MainStreet Bancshares Inc. Reports First Quarter Results

Expanding Net Interest Margin, Resilient Loan Portfolio and Well Capitalized, /PRNewswire/ -- MainStreet Bancshares, Inc. (Nasdaq: MNSB & MNSBP), the financial holding company for MainStreet Bank, reported first quarter net income of $2.5 million with a net interest margin of 3.30%, up 34 basis points from the previous quarter. Net interest income after provision for credit losses was $16.5 million, up $3.9 million from the previous quarter and earnings per common share were $0.25 for the first quarter. The Company continues to report strong asset quality and strong capital. MainStreet Bank Headquarters 10089 Fairfax Blvd Fairfax, Virginia 22030 (PRNewsfoto/MainStreet Bancshares, Inc.) Total deposits maintained their level at $1.9 billion, with total funding costs improving by 24 basis points from the previous quarter to 3.49%. "Our net interest margin expansion was fueled primarily by an opportunity to replace higher cost deposits," said Alex Vari, Chief Accountant for MainStreet Bank. "We worked diligently to optimize pricing on our deposit stack, while also structuring $211 million of our $578 million in noncore deposits to reprice quickly should rates adjust down." The loan-to-deposit ratio of 96% indicates efficient utilization of deposit funds for lending. Nonperforming loans held steady at a low level of $21.7 million during the quarter, with another $11.2 million expected to pay off at par in the second quarter based upon a successful court-approved resolution. Chief Credit Officer Chris Johnston said, "The resolution of nonperforming loans is a testament to the team's diligent and creative efforts to work together with borrowers to find positive outcomes in a timely manner." Total assets were $2.2 billion with gross loans demonstrating stability at $1.8 billion. "We remain cautiously optimistic about the DC Metropolitan market," said Abdul Hersiburane, President of MainStreet Bank. "Our team is steadfast on serving our customers but taking conservative steps as we monitor the early days that come with a new administration."Banking-as-a-Service"This quarter saw a change in direction for the Avenu technology initiative, which will not be moving forward," according to Chairman and CEO Jeff W. Dick. "The timeline for the expected return on invested capital extended beyond the Company's plan, and we decided to devote our energy on the core bank."About MainStreet Bank: MainStreet operates six branches 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 thousands of 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 also works with the SBA to offer 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.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. UNAUDITED CONSOLIDATED BALANCE SHEET INFORMATION (In thousands) March 31, 2025 December 31, 2024* September 30, 2024 June 30, 2024 March 31, 2024 ASSETS Cash and cash equivalents Cash and due from banks $ 18,385 $ 21,351 $ 15,319 $ 17,112 $ 17,270 Interest-bearing deposits at other financial institutions 159,582 161,866 191,637 50,495 76,178 Federal funds sold 24,673 24,491 25,158 23,852 31,293 Total cash and cash equivalents 202,640 207,708 232,114 91,459 124,741 Investment securities available for sale, at fair value 55,935 55,747 58,489 57,605 58,699 Investment securities held to maturity, at amortized cost, net of allowance for credit losses of $0 for all periods 15,657 16,078 16,016 16,036 17,251 Restricted equity securities, at amortized cost 33,611 30,623 26,745 26,797 23,924 Loans, net of allowance for credit losses of $19,460, $19,450, $18,327, $17,098, and $16,531, respectively 1,811,789 1,810,556 1,775,558 1,778,840 1,727,110 Premises and equipment, net 13,020 13,287 13,571 13,787 14,081 Accrued interest and other receivables 9,607 11,311 11,077 11,916 10,727 Computer software, net of amortization — — 18,881 17,205 15,691 Bank owned life insurance 39,809 39,507 39,203 38,901 38,609 Other assets 40,777 43,281 32,945 41,200 39,182 Total Assets $ 2,222,845 $ 2,228,098 $ 2,224,599 $ 2,093,746 $ 2,070,015 LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Non-interest bearing deposits $ 345,319 $ 324,307 $ 347,575 $ 314,636 $ 348,945 Interest-bearing demand deposits 106,033 139,780 197,527 179,513 165,331 Savings and NOW deposits 124,049 64,337 61,893 60,867 46,036 Money market deposits 511,925 560,082 451,936 476,396 446,903 Time deposits 820,999 819,288 834,738 723,951 725,520 Total deposits 1,908,325 1,907,794 1,893,669 1,755,363 1,732,735 Subordinated debt, net 72,138 73,039 72,940 72,841 72,741 Other liabilities 32,764 39,274 31,939 40,827 41,418 Total Liabilities 2,013,227 2,020,107 1,998,548 1,869,031 1,846,894 Stockholders' Equity: Preferred stock 27,263 27,263 27,263 27,263 27,263 Common stock 29,810 29,466 29,463 29,452 29,514 Capital surplus 67,612 67,823 67,083 66,392 65,940 Retained earnings 92,305 91,150 108,616 109,651 108,334 Accumulated other comprehensive loss (7,372) (7,711) (6,374) (8,043) (7,930) Total Stockholders' Equity 209,618 207,991 226,051 224,715 223,121 Total Liabilities and Stockholders' Equity $ 2,222,845 $ 2,228,098 $ 2,224,599 $ 2,093,746 $ 2,070,015 *Derived from audited financial statements UNAUDITED CONSOLIDATED STATEMENTS OF INCOME (LOSS) INFORMATION (In thousands, except share and per share data) Three Months Ended March 31, 2025 December 31, 2024 September 30, 2024 June 30, 2024 March 31, 2024 INTEREST INCOME: Interest and fees on loans $ 31,111 $ 31,323 $ 31,615 $ 31,655 $ 30,582 Interest on investment securities Taxable securities 420 431 397 430 435 Tax-exempt securities 263 262 294 268 270 Interest on interest-bearing depositsat other financial institutions 946 2,826 1,041 806 889 Interest on federal funds sold 223 277 244 277 293 Total interest income 32,963 35,119 33,591 33,436 32,469 INTEREST EXPENSE: Interest on interest-bearing demand deposits 1,048 2,612 2,117 2,118 1,814 Interest on savings and NOW deposits 221 201 206 190 157 Interest on money market deposits 5,276 5,475 5,277 5,542 5,092 Interest on time deposits 9,031 10,003 9,543 9,010 8,808 Interest on federal funds purchased 65 — 277 191 107 Interest on Federal Home Loan Bank advances — — — — 46 Interest on subordinated debt 812 787 828 820 820 Total interest expense 16,453 19,078 18,248 17,871 16,844 Net interest income 16,510 16,041 15,343 15,565 15,625 Provision for (recovery of) credit losses — 3,407 2,913 638 (195) Net interest income after provision for (recovery of) credit losses 16,510 12,634 12,430 14,927 15,820 NON-INTEREST INCOME: Deposit account service charges 530 481 557 490 469 Bank owned life insurance income 302 304 302 291 292 Gain on retirement of subordinated debt 60 — — — — Net loss on securities called or matured — — — (48) — Other non-interest income 47 22 27 31 35 Total non-interest income 939 807 886 764 796 NON-INTEREST EXPENSES: Salaries and employee benefits 8,385 8,253 7,250 7,484 7,488 Furniture and equipment expenses 1,016 830 931 940 935 Advertising and marketing 481 600 579 566 454 Occupancy expenses 396 358 407 415 435 Outside services 1,173 1,168 845 839 774 Administrative expenses 229 243 215 229 242 Computer software intangible impairment — 19,721 — — — Other operating expenses 2,634 3,258 2,992 2,362 2,153 Total non-interest expenses 14,314 34,431 13,219 12,835 12,481 Income (loss) before income tax expense (benefit) 3,135 (20,990) 97 2,856 4,135 Income tax expense (benefit) 682 (4,823) (168) 238 830 Net income (loss) 2,453 (16,167) 265 2,618 3,305 Preferred stock dividends 539 539 539 539 539 Net income (loss) available to common shareholders $ 1,914 $ (16,706) $ (274) $ 2,079 $ 2,766 Earnings (loss) per common share, basic and diluted $ 0.25 $ (2.20) $ (0.04) $ 0.27 $ 0.36 Weighted average number of common shares, basicand diluted 7,636,191 7,603,318 7,601,925 7,608,389 7,611,990 UNAUDITED LOAN, DEPOSIT AND BORROWING DETAIL (In thousands) March 31, 2025 December 31, 2024 March 31, 2024 Percentage Change $ Amount % of Total $ Amount % of Total $ Amount % of Total Last 3 Mos Last 12 Mos LOANS: Construction and land development loans $ 344,742 18.8 % $ 393,385 21.4 % $ 408,903 23.4 % -12.4 % -15.7 % Residential real estate loans 450,728 24.6 % 439,481 23.9 % 451,991 25.8 % 2.6 % -0.3 % Commercial real estate loans 933,947 50.9 % 895,743 48.8 % 813,387 46.5 % 4.3 % 14.8 % Commercial and industrial loans 105,180 5.6 % 104,815 5.7 % 71,822 4.1 % 0.3 % 46.4 % Consumer loans 1,331 0.1 % 1,574 0.2 % 2,902 0.2 % -15.4 % -54.1 % Total Gross Loans $ 1,835,928 100.0 % $ 1,834,998 100.0 % $ 1,749,005 100.0 % 0.1 % 5.0 % Less: Allowance for credit losses (19,460) (19,450) (16,531) Net deferred loan fees (4,679) (4,992) (5,364) Net Loans $ 1,811,789 $ 1,810,556 $ 1,727,110 DEPOSITS: Non-interest bearing deposits $ 345,319 18.1 % $ 324,307 17.0 % $ 348,945 20.1 % 6.5 % -1.0 % Interest-bearing deposits: Demand deposits 106,033 5.6 % 139,780 7.3 % 165,331 9.5 % -24.1 % -35.9 % Savings and NOW deposits 124,049 6.5 % 64,337 3.4 % 46,036 2.7 % 92.8 % 169.5 % Money market deposits 511,925 26.8 % 560,082 29.4 % 446,903 25.8 % -8.6 % 14.5 % Certificates of deposit $250,000 or more 541,772 28.4 % 535,676 28.1 % 467,892 27.0 % 1.1 % 15.8 % Certificates of deposit less than $250,000 279,227 14.6 % 283,612 14.8 % 257,628 14.9 % -1.5 % 8.4 % Total Deposits $ 1,908,325 100.0 % $ 1,907,794 100.0 % $ 1,732,735 100.0 % 0.0 % 10.1 % BORROWINGS: Subordinated debt, net 72,138 100.0 % 73,039 100.0 % 72,741 100.0 % -1.2 % -0.8 % Total Borrowings $ 72,138 100.0 % $ 73,039 100.0 % $ 72,741 -1.2 % -0.8 % Total Deposits and Borrowings $ 1,980,463 $ 1,980,833 $ 1,805,476 0.0 % 9.7 % Core customer funding sources (1) $ 1,330,390 67.2 % $ 1,439,657 72.7 % $ 1,312,746 72.7 % -7.6 % 1.3 % Brokered and listing service sources (2) 577,935 29.2 % 468,137 23.6 % 419,989 23.3 % 23.5 % 37.6 % Subordinated debt, net (3) 72,138 3.6 % 73,039 3.7 % 72,741 4.0 % -1.2 % -0.8 % Total Funding Sources $ 1,980,463 100.0 % $ 1,980,833 100.0 % $ 1,805,476 100.0 % 0.0 % 9.7 % (1) Includes ICS, CDARS, and reciprocal deposits maintained by customers, which represent sweep accounts tied to customer operating accounts. (2) Consists of certificates of deposit (CD) through multiple listing services and multiple brokered deposit services, as well as ICS and CDARS one-way certificates of deposit and regional money market accounts. Excludes $87.8 million in core deposits placed in reciprocal networks for FDIC insurance coverage that will be classified as brokered deposits on the call report in pursuant to rule 12 CFR 337.6(e) as of March 31, 2025. (3) Subordinated debt obligation qualifies as Tier 2 capital at the holding company and Tier 1 capital at the Bank. UNAUDITED AVERAGE BALANCE SHEETS, INTEREST AND RATES (In thousands) For the three months ended March 31, 2025 For the three months ended March 31, 2024 AverageBalance InterestIncome/ Expense (3)(4) AverageYields/ Rate(annualized) (3)(4) AverageBalance InterestIncome/ Expense (3)(4) Average Yields/ Rate (annualized) (3)(4) ASSETS: Interest-earning assets: Loans (1)(2) $ 1,838,358 $ 31,111 6.86 % $ 1,728,761 $ 30,582 7.10 % Securities: Taxable 53,143 420 3.21 % 56,001 435 3.12 % Tax-exempt 35,200 333 3.84 % 37,420 342 3.66 % Interest-bearing deposits at other financial institutions 86,715 946 4.42 % 66,253 889 5.38 % Federal funds sold 24,975 223 3.62 % 25,740 293 4.57 % Total interest-earning assets $ 2,038,391 $ 33,033 6.57 % $ 1,914,175 $ 32,541 6.82 % Other assets 117,070 123,294 Total assets $ 2,155,461 $ 2,037,469 Liabilities and Stockholders' Equity: Interest-bearing liabilities: Interest-bearing demand deposits $ 111,413 $ 1,048 3.81 % $ 146,248 $ 1,814 4.98 % Savings and NOW deposits 67,851 221 1.32 % 44,219 157 1.42 % Money market deposits 537,733 5,276 3.98 % 433,654 5,092 4.71 % Time deposits 798,007 9,031 4.59 % 710,019 8,808 4.98 % Total interest-bearing deposits $ 1,515,004 $ 15,576 4.17 % $ 1,334,140 $ 15,871 4.77 % Federal funds purchased 5,610 65 4.70 % 7,476 107 5.74 % FHLB advances — — — 3,297 46 5.60 % Subordinated debt, net 73,043 812 4.51 % 72,703 820 4.52 % Total interest-bearing liabilities $ 1,593,657 $ 16,453 4.19 % $ 1,417,616 $ 16,844 4.77 % Demand deposits and other liabilities 353,711 397,753 Total liabilities $ 1,947,368 $ 1,815,369 Stockholders' Equity 208,093 222,100 Total Liabilities and Stockholders' Equity $ 2,155,461 $ 2,037,469 Interest Rate Spread 2.38 % 2.05 % Net Interest Income $ 16,580 $ 15,697 Net Interest Margin 3.30 % 3.29 % (1) Includes loans classified as non-accrual (2) Total loan interest income includes amortization of deferred loan fees, net of deferred loan costs (3) Income and yields for all periods presented are reported on a tax-equivalent basis using the federal statutory rate of 21% (4) Refer to "Unaudited Reconciliation of Certain Non-GAAP Financial Measures" for reconciliation of non-GAAP measures UNAUDITED SUMMARY FINANCIAL DATA (Dollars in thousands except share and per share data) At or For the Three Months Ended March 31, 2025 2024 Per share Data and Shares Outstanding Earnings per common share (basic and diluted) $ 0.25 $ 0.36 Book value per common share $ 23.67 $ 25.72 Tangible book value per common share(2) $ 23.67 $ 23.66 Weighted average common shares (basic and diluted) 7,636,191 7,611,990 Common shares outstanding at end of period 7,703,197 7,614,090 Performance Ratios Return on average assets (annualized) 0.46 % 0.65 % Return on average equity (annualized) 4.78 % 5.97 % Return on average common equity (annualized) 5.50 % 6.80 % Yield on earning assets (FTE) (2) (annualized) 6.57 % 6.82 % Cost of interest bearing liabilities (annualized) 4.19 % 4.77 % Net interest spread (FTE)(2) (annualized) 2.38 % 2.05 % Net interest margin (FTE)(2) (annualized) 3.30 % 3.29 % Non-interest income as a percentage of average assets (annualized) 0.18 % 0.16 % Non-interest expense to average assets (annualized) 2.69 % 2.46 % Efficiency ratio(3) 82.03 % 76.01 % Asset Quality Allowance for credit losses (ACL) Beginning balance, ACL - loans $ 19,450 $ 16,506 Add: recoveries 10 2 Less: charge-offs — (141) Add: provision for credit losses - loans — 164 Ending balance, ACL - loans $ 19,460 $ 16,531 Beginning balance, reserve for unfunded commitment (RUC) $ 287 $ 1,009 Add: recovery of unfunded commitments, net — (359) Ending balance, RUC $ 287 $ 650 Total allowance for credit losses $ 19,747 $ 17,181 Allowance for credit losses on loans to total gross loans 1.06 % 0.95 % Allowance for credit losses on loans to non-performing loans 89.82 % 1.78X Net charge-offs to average gross loans (annualized) 0.00 % 0.03 % Concentration Ratios Commercial real estate loans to total capital (4) 388.24 % 364.65 % Construction loans to total capital (5) 115.56 % 130.06 % Past due and Non-performing Assets Loans 30-89 days past due and accruing to total gross loans 2.19 % 0.22 % Loans 90 days past due and accruing to total gross loans 0.00 % 0.51 % Non-accrual loans to total gross loans 1.18 % 0.53 % Other real estate owned $ — $ — Non-performing loans $ 21,665 $ 9,263 Non-performing assets to total assets 0.97 % 0.45 % Regulatory Capital Ratios (Bank only) (1) Total risk-based capital ratio 15.83 % 17.05 % Tier 1 risk-based capital ratio 14.78 % 16.12 % Leverage ratio 12.90 % 14.54 % Common equity tier 1 ratio 14.78 % 16.12 % Other information Common shares closing stock price $ 16.72 $ 18.16 Tangible equity / tangible assets (2) 9.43 % 10.10 % Average tangible equity / average tangible assets (2) 9.65 % 10.24 % Number of full time equivalent employees 182 191 Number of full service branch offices 6 6 (1) Regulatory capital ratios as of March 31, 2025 are preliminary (2) Refer to "Unaudited Reconciliation of Certain Non-GAAP Financial Measures" for reconciliation of non-GAAP measures (3) Efficiency ratio is calculated as non-interest expense as a percentage of net interest income and non-interest income (4) Commercial real estate includes only non-owner occupied, multifamily, and construction loans as a percentage of Bank capital (5) Construction loans as a percentage of Bank capital Unaudited Reconciliation of Certain Non-GAAP Financial Measures (Dollars In thousands) For the three months ended March 31, 2025 2024 Net interest margin (FTE) Net interest income (GAAP) $ 16,510 $ 15,625 FTE adjustment on tax-exempt securities 70 72 Net interest income (FTE) (non-GAAP) 16,580 15,697 Average interest earning assets 2,038,391 1,914,175 Net interest margin (GAAP) 3.28 % 3.27 % Net interest margin (FTE) (non-GAAP) 3.30 % 3.29 % For the three months ended March 31, 2025 2024 Yield on earning assets (FTE) Total interest income (GAAP) $ 32,963 $ 32,469 FTE adjustment on tax-exempt securities 70 72 Total interest income (FTE) (non-GAAP) 33,033 32,541 Average interest earning assets 2,038,391 1,914,175 Yield on earning assets (GAAP) 6.56 % 6.80 % Yield on earning assets (FTE) (non-GAAP) 6.57 % 6.82 % For the three months ended March 31, 2025 2024 Net interest spread (FTE) Yield on earning assets (GAAP) 6.56 % 6.80 % Yield on earning assets (FTE) (non-GAAP) 6.57 % 6.82 % Yield on interest-bearing liabilities (GAAP) 4.19 % 4.77 % Net interest spread (GAAP) 2.37 % 2.03 % Net interest spread (FTE) (non-GAAP) 2.38 % 2.05 % As of March 31, 2025 2024 Tangible common stockholders' equity Total stockholders equity (GAAP) $ 209,618 $ 223,121 Less: intangible assets — (15,691) Tangible stockholders' equity (non-GAAP) 209,618 207,430 Less: preferred stock (27,263) (27,263) Tangible common stockholders' equity (non-GAAP) 182,355 180,167 Common shares outstanding 7,703,197 7,614,090 Tangible book value per common share (non-GAAP) $ 23.67 $ 23.66 As of March 31, 2025 2024 Stockholders equity, adjusted Total stockholders equity (GAAP) $ 209,618 $ 223,121 Less: intangible assets — (15,691) Total tangible stockholders equity (non-GAAP) 209,618 207,430 As of March 31, 2025 2024 Total tangible assets Total assets (GAAP) $ 2,222,845 $ 2,070,015 Less: intangible assets — (15,691) Total tangible assets (non-GAAP) 2,222,845 2,054,324 For the three months ended March 31, 2025 2024 Average tangible stockholders' equity Total average stockholders' equity (GAAP) $ 208,093 $ 222,100 Less: average intangible assets — (15,078) Total average tangible stockholders' equity (non-GAAP) 208,093 207,022 For the three months ended March 31, 2025 2024 Average tangible assets Total average assets (GAAP) $ 2,155,461 $ 2,037,469 Less: average intangible assets — (15,078) Total average tangible assets (non-GAAP) 2,155,461 2,022,391 Contact: Billy FreesmeierChief of Staff(703) 481-4579SOURCE MainStreet Bancshares, Inc. 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MainStreet Bancshares Inc. Reports First Quarter Results

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