September Small-Cap Virtual Conference. My name is Brendan McCarthy. I am an Analyst here at Sidoti, and I am very pleased to welcome MVB Financial. The ticker is MVBF. Joining us from the firm is President and CEO, Larry Mazza, as well as CFO, Mike Sumbs. Before I hand it over, a quick reminder that the Q&A tab is located at the bottom of the screen. Feel free to type in any questions throughout the presentation, and we can save time for Q&A at the end. With that said, Larry, take it away.
Hey, Brendan. Thank you very much, and thanks for inviting us to the conference. It has been great today and yesterday, so appreciate the opportunity. As Brendan said, I am Larry Mazza. I am CEO of MVB. Happy and honored to present with my partner here, Mike Sumbs, who is our CFO. I will do around 10 minutes of the intro. Mike will get into more details of the financials, and then we will have about 10 minutes for Q&A. Just so you know how we are going to run through this. A quick background on myself. CPA, worked with KPMG. Out of KPMG, went into a bank where, at 29, I became CEO and then eventually merged with Truist. I spent a while with Truist, which was then BB&T, and then in 2005, went over to MVB as part of what I will call the founder succession plan. I was not the founder of MVB.
Came in at around $120 million in assets. Today, as you will see on this next slide, that gives you a good idea of who we are. You are looking at about $3.5 billion in assets, $2.5 billion in loans, $3.1 billion in deposits, and a strong 51.6% revenue growth, which we will talk about. When you look at MVB, you are really looking at a two-part story. We call ourselves really the quiet company that is fueling fintechs. You will see, one, a legacy bank, which I will talk about briefly when I get to our strategy on a page, and then you will also see a fintech-driven technology company really that fuels fintechs, that is really part of our growth story. So it is a balanced two-pronged approach to where we are. On the next slide, what you will see is some of our strategies, which I will get into more of these investment highlights.
Really what are the catalysts that would drive an investor to invest in MVB. The next slide starts to get into our strategy on a page. If you want to know everything about MVB in a snapshot, one page, folk, this is what we call our SOAP. Again, strategy on a page. Our purpose is to be trusted partners on the financial frontier committed to your success. So that purpose has three pieces to it, trusted partnerships, the financial frontier, and a commitment to success. We back up that purpose statement. It is not only words on a page, but we back it up with our values, and then we look at these values as we talk to every one of our teammates in our reviews and our feedback to each other. But the first three values tie to trusted partnerships.
When you got on this call today and you saw me pop up, you ask yourself subconsciously three questions. Can I trust this guy? Does he care? Is he committed? You are putting your assets or your client's assets to work in potentially MVB stock, and that is our first three values. We call it love, trust, and commitment. It is not the love that you have for your spouse or your kids or something like that. It is the caring love. It is what they call the agape friendship type love and caring. Then we have the trust that solidifies all relationships, and then the commitment to be the best that we can be every day. That is trusted partnerships and how we live it in values. The second part that we talk about is the financial frontier, and that is adaptivity.
Charles Darwin said it best, "It is not the strongest of a species that survives, it is the most adaptable of the species that survives." We have been adapting since 2016. That is when we did our white paper on fintech and a transition to not only to be a traditional legacy-type bank with commercial lending and mortgage lending and branches, but also to drive and fuel the operations of fintech because every fintech needs a bank. The last piece and the last value of teamwork drives through commitment of success. When we talk about your success, we are talking about our investors, we are talking about our teammates, we are talking about our communities, and importantly, our clients. We have those four constituencies. Just like it takes a village to raise a child, it takes a teamwork to help for those four constituencies to be successful. So that is our purpose and values.
Then you look at the four lanes that we play in. The first lane that we play in is what I talked about earlier, our first prong. The next three prongs will go to fintech, but the first prong is our legacy bank, and our legacy bank includes things like commercial lending. We do CRE-type lending, commercial real estate, C&I, commercial and industrial. We do mortgage lending. We do litigation finance type lending is our specialty lending prong and do lending of that source. We are conservative lenders. We are regional lenders, and that is how we deploy our assets. Then you look at the next three lanes that we talk about, and these are the three fintech lanes, and this is where really the growth comes in both non-interest income or even drives our deposits, and a lot of those are low-cost, even non-interest-bearing deposits.
We have one of the highest non-interest-bearing deposits in the industry at nearly 35% of all of our deposits are non-interest-bearing, which is very solid compared to any peer group that we were in. It is the second lane, but the first of the fintechs is to be the bankers of choice of fintech. In this lane, you will see critical areas that we represent. One is the payments vertical, where we do payments for acquiring, issuing for companies like PayPal. We work with Fiserv, we work with Worldpay, we work with large companies like that to process their payments. Very important to us. A multi-trillion-dollar business. We have our small part of it, and it is very powerful. You will also see under the bankers of choice of fintech is our banking as a service.
There you will see one of our largest clients, which shows you our ability to handle scale, is Credit Karma, who is, of course, owned by Intuit. Not only do we do Credit Karma savings and cash, which we had nearly 6 million relationships of both savings and checking. It shows you the ability for us to do scale with fintechs, which makes us one of the largest banks in the country as far as number of accounts. Not in assets or liabilities, but number of accounts. We have a lot of volume that we throughput, and we will talk about how we look at risk and compliance for that, which we honor that. I told you at the top of the call, I am a CPA. I honor audit, I honor risk, I honor compliance.
I will show you a very strong platform that we use to manage that vertical of banking as a service. The next thing that we have in the bankers of choice is our gaming vertical. We were one of the first banks that got into digital gaming. When I am talking about digital gaming, you are probably familiar with names like DraftKings, FanDuel, BetMGM. We have 38 digital banking clients. We were one of the first banks in the daily fantasy sports as well as other than sports betting, et cetera. We, again, had to have a strong infrastructure of compliance and risk, which we have done a heck of a job in. There were 22 fintech banks that in 2022 to 2024 that had consent orders. We knock on wood, and thank God we never had one of those consent orders. It is also by choice.
What I mean by choice is that we choose to be compliant. We choose to build the infrastructure. We spent $22 million in that infrastructure, and I will show you how it has paid off in later slides, but it has been a good choice. Those are some of the lines of business that we have in what we call the bankers of choice of fintechs, and that helps you understand that. The builders of fintech are, we have built companies like Victor. We started it on a back of a napkin, and four and a half years later, we had a heck of a company that had API connections because we believe APIs are now table stakes. A lot of banks do not have API connections. We built that early on. It is one of our high choices of products for clients.
We also had Victor build ledgering as well as some compliance skills. That was so successful, Jack Henry, a large-cap bank core processor, wanted to buy Victor off of us. They were our core processor. It was like sending your kids to college, and we did. We went from 17 developers that we had that built that technology, to 2,000 developers that Jack Henry has to help that grow along. Victor has been doing great for the last year under Jack Henry's tutelage. We still use them, we still share profits with them, and it is still a great software for MVB, just with a lot more firepower behind it after we got it started. The last one is backers of fintech. This is where we invest in fintech. We have a great insight to a number of fintechs.
We have a fintech portfolio that has somewhere between 15+ fintechs that we have invested in. I'd say about 95% of those fintechs actually do business with us. We make money in two ways on that backers of fintech or investors of fintech. One is on the growth of the investment, which you'll see in this second quarter results. One of our fintechs had a liquidity event that helped us have a gain. We also make money off of doing business with them. We have great business relationships and do business with fintechs and make money off of that as well. Following the qualifying track and the fast track are a lot of what I've talked about already. I'll jump to the next slide. This is our team, one of the best teams pound for pound in the country.
You'll see people like Mike Sumbs coming, an investment banker out of Raymond James is our CFO, Jeremy Kuiper, who worked with The Bancorp and with Pathward, two of the really best banks in the country in payments. Jeremy was president of The Bancorp's fintech division. Led them for 15 years to be really to the position they are today. You have Joe Rodriguez, who's our Chief Legal, part of the DOJ, CFPB, in a large law firm as well, coming out of Capital One to us. Julie O'Connor, one of the best of the best in compliance, coming out of fintech and banking, CPA as well. Mike Giorgio, our CIO and COO, a great tech guy coming out of banking and digital assets.
Brad Greathouse, who's our Chief Administration Officer, coming out of a 6,000-person area that he led after the sale of his pharmaceutical to a larger pharmaceutical. He joined us and has done a fantastic job. The next slide that you look at is our growth trajectory. I told you we had two pieces, and the rest of these slides will really focus on the growth that we are seeing on the fintech side, which we think will add a shareholder value. You can see our growth. Compounded annual growth rate is 10.5%. We went from $1.5 billion in 2017 to where we are today at $3.5 billion and continue to grow at that clip and a little better. The next slide gives you an idea of where we are with the fintech and the fintech as part of the division of Fintech versus what we call CoRe.
CoRe is not spelled wrong there. C-O capital R-E. C-O stands for our commercial business. R-E stands for our retail business. We have those two working together. You can see it's around a 60/40 split on where we are today. The Fintech is the faster-growing of the two prongs that we're approaching. The next slide gives you an idea. [inaudible] Wiring, issuing wires, ACH, et cetera. When you look at us as a banking as a service, I already mentioned Credit Karma. We have 6 million relationships with them in both bank checking and savings. We service those accounts for them, as well as we do earned wage access for them. Additionally, there's 66 million TurboTax refunds that Credit Karma hopes to push those into Credit Karma savings or checking. On the gaming side, I told you we had 38 digital gaming clients.
We have a great moat around these clients in that we have built and invested in technology such as Interchecks, which is a technology company, and Aeropay that help these companies make payments over the weekends. For example, sports betting is done on football, college football on Saturday, pro football on Sunday. People want their money when they win, and they use MVB's portfolio companies to do something called push-to-card, which is a great tech that helps us keep our moat around these larger clients. The next slide gives you an idea of our fintech pipeline. Let me give you a quick. As we invested and grew fintech in 2024, I told you earlier in the presentation, we spent $22 million in building our foundation and in both infrastructure for risk and compliance. We onboarded two fintechs in 2024 during that time during our build.
In 2025, we onboarded five fintechs. What you will see as part of our growth engine in 2026, you will see MVB onboard 20 fintechs. So from two to five to 20, based on that relationship. A lot of that is because of what we built early on in 2023 and 2024. That has reaped its rewards, and I think we will do even more in 2027. The pipeline holds around 50 total. These are the ones that are near closing through the rest of the third and fourth quarter. The next slide gives you our AI journey. What we have done here is built heavily and indexed heavily into AI. We started in 2024 with our data pool. We wanted to build a strong foundation in our data lake, and we did that with Snowflake. We then upgraded that with AI technology at [Risk Canvas].
Additionally went into work and started building what we call Digis. Some would call bots or digital workers. We now have 38 digital workers, and we believe by the end of next year, we will have 101 digital workers. Everything that takes an hour or more worth of our teammates' time, we want to put a digie on that so that it can be automated through AI. What kind of dividends is it paying? When you look at our expenses, they are flat. When you go to the next slide, you will see what it has done with our risk and compliance team. You can see we peaked at 160 people. Because of AI today, we are down to 116. I can tell you after the end of the third and fourth quarter, we will be closer to 90 people in those areas.
We have been able to grow without having to increase our expenses. In summary, what you will see with MVB is one, you will see net interest margin continuing to grow through both our shift in deposits going out of high-priced CDs into more fintech-type lower-cost deposits, as well as our shift in assets into specialty lending, which I talked about earlier. You will see non-interest income growth through our fintech payments division as well as growth in deposits. You also see non-interest expense staying flat and very strong pipelines for our continued fintech. With that, I will kick it over to Mike Sumbs.
Thanks, Larry. Good morning, everyone. Mike Sumbs, CFO of MVB Financial. I will touch a little bit on the financial highlights, and then we will open it up for questions. In terms of strategic capital allocation, how we think about deploying our capital against the business. First and foremost is platform investment, investments in technology, our products, our capabilities to continue to be an innovator in what we do and support our clients. Beyond that, we do have, as Larry mentioned, a $3.5 billion balance sheet. Really the focus is on optimizing that balance sheet, continuing to grow, but more importantly, optimizing the funding mix as we evolve from a legacy community bank into one that is now equal parts legacy community bank and fintech, and continue to migrate towards the fintech side of the business.
From there, strategic M&A, looking at both opportunities to acquire capabilities and technologies that support our strategic initiatives as well as Larry mentioned with Victor, opportunities to monetize investments we have made. Then finally, shareholder returns, both through opportunistic repurchases of our shares and also dividends. We pay a $0.17 per share per quarter common dividend to shareholders. Moving on to the capitalization of the company. Tangible common equity is right around 9.7% at the consolidated level, and the bank is just over 10% on a leverage ratio basis, and just over 12% on a Common Equity Tier 1 capital basis.
As you can see, the capital has allowed us to do some optimization efforts to further enhance the profitability of the company, including divesting some low-yielding securities late last year and redeploying into higher-performing securities that has helped supplement our net interest income, as well as retiring higher cost debt and continuing to return capital to shareholders through dividends and buybacks. From a tangible book value growth perspective, it has compounded at about a 9% growth rate over the last six years. Importantly, if you include dividends, that is about an 11.5% compounded annual growth rate in the tangible value of the company. Touching on the second quarter. Net income was up about 136% from the second quarter of 2025, and largely that was driven by expansion in our net interest income, as well as our non-interest income.
Non-interest income was up about 10%, and then within that non-interest income, our payment card and service charge income, which is really tied to the fintech payment business that we are focused on, was up just over 29% over the linked quarter last year. Then again, just from a growth standpoint, the balance sheet on the loan side has grown about 15% year-over-year, which represents about $320 million of loan growth, and similar numbers on the deposit side, about $300 million of deposit growth. So continued strong growth through the second quarter of this year. In terms of revenue and profitability, this slide lays out where we are at through June 30th of 2026 versus last year, June 30th of 2025.
And you can see that net income, as well as measures of pre-provision net income, net interest income, and non-interest income all compare favorably to where we were at a year ago. We have shown this analysis excluding the $10 million non-recurring gain that we had in the second quarter. You can see that the CoRe profitability continues to trend in the right direction. What is driving that is, as I mentioned, continued investment and growth in our payments and fintech business line, which provides both deposits. You can see on the left side of the page the average balance of our payment deposits increasing every year since 2021, and then also the revenue we derive from those payment fintech clients increasing each year. Just to dig a little further into the deposit base.
The dual- track strategy of the CoRe bank and the Fintech bank has really provided us a nice diversified funding base with about 60% of the deposits at June 30th coming from our CoRe franchise and 40% coming from Fintech. Within that, you can see there is a number of verticals both on the CoRe and the Fintech side that provide good diversity in the overall funding base of the company. What that has allowed us to do is really diversify and migrate away from higher cost non-CoRe wholesale and CD funding. You can see the balance of CDs has come down from just over $730 million at the beginning of 2025 to now around $350 million or about $425 million, I should say, of CDs at the end of June 30th, which has supported a continued growth in our net interest income.
We continue to look for opportunities to migrate that funding base into lower-cost deposit source through both Fintech and CoRe relationships. On the lending side, we have had consistent and strong growth in the loan portfolio. It is about 11.5% on a compounded annual growth basis since the end of 2024, which again has provided a nice stable growth in our net interest income. The loan portfolio is fairly well diversified across commercial real estate, residential real estate, and then in small business. Finally, on asset quality, it has been fairly stable over the last several years. We increased the reserves in the second quarter to 1.14%, and charge-offs have remained relatively stable in the 20-basis-point range. With that, I am happy to open it up for questions from the audience.
Well, thank you Larry and Mike for the overview and the information. We will open it up for Q&A here. Why do not we start off with the revenue mix. What is the revenue mix look like now between the CoRe banking platform and the Fintech side of the business, and really how do you expect that to evolve in the coming three to five years?
Yeah, I'll hit that one. Today, certainly the fintech non-interest income payments revenue is one of our fastest-growing revenue line items. You could see it grew at about 29% year-over-year in the second quarter. We are very excited about that opportunity. We have got a strong pipeline, as we mentioned. What we like about that business is that it is fee income, not reliant on growing the balance sheet. Today that represents less than 20% of our overall revenue. We expect to see that number continue to grow and comprise a larger percent of the overall revenue as we execute on the pipeline of opportunities we have.
Got it. As you look at the gaming aspect of the business, how did you come to develop those relationships with some of those large players? I think you mentioned DraftKings and FanDuel. How sticky are those relationships, and really how do you expect that growth to evolve?
Hey Brendan, I'll answer that question. A little more about my background. I am also an owner of a company that is a sports media company called ProFootballTalk . I have a business partner, Mike Florio. We have been with that business for 20 years, and we sell our content to NBC Sports. The reason I tell you that is it is a deep relationship with the gaming industry, and that at one point NBC Sports owned 40% of FanDuel. They are the ones that introduced us to FanDuel as a potential bank. The reason they introduced us was Bank of America, because of the State of New York had said that daily fantasy sports was a game of chance, not a game of skill. When that potential went to that direction, which would have changed the regulatory environment totally, Bank of America cut those accounts off.
FanDuel, DraftKings was never happy to get those checks back. We became their bank instantly and have deep relationships. The reason we now have a moat around it, hey, it is a competitive world and it has changed dramatically with prediction markets. We also bank Polymarket and Kalshi through our tech platform of Aeropay and Interchecks. We built a moat around the gaming industry that way. We have long relationships. I can call the CEOs of those companies today. We have been with them from day one. They appreciate that loyalty. We also pay them interest income now. It was all non-interest bearing, but as that competition increased, they are still low-cost deposits and they are a nice piece of business for us, supported by our tech.
That's great. That's very interesting. One last question here. As you look at the fintech pipeline, that seems to be one of the key earnings drivers looking ahead. I guess how much of that pipeline do you anticipate to close in the next 12 months? What does the sourcing process look like when you aim to develop those relationships?
A great question, Brendan. Thank you for that. I think the big thing for us is, one, the sourcing process, I'll start with the last part of that question, comes from a number of companies. One or two in particular, Fiserv and Discover give us first right of refusal on all their new clients. For example, we picked up three new clients over the weekend with Fiserv. We do have four business development people in our payments area that are constantly developing business and going out there after it. That's how we source with addition to the referrals we get from these payment companies. Big things happen all the time. There's always changes that occur, and the big thing now is a lot of companies want a second bank. They have been dominate one bank only, so that's also been a source.
I love to be in second place when first becomes available, but we do get the second part of the volume that gets shifted to us. It's always good. That current pipeline, as I said, it went from two closed in 2024, five closed in 2025, to 20 closed in 2026. We see in the next 12 months that we'll probably beat that number as well in 2027. Still have a very strong, robust pipeline of over 50 fintechs that we're doing. Not all 50 fintechs will close. Not all 50 will get through that. But as we continue, that robust part of it will still be there for us to acquire.
Well, that's great. Larry and Mike, we really appreciate the time and the overview. A very interesting model and I know there may have been some questions we didn't get to, so feel free to reach out to MVB directly, or you can contact Sidoti. But thank you again for your time.
Thank you, guys. Thanks for the opportunity. Bye-bye.
Thanks everybody.