Press Release

MainStreet Bancshares, Inc. Reports Record Second Quarter Earnings

Company Release - 7/15/2019 9:00 AM ET

FAIRFAX, Va., July 15, 2019 /PRNewswire/ -- MainStreet Bancshares, Inc. (NASDAQ: MNSB) reported record net income of $3.4 million for the second quarter of 2019; more than double the amount from the second quarter of 2018.

MainStreet Bancshares, Inc. Logo

The Company recorded net income of $6.7 million for the first half of 2019; slightly more than double that earned in the first half of 2018.  Earnings per share for both common and diluted shares was $0.81 for the six months ending June 30, 2019, compared to $0.55 for both common and diluted shares for the six months ended June 30, 2018.  The Company produced a 1.18% return on average assets and 10.67% return on average equity for the six months ended June 30, 2019, compared to a 0.76% return on average assets and a 9.03% return on average equity for the first six months ended June 30, 2018.

Net interest income was $19.2 million for the six months ending June 30, 2019, nearly double the amount for the six months ending June 30, 2018.  Loan loss provisions of $1.1 million for the six months ending June 30, 2019 decreased 47% from the six months ending June 30, 2018.  The decrease in loan loss provisions is largely tied to the Company's strategic decision to moderate loan growth. 

Noninterest income of $2.3 million for the six months ending June 30, 2019 was more than double the amount from the six months ending June 30, 2018.  The increase is due to an increase in deposit account fees, interest rate swap fees related to loan transactions, and gains recorded for the sale of the guaranteed portion of Small Business Administration ("SBA") loans.  These sources are expected to continue in a consistent manner going forward.

Total assets were $1.2 billion at June 30, 2019, as compared to $936.1 million at June 30, 2018, an increase of 27%. Net loans at June 30, 2019 total $983.6 million against net loans outstanding at June 30, 2018 of $815.9 million, an increase of 21%.  Asset quality remains solid with non-performing assets to total assets at 0.10% as of June 30, 2019, down from 0.21% as of June 30, 2018. Capital levels for the Company remain strong. 

Non-interest-bearing deposits increased to $201.4 million as of June 30, 2019, a 12% increase from June 30, 2018.  Non-interest-bearing deposits represent 20% of total deposits at June 30, 2019.  Total deposits as of June 30, 2019 were $1.0 billion an increase of $209.6 million from June 30, 2018.

As of June 30, 2019, the Company's tangible book value per share was $15.64, up 26% from $12.42 as of June 30, 2018.  According to NASDAQ, there were 12,179 trades during the quarter totaling 2.0 million shares traded. The closing share price was $22.79, or 146% of book value. The market cap was $188.0 million as of June 30, 2019.

QUOTES: "We are excited with the opportunity to expand our branch network into Washington, DC later this year," says Chris Brockett, President of MainStreet Bancshares, Inc. and MainStreet Bank. "With nearly a quarter of our outstanding loans originating from the DC corridor, we feel confident that we can have a strong presence in the District that will complement our overall footprint."

"Our goal for 2019 is to moderate growth in order to increase core deposits and enhance our net interest margin," says Jeff W. Dick, Chairman and CEO of MainStreet Bancshares, Inc. and MainStreet Bank.  "Balance sheet growth for the first half of 2019 is 7.6%, which is down from 15.9% for the first half of 2018.  While core deposit growth remains a challenge, our Business Bankers are making good inroads and we continue to build our Payments team, which should further enhance core deposit growth as well as fee income."

ABOUT MAINSTREET BANK:  MainStreet operates six branches in Herndon, Fairfax, Fairfax City, McLean, Leesburg and Clarendon.  A seventh branch on 1130 Connecticut Avenue in Washington, DC will open late in the third quarter of 2019. 

MainStreet 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 has a full complement of payment system services for third party payment providers.  MainStreet has a nationally known market leader and a highly experienced team ready to help payment providers create a solution perfect for their needs.

MainStreet 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 mobile banking and Apple Pay to instant-issue Debit Cards, MainStreet Bank is always looking for ways to improve its customer experience.    

MainStreet Bank was the first community bank in the Washington, DC 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, 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

(Unaudited)

(In thousands, except share data)




June 30,
2019



March 31,
2019



December 31,
2018



September 30,
2018



June 30,
2018


ASSETS





















Cash and cash equivalents





















Cash and due from banks


$

44,976



$

29,741



$

27,886



$

38,634



$

27,163


Federal funds sold



19,835




30,034




30,190




21,739




4,104


Total cash and cash equivalents



64,811




59,775




58,076




60,373




31,267


Investment securities available for sale, at fair value



60,079




69,308




55,979




79,489




20,806


Investment securities held to maturity, at carrying value



24,946




25,487




26,178




26,221




27,422


Restricted equity securities, at cost



5,307




5,732




5,894




4,209




4,737


Loans, net of allowance for loan losses of $9,185, $9,189, $8,831,

$8,327, and $7,731, consecutively



983,574




943,735




917,125




850,822




815,875


Premises and equipment, net



14,208




14,226




14,222




14,414




14,660


Other real estate owned, net



1,207




-




-




-




-


Accrued interest and other receivables



5,681




5,644




5,148




4,919




4,695


Bank owned life insurance



14,275




14,169




14,064




13,957




13,851


Other assets



10,676




8,005




3,927




2,577




2,842


Total Assets


$

1,184,764



$

1,146,081



$

1,100,613



$

1,056,981



$

936,155


LIABILITIES AND STOCKHOLDERS' EQUITY





















Liabilities:





















Non-interest bearing deposits


$

201,405



$

193,744



$

211,749



$

191,986



$

179,827


Interest-bearing DDA deposits



65,117




59,639




60,588




59,295




60,389


Savings and NOW deposits



61,945




61,537




51,371




52,602




48,659


Money market deposits



115,641




147,655




138,153




109,498




118,194


Time deposits



567,023




504,252




458,276




476,511




394,433


Total deposits



1,011,131




966,827




920,137




889,892




801,502


Federal Home Loan Bank advances and other borrowings



20,000




30,000




40,000




30,000




45,117


Subordinated debt



14,791




14,783




14,776




14,769




14,762


Other liabilities



9,806




9,488




4,449




2,785




2,617


Total Liabilities



1,055,728




1,021,098




979,362




937,446




863,998


Stockholders' Equity:





















Common stock, par value $4 per share, authorized 10,000,000

   shares; issued and outstanding, 8,250,259 shares at June 30, 2019

   including 170,359 unvested shares, 8,249,759 at March 31, 2019

   including 153,086 unvested shares, 8,177,978 shares at

   December 31, 2018 including 133,869 unvested shares, 8,179,871

   shares at September 30, 2018 including 142,457 unvested shares,

   5,810,498 at June 30, 2018 including 144,626 unvested shares.



32,387




32,387




32,177




32,177




22,691


Capital surplus



74,609




74,353




74,256




76,427




40,731


Retained earnings



21,826




18,395




15,185




11,371




9,020


Accumulated other comprehensive gain (loss)



214




(152)




(367)




(440)




(285)


Total Stockholders' Equity



129,036




124,983




121,251




119,535




72,157


Total Liabilities and Stockholders' Equity


$

1,184,764



$

1,146,081



$

1,100,613



$

1,056,981



$

936,155


 

 

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME INFORMATION

(Unaudited)

(In thousands, except share and per share data)




Year-to-Date



Three Months Ended




June 30,
2019



June 30,
2018



June 30,
2019



March 31,
2019



December 31,
2018



September 30,
2018



June 30,
2018


INTEREST INCOME:





























Interest and fees on loans


$

26,793



$

17,965



$

13,877



$

12,916



$

12,244



$

11,061



$

9,649


Interest on investment securities



1,171




748




615




556




381




341




407


Interest on federal funds sold



720




215




375




345




457




423




115


Total interest income



28,684




18,928




14,867




13,817




13,082




11,825




10,171


INTEREST EXPENSE:





























Interest on interest bearing DDA deposits



528




386




283




245




269




245




222


Interest on savings and NOW deposits



147




109




74




73




77




65




63


Interest on money market deposits



1,350




678




587




763




598




432




414


Interest on time deposits



6,566




2,604




3,635




2,931




2,784




2,677




1,513


Interest on Federal Home Loan Bank

   advances and other borrowings



381




389




162




219




188




199




210


Interest on subordinated debt



479




479




241




238




244




243




241


Total interest expense



9,451




4,645




4,982




4,469




4,160




3,861




2,663


Net interest income



19,233




14,283




9,885




9,348




8,922




7,964




7,508


Provision for loan losses



1,075




2,030




750




325




496




600




1,395


Net interest income after provision
    
for loan losses



18,158




12,253




9,135




9,023




8,426




7,364




6,113


OTHER INCOME:





























Deposit account service charges



816




472




446




370




311




320




259


Bank owned life insurance income



211




215




106




105




107




105




109


Loan swap fee income



471







181




290




713








Net gains on sale of loans



263







263














Other fee income



506




404




345




161




331




261




215


Total other income



2,267




1,091




1,341




926




1,462




686




583


OTHER EXPENSES:





























Salaries and employee benefits



7,707




5,560




3,847




3,860




3,267




3,018




2,811


Furniture and equipment expenses



820




832




435




385




534




493




451


Advertising and marketing



296




297




191




105




146




171




141


Occupancy expenses



430




310




217




213




220




206




159


Outside services



388




436




161




227




164




239




240


Administrative expenses



343




273




176




167




142




161




155


Other operating expenses



2,201




1,738




1,150




1,051




900




872




912


Total other expenses



12,185




9,446




6,177




6,008




5,373




5,160




4,869


INCOME BEFORE INCOME TAXES



8,240




3,898




4,299




3,941




4,515




2,890




1,827


Income tax expense



1,562




709




868




694




846




539




324


NET INCOME


$

6,678



$

3,189



$

3,431



$

3,247



$

3,669



$

2,351



$

1,503


Net income per common share,

   basic and diluted (1)


$

0.81



$

0.55



$

0.42



$

0.39



$

0.45



$

0.35



$

0.26


Weighted average number of shares,

   basic and diluted (1)



8,246,562




5,801,541




8,250,210




8,242,873




8,178,888




6,788,868




5,810,383
































(1) Amounts for all periods reflect the effect of the 5% stock dividend on April 30, 2018.

 

 

UNAUDITED LOAN, DEPOSIT AND BORROWING DETAIL

(Unaudited)

(In thousands)




June 30, 2019



March 31, 2019



June 30, 2018



Percentage Change




$ Amount



% of

Total



$ Amount



% of

Total



$ Amount



% of

Total



Last

3 Mos



Last

12 Mos


LOANS:

































Construction and land development loans


$

203,873




20.5

%


$

192,494




20.2

%


$

125,475




15.2

%



5.9

%



62.5

%

Residential real estate loans



158,406




15.9

%



151,884




15.9

%



124,253




15.1

%



4.3

%



27.5

%

Commercial real estate loans



425,862




42.8

%



409,522




42.9

%



342,757




41.6

%



4.0

%



24.2

%

Commercial industrial loans



117,905




11.9

%



105,391




11.0

%



127,678




15.5

%



11.9

%



-7.7

%

Consumer loans



88,421




8.9

%



95,299




10.0

%



104,286




12.6

%



-7.2

%



-15.2

%

Total Gross Loans


$

994,467




100.0

%


$

954,590




100.0

%


$

824,449




100.0

%



4.2

%



20.6

%

Less: Allowance for loan losses



(9,185)








(9,189)








(7,731)














Net deferred loan fees



(1,708)








(1,666)








(843)














Net Loans


$

983,574







$

943,735







$

815,875














DEPOSITS:

































Non-interest bearing demand deposits


$

201,405




19.9

%


$

193,744




20.0

%


$

179,827




22.4

%



4.0

%



12.0

%

Interest-bearing demand deposits:

































Demand deposits



65,117




6.5

%



59,639




6.2

%



60,389




7.6

%



9.2

%



7.8

%

Savings and NOW deposits



61,945




6.1

%



61,537




6.4

%



48,659




6.1

%



0.7

%



27.3

%

Money market accounts



115,641




11.4

%



147,655




15.3

%



118,194




14.7

%



-21.7

%



-2.2

%

Certificates of deposit $250,000 or more



222,292




22.0

%



129,671




13.4

%



81,456




10.2

%



71.4

%



172.9

%

Certificates of deposit less than $250,000



344,731




34.1

%



374,581




38.7

%



312,977




39.0

%



-8.0

%



10.1

%

Total Deposits


$

1,011,131




100.0

%


$

966,827




100.0

%


$

801,502




100.0

%



4.6

%



26.2

%

BORROWINGS:

































Federal Home Loan Bank advances



20,000




57.5

%



30,000




67.0

%



45,117




75.3

%



-33.3

%



-55.7

%

Subordinated debt



14,791




42.5

%



14,783




33.0

%



14,762




24.7

%



0.1

%



0.2

%

Total Borrowings


$

34,791




100.0

%


$

44,783




100.0

%


$

59,879




100.0

%



-22.3

%



-41.9

%

Total Deposits and Borrowings


$

1,045,922







$

1,011,610







$

861,381








3.4

%



21.4

%


































Core customer funding sources (1)


$

605,484




57.9

%


$

566,398




56.0

%


$

579,848




67.3

%



6.9

%



4.4

%

Brokered and listing service sources (2)



405,647




38.8

%



400,429




39.5

%



221,654




25.8

%



1.3

%



83.0

%

Federal Home Loan Bank advances



20,000




1.9

%



30,000




3.0

%



45,117




5.2

%



-33.3

%



-55.7

%

Subordinated debt (3)



14,791




1.4

%



14,783




1.5

%



14,762




1.7

%



0.1

%



0.2

%

Total Funding Sources


$

1,045,922




100.0

%


$

1,011,610




100.0

%


$

861,381




100.0

%



3.4

%



21.4

%




(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.

(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

(Unaudited)

(In thousands)




For the three months ended June 30, 2019



For the three months ended June 30, 2018




Average

Balance



Interest

Income/

Expense



Average

Yields/ Rate

(annualized)



Average

Balance



Interest

Income/

Expense



Average

Yields/ Rate

(annualized)


ASSETS:

























Interest earning assets:

























Loans (1)


$

978,282



$

13,877




5.67

%


$

760,531



$

9,649




5.07

%

Investment securities



73,218




615




3.36

%



54,803




407




2.97

%

Federal funds and interest-bearing deposits



73,494




375




2.04

%



33,136




115




1.39

%

Total interest earning assets


$

1,124,994



$

14,867




5.29

%


$

848,470



$

10,171




4.79

%

Other assets



40,842












35,756










Total assets


$

1,165,836











$

884,226










Liabilities and Stockholders' Equity:

























Interest-bearing liabilities:

























Interest-bearing demand deposits


$

57,299



$

283




1.98

%


$

58,220



$

223




1.53

%

Money market deposit accounts



123,110




587




1.91

%



122,938




413




1.34

%

Savings and NOW deposits



62,613




74




0.47

%



50,024




62




0.50

%

Time deposits



548,669




3,635




2.65

%



344,900




1,514




1.76

%

Total interest-bearing deposits


$

791,691



$

4,579




2.31

%


$

576,082



$

2,212




1.54

%

Federal funds and repos purchased



-




-




-




850




5




2.35

%

Subordinated debt



14,788




241




6.52

%



14,759




241




6.53

%

FHLB borrowings



23,956




162




2.70

%



47,135




205




1.74

%

Total interest-bearing liabilities


$

830,435



$

4,982




2.40

%


$

638,826



$

2,663




1.67

%

Demand deposits and other liabilities



208,405












173,941










Total liabilities


$

1,038,840











$

812,767










Stockholders' Equity



126,996












71,459










Total Liabilities and Stockholders' Equity


$

1,165,836











$

884,226










Interest Rate Spread











2.89

%











3.12

%

Net Interest Income and Margin






$

9,885




3.51

%






$

7,508




3.54

%



(1)  Includes loans classified as non-accrual.

 

 

UNAUDITED AVERAGE BALANCE SHEETS, INTEREST AND RATES

(Unaudited)

(In thousands)




For the six months ended June 30, 2019



For the six months ended June 30, 2018




Average

Balance



Interest

Income/

Expense



Average

Yields/ Rate

(annualized)



Average

Balance



Interest

Income/

Expense



Average

Yields/ Rate

(annualized)


ASSETS:

























Interest earning assets:

























Loans (1)


$

957,457



$

26,793




5.60

%


$

721,101



$

17,965




4.98

%

Investment securities



70,897




1,171




3.30

%



55,453




748




2.70

%

Federal funds and interest-bearing deposits



69,242




720




2.08

%



29,338




215




1.47

%

Total interest earning assets


$

1,097,596



$

28,684




5.23

%


$

805,892



$

18,928




4.70

%

Other assets



38,827












35,765










Total assets


$

1,136,423











$

841,657










Liabilities and Stockholders' Equity:

























Interest-bearing liabilities:

























Interest-bearing demand deposits


$

57,013



$

528




1.85

%


$

54,728



$

386




1.41

%

Money market deposit accounts



133,410




1,350




2.02

%



109,671




678




1.24

%

Savings and NOW deposits



60,626




147




0.48

%



48,922




109




0.45

%

Time deposits



508,421




6,566




2.58

%



326,276




2,604




1.60

%

Total interest-bearing deposits


$

759,470



$

8,591




2.26

%


$

539,597



$

3,777




1.40

%

Federal funds and repos purchased



69




1




2.89

%



885




12




2.71

%

Subordinated debt



14,784




479




6.48

%



14,755




479




6.49

%

FHLB borrowings



29,006




380




2.62

%



45,589




377




1.65

%

Total interest-bearing liabilities


$

803,329



$

9,451




2.35

%


$

600,826



$

4,645




1.55

%

Demand deposits and other liabilities



207,925












170,177










Total liabilities


$

1,011,254











$

771,003










Stockholders' Equity



125,169












70,654










Total Liabilities and Stockholders' Equity


$

1,136,423











$

841,657










Interest Rate Spread











2.88

%











3.15

%

Net Interest Income and Margin






$

19,233




3.50

%






$

14,283




3.54

%



(1) Includes loans classified as non-accrual.

 

 

UNAUDITED AVERAGE BALANCE SHEETS, INTEREST AND RATES

(Unaudited)

(Dollars in thousands except per share data)




At or For the Three Months Ended


At or For the Six Months Ended




June 30,


June 30,




2019



2018


2019



2018


Per share Data and Shares Outstanding (1)
















Earnings per share – (basic and diluted)


$

0.42



$

0.26


$

0.81



$

0.55


Tangible book value per share


$

15.64



$

12.42


$

15.64



$

12.42


Weighted average common shares (basic and diluted)



8,250,210




5,810,383



8,246,562




5,801,541


Common shares outstanding at end of period



8,250,259




5,810,498



8,250,259




5,810,498


Performance Ratios
















Return on average assets (annualized)



1.18

%



0.68

%


1.18

%



0.76

%

Return on average equity (annualized)



10.81

%



8.90

%


10.67

%



9.03

%

Yield on earning assets (annualized)



5.29

%



4.79

%


5.23

%



4.70

%

Cost of interest bearing liabilities (annualized)



2.40

%



1.67

%


2.35

%



1.55

%

Net interest spread



2.89

%



3.12

%


2.88

%



3.15

%

Net interest margin (annualized)



3.51

%



3.54

%


3.50

%



3.54

%

Noninterest income as a percentage of average assets (annualized)



0.46

%



0.26

%


0.40

%



0.26

%

Noninterest expense to average assets (annualized)



2.12

%



2.20

%


2.14

%



2.24

%

Efficiency ratio



55.02

%



60.18

%


56.67

%



61.44

%

Asset Quality
















Loans 30-89 days past due to total gross loans



0.03

%



0.01

%


0.03

%



0.01

%

Loans 90 days past due to total gross loans



0.00

%



0.00

%


0.00

%



0.00

%

Non-accrual loans to total gross loans



0.00

%



0.24

%


0.00

%



0.24

%

Non-performing assets


$

1,242



$

1,939


$

1,242



$

1,939


Non-performing assets to total assets



0.10

%



0.21

%


0.10

%



0.21

%

Allowance for loan losses to total gross loans



0.92

%



0.94

%


0.92

%



0.94

%

Allowance for loan losses to non-performing loans


N/A




3.92


N/A




3.92


Net loan charge-offs (recoveries)


$

754



$

(2)


$

721



$

5


Net charge-offs to average loans (annualized)



0.31

%



0.00

%


0.15

%



0.00

%

Troubled debt restructurings (total)
















Performing in accordance with modified terms


$

1,494



$

1,526


$

1,494



$

1,526


Not performing in accordance with modified terms


$

-



$

1,939


$

-



$

1,939


Regulatory Capital Ratios (Bank only) (2)
















Total risk-based capital ratio



13.34

%



10.10

%


13.34

%



10.10

%

Tier 1 risk-based capital ratio



12.52

%



9.25

%


12.52

%



9.25

%

Leverage ratio



12.38

%



9.64

%


12.38

%



9.64

%

Common equity tier 1 ratio



12.52

%



9.25

%


12.52

%



9.25

%

Other information
















Closing stock price


$

22.79



$

20.75


$

22.79



$

20.75


Tangible equity / tangible assets



10.89

%



7.71

%


10.89

%



7.71

%

Average tangible equity / average tangible assets



10.89

%



8.09

%


11.01

%



8.39

%

Number of full time equivalent employees



120




103



120




103


# Full service branch offices



6




6



6




6


































(1) Amounts for all periods presented are adjusted to reflect a 5% stock dividend effective April 30, 2018

(2) Regulatory capital ratios as of June 30, 2019 are preliminary.

 

Contact: Jeff W. Dick
(703) 481-4567

Cision View original content to download multimedia:http://www.prnewswire.com/news-releases/mainstreet-bancshares-inc-reports-record-second-quarter-earnings-300884504.html

SOURCE MainStreet Bancshares, Inc.

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