choice of fintech. This is where we get interesting. The bankers of choice of fintech is, I said, we bank Fortune 500, Fortune 200 companies. We bank DraftKings, FanDuel, BetMGM. These are all gaming companies. You take our client base, which is 43 digital gaming companies. We were the first bank in when sports gaming came about, which came about May 14th, 2018, when PASPA reversed.
PASPA was the Professional Amateur Sports Protection Act. Most bankers had no idea what PASPA was. The reason I knew what PASPA was, I do have an entrepreneurial background. I have a sports media company called Pro Football Talk. We sell our content to NBC Sports. So our writers really focused on PASPA because they knew what a game changer sports betting would be. Also, we sold our content to NBC Sports. NBC Sports owned 40% of FanDuel at one point. You may not have known that, but that's part of the case. In the wisdom of the Attorney General of the State of New York, they said that sports gaming or daily fantasy sports was now a game of chance, not a game of skill. What does that matter? That small change, dramatic change, because bankers cannot bank games of chance. We can only bank games of skill.
The Attorney General had started to talk about that in New York. They shut down FanDuel and DraftKings at Bank of America, sent them back $10 million checks. NBC asked me if I would help FanDuel. We helped FanDuel, and it changed our lives. Once we got FanDuel, we got DraftKings, and now we own 84% of the gaming market as part of that. That is one of our drivers. That is part of the bankers of choice of fintech. In addition to that, we have Intuit, which is a top company in the country where we bank Credit Karma. We have Credit Karma Checking, Credit Karma Savings. We call it Banking As a Service. That is what fintech banking is to us. The third lane that we have on track is builders of fintech. This is where we have learned so much banking fintech.
We went in and we knew we had to derive moats around these Fortune 200, Fortune 500 companies. What we did was we developed technology. We hired 17 developers, and we developed something called Victor. Victor was something that we put on DraftKings, FanDuel, Credit Karma, Intuit that would develop payment technology, ledgering, APIs, and some compliance. With that, we deepened our tentacles into these larger companies, which is right up there with Bank of America. I can tell you right now, you can sit down with the CFO of DraftKings and he'll tell you the first thing he pulls up in the morning is Victor because Victor has something called webhooks. It pulls all his bank accounts into one place, and he's able to see where he stands live because it's API connected. He can't do that with his software at Bank of America.
This was so successful this last quarter, we sold Victor. We knew we developed it for four and a half years. We developed it into a great piece of software. A company named Jack Henry, which is one of the biggest core processors in the country for banks, has over 2,000 banking clients, wanted our development. We sold it to them because we knew we could only take it so far. We had 17 developers. They had 2,000 developers. The good news is not only did we sell for $43 million, a $34 million gain, which was a great mini capital raise, not diluting our shareholders, but helping our book value and putting us in the top six in the country. What it did was we were able to keep the connection to Victor. We still use Victor at 100%. They take care of it now.
They continue to grow it and develop it. We also have a profit share with them. It was a great, great evolution. That is what builders of fintech mean to us, and that is what we have done. The last one is backers of fintech. We have invested in companies like Bill GO, like Socure, like Interchecks. These are all companies we do business with, but we also are able to connect with them on these payment rails, etc., making us one of the best payment banks in the country. Those are our four lanes that we drive in. Now people ask us, "What are your growth vehicles? What are your catalysts? How are you taking the company to the next level?" It is not just growing loans and deposits the traditional community bank way. It is going it our way.
The first one I talked about, one of our biggest growth catalysts is Banking As a Service. This is where we have Credit Karma. We have $6 million relationships with Credit Karma. We do checking, savings, and earned wage access with them. This is 6 million clients that we have at the bank. Now, the thing of it there is Credit Karma has 130 million—that did not stutter—it is 130 million clients that visit them annually. 40 million that visit monthly and 30 million that visit weekly. They have an opportunity to sell into that because they trust Credit Karma. Credit Karma gives you your credit report and then tells you how to improve it every day. That is their goal, to continue to help Americans improve their credit score and eventually their lives. It is very, very positive.
They wanted to take the average savings rate, which we have their deposits. We have over $1 billion in deposits with Credit Karma. They want to take that average American savings rate from $400 to $5,000. If you put that to that client base, it's a very big growth vehicle and positive for us. The next one is fintech-sponsored lending. This is where we go in and work with fintechs on making loans, etc., to their client base. You can see that everything from Intuit and helping them with tax refund loans to other type companies out there that we would help with their lending. The next one is gaming. I touched on gaming already. We have 43 digital gaming clients that we do payment services for in addition to operating accounts, etc. We have a pretty strong connection into the gaming industry.
Payments is probably one of our most promising growth vehicles in our stack. The reason payments is we do every type of payment modality. If you want to move money through ACH, through real-time payments, through you name it, we will help you move that money. We love it because it's a multi-trillion dollar business, and we just want a small piece of it. We look at stablecoin as well. People say, "Why do you get involved in stablecoin?" We do have some cross-border payments. We actually have a client in London that uses stablecoin, and we facilitate. Why? Because it's a lot cheaper. It only costs $0.04 a transaction versus $0.75 a transaction. I can actually do it a lot faster in that I can actually fly a payment and beat the old rails and get it to London from New York.
With stablecoin, you can get it done instantly. Stablecoin is here. It's here to stay. It will be part of our payment modalities. I think that's important as well. The last one is our core lending and deposit. That's the plain vanilla banking. When I told you that's our traditional legacy banks, the branches, commercial lending, mortgage lending, we do all that in addition to branch deposits, etc. Those are it. We talked about strategic M&A. We talked about compliance and risk. We have to honor that. It's important to be a fintech bank. Our talent culture, our client partner relationships, and what we call operational excellence. One thing about operational excellence that you'll see, to be a fintech bank, you have to be highly compliant. At one point, we had 160 people in our compliance and risk.
When you hear 160 people coming out of a 400-person bank and you're coming out of a $3.5 billion bank, it sounds like, "Wow, that's pretty heavy." It is heavy because that's what it takes to bank fintechs. What we have done with AI now is we've taken that 160 down to 117, and we're likely to take that to under 100 by the end of 2026 through what we call our digital employees. Digital employees, some would call bots. I can give you an idea of what Evelyn does. Evelyn is one of our new digital employees. An employee can do BSA work. They can do about 30 transaction monitoring a day. Evelyn can do a million a day. It really gives us operating leverage, ability to scale, etc. We see operation excellence is something massive for us.
You'll see that a lot of our analysts will show flat expense growth for 2026, which we're pretty happy and excited about that because of the way we're using AI. With that, I'm going to kick it over to Michael to cover some of the details.
Hey, everyone. Good afternoon. I'm going to use the mic here because my voice doesn't project as well as Larry. I was told this is being webcast. So Mike Sumbs, CFO of MVB Bank and MVB Financial. Good to be with you all this afternoon. As you can tell from Larry's comments, we are not your traditional bank. We are, in fact, the only bank here today. Glad to represent the banking community, albeit in a little different way. Clearly, from Larry's comments, you get the impression that MVB is not your traditional community bank.
I think the easiest way to think about MVB is we do have a traditional community bank. We have seven branches, six branches in West Virginia, one branch in Northern Virginia that comprises about 40% of our balance sheet today. The fintech side of the bank is the more high-growth sector. To me, the easiest way to think about it is I spent 17 years as an investment banker focused on community banks. The one thing that became very apparent during those 17 years was that banking is largely a race to the bottom. When I started, we had 6,000 community banks in the country. We're now down to about 3,000. You continue to see that trend line go down every year.
It really becomes a situation where small banks do not have the economies of scale to compete with the large banks in its hand-to-hand combat for deposits and loans. What we have been able to do with our fintech vehicle is broaden the aperture of our distribution network. Like Larry said, we have millions of accounts through Credit Karma. Credit Karma really serves as our marketing and customer acquisition vehicle while we get to serve as the plumbing and collect our toll along the way. We have been able to deploy that across Banking As a Service through Credit Karma, online gaming, where we really have a dominant market share in that niche. We have had some questions today about online gaming. Is that being disrupted by predictive markets? The answer is yes and no. Online gaming is currently legal in 37 states. Texas is not one of those.
California is not one of those, which are two of the most populous states. What is sort of legal is predictive markets. We also play in that space. While some of it is being disrupted through the emergence of predictive markets, that is really another opportunity for us to continue to grow that gaming vehicle. Moving on to some of the basics about the company. We are a $3.5 billion asset bank, $330 million market cap. We trade right around one times tangible book and a little over 10 times forward earnings. We think it is a great value. Like I said, most banks today are really struggling to find places to grow. We have got more growth opportunities than we can onboard today. It is really about selectively trying to figure out where to prioritize our resources.
We just completed a $10 million share repurchase, which, again, we think the stock is a very attractive buy. We put another $10 million authorization in place in October. We've had $500,000. That number is actually a little outdated. It's more than that now of insider purchases. Larry told you he owns almost 10% of the company. We certainly put our money where our mouth is when it comes to believing in the story. In addition, we pay a little over 2% dividend yield to provide shareholder return along the way. I want to talk a little bit about payments because that's a big vehicle for us. With payments, what does that mean? It means we provide all of the back-end plumbing and connection into the banking, into the regulated banking system for any fintech. Embedded finance, you go on, you want to make a purchase.
You can do that seamlessly through your consumer-facing app when you put your card up to a point of sale terminal. All of that needs to flow through the banking. We are on the back end of that through merchant acquiring. When you go buy a coffee at Starbucks, that money needs to flow through a bank. We get volume through that, and we do it for some Fortune 500, Fortune 200 companies. On the card issuing side, we do that with virtual cards and also physical cards. Then broadly, just money movement solutions of any type. One interesting use case we are working on right now is helping a technology company streamline the dental insurance collections process. Very cumbersome process today. We are setting up a network or a program of ACH payments to make that much more efficient. This to us is all about throughput volume.
The more volume we can drive, the more fee income it produces for the bank. We're partnered with some of the biggest companies in the space: PayPal, Fiserv, Worldpay. That is the payment side. Banking As a Service we talked about. We do that for Credit Karma, and that is providing deposit accounts. In gaming, we have all the household names in the gaming side. This is just a quick view of the growth in our payments vehicles. You can see it provides both deposit funding on our balance sheet and also revenue through fee income. Most banks are traditionally focused on spread income, which is how can I make more loans and lower the cost of my deposits, which again goes back to that really competitive race to the bottom. We've come at it a different angle.
We do have a spread business, but we also have a big fee income generator, and that's really where we're focused. I'll talk a little bit about our pipeline because it's very robust. Thinking about where we've been over the last three or four years, the banking regulations were very strict. The last administration, I'll put this politely, was not a fan of banks. That ranges from every bank, big, small, fintech, Main Street. It was a very difficult environment from a regulatory standpoint, in addition to just having a flat yield curve and a high interest rate environment. With the new administration, a lot of that over-regulation has started to be peeled back, and we've started to see a lot more opportunities for growth emerging, both on the traditional banking side, but really on the fintech side.
This just gives you a flavor of the pipeline that we're currently working on onboarding. We've launched two new clients this quarter. We have four more that will be launched in the fourth quarter. The big part that I want to point to is the 14 that we have currently signed MSA. That's a master service agreement. These are not the Joseph A. Bank of buy five suits and walk out the door. This is a very custom program that we set up for each of these clients. These are multi-year clients with multi-year revenue streams and deposit sources for us.
What I think is really exciting to me as a shareholder and to you as an investor is all of this work we're doing today is going to pay dividends down the road for years to come. These are very sticky relationships, and I don't view any of this as being priced into the stock today. This is a taste of what the pipeline looks like today, with 14 currently signed, four that we're in the testing process of launching. The other important number is that we have 52 clients in the earlier stage pipeline. Not all of those will make it to launch, but if you think about how deep that pipeline is, and it really shows no signs of slowing down, there's a huge amount of appetite for this type of service in the banking industry.
Unlike the 3,000 other banks that are competing on Main Street, there is probably a dozen to 20 banks focused in this specific segment of the market. It is really not a question of competing with our peers. In fact, we have a pretty collaborative relationship with a lot of our peers because there is plenty of business to go around. We just want to make sure everyone is doing it well. If everyone is doing it well, then the regulators are much more comfortable with it. I feel really good about the pipeline, really good about the growth opportunities going forward. I will just give you some metrics on our deposit base. We have about $3 billion, $2.8 billion of deposits on balance sheet today. Given we have excess deposits due to our relationships in the gaming and with Credit Karma, we actually push deposits off our balance sheet.
What does that mean? It means there's a network where we can sell deposits to other banks that need deposits because we're flush with them. At the end of the last quarter, we had about $900 million of deposits that we were pushing out to networks, and we get paid for those deposits. About 37% of our deposit base is non-interest bearing, which is a really good number. Most community banks are in the 20%-25% range or lower. We have a nice deposit base. We have over $2 billion of additional liquidity we can pull onto the balance sheet. The scare of March of 2023 for the California banks and First Republic is really not something that we worry about. Of course, we take it seriously, and we have rigorous liquidity monitoring, but deposits and funding is one of our core strengths.
Again, this just touches on the deposit source. It's a diversified deposit base, both a mix of kind of traditional retail and fintech. I will say there's a near-term opportunity coming up in the next several quarters to run off some higher-cost deposits that we do have. In the first quarter of 2026, we have a little over $200 million of deposits that we're paying about 4.5% on. Most of those are certificates of deposit that will run out of the bank. That will be an immediate savings to us on our cost of funding. In terms of the loan portfolio, we are a bank. We do make loans. And we've seen quite significant loan growth over the last several quarters. Going back to the end of 2024, our loan portfolio was about $2.1 billion. It's up about $160 million from the end of 2024.
We're out actively providing credit in the markets that we serve, which again provides a catalyst for earnings growth in the coming quarters. As far as what we lend in, Larry mentioned the fintech sponsorship lending. Traditionally, our lending has been regionally focused in our markets of West Virginia, Virginia, and Maryland. We do have a niche in the healthcare space that we've been very strong in for over a decade. Where we're going on the lending side is more akin to what we do on the deposit side with a focus on fintech. When we say fintech lending, that doesn't mean we're lending to early-stage companies. What that means is we're partnering with companies that provide credit, and we're the originating bank for them. Again, it goes back to what I said about being the distribution channel for our banking services.
We will not actually hold those loans on our balance sheet. We will originate and then sell off to the partner in the second, and they can sell those loans in the secondary market. What I love about that business line is it provides fee income. It provides a high ROE for our business, and it does not expose us to credit losses like traditional lending does. I am really excited about the fintech sponsorship lending opportunity for us in 2026 and as a growth vehicle in 2026 and beyond. In terms of asset quality, that is always something people want to talk about with banks. We have had historically strong asset quality. We have over a 1% reserve on our balance sheet relative to our loans. You can see our charge-offs have been less than 20 basis points year to date, and we are 11 basis points in the last quarter.
There's been a lot of talk about, as commercial real estate is a scary asset class, we don't do a lot of the lending that's gotten folks into trouble with hospitality, high-rise downtown office space. Our CRE tends to be more downscale and things that haven't been impacted. I feel really good about our lending book and feel really good about our ability to continue to generate high-quality assets. In terms of our capitalization, we're sitting at a little over 10% capital today and 11% as a regulated bank leverage ratio. Just to give you some context, anything over 7% is considered well capitalized. We have excess capital, which we're deploying both through the share repurchases, and then we'll continue to grow in through the growth opportunities that we have in our balance sheet. A really strong capital foundation to build off of.
One of the core valuation metrics that people look at when evaluating banks is tangible book value. Just to give you some context, over the last five years or last six years, really, from 2019 to September 30, 2025, we've grown tangible book value by 9.8% annually. That does not include the $3.68 that we've returned to shareholders. We've provided a really good shareholder return. Our stock is up 35% year to date, which Larry said is the sixth best-performing community bank in the U.S. I feel very proud about that. The last thing I'll touch on, and Larry, you can chime more on this, but one of the big things Larry mentioned is being a fintech bank does come with a high level of compliance and oversight for our partners. One of the things we're doing to continue to generate more efficiency is leaning hard into AI.
It's been a multi-year process of building out the foundation to leverage AI. We made significant investments in building a clean data lake to allow us to leverage and put on top of that AI to help us with decisioning, particularly in the compliance side of the business, which has historically been a heavy cost center for us. This chart just shows you the headcount by specific type of compliance focus. You can see that peaked in the second quarter of 2024 at a little over 160 people. We've been able to effectively manage that down to 117, and we see more savings to come in that department, even with the additional growth that we expect. Continue to expect good operating leverage and better financial performance on the back of more efficiencies through AI. I think we're about at time.
I wanted to leave a little bit of time for Q&A. Larry, if you want to say anything to wrap us up, or we can go straight into Q&A. Thank you all. Any questions for us? Yeah. The question was, do we bank physical sports books like you'd go into in Vegas, or do we just do the digital clients? We just focus on the online gaming clients. We do not do the brick-and-mortar casinos. No. They are online credits. Yes. Yes. Yeah. Yeah. Yeah. DraftKings and FanDuel are the two biggest. It is a little bit of a duopoly, but yeah, we have BetMGM, PrizePicks. Forty-three digital banking clients. They are in that space. They are in that space, yeah.
Hold on. We bank 43 digital gaming clients. MGM, FanDuel, DraftKings, you name it. The predictive market companies as well, like Kalshi and Polymarket. There is a story with the stray branch over there in Northern Virginia. It seems like all of the other branches are up and down the highway in West Virginia. That one is kind of an outlier.
The question, yeah, the question was, is there a story with the branch in Northern Virginia versus the six in West Virginia?
The story is on that branch is we bought a mortgage company back in 2012 called Potomac Mortgage Group. As part of that acquisition, we put a bank branch to complement the mortgage business. At one point, our strategy when we were, I'll call it community bank, was to build three branches a year in Northern Virginia. We did a pivot to fintech.
That's the loan ranger over there right now. We don't plan to add any more branches at this point. We're really a digital bank, and the bricks-and-mortar branches are just not a focus of ours. If anything, it's what Mike calls a put option. We could sell all six or seven branches right now at a pretty solid price if we wanted to. We don't want to, but that's out there as an opportunity. We don't see us growing it, though. It'll grow organically, but not a number of physical locations. We're more like an Apple store. You have Apple stores everywhere once in a while. That's who we are. We're more like Apple. We have branches here and there. Yes, sir. Are you a buyout candidate?
Are we a buyout candidate? Are we looking to other banks? I've always said, being one of the largest shareholders, we will always look at opportunities. We'll always look at acquisitions. We just sold Victor, which was a nice gain for our shareholders. As far as other banks looking for us in that niche, I think there are bigger banks that would love to be in the payments business. It's a lot to ramp up. There's a lot of moats around it because of the compliance and everything that goes with it. Yeah, we're always looking, and we'd never say never. Both ways, buy or sell. We would probably not buy a traditional bank. We would look more forward to someone who would be complementary to our payments business. It wouldn't be a good investment banker if we weren't open to deals, right? A good farmer investment banker. Right.
Right. There's another question. Yes.
One of the previous questions, what's the strategic thinking behind switching from the community banking to more fintech? The second one is, in the fintech world, who do you see as competitors?
That's two good questions. The first question was, why did we switch from community banking to fintech banking? The second question is, who are our competitors? I can tell you it was what I call a Starbucks moment that switched us. In 2016, I was driving through the Starbucks drive-through. I know what I was ordering. I was ordering a matcha latte tea. Okay? I get up to the window, and they said, "Hey, you need to refill your Starbucks card." I said, "Okay." I refill it, and it came out of my debit card for MVB.
Then I said, "Uh-oh, this is a problem," because Starbucks doesn't have any banks here, but they just took $100 of mine pretty easily. I went back and started researching, who's the bank of Starbucks? The bank of Starbucks was Bank of America, and they had over $3 billion in deposits through this type of relationships. It was no longer the corner of Main Street and Second Street where you put a branch and you hope to get as many deposits as you can. It was now the corner of the internet. Where can you get your deposits and loans digitally? It's not physically anymore. That's what caused us to pivot into fintech banking. The second competitors of ours would be like Coastal Bank, Cross River Bank, FinWise Bank, Pathward Bank, Bancorp out of New Jersey.
Those would be some of the banks that we compete with. There's only really 35 banks that fill our niche. Out of those 35, there's probably only 20 that do it really well. It is a really small group of where we play. We like it that way because it's still a blue ocean versus the red ocean. There's the red ocean of competition where everybody's going after the same 10 clients. The margins are going to zero, and everybody's killing themselves. There is the blue ocean where the competition's not there. There is still margin. It's still a good place to be. Thank you very much. Thank you.