MainStreet Bancshares Inc. Reports First Quarter Results

Malaysian Reserve

21-04-2025

Expanding Net Interest Margin, Resilient Loan Portfolio and Well Capitalized
FAIRFAX, Va., April 21, 2025 /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.
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) 481-4579