Press Release

MainStreet Bancshares, Inc. Reports Record Third Quarter Earnings

Company Release - 10/16/2019 8:00 AM ET

FAIRFAX, Va., Oct. 16, 2019 /PRNewswire/ -- MainStreet Bancshares, Inc. (Nasdaq: MNSB) reported record net income of $3.7 million for the third quarter of 2019, or $0.45 per share of common stock. Net income for the nine months ending September 30, 2019 was $10.4 million, or $1.26 per share of common stock.

The Company produced a 1.20% return on average assets and 10.88% return on average equity for the nine months ended September 30, 2019, compared to a 0.82% return on average assets and a 9.46% return on average equity for the nine months ended September 30, 2018.

Net interest income was $29.2 million for the nine months ending September 30, 2019, up 38% from the nine months ending September 30, 2018. Noninterest income of $3.7 million for the nine months ending September 30, 2019 was more than double the amount from the nine months ending September 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. We anticipate that these sources should continue in a similar manner going forward.

Loan loss provisions of $1.3 million for the nine months ending September 30, 2019 are down 52% from the nine months ending September 30, 2018. The decrease in loan loss provisions is consistent with the Company's strategic decision to moderate loan growth for 2019.

Total assets were $1.2 billion at September 30, 2019, as compared to $1.1 billion at September 30, 2018, an increase of 17%. Net loans at September 30, 2019 total $992.6 million against net loans outstanding at September 30, 2018 of $850.8 million, an increase of 17%. Asset quality remains solid with non-performing assets to total assets at 0.10% as of September 30, 2019, down from 0.18% as of September 30, 2018. Capital levels for the Company remain strong.

Non-interest-bearing deposits increased to $218.1 million as of September 30, 2019, a 14% increase from September 30, 2018. Non-interest-bearing deposits represent 20% of total deposits at September 30, 2019. Total deposits as of September 30, 2019 were $1.1 billion an increase of $174.7 million from September 30, 2018.

As of September 30, 2019, the Company's tangible book value per share was $16.13, up 10% from $14.61 as of September 30, 2018. According to Nasdaq, there were 10,012 trades during the quarter totaling 722,531 shares traded. The closing share price was $21.05, or 131% of book value. The market cap was $173.9 million as of September 30, 2019.

QUOTES: "Even though there is an undercurrent of economic uncertainty, the Washington DC Market remains vibrant," says Chris Brockett, President of MainStreet Bancshares, Inc. and MainStreet Bank. "Our team of Lenders and Business Bankers are very active in the community and are working diligently to build strong and lasting business and financial relationships."

"Our focus has been to improve earnings and continue with good balance sheet growth," says Jeff W. Dick, Chairman and CEO of MainStreet Bancshares, Inc. and MainStreet Bank. "Our profitability is trending nicely and balance sheet growth through the third quarter is at 12%. We are making consistent progress growing low-cost and total core deposits."

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 in the fourth 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)




September 30,
2019



June 30,
2019



March 31,
2019



December 31,
2018



September 30,
2018


ASSETS





















Cash and cash equivalents





















Cash and due from banks


$

52,580



$

44,976



$

29,741



$

27,886



$

38,634


Federal funds sold



19,432




19,835




30,034




30,190




21,739


Total cash and cash equivalents



72,012




64,811




59,775




58,076




60,373


Investment securities available for sale, at fair value



88,198




60,079




69,308




55,979




79,489


Investment securities held to maturity, at carrying value



24,410




24,946




25,487




26,178




26,221


Restricted equity securities, at cost



4,882




5,307




5,732




5,894




4,209


Loans, net of allowance for loan losses of $9,370, $9,185, $9,189,

$8,831, and $8,327, consecutively



992,609




983,574




943,735




917,125




850,822


Premises and equipment, net



14,109




14,208




14,226




14,222




14,414


Other real estate owned, net



1,207




1,207











Accrued interest and other receivables



5,373




5,681




5,644




5,148




4,919


Bank owned life insurance



19,381




14,275




14,169




14,064




13,957


Other assets



12,095




10,676




8,005




3,927




2,577


Total Assets


$

1,234,276



$

1,184,764



$

1,146,081



$

1,100,613



$

1,056,981


LIABILITIES AND STOCKHOLDERS' EQUITY





















Liabilities:





















Non-interest bearing deposits


$

218,087



$

201,405



$

193,744



$

211,749



$

191,986


Interest-bearing DDA deposits



54,438




65,117




59,639




60,588




59,295


Savings and NOW deposits



63,746




61,945




61,537




51,371




52,602


Money market deposits



125,716




115,641




147,655




138,153




109,498


Time deposits



602,577




567,023




504,252




458,276




476,511


Total deposits



1,064,564




1,011,131




966,827




920,137




889,892


Federal Home Loan Bank advances and other borrowings



10,000




20,000




30,000




40,000




30,000


Subordinated debt



14,798




14,791




14,783




14,776




14,769


Other liabilities



11,697




9,806




9,488




4,449




2,785


Total Liabilities



1,101,059




1,055,728




1,021,098




979,362




937,446


Stockholders' Equity:





















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





















shares; issued and outstanding, 8,260,259 shares at September 30, 2019





















including 160,961 unvested shares, 8,250,259 shares at June 30, 2019





















including 153,586 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.



32,397




32,387




32,387




32,177




32,177


Capital surplus



74,860




74,609




74,353




74,256




76,427


Retained earnings



25,535




21,826




18,395




15,185




11,371


Accumulated other comprehensive gain (loss)



425




214




(152)




(367)




(440)


Total Stockholders' Equity



133,217




129,036




124,983




121,251




119,535


Total Liabilities and Stockholders' Equity


$

1,234,276



$

1,184,764



$

1,146,081



$

1,100,613



$

1,056,981


    




UNAUDITED CONSOLIDATED STATEMENTS OF INCOME INFORMATION
(Unaudited)
(In thousands, except share and per share data)




Year-to-Date



Three Months Ended




September 30,
2019



September 30,
2018



September 30,
2019



June 30,
2019



March 31,
2019



December 31,
2018



September 30,
2018


INTEREST INCOME:





























Interest and fees on loans


$

40,985



$

29,026



$

14,192



$

13,877



$

12,916



$

12,244



$

11,061


Interest on investment securities



1,668




1,089




497




615




556




381




341


Interest on federal funds sold



1,132




638




412




375




345




457




423


Total interest income



43,785




30,753




15,101




14,867




13,817




13,082




11,825


INTEREST EXPENSE:





























Interest on interest bearing DDA deposits



803




629




275




283




245




269




245


Interest on savings and NOW deposits



218




174




71




74




73




77




65


Interest on money market deposits



1,889




1,109




539




587




763




598




432


Interest on time deposits



10,466




5,283




3,900




3,635




2,931




2,784




2,677


Interest on Federal Home Loan Bank

advances and other borrowings



457




589




76




162




219




188




199


Interest on subordinated debt



723




722




244




241




238




244




243


Total interest expense



14,556




8,506




5,105




4,982




4,469




4,160




3,861


Net interest income



29,229




22,247




9,996




9,885




9,348




8,922




7,964


Provision for loan losses



1,260




2,630




185




750




325




496




600


Net interest income after provision
   for loan losses



27,969




19,617




9,811




9,135




9,023




8,426




7,364


OTHER INCOME:





























Deposit account service charges



1,208




792




392




446




370




311




320


Bank owned life insurance income



317




320




106




106




105




107




105


Loan swap fee income



878







407




181




290




713





Net gain on available-for-sale securities



5










5











Net gains on sale of loans



566







303




263











Other fee income



730




665




228




341




161




331




261


Total other income



3,704




1,777




1,436




1,342




926




1,462




686


OTHER EXPENSES:





























Salaries and employee benefits



11,597




8,578




3,890




3,847




3,860




3,267




3,018


Furniture and equipment expenses



1,271




1,325




451




435




385




534




493


Advertising and marketing



531




468




235




191




105




146




171


Occupancy expenses



644




515




214




217




213




220




206


Outside services



694




675




306




161




227




164




239


Administrative expenses



533




434




190




176




167




142




161


Other operating expenses



3,404




2,610




1,203




1,150




1,051




900




871


Total other expenses



18,674




14,605




6,489




6,177




6,008




5,373




5,159


INCOME BEFORE INCOME TAXES



12,999




6,789




4,758




4,300




3,941




4,515




2,891


Income tax expense



2,612




1,248




1,049




869




694




846




539


NET INCOME


$

10,387



$

5,541



$

3,709



$

3,431



$

3,247



$

3,669



$

2,352


Net income per common share,

   basic and diluted (1)


$

1.26



$

0.90



$

0.45



$

0.42



$

0.39



$

0.45



$

0.35


Weighted average number of shares,

   basic and diluted (1)



8,248,284




6,131,987




8,251,672




8,250,210




8,242,873




8,178,888




6,788,868



(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)




September 30, 2019



June 30, 2019



September 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


$

207,441




20.7

%


$

203,873




20.5

%


$

162,233




18.9

%



1.8

%



27.9

%

Residential real estate loans



162,801




16.2

%



158,406




15.9

%



124,906




14.5

%



2.8

%



30.3

%

Commercial real estate loans



434,735




43.3

%



425,862




42.8

%



343,923




40.0

%



2.1

%



26.4

%

Commercial industrial loans



115,902




11.5

%



117,905




11.9

%



125,011




14.5

%



-1.7

%



-7.3

%

Consumer loans



83,013




8.3

%



88,421




8.9

%



104,067




12.1

%



-6.1

%



-20.2

%

Total Gross Loans


$

1,003,892




100.0

%


$

994,467




100.0

%


$

860,140




100.0

%



0.9

%



16.7

%

Less: Allowance for loan losses



(9,370)








(9,185)








(8,327)














Net deferred loan fees



(1,913)








(1,708)








(991)














Net Loans


$

992,609







$

983,574







$

850,822














DEPOSITS:

































Non-interest bearing demand deposits


$

218,087




20.5

%


$

201,405




19.9

%


$

191,986




21.6

%



8.3

%



13.6

%

Interest-bearing demand deposits:

































Demand deposits



54,438




5.1

%



65,117




6.5

%



59,295




6.7

%



-16.4

%



-8.2

%

Savings and NOW deposits



63,746




6.0

%



61,945




6.1

%



52,602




5.9

%



2.9

%



21.2

%

Money market accounts



125,716




11.8

%



115,641




11.4

%



109,498




12.3

%



8.7

%



14.8

%

Certificates of deposit $250,000 or more



119,214




11.2

%



222,292




22.0

%



379,355




42.6

%



-46.4

%



-68.6

%

Certificates of deposit less than $250,000



483,363




45.4

%



344,731




34.1

%



97,156




10.9

%



40.2

%



397.5

%

Total Deposits


$

1,064,564




100.0

%


$

1,011,131




100.0

%


$

889,892




100.0

%



5.3

%



19.6

%

BORROWINGS:

































Federal Home Loan Bank advances



10,000




40.3

%



20,000




57.5

%



30,000




67.0

%



-50.0

%



-66.7

%

Subordinated debt



14,798




59.7

%



14,791




42.5

%



14,769




33.0

%



0.0

%



0.2

%

Total Borrowings


$

24,798




100.0

%


$

34,791




100.0

%


$

44,769




100.0

%



-28.7

%



-44.6

%

Total Deposits and Borrowings


$

1,089,362







$

1,045,922







$

934,661








4.2

%



16.6

%


































Core customer funding sources (1)


$

655,631




60.2

%


$

605,484




57.9

%


$

569,842




61.0

%



8.3

%



15.1

%

Brokered and listing service sources (2)



408,933




37.5

%



405,647




38.8

%



320,050




34.2

%



0.8

%



27.8

%

Federal Home Loan Bank advances



10,000




0.9

%



20,000




1.9

%



30,000




3.2

%



-50.0

%



-66.7

%

Subordinated debt (3)



14,798




1.4

%



14,791




1.4

%



14,769




1.6

%



0.0

%



0.2

%

Total Funding Sources


$

1,089,362




100.0

%


$

1,045,922




100.0

%


$

934,661




100.0

%



4.2

%



16.6

%


(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 September 30, 2019



For the three months ended September 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)


$

996,777



$

14,192




5.70

%


$

842,558



$

11,061




5.25

%

Investment securities



71,182




497




2.79

%



55,152




341




2.47

%

Federal funds and interest-bearing deposits



82,056




412




2.01

%



97,021




423




1.74

%

Total interest earning assets


$

1,150,015



$

15,101




5.25

%


$

994,731



$

11,825




4.76

%

Other assets



43,524












37,623










Total assets


$

1,193,539











$

1,032,354










Liabilities and Stockholders' Equity:

























Interest-bearing liabilities:

























Interest-bearing demand deposits


$

58,510



$

275




1.88

%


$

61,440



$

245




1.60

%

Money market deposit accounts



117,717




539




1.83

%



113,054




432




1.53

%

Savings and NOW deposits



62,975




71




0.45

%



51,893




65




0.50

%

Time deposits



587,537




3,900




2.66

%



478,164




2,677




2.24

%

Total interest-bearing deposits


$

826,739



$

4,785




2.32

%


$

704,551



$

3,419




1.94

%

Subordinated debt



14,795




244




6.60

%



14,766




243




6.58

%

FHLB borrowings



11,522




76




2.64

%



34,376




199




2.32

%

Total interest-bearing liabilities


$

853,056



$

5,105




2.39

%


$

753,693



$

3,861




2.05

%

Demand deposits and other liabilities



209,125












186,559










Total liabilities


$

1,062,181











$

940,252










Stockholders' Equity



131,358












92,102










Total Liabilities and Stockholders' Equity


$

1,193,539











$

1,032,354










Interest Rate Spread











2.86

%











2.71

%

Net Interest Income and Margin






$

9,996




3.48

%






$

7,964




3.20

%


(1) Includes loans classified as non-accrual.


    



UNAUDITED AVERAGE BALANCE SHEETS, INTEREST AND RATES
(Unaudited)
(In thousands)




For the nine months ended
September 30, 2019



For the nine months ended
September 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)


$

970,708



$

40,985




5.63

%


$

762,031



$

29,026




5.08

%

Investment securities



71,069




1,668




3.13

%



55,235




1,089




2.63

%

Federal funds and interest-bearing deposits



72,011




1,132




2.10

%



51,884




638




1.64

%

Total interest earning assets


$

1,113,788



$

43,785




5.24

%


$

869,150



$

30,753




4.72

%

Other assets



41,883












36,885










Total assets


$

1,155,671











$

906,035










Liabilities and Stockholders' Equity:

























Interest-bearing liabilities:

























Interest-bearing demand deposits


$

57,517



$

803




1.86

%


$

63,395



$

629




1.32

%

Money market deposit accounts



128,122




1,889




1.97

%



104,365




1,109




1.42

%

Savings and NOW deposits



61,418




218




0.47

%



49,923




174




0.46

%

Time deposits



535,083




10,466




2.61

%



377,376




5,283




1.87

%

Total interest-bearing deposits


$

782,140



$

13,376




2.28

%


$

595,059



$

7,195




1.61

%

Federal funds and repos purchased



46







0.00

%



609




12




2.63

%

Subordinated debt



14,788




723




6.52

%



14,759




722




6.52

%

FHLB borrowings



23,114




457




2.64

%



41,810




577




1.84

%

Total interest-bearing liabilities


$

820,088



$

14,556




2.37

%


$

652,237



$

8,506




1.74

%

Demand deposits and other liabilities



208,328












175,916










Total liabilities


$

1,028,416











$

828,153










Stockholders' Equity



127,255












77,882










Total Liabilities and Stockholders' Equity


$

1,155,671











$

906,035










Interest Rate Spread











2.87

%











2.98

%

Net Interest Income and Margin






$

29,229




3.50

%






$

22,247




3.41

%


(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 Nine Months Ended




September 30,


September 30,




2019



2018


2019



2018


Per share Data and Shares Outstanding (1)
















Earnings per share – (basic and diluted)


$

0.45



$

0.35


$

1.26



$

0.90


Tangible book value per share


$

16.13



$

14.61


$

16.13



$

14.61


Weighted average common shares (basic and diluted)



8,251,672




6,788,868



8,248,284




6,131,987


Common shares outstanding at end of period



8,260,259




8,179,871



8,260,259




8,179,871


Performance Ratios
















Return on average assets (annualized)



1.24

%



0.91

%


1.20

%



0.82

%

Return on average equity (annualized)



11.33

%



8.90

%


10.88

%



9.46

%

Yield on earning assets (annualized)



5.25

%



4.76

%


5.24

%



4.72

%

Cost of interest bearing liabilities (annualized)



2.39

%



2.05

%


2.37

%



1.74

%

Net interest spread



2.86

%



2.71

%


2.87

%



2.98

%

Net interest margin (annualized)



3.48

%



3.20

%


3.50

%



3.41

%

Noninterest income as a percentage of average assets (annualized)



0.48

%



0.27

%


0.43

%



0.26

%

Noninterest expense to average assets (annualized)



2.17

%



2.00

%


2.15

%



2.15

%

Efficiency ratio



56.75

%



59.65

%


56.70

%



60.79

%

Asset Quality
















Loans 30-89 days past due to total gross loans



0.01

%



0.01

%


0.01

%



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

%



0.23

%


0.00

%



0.23

%

Non-performing assets


$

1,208



$

1,939


$

1,208



$

1,939


Non-performing assets to total assets



0.10

%



0.18

%


0.10

%



0.18

%

Allowance for loan losses to total gross loans



0.94

%



0.97

%


0.94

%



0.97

%

Allowance for loan losses to non-performing loans


N/A




4.29


N/A




4.29


Net loan charge-offs (recoveries)


$



$

4


$

721



$

8


Net charge-offs to average loans (annualized)



0.00

%



0.00

%


0.10

%



0.00

%

Troubled debt restructurings (total)
















Performing in accordance with modified terms


$

1,488



$

1,521


$

1,488



$

1,521


Not performing in accordance with modified terms


$



$

1,939


$



$

1,939


Regulatory Capital Ratios (Bank only) (2)
















Total risk-based capital ratio



13.60

%



14.58

%


13.60

%



14.58

%

Tier 1 risk-based capital ratio



12.77

%



13.70

%


12.77

%



13.70

%

Leverage ratio



12.52

%



12.57

%


12.52

%



12.57

%

Common equity tier 1 ratio



12.77

%



13.70

%


12.77

%



13.70

%

Other information
















Closing stock price


$

21.05



$

20.95


$

21.05



$

20.95


Tangible equity / tangible assets



10.79

%



11.31

%


10.79

%



11.31

%

Average tangible equity / average tangible assets



10.98

%



8.92

%


11.01

%



8.62

%

Number of full time equivalent employees



118




105



118




105


# 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 September 30, 2019 are preliminary.



    

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

Cision View original content:http://www.prnewswire.com/news-releases/mainstreet-bancshares-inc-reports-record-third-quarter-earnings-300939285.html

SOURCE MainStreet Bancshares, Inc.

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