1. MNSB reported a $9.98 million loss in 2024. 2. Capitalized software impairment affected earnings but is essential for future growth. 3. Deposits grew 13% to $1.9 billion, demonstrating strong liquidity. 4. Net interest margin ended at 3.13%, reflecting effective fund management. 5. Resolution of nonperforming loans improved portfolio quality.
Despite a loss, growth in deposits and resolutions of nonperforming loans are positive.
While losses were recorded, the significant growth in deposits and lending strategies indicate resilience.
The immediate market sentiment may improve, but ongoing performance will dictate longer-term effects.
FAIRFAX, Va., Jan. 27, 2025 /PRNewswire/ -- MainStreet Bancshares, Inc. (Nasdaq: MNSB & MNSBP), the financial holding company for MainStreet Bank reported a loss of $9.98 million for 2024 resulting from the nonrecurring impairment of capitalized intangible software and the resolution of nonperforming assets. The Company remains strongly capitalized with good liquidity.
"At the end of 2024, the Company impaired the full value of its capitalized intangible software. Despite this impairment, the software remains a component of our Avenu Banking-as-a-Service solution and will continue to be used to drive fintech partnerships to grow low-cost deposits and fee income," said Jeff W. Dick, Chairman & CEO of MainStreet Bancshares, Inc. and MainStreet Bank. "The end of 2024 was management's first opportunity to review the Avenu platform's performance, as it was only put into production during the fourth quarter. The delays in bringing Avenu to market and subsequent changes in the potential for revenue generation necessitated management's review for impairment and resulting charge to earnings. Management conducted the impairment assessment in accordance with ASC 350-40-35, using the income approach. We remain committed to providing innovative embedded banking services that meet our customers where they do business and that allow developers to focus on providing leading-edge digital financial solutions."
"During 2024, the Company ended the year with a healthy net interest margin of 3.13%," said Alex Vari, Chief Accountant for MainStreet Bank. "Excess liquidity in the fourth quarter gave us the opportunity to exercise call options on higher-yielding term deposits and restructure our wholesale deposit position. This will further reduce our funding costs into 2025, and with expense management efforts will yield positive results for the Company and for our shareholders."
Chief Lending Officer Tom Floyd said, "the lending team worked diligently to grow the loan portfolio by 6% while also resolving 62% of our nonperforming loans and making solid progress on resolving the final $21.7 million in a timely manner."
Total deposits grew 13% from prior year-end to $1.9 billion, with core deposits growing $187 million year on year. Total core deposits at year-end were $1.4 billion, or 75% of total deposits.
"The DC Metropolitan area remains a vibrant market. The interest rate environment is normalizing, with the FOMC cutting rates three times thus far for a total of 1.0%," said Abdul Hersiburane, President of MainStreet Bank. "Our borrowers are benefiting from the declining rate environment with strengthening liquidity."
BACKGROUND: MainStreet Bancshares, Inc. (Nasdaq: MNSB & MNSBP), is a small-cap financial holding company trading in the Nasdaq Capital Market index. The financial holding company owns 100% of MainStreet Bank, a business-focused community bank headquartered in Fairfax, Virginia. The Bank engages a branch-lite model with six full-service financial centers in Herndon, Fairfax, McLean, Leesburg, Clarendon, and Washington, D.C. MainStreet Bank has 55,000 free ATMs and a fully integrated online and mobile banking solution. The Bank is not restricted by a conventional branching system, as it can offer business customers the ability to Put Our Bank in Your Office®. With robust and easy-to-use online business banking technology, MainStreet has "put our bank" in well over 1,000 businesses in the metropolitan area.
MainStreet Bank has a robust line of business and professional lending products, including government contracting lines of credit, commercial lines and term loans, residential and commercial construction, and commercial real estate. MainStreet Bank is an SBA Preferred Lender, offering 7A and 504 lending solutions. From sophisticated cash management to enhanced mobile banking and instant-issue Debit cards, MainStreet Bank is always looking for ways to improve our customer's experience.
MainStreet Bank was the first community bank in the Washington, D.C., metropolitan area to offer a full online business banking solution. MainStreet Bank was also the first bank headquartered in the Commonwealth of Virginia to offer CDARS – a solution that provides multi-million-dollar FDIC insurance. Further information on the Bank can be obtained by visiting its website at mstreetbank.com.
In 2021, the Board and management decided to make an investment in technology that would best serve clients requiring Banking-as-a-Service (BaaS). The Avenu BaaS solution officially launched on October 1, 2024. The ability to digitally offer banking services in a safe and compliant manner allows the Company to reach new customer deposit segments, diversify revenue streams and generate additional income. The BaaS market is currently underserved, and the opportunities for a well-developed solution are robust. The Avenu business model is in-line with the Company's physical branch-lite strategy.
Avenu provides a full-stack embedded banking solution that connects our partners and their apps directly and seamlessly to our purpose-built Avenu core. Avenu's clients are fintechs, social media solutions, application developers, money movers, and entrepreneurs. They all have one thing in common: They are in search of a reliable partner to help innovate how money moves - solving real-world issues and helping communities thrive. MainStreet Bank is that reliable partner dedicated to providing a best-in-class solution to sustain long-term business relationships.
MainStreet Bancshares, Inc. has an investment grade rating of "A" from Egan-Jones Rating Company. This release contains forward-looking statements, including our expectations with respect to future events that are subject to various risks and uncertainties. The statements contained in this release that are not historical facts are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Words such as "may," "will," "could," "should," "expect," "plan," "project," "intend," "anticipate," "believe," "estimate," "predict," "potential," "pursuant," "target," "continue," and similar expressions are intended to identify such forward-looking statements. Factors that could cause actual results to differ materially from management's projections, forecasts, estimates and expectations include: fluctuation in market rates of interest and loan and deposit pricing, adverse changes in the overall national economy as well as adverse economic conditions in our specific market areas, future impacts of pandemic outbreaks, maintenance and development of well-established and valued client relationships and referral source relationships, and acquisition or loss of key production personnel. We caution readers that the list of factors above is not exclusive. The forward-looking statements are made as of the date of this release, and we may not undertake steps to update the forward-looking statements to reflect the impact of any circumstances or events that arise after the date the forward-looking statements are made. In addition, our past results of operations are not necessarily indicative of future performance.
| ASSETS | December 31, 2024 | September 30, 2024 | June 30, 2024 | March 31, 2024 | December 31, 2023* |
|---|---|---|---|---|---|
| Cash and cash equivalents | $47,553 | $40,955 | $41,697 | $49,208 | $53,581 |
| Federal funds sold | $160,155 | $191,159 | $49,762 | $75,533 | $60,932 |
| Total cash and cash equivalents | $207,708 | $232,114 | $91,459 | $124,741 | $114,513 |
| Investment securities available for sale, at fair value | $55,747 | $58,489 | $57,605 | $58,699 | $59,928 |
| Investment securities held to maturity, at amortized cost, net of allowance for credit losses of $0 for all periods | $16,078 | $16,016 | $16,036 | $17,251 | $17,275 |
| Restricted equity securities, at amortized cost | $30,623 | $26,745 | $26,797 | $23,924 | $24,356 |
| Loans, net of allowance for credit losses of $19,450, $18,327, $17,098, $16,531, and $16,506, respectively | $1,810,556 | $1,775,558 | $1,778,840 | $1,727,110 | $1,705,137 |
| Premises and equipment, net | $13,287 | $13,571 | $13,787 | $14,081 | $13,944 |
| Accrued interest and other receivables | $11,311 | $11,077 | $11,916 | $10,727 | $12,390 |
| Computer software, net of amortization | — | $18,881 | $17,205 | $15,691 | $14,657 |
| Bank owned life insurance | $39,507 | $39,203 | $38,901 | $38,609 | $38,318 |
| Other assets | $43,281 | $32,945 | $41,200 | $39,182 | $34,914 |
| Total Assets | $2,228,098 | $2,224,599 | $2,093,746 | $2,070,015 | $2,035,432 |
(In thousands, except share and per share data)
| Year-to-Date | Three Months Ended | December 31, 2024 |
|---|---|---|
| INTEREST INCOME: | INTEREST INCOME: | Interest and fees on loans |
| $125,177 | $31,323 | $125,177 |
| Interest on investment securities | Interest on investment securities | Taxable securities |
| $1,693 | $431 | $1,693 |
| Tax-exempt securities | $262 | $1,093 |
| $1,346 | $1,678 | $1,346 |
| Total interest income | $134,615 | $35,119 |
Contact: Billy Freesmeier
Chief of Staff
Desk (703) 481-4579