MVBF

Overall Financial Performance

• Reported net income of $12.3 million, or $0.93 per diluted share, with meaningful improvements both sequentially and year-over-year, reflecting growing core earnings power.
• The two-engine diversified business model is performing as designed: core banking delivers healthy loan and deposit growth with a declining cost of funds, while the FinTech banking platform scales fee income and adds new partners.

Credit Quality Updates

• The company's largest non-performing loan was fully repaid during the quarter with no loss, leading to an overall improvement in credit metrics. Nonperforming loans decreased $5.5 million to $29.2 million.
• The higher loan loss provision in the quarter reflects three targeted factors: new reserve requirements for growing the loan portfolio, specific reserves for a small number of isolated credits, and model updates for qualitative factors related to higher interest rates and geopolitical inflation pressures, not broad-based asset quality deterioration.
• The allowance for loan loss reserve ratio stands at 1.14% in Q2 2026, and management believes the portfolio is appropriately reserved at this time.

FinTech Business Momentum

• Launched 3 new FinTech partners and products in Q2 2026, bringing the 2026 year-to-date total to 5 new partnerships, matching the full-year 2025 total. The pipeline remains robust at over 50 prospective partners, one of the strongest in the industry.
• 10 launches since Q2 2025 are currently only at ~25% of their expected full run-rate contribution to earnings, with the majority of future revenue expected to materialize from late 2026 to early 2027. Management targets up to 15 additional new partner onboards in the second half of 2026.
• Q2 2026 performance was particularly encouraging as the quarter is typically seasonally softer for FinTech deposit growth.

Strategic Investments and Operations

• Management is continuing to invest in expanded payment capabilities, AI and automation, infrastructure, and talent to support sponsorship banking and overall long-term growth, with the goal of improving operational efficiency and strengthening competitive positioning.
• AI/automation has already reduced risk management headcount sequentially from 123 to 116 employees, with further streamlining opportunities expected. 31 AI-powered digital tools (dubbed digis) are either completed or in development, with notable efficiency gains in risk and compliance functions.
• Prior multi-year investments in people, technology, and risk infrastructure are now driving improved operating leverage and higher earnings power.
• The company's capital position remains strong, with a steady tangible common equity ratio of 9.7% and tangible book value per share of $26.52. 48,000 shares were repurchased in the quarter for ~$1.2 million under the existing buyback program.

• Core net interest margin is expected to continue expanding over the remainder of 2026, but at a slower pace than the 14 basis point core expansion seen in Q2 2026, from the current core level of 3.87%.
• Loan growth is expected to continue at a similar pace to the first half of 2026, or approximately $60-$70 million per quarter (12% annualized), with a growing share of growth expected to come from the specialty lending vertical.
• Long-term non-interest revenue growth is expected supported by the strong FinTech partner pipeline, but Q3 2026 is expected to be seasonally softer than Q2 2026.
• Overall operating expenses are expected to hold steady at or slightly below Q2 2026 levels, as the majority of AI-related capital expenditure has already been incurred, with future upside from operating leverage and cost management.

1. Core Banking: Net interest income was $32.3 million, a 13% increase quarter-over-quarter. Including $2.3 million in non-recurring net interest income from the payoff of the largest non-performing loan, core net interest income increased 5.5% sequentially. Core net interest margin on a fully tax-equivalent basis expanded 14 basis points to 3.87%. Loans grew 3% quarter-over-quarter (12% annualized), marking the fifth consecutive quarter of net loan growth. Deposits increased 7.4% quarter-over-quarter, with non-interest-bearing deposits growing 5.7% and making up 34.4% of total deposits at quarter end, for a low-cost funding base. Liquidity was strong with a loan-to-deposit ratio just under 80%.
2. FinTech: Non-interest income totaled $18.8 million, including a $10 million pre-tax gain from a FinTech investment. Excluding this gain, core fee income for the FinTech segment grew 7% sequentially, with payment, card, and service charge income rising 18% quarter-over-quarter and 29% year-over-year, contributing the majority of segment revenue. Ten FinTech launches since Q2 2025 have already generated $2 million in revenue and $158 million in low-cost deposits, with 60% of that 2026 year-to-date revenue coming in Q2 2026.

• Geopolitical events have contributed to higher inflation and higher interest rate pressures, which required updates to the company's allowance for loan loss model and may create future credit challenges if economic conditions deteriorate further.
• Customized client requirements for new FinTech partners create a capacity constraint for onboarding, as partners require tailored solutions rather than standardized onboarding. The company prioritizes partners via a REVO framework (Risk, Effort, Value, Opportunity cost) to manage this constraint.
• The bulk of revenue from recently launched FinTech partnerships will only be realized over time as they mature, creating near-term revenue visibility uncertainty.
• Credit risk remains concentrated in a small number of isolated portfolios, specifically the legacy 2021-2022 vintage SBA portfolio which the company no longer originates new loans for, requiring specific reserves.

Q: Analyst Brett Rabaton asks for confirmation on expected loan growth pace for H2 2026, how much growth will come from specialty lending, and what the impact of AI investments will be on future expenses and operations. / A: Management confirms loan growth will hold at $60-$70 million per quarter, matching the first half pace, with specialty lending expected to contribute a solid chunk of growth as early as Q3 2026 due to its strong pipeline. On AI, 31 digital AI tools are already built or in development, with major efficiency gains already seen in risk and compliance. The heavy AI-related investment expense is already incurred, and management expects future upside from operating leverage and cost management, with overall expenses expected to stay at or slightly below Q2 2026 levels going forward.

Q: Analyst Joe Yanchunas asks what portion of revenue from recent FinTech launches has been realized, when full revenue will hit, what the company's capital deployment priorities are, and what the isolated credits driving the higher provision are. / A: Management says 10 launches since Q2 2025 are only at ~25% of their expected full run rate, with 60% of 2026 year-to-date revenue coming in Q2, and full benefits expected to materialize between late 2026 and early 2027, with up to 15 more launches in H2 2026. Capital is prioritized first for organic balance sheet and platform growth, followed by opportunistic price-driven share repurchases and investments in high-return business lines. The $3.3 million in specific provision is split between legacy SBA loans originated in 2021-2022 (a segment the company no longer originates in) and a small number of other isolated idiosyncratic commercial credits, plus general model updates for geopolitical inflation and rate pressures.

Q: Analyst Janet Lee asks if core NIM will continue expanding off the Q2 3.87% level, how funding costs will change, and if the balance sheet is asset-sensitive to rate hikes. / A: Management confirms core NIM will continue expanding off the Q2 level, with expansion driven mostly by shifting the asset mix to higher-yielding loans, with only modest further reductions in funding costs expected. The addition of low-cost FinTech deposits has helped pull down average funding costs as higher-cost CDs are replaced. The balance sheet is overall asset-sensitive: roughly 35% of deposits are non-interest-bearing, cash holdings benefit immediately from rate hikes, and the loan portfolio has short average re-pricing and a high share of variable rate loans, so NIM would benefit from a rate hike, though the full impact would take time to flow through to margins.