Cuộc họp công bố kết quả kinh doanh Quý 3/2026 của MVB Financial (MVBF): Tăng trưởng tiền gửi Fintech, Trích lập dự phòng tín dụng

MVB Financial Corp. (NASDAQ: MVBF) đã báo cáo lợi nhuận ròng quý 3 năm 2026 đạt 438.000 USD, tương đương 0,03 USD trên mỗi cổ phiếu pha loãng. Kết quả kinh doanh chịu áp lực từ khoản dự phòng rủi ro tín dụng trị giá 9,9 triệu USD, bao gồm các khoản dự phòng liên quan đến một khoản vay mua đất và phát triển dự án cùng một số khoản tín dụng SBA và C&I cũ.

Xu hướng hoạt động ngân hàng cốt lõi đã cải thiện. Biên lãi thuần (NIM) lõi mở rộng, tiền gửi thanh toán fintech tăng mạnh và chi phí ngoài lãi giảm. Ban lãnh đạo cho biết khoản tín dụng đất đai lớn này là trường hợp nhỏ lẻ và không phản ánh sự suy giảm trên diện rộng của danh mục đầu tư.

Các điểm chính

• Lợi nhuận ròng giảm xuống 438.000 USD, tương đương 0,03 USD trên mỗi cổ phiếu pha loãng, từ mức 12,3 triệu USD, tương đương 0,93 USD trên mỗi cổ phiếu trong quý 2 năm 2026. Sự sụt giảm này phản ánh khoản dự phòng tín dụng cao hơn và không còn khoản lợi nhuận trước thuế 10 triệu USD từ đầu tư fintech như quý trước.
• Biên lãi thuần (NIM) lõi tăng 15 điểm cơ bản so với quý trước lên 4,02%, nhờ tăng trưởng dư nợ cho vay, chi phí vốn thấp hơn và tối ưu hóa bảng cân đối kế toán. Tổng chi phí vốn giảm 6 điểm cơ bản xuống 2,07%.
• Tiền gửi thanh toán fintech tăng 28% so với quý trước và tăng gần 55% so với cùng kỳ năm ngoái lên 766 triệu USD, chiếm khoảng 25% tổng tiền gửi.
• Dự phòng rủi ro tín dụng tăng lên 9,9 triệu USD từ mức 4,7 triệu USD. Khoản này bao gồm 4,6 triệu USD dự phòng cụ thể cho một khoản vay mua đất và phát triển dự án và 3,2 triệu USD cho một số khoản tín dụng SBA và C&I liên quan cũ.
• Tổng dư nợ cho vay tăng 44 triệu USD lên 2,52 tỷ USD, tương đương mức tăng trưởng 7,2% tính theo năm và đánh dấu quý thứ sáu liên tiếp mở rộng dư nợ cho vay.
• Chi phí ngoài lãi giảm xuống 29,8 triệu USD, giảm khoảng 2% so với quý trước và giảm 10% so với cùng kỳ năm ngoái, do MVB tiếp tục kiểm soát chi phí và mở rộng việc áp dụng trí tuệ nhân tạo (AI) cùng tự động hóa.

Dữ liệu tài chính chính

Kết quả kinh doanh và hoạt động

Tiền gửi fintech củng cố cơ cấu nguồn vốn

Tiền gửi thanh toán fintech đạt 766 triệu USD sau khi tăng 28% trong quý. MVB cho biết sự tăng trưởng này đã giúp ngân hàng giảm số dư tiền gửi chi phí cao hơn và tránh phụ thuộc nhiều hơn vào các chứng chỉ tiền gửi. Tỷ lệ dư nợ cho vay trên tổng tiền gửi kết thúc quý ở mức 81,6%.

MVB đã thu hút được 9 đối tác fintech mới trong 9 tháng đầu năm 2026, so với 5 đối tác trong cả năm 2025. Ban lãnh đạo mô tả lượng khách hàng tiềm năng là rất dồi dào và cho biết công ty có gần 50 khách hàng fintech tiềm năng ở các giai đoạn khác nhau trong quy trình tiếp cận.

Thu nhập từ thẻ thanh toán và phí dịch vụ giảm so với quý trước xuống 5,2 triệu USD do yếu tố mùa vụ thông thường của mảng trò chơi có thưởng. Tuy nhiên, chỉ số này đã tăng gần 40% so với cùng kỳ năm ngoái và khoảng 22% trong 9 tháng đầu năm 2026.

Tăng trưởng cho vay và tối ưu hóa biên lợi nhuận

Tổng dư nợ cho vay tăng quý thứ sáu liên tiếp, lên mức 2,52 tỷ USD. Ban lãnh đạo nhấn mạnh lượng hợp đồng cho vay chuyên biệt dồi dào trước khi bước vào quý 4 và có kế hoạch dịch chuyển danh mục đầu tư sang các khoản vay bảo trợ pháp lý và fintech có lợi suất cao hơn.

Cho năm 2027, ban lãnh đạo xác định “tối ưu hóa biên lợi nhuận” là ưu tiên hàng đầu. Công ty mục tiêu thay thế các khoản vay có lợi suất khoảng 6,5% đến 7% bằng các cơ hội có rủi ro tương đương nhưng lợi suất gần 8,5% đến 9%. Đây là mục tiêu của ban lãnh đạo chứ không phải dự báo về lợi suất danh mục đầu tư thực tế đạt được.

Chi phí và tự động hóa

Chi phí ngoài lãi đã giảm xuống dưới 30 triệu USD, còn 29,8 triệu USD. MVB có hơn 100 trợ lý kỹ thuật số, hay “Digis”, đã được triển khai hoặc đang được phát triển, đồng thời sở hữu 14 kỹ sư Claude đã qua đào tạo và chứng nhận thông qua mối quan hệ đối tác với Anthropic.

Ban lãnh đạo cho biết việc cắt giảm thêm nhân sự bộ phận quản trị rủi ro và tuân thủ có thể giới hạn ở khoảng 5 đến 7 vị trí vì sự giám sát của con người vẫn là cần thiết khi các chương trình fintech mới được bổ sung.

Triển vọng và định hướng từ ban lãnh đạo

• Ban lãnh đạo tin rằng biên lãi thuần (NIM) lõi vẫn còn dư địa vượt lên trên mức 4%, được hỗ trợ bởi hoạt động cho vay có lợi suất cao hơn và sự tăng trưởng tiếp tục của tiền gửi fintech chi phí thấp hơn.
• Công ty dự kiến sẽ thu hút thêm khoảng 8 đến 11 khách hàng fintech trong quý 4 năm 2026, đưa tổng số của cả năm lên gần 20, tùy thuộc vào tiến độ thực hiện.
• Ban lãnh đạo kỳ vọng tiền gửi fintech sẽ vượt 1 tỷ USD trong tương lai gần và dự báo tiếp tục tăng trưởng vào năm 2027.
• MVB dự định ưu tiên các khách hàng fintech mô hình “lift and shift” đã ổn định, những đơn vị có thể đóng góp doanh thu nhanh hơn so với các chương trình khởi nghiệp. Ban lãnh đạo cho biết các khách hàng này có thể tạo ra gần như toàn bộ doanh thu kỳ vọng ngay khi tham gia, so với khoảng 25% được ghi nhận ban đầu từ các chương trình chưa trưởng thành.
• Ban lãnh đạo có kế hoạch giữ chi phí về cơ bản quanh mức hiện tại thông qua việc tiếp tục tự động hóa và cải tiến quy trình, mặc dù thừa nhận áp lực lạm phát tiền lương và dư địa cắt giảm thêm là có hạn.
• Công ty cho biết số tiền xóa nợ ròng trong quý 4 có thể vẫn ở mức tương đương quý 3 khi ngân hàng xử lý các khoản vay đã chuyển sang nhóm nợ xấu.

Rủi ro và các mảng cần theo dõi

Vấn đề tín dụng chính là khoản vay mua đất và phát triển dự án trị giá 13,1 triệu USD. Kết quả định giá lại mới nhất thấp hơn đáng kể so với giá trị được sử dụng khi giải ngân ban đầu, một phần do các thủ tục pháp lý của bất động sản. MVB đã trích lập 4,6 triệu USD dự phòng cụ thể, đưa giá trị khoản vay về mức giá trị định giá hiện tại trừ đi chi phí bán hàng ước tính.

Công ty đang điều tra khả năng có thông tin sai lệch và sự thiếu minh bạch trong quá trình thẩm định chi tiết và định giá ban đầu. Ngân hàng đã thuê một công ty định giá pháp lý và đang đánh giá các biện pháp khắc phục khả thi. Thời gian giải quyết hiện vẫn chưa chắc chắn.

Danh mục đầu tư SBA cũ có tổng giá trị chưa đến 23 triệu USD tính đến ngày 30 tháng 9, bao gồm khoảng 3 triệu USD dư nợ được chính phủ bảo lãnh. Khoảng 53% danh mục này đã bị xếp loại nợ xấu/nợ cần chú ý, và ban lãnh đạo cho biết toàn bộ danh mục tiếp tục được giám sát tăng cường.

Thu nhập từ khoản đầu tư vào công ty liên kết theo phương pháp vốn chủ sở hữu liên quan đến thế chấp vẫn chịu rủi ro từ mặt bằng lãi suất cao và hoạt động thế chấp yếu hơn. Ngoài ra, một số khoản tiền gửi fintech có trả lãi được neo theo lãi suất quỹ liên bang hiệu dụng, tạo ra sự nhạy cảm về chi phí vốn nếu lãi suất tăng.

Các điểm chính trong phần Hỏi & Đáp với chuyên gia phân tích

Dự phòng tín dụng đã chuẩn hóa: Ban lãnh đạo cho biết các nhà đầu tư có thể bắt đầu đánh giá khoản dự phòng đã chuẩn hóa bằng cách loại trừ khoản dự phòng cho vay đất đai 4,6 triệu USD và 3,2 triệu USD dự phòng liên quan đến các khoản tín dụng SBA và C&I cũ. Các khoản dự phòng trong tương lai vẫn sẽ phụ thuộc vào việc có thêm các khoản tín dụng chuyển sang nhóm nợ xấu hay không.

Xử lý khoản vay đất đai: Khoản vay đã bị hạ xếp loại tín dụng trong quý khi sắp đến hạn trả nợ và nhận được kết quả định giá cập nhật. Ban lãnh đạo cho biết khoản dự phòng hiện tại phản ánh giá trị định giá trừ đi chi phí bán hàng, nhưng chưa thể cung cấp mốc thời gian xử lý cụ thể.

Cơ cấu tiền gửi: Ban lãnh đạo kỳ vọng tiền gửi fintech sẽ chiếm tỷ trọng ngày càng tăng trong nguồn vốn vì nền tảng này có quy mô hiện diện trên toàn quốc tại 40 bang, so với sự tập trung của ngân hàng cốt lõi (CoRe bank) tại Bắc Virginia và West Virginia.

Mức độ nhạy cảm với lãi suất: Một số khoản tiền gửi dự phòng fintech không hưởng lãi, trong khi các số dư tiền gửi hưởng lãi lớn hơn có thể được tính giá theo tỷ lệ phần trăm của lãi suất quỹ liên bang hiệu dụng. Ban lãnh đạo mô tả tổng nguồn tiền gửi fintech là nguồn vốn có hệ số beta thấp hơn khi tính cả các số dư không trả lãi.

Ưu tiên cho năm 2027: MVB đã xác định ba ưu tiên: tối ưu hóa biên lợi nhuận thông qua cho vay có lợi suất cao hơn, tăng tốc hợp tác với các khách hàng fintech đã ổn định thông qua chiến lược “Prime Capture”, và sử dụng AI cùng tự động hóa để giữ chi phí ổn định hoặc có khả năng giảm bớt.

Toàn văn cuộc họp công bố kết quả kinh doanh

Toàn văn cuộc gọi công bố kết quả kinh doanh

Phần trình bày của ban lãnh đạo

Operator

Greetings. Welcome to the MVB Financial Corp. Third Quarter 2026 Earnings Call. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to Amy Baker, VP, Corporate Communications and Marketing. Thank you, Amy, you may begin.

Amy Baker

Thank you, operator. Good afternoon, and thank you all for joining us today for MVB's Third Quarter 2026 Earnings Conference Call. The company issued its earnings press release earlier this afternoon, and it is available on the company's website at ir.mvbbanking.com. In addition, the company has included a slide presentation that you can refer to during the call, which is also available on the website.

Participating on today's call are MVB's President and CEO, Larry F. Mazza; CFO, Mike Sumbs; and Chief Credit Officer, Tony Eastman. Larry will provide an overview of our third quarter performance and business developments, and Michael will discuss the quarter's financial results in more detail. We will then open the call for your questions.

Before we begin, I would like to remind you that this conference call contains forward-looking statements regarding the future performance and financial condition of MVB Financial, which involve risks and uncertainties. Various factors could cause actual results to differ materially from those expressed or implied by such statements. These factors are discussed in the company's SEC filings, which are available on our website. The company disclaims any obligation to update forward-looking statements made during the call.

Additionally, management may refer to non-GAAP financial measures, which are intended to supplement, but not substitute for the most directly comparable GAAP measures. The earnings release available on our website contains the financial and other quantitative information discussed today, along with the applicable non-GAAP reconciliations.

With that, I'd like to turn the call over to MVB's President and CEO, Larry Mazza.

Larry Mazza

Thank you, Amy. Good afternoon, everyone, and thank you for joining us. During the third quarter, we made significant progress on several important initiatives that are strengthening our underlying business and positioning MVB for continued improved financial performance. We continue to grow net interest income, expand our core net interest margin, diversify our funding base and build momentum across our fintech payments business. At the same time, we maintained expense discipline and addressed specific credit exposure.

Our reported earnings of $0.03 per diluted share do not fully reflect the strength of our underlying business or the operating progress we're making, largely because of the elevated provision for credit losses this quarter. I'll discuss credit in a few minutes. But first, I'd like to walk through the progress we've made across our strategic initiatives, which gives us confidence in the direction of the business.

For those who may be joining one of the earnings calls for the first time, MVB combines a traditional banking franchise with a growing fintech banking platform, serving clients across payments, Banking-as-a-Service and gaming. The combination provides us with multiple sources of funding and revenue and creates opportunities to improve the efficiency and profitability of our overall franchise.

Two of the most important developments this quarter were the continued progress in growing net interest income along with expanding our core net interest margin and the momentum in our fintech payments business. Net interest income increased approximately 18% through the first 9 months of this year compared to the same period last year. In the third quarter, our core net interest margin expanded another 15 basis points sequentially to 4.02%. Several factors contributed to that improvement, including continued loan growth and our effort to optimize the funding side of the balance sheet.

I want to spend a little time on one particular important contributor, the growth of our fintech payments deposit relationships. Fintech payment deposits increased 28% sequentially to $766 million, now representing nearly 1/4 of our total deposits and up nearly 55% from a year ago. These relationships matter more than the deposits themselves because they give us greater flexibility in managing our overall funding base. As we grow these deposits, we can reduce our reliance on more expensive sources of funding, improve our overall funding mix and further diversify our deposit base.

During the third quarter, that progress contributed to a 6 basis point sequential decline in our total cost of funds to 2.07%. We view that as particularly encouraging results given the interest rate environment, and it illustrates how growth in our fintech payment business translates into tangible improvements in the profitability of our CoRe banking operations. We are also encouraged by the continued execution of our fintech partner pipeline. We've now onboarded 9 new fintech partners through the first 9 months of 2026 compared to 5 during all 2025, and the overall pipeline remains robust.

Turning briefly to our lending. We grew total loans by approximately $44 million or 7.2% annualized during the quarter, marking our sixth consecutive quarter of loan growth. We're pleased with the consistency of the growth with opportunities across our lending business.

Now I'd like to spend a few minutes on credit. We took decisive action during the quarter to proactively address specific credit exposure, which contributed meaningfully to the elevated provision of credit losses of approximately $9.9 million. That provision had a significant impact on our reported earnings. It's important, however, to understand both the nature of the exposures involved and the broader trends across our loan portfolio.

Nearly 75% of the increase in nonperforming loans during the quarter was attributed to 1 acquisition and development land loan involving circumstances specific to the borrower and the property. That same credit accounted for almost half of our quarterly provision. We are investigating potential misrepresentations and lack of transparency in the due diligence and appraisal process associated with this loan. Subsequent to this development, we have taken additional broader review of our existing loan portfolio, and we believe this was an isolated case. Also, we have implemented additional steps to further enhance future underwriting standards. We believe the loan is adequately reserved based on our assessment as of September 30 and continue to work for full resolution.

Outside this specific isolated loan, the overall portfolio continues to perform in line with our expectations, and we have not seen broader credit deterioration. We also continue to work through our legacy SBA portfolio, which we began winding down in 2022. The outstanding balance of the SBA portfolio was less than $23 million as of September 30, which includes approximately $3 million in government-guaranteed balances. Approximately 53% of the SBA portfolio is classified and has been individually analyzed for collateral impairments representing 75% of the unguaranteed exposure, while the entire portfolio continues to receive enhanced monitoring and oversight. These are identifiable exposures, and we are actively managing.

I also want to put the current credit metrics in a broader perspective. Since early 2025, criticized loans have now declined approximately 45% from roughly $135 million to $74 million. Over the same period, our allowance for credit losses increased from $19 million to $36 million. Classified loans have also declined materially over that period. We believe these developments reflect meaningful progress in strengthening our overall credit risk profile.

Turning back to the growth in our fintech business. Beyond the benefits we're seeing from payment-related deposit growth, our payment business continues to generate encouraging fee income growth. Payment card and service charge income has increased approximately 22% through the first 9 months of the year and was up nearly 40% compared to the third quarter of 2025. The sequential decline during the quarter primarily reflected normal seasonality within our gaming-related business. We remain encouraged by the long-term growth in payments activity and the growing fintech relationships and pipeline.

Another important area of focus has been expense management. Noninterest expense declined below $30 million during the third quarter, down approximately 2% sequentially and approximately 10% from a year ago. We invested significantly over the past several years in our technology, people, compliance and risk management infrastructure. We're also increasingly using AI and automation to improve efficiency across the organization with more than 100 digital assistants, which we formally call Digis, either developed or in progress. These initiatives are helping us streamline workflows and create opportunities to operate more efficiently as the business grows.

Additionally, we deepened our relationship with Anthropic and now have 14 trained and certified Claude engineers on our team. As I step back and look at the quarter, there are 3 things I'd emphasize. First, the underlying banking business continues to improve. We're growing net interest income, expanding core margin and strengthening our funding base. Second, our fintech payment strategy is generating tangible results. We're onboarding new partners, growing payments-related deposits and building a large base of fee-generating activity.

And third, while the provision weighed on the reported earnings this quarter, we have made meaningful progress in addressing identified credit exposure early and strengthening our reserves. As I mentioned earlier, the primary driver of the elevated provision this quarter was a single isolated loan, and it's not representative of our broader portfolio. The overall loan book continues to perform in line with our expectations.

With that, I'll turn the call over to Mike Sumbs to walk through the quarter's financial results in more detail.

Michael Sumbs

Thank you, Larry, and good afternoon, everyone. I'll provide some additional detail on the third quarter financial performance, including net interest income and margin, balance sheet trends, noninterest income and expenses, credit quality and capital.

Starting with earnings. We reported net income of approximately $438,000 or $0.03 per diluted share compared with $12.3 million or $0.93 per diluted share in the second quarter. The sequential decline primarily reflected a higher provision for credit losses and the absence of a significant investment gain recognized in the prior quarter. As Larry discussed, we continue to see encouraging trends in the underlying net interest income, core margin and fintech payments business.

Net interest income on a fully tax equivalent basis increased to $32.7 million compared with $32.4 million in the second quarter despite the prior quarter, including approximately $2.3 million of nonrecurring interest income associated with the loan payoff. Our reported FTE net interest margin was 4.02% compared with 4.16% in the prior quarter. Excluding nonrecurring interest income in the prior quarter, core net interest margin expanded 15 basis points sequentially from 3.87% to 4.02%, reflecting continued loan growth, lower funding costs and ongoing balance sheet optimization.

Turning to the balance sheet. Total loans increased approximately $44 million or 7.2% annualized during the quarter to $2.52 billion. We are continuing to build out our specialty lending business, which offers opportunities to originate higher-yielding loans. The specialty lending pipeline is strong heading into the fourth quarter. As our portfolio mix gradually shifts towards these specialty lending opportunities, we believe we can continue to grow net interest income and improve the profitability and capital efficiency of our lending operations.

Total deposits were approximately $3.09 billion at September 30, down $24 million or less than 1% from the prior quarter, reflecting a seasonal decline in noninterest-bearing deposits, partially offset by growth in interest-bearing deposits. Importantly, fintech payment deposits increased 28% to $766 million, representing approximately 25% of total deposits compared with approximately 19% at June 30. While point-to-point noninterest-bearing deposits declined in the quarter, the average balance of noninterest-bearing deposits over the third quarter increased by approximately $71 million versus the prior quarter.

This growth allowed us to reduce reliance on higher cost deposit products, including balances we allowed to run off or move off the balance sheet. Together with our broader funding initiatives, these developments contributed to a 6 basis point reduction in our overall funding cost from 2.13% to 2.07%. We ended the quarter with a loan-to-deposit ratio of 81.6%, maintaining a solid on-balance sheet liquidity position.

Turning to noninterest income. We reported $7.8 million compared to $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 approximately 10.5% sequentially, reflecting normal seasonality in payment-related fee income and lower contributions from our mortgage investment, which remains sensitive to interest rates and broader market conditions. Payment cards and service charge income totaled $5.2 million, down approximately 13% from the prior quarter, primarily reflecting normal seasonality in our gaming business. However, that revenue increased nearly 40% year-over-year and approximately 22% through the first 9 months of 2026.

On the expense side, noninterest expenses declined to $29.8 million compared to $30.4 million in the second quarter and $33.3 million a year ago, reflecting continued expense discipline and the benefit of the previously implemented cost containment initiatives.

Now turning to credit. The provision for credit losses totaled $9.9 million compared to $4.7 million in the prior quarter. The increase was driven primarily by reserves established against the limited number of identified credits. The provision included a $4.6 million specific reserve on 1 acquisition and development credit and a $3.2 million specific reserve on a small number of credits within our legacy SBA and associated C&I portfolio. Loan growth and adjustments to our allowance model also contributed to the elevated loan loss provision.

Nonperforming loans increased to $46.8 million at September 30 compared to $29.2 million at June 30. Of the approximately $17.6 million increase, $13.1 million was attributable to the single land loan that Larry referenced rather than a broad migration of loans into nonperforming. Looking at broader credit trends, criticized loans declined to approximately $74 million or 3% of total loans compared to $77 million or 3.1% at June 30. Since March 2025, criticized loans have declined approximately 45% from $135 million or 6.6% of loans.

Classified loans increased modestly during the quarter to approximately $50 million or 2% of loans from $47 million or 1.9%, but remain approximately 25% below their March 2025 level. At the same time, we've significantly strengthened our allowance for credit losses, which increased to $36.2 million or 1.44% of total loans compared to $28.2 million or 1.14% at June 30. Our allowance has nearly doubled since March 2025, while criticized loans have declined meaningfully. We believe these trends reflect progress in strengthening our overall credit risk profile. Net charge-offs were $2.5 million during the third quarter, representing 41 basis points annualized of average loans compared to $1.4 million or 23 basis points annualized during the second quarter.

Finally, turning to capital. Our tangible common equity ratio was 9.3% at September 30 compared to 9.7% at June 30. Tangible book value per share was $25.26 compared to $26.52 at the end of the prior quarter, with the decline primarily attributable to an increase in unrealized losses in our securities portfolio reflected through other accumulated comprehensive loss. We remain focused on maintaining a strong capital position while supporting the continued development of our banking and fintech businesses.

With that, operator, we're ready to open the line for questions.

Operator

[Operator Instructions] Our first question is from Joe Yanchunis with Raymond James.

Phần hỏi đáp

Joseph Yanchunis

So I guess to start off, in your prepared remarks, you referenced a few times how your allowance has increased while criticized assets have declined over the past couple of years and quarters. I guess assuming the broader credit environment remains stable, how should we think about a normalized provision expense from here?

Larry Mazza

Michael?

Michael Sumbs

Yes. Joe, thanks for the question. Yes, I think if you look at the components of the provision this quarter, you can see a significant portion of it was specific reserves really on 2 buckets. One was the land loan that we discussed in the prepared remarks, which is $4.6 million of specific reserves. And then as we discussed in the prepared remarks, we've seen some migration of the legacy SBA book into nonperforming, which was about 3.2% or $3.2 million of specific reserves. So if you strip that out, you can sort of get to what a normalized provision level is absent, specific reserves and go from there. And to the extent there are credits that move into nonperforming, we'll address those. But I think that's a good place to start as you think about a normalized provision level.

Joseph Yanchunis

Okay. That's helpful. And then I was through the updated presentation, it shows your risk and compliance staff declined to 81 from 116 last quarter, so well below your prior target of 90 by year-end. I guess I'm kind of wondering like how much left is there to cut on the risk and compliance front with you being down so much this quarter? I guess when did those cuts occur in the quarter? Should there be any wraparound benefit and cost saves to the fourth quarter? And just kind of how long can you keep noninterest expenses below $30 million kind of given wage inflation?

Larry Mazza

Joe, that's a deep question and an important question for us. We've been very -- our team has really embraced AI. You saw my earlier comments -- can you hear me okay?

Joseph Yanchunis

I hear just fine.

Larry Mazza

Okay. Great. So you saw earlier in my comments, the relationship with Anthropic. We now have 14 certified Anthropic Claude engineers. They've been working hard. We now have -- as you also heard me say, we now have 100 Digis either. And Digis is what we would call our digital workers, some would call bots. We now have 100 either working for us, working in the field or in the development of that. Our engineers, our 14 engineers have come so far where now the AI is starting to program the Digis. So they're coming along really, really nicely.

So our focus in Julie O'Connor's area, who has risk and compliance, has done a fantastic job of implementing AI in that area. And I do believe there -- obviously, expense cuts are finite, right? And revenue growth is infinite. We believe there is a floor there on the risk and compliance side. You may have 5 to 7 more in reduction there, but that's about it because we have -- as you also saw, we've onboarded 9 new programs, 9 new clients. And we continue to focus probably with another somewhere between 8 to 11 new clients here in the fourth quarter that we will onboard. So we still need to -- even though we have the technology and AI monitoring, we still need the human in the loop.

So as far as expense reduction, we feel comfortable on the level we are. We hope to keep around that $9.5 million, $10 million level into the rest of this year and only a small increase, maybe around $10 million -- $9 million a month versus $10 million a month, $9.5 million versus $10 million going into 2027. So as far as -- there's very few banks that I think that have cut expenses 10% year-over-year while they're growing. You saw excellent growth in the loan portfolio. You saw excellent growth on deposits in fintech. You're looking now at a fintech partnership in our payment side, nearly $1 billion. It's almost $800 million right now and continues to grow. You saw that our NIM was up 15 basis points. Our cost of funds were down 6 basis points. So the trends definitely our friend on the revenue side. And on the expense side, we continue to hold and believe that just holding steady and flat is a big win in this inflationary market.

Joseph Yanchunis

And in this inflationary market, you just kind of touched on it. One of the other big positives this quarter was the NIM expansion to 15 basis points. Given kind of the shape of the curve here, is that plus 4%, is that defendable kind of at current levels as you start to gain more of these noninterest-bearing deposits to replace higher funding costs? Or do you think there's kind of more room to move higher from here?

Larry Mazza

Joe, I do believe there's room to move higher. We now have a project inside the bank called margin optimization. We really want to optimize our margin. You know some of our lending programs on the legal lending side with John Madia, with some of our fintech lending, all those are the same level of risk but higher yields on our asset side. So we feel comfortable with that. You saw where our payment deposits are up 28%, and that will help us stay away from any fundraising of higher cost CDs, which will really position us well as far as our cost of funds at least staying steady while we believe our asset side can grow in yield.

Operator

Our next question is from Will Jones with KBW.

Larry Mazza

Will, welcome to the team. First call, glad to hear from you.

William Jones

Maybe just to close the loop on the NPA from this quarter. I guess, a, was that a criticized loan last quarter? How did you guys kind of go about identifying it? And as you kind of see the playing field as it is right now, is there any kind of defined path to resolution there? Or is it still too early to tell?

Larry Mazza

Michael, I'll let you take that. We also have Tony Eastman on the call as well, our Chief Credit Officer. We wanted to have him today here just for any clarifications or to dig deeper into questions like this. But we'll let Mike Sumbs kick it off. And if Tony needs to add, that would be wonderful. But Michael?

Michael Sumbs

Yes. Thanks for the question, Will. So yes, that loan was identified as a criticized loan in the quarter. And then as it approached maturity this quarter, we had an updated appraisal ordered on the property, and that appraisal came in significantly lower than the appraised value at the time of the origination. And a lot of that appraised -- the delta in the appraised value is related to entitlements that were associated with the property at the time of underwriting. So we're continuing to gather facts around the situation. We've engaged a forensic appraisal firm to assist in our review, and we're evaluating all available options and remedies as we continue to gather and assess the facts. We did record a $4.6 million specific reserve on it, which wrote the loan down to current appraised value less selling costs. So we're comfortable with where we've marked the loan, and we'll continue to work through options as it relates to resolving the credit as we go forward.

William Jones

Yes. Okay. I appreciate that color. And you guys gave great color in your prepared remarks as well. I wanted to go to -- in the slides, you guys kind of call out 45% fintech deposits now, 55% CoRe bank. That number has increased in favor of fintech. Larry, big picture question for you. When you fast forward a year, 2 years down the road, what is the right mix of deposits for MVB? Do you continue to see that migration in favor of fintech as you grow that platform and that part of the franchise? Or where could we ultimately see the fintech or how do you ultimately frame the deposit opportunity on the fintech side?

Michael Sumbs

Well, I can jump in.

Larry Mazza

I'm sorry. I got it now. I got it, Michael, sorry. So when you look at the CoRe bank, well, the CoRe bank is limited as far as its market. And what I mean by that is we have great markets in Northern Virginia, Reston, Fairfax, et cetera. Monica Tressler there is our Chief Deposit Officer and does a fantastic job with her team of growing deposits in that market. That's the thing, though. It is limited to Northern Virginia and West Virginia, which we value and honor those legacy markets.

The thing of it is in our fintech with Jeremy Kuiper, who leads that, he has a national footprint. We have clients in 40 different states. We have a pipeline of 50 fintechs coming on. It's been one of the best markets that we have been in as far as growth. We see that continuing to grow. We will -- I said we're kissing close to $1 billion in those deposits. I believe in the near future, we will be over $1 billion in fintech deposits and have a very robust 2027 in fintech deposits. Our core markets will do well, but you're competing in 2 states versus 40 states and a very robust pipeline. And it's been good, and I think it will continue to grow very positively over the next several years.

William Jones

That's great...

Larry Mazza

Low-cost deposits, Will, which are great low-cost deposits.

William Jones

That's a great segue to my next follow-up here, Mike, you can help us out. When we think -- as we familiarize ourselves with kind of the competitive dynamics on the fintech deposit side, what is the -- in a Fed hike scenario, what is the beta on the cohort of fintech deposits as opposed to the CoRe bank? We obviously saw deposit cost reduction this quarter. Maybe just help frame what you ultimately see interest-bearing deposit costs do over a Fed hike cycle.

Michael Sumbs

Yes. So a couple of pieces on that, Will. It really depends on the nature of the relationship in terms of how we price those deposits. But from a broad sort of a broad brush standpoint, typically, there's some level of deposits that are noninterest-bearing. If they're reserve deposits for some sort of money movement, those are typically noninterest-bearing. For the more sizable deposit opportunities, tends to get into an interest-bearing situation. Oftentimes, we'll index those into the effective Fed funds rate at some percentage. So on that interest-bearing portion of those fintech deposits, there's a 100% beta as it relates to Fed funds. But if it's at a 50% effective Fed funds, you essentially have a 50% beta on that relationship.

So as you think about the overall fintech pool, including noninterest-bearing, it tends to be -- yes, I would say, a lower beta deposit base, which I think you sort of are seeing in the numbers with cost of funds flat to even down this quarter. Some of that's attributable to the CD runoff and the work we've done in that portfolio running off higher cost CDs and remixing out of CDs. But overall, that hopefully gives you a general framework for how those fintech deposits interact with rate movements.

William Jones

Yes. No, that's great. That's very helpful. I appreciate that, Mike. And Larry, last question for me, big picture. As we kind of start to think about 2027, what the year looks like, what are really your kind of top 3 priorities, if you had to name them for what you would like to see MVB accomplish as we start to think about next year?

Larry Mazza

I love that question, Will, because we are already focused on 2027. We're really looking forward in a positive way based on the encouragement we have really this quarter. I don't want you to miss the doughnut for the hole. I mean the land loan is disappointing, don't get me wrong, but that is an aberration and a very unique circumstance, which -- this too shall pass. But when we look at 2027, the top 3 priorities, the first one is what I'll call margin optimization. I mentioned that earlier with Joe. Margin optimization is our ability to make higher-yielding equivalent risk loans in the legal lending market and in the fintech sponsorship lending markets. We believe that we will option out loans that are yielding anywhere between 6.5% to 7% with higher yields of closer to 8.5% to 9%. That's our first and most important project. We weight these projects. When I'm saying weight, it's weight, weight them in order of importance and how we focus our resources.

The second one is what we call Prime Capture. That's our second project name. And Prime Capture are these fintechs that we are onboarding. I mentioned earlier that we have nearly 50 fintech clients in the pipeline. There's no way, that's 2 years' worth of fintechs based on our current onboarding, which will be nearly 20 this year versus 5 last year. We've really improved, and I'm really happy with the team's progress on onboarding. We really have done a good job with that. But now we are weighting, weight, the onboarding prospects to -- when I'm saying Prime Capture, for example, I mentioned last month -- last quarter to Joe about our portfolios like wine it has to maturate. Well, as we look at the wine, we're accelerating this through what we call lift and shift. Lift and shift fintech clients are clients that are already in development, the clients that already have a strong fintech client base where the revenue as soon as they're onboarded, shifts immediately to us versus a start-up program that takes months and months and months to maturate and recognize that revenue.

So that's a high priority for us in 2027 is this Prime Capture, capturing these prime clients that are in our pipeline, putting them to the front of the list so that we can lift and shift their revenue to us much quicker than some of these ones that are coming on. If you remember from a previous quarter call, we said we really only recognize about 25% of the revenue because it takes time to maturate. With these lift and shifts, we recognize nearly 100% of the revenue once they're on board. So we're excited about that as 2027 nears and how we are onboarding clients.

The third one is what we mentioned earlier, we now have 14 certified Claude engineers, and that will continue to grow. Our team continues to educate and grow. We have a wonderful partnership with Anthropic. We believe will be a case study for them in the near future of how to use AI and banking. And with that, now with these 100 Digis, what we want to do when we talked about this 10% reduction in cost year-over-year in a growing inflationary market, we want to at least maintain these cost levels and not grow them. And that we do with our onboarding of our Digis, continue to improving our processes. So those are our big 3, 2 revenue drivers and including loans and our fintech, which will also drive lower cost deposits, that fintech onboarding. It's not only driving fee income, but it's driving lower cost deposits and holding our expenses steady to maybe even downward. Those are our big 3.

Operator

[Operator Instructions] Our next question is from Janet Lee with TD Cowen.

Sun Young Lee

If I recall correctly, in the last rising rate cycle, you guys went more defense and your balance sheet shrank a little bit as you were playing defense. If you get more rate hikes, is there any different in terms of your strategy? And how should we think about your loan and deposit growth in '27?

Larry Mazza

Michael, do you want to take that one?

Michael Sumbs

Yes. Janet, thanks for the question. Yes. I think it's a little different this go around. And I would say from a growth standpoint, we're still seeing good opportunities in the pipeline for loan growth, particularly excited about the specialty lending pipeline heading into Q4. And as Larry mentioned on the margin optimization effort, I think a lot of that work can be done in terms of remixing our loan portfolio into higher-yielding loans. Just this quarter, the core yield on loans was up about 20 basis points versus Q2. So while the average balance of loans wasn't up significantly over the quarter. We still saw nice growth in the interest income related to that enhanced yield in the loan portfolio.

And then on the deposit side, we're still seeing really strong opportunities for deposit growth. I think we've had about $300 million in new fintech-related deposits come on over the course of this year. And I don't really see that opportunity changing materially in a higher rate environment. So I think we're set up well as it relates to the balance sheet for continued growth, but also continued mixing of both the loan and earning asset side as well as the funding side.

Sun Young Lee

On the AD&C portfolio, the $13 million, so you took close to $5 million of specific reserves. How should we think about the loss content here realistically? And should we expect net charge-offs to remain sort of in the third quarter levels before trailing back to the 20 basis point range that you've typically experienced? How should we think about the path or the timing around getting back to the normalized levels?

Michael Sumbs

Yes, I'll take that one, Janet. So I would say from a charge-off standpoint, there could be a similar level in Q4 as to what you saw in Q3 as we continue to work through some of the loans that have migrated into the nonperformer. As it relates to the larger AD&C loan that we've discussed on the call, I feel good about where we reserved that loan based on the current appraised value and factoring in associated costs with resolving that or selling that property. It's hard to predict the exact timing of resolution on that particular credit. And as we mentioned, we're still collecting facts around the situation, but we're actively working through it and hopeful to remediate it and resolve it expeditiously.

Sun Young Lee

Okay. Got it. And on the fee income side, you've obviously been adding a lot of fintech partners and payment card and services income have been growing at a very strong pace. But that's been, I guess, somewhat masked by slower or declining equity method investment income. I believe that's somewhat tied to the mortgage performance, but it can only go so much lower. How should we think about the overall fee income for MVB from here versus that -- because it's been kind of range bound in the $7 million to $8 million range per quarter. How should we think about that inflection point?

Michael Sumbs

Yes. So as you mentioned, the payment card and service charge income line items has been growing nicely, and that's the line item we're really focused on continuing to grow and hopeful with all the new partners that we've been onboarding as they continue to mature on the platform, we can continue to support those growth rates. You're correct that the equity method investment is largely related to activity in the mortgage space. So I think the rate environment is certainly elevated, and that's having a direct impact on activity in the mortgage industry. A lot of that increase in the rate environment happened late in the quarter. So I expect there could be continued slow activity in mortgage as rates remain elevated. So we're really focused on continuing to grow the payment card, the service charge income and the equity method income will be largely tied to the overall mortgage market.

Operator

We have reached the end of the question-and-answer session. I would like to turn the floor back over to Larry Mazza for closing comments.

Larry Mazza

Thank you, Max. Thanks to everyone for joining us today. We're encouraged by the progress we're making in strengthening our CoRe banking operations. We've expanded our payment deposits. They're up 28%. Our payment and card service charges are up 40%. Our NIM is up 15 basis points to over 4%. Our cost of funds are down 6 basis points to 2.07%. Our expenses are down 10.5% year-over-year, and our loan loss reserve, we feel is adequate. We remain focused on building on that momentum and delivering stronger financial performance. We appreciate your continued interest and support in MVB and look forward to speaking to you next quarter. Have a wonderful evening.

Operator

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.