MainStreet Bancshares Inc. Delivered Consistent 2023 Earnings Despite Market Turmoil

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Jan 22, 2024, 08:00 ET

Year-End and Fourth Quarter Results Underscore Steady Progress in Challenging Environment

FAIRFAX, Va., Jan. 22, 2024 /PRNewswire/ -- MainStreet Bancshares, Inc. (Nasdaq: MNSB & MNSBP), the holding company for MainStreet Bank, reported net income of $26.6 million for the year ended December 31, 2023, consistent with expectations. Earnings per share for the year totaled $3.25.

Annualized returns for 2023 included:

Return on Average Equity (ROAE):	12.66 %
Return on Average Assets (ROAA):	1.38 %
Net Interest Margin (NIM) (tax equivalent):	4.08 %
Efficiency Ratio:	56.7 %
Liquidity Coverage Ratio:	133 %
Core Deposit Ratio:	74 %
FDIC Insured Deposits / Total Deposits:	77 %
Allowance for Credit Losses (ACL):	1.01 %
Tangible Book Value per Common Share:	$23.86

"We've maintained a steady course, meeting customer credit needs and delivering healthy shareholder value at a time when community banks across our region and the nation face intense headwinds," said Jeff W. Dick, Chairman and CEO of MainStreet Bancshares Inc. and MainStreet Bank.

"It's worth reflecting on what an extraordinarily challenging year this was," he continued. "In the first quarter of 2023, we witnessed the second, third, and fourth largest bank failures in U.S. history. The fallout increased the impact of historically steep interest rate hikes. Yet MainStreet Bancshares has not just persevered but prospered. We see a bright future for all facets of our business, and we continue to invest in innovation as our Avenu embedded banking solution comes to fruition."

Strong Fundamentals
"Our core banking business is thriving," added Abdul Hersiburane, MainStreet Bank's President. "Core deposits rose to 74% in the fourth quarter, up from 68% in the third quarter, and in the same period our wholesale deposits declined from 31% to 24%. Net loans, meanwhile, were up 8% for the year."

The Company's loan book totaled $1.73 billion at the end of 2023, and concentrations are well managed, with commercial real estate standing at 373% of total capital, below the board-set limit of 375%. The quality of the loan portfolio remained pristine, with negligible net chargeoffs and past-due loans.

The cumulative net interest margin rested at 4.08% for the year, as funding costs began to stabilize. While this measure has trended down quarter over quarter, the Company's levels have consistently remained higher than most of its peers due to strong balance sheet management.

Fortifying Avenu for Growth
Since it went live in the third quarter, Avenu has continued to make progress in attracting and onboarding customers. Its inaugural client, Safari Pay, has now entered the beta stage and is gradually adding customers and conducting transactions. As Avenu ramps up and begins compliance reviews and onboarding with additional customers, the team will continue to harden and test systems and fortify the operation to scale up.

"We set out to build from scratch a compliance-centric system that can connect our partners and their apps directly and seamlessly to MainStreet Bank's banking core," Dick noted. "This was never a modest task because we weren't interested in jumping onboard the middleware bandwagon. We wanted to build our embedded banking solution with meticulous care, bringing our deep understanding of regulatory and business challenges to bear. We are confident that our embedded banking solution will prove innovative and enhance MainStreet Bank's deposit growth and support expanded lending."

ABOUT AVENU
Avenu, MainStreet Bank's fully integrated Software as a Service (SaaS) solution, identified its first client on October 18. SafariPay, via its global money transmittance service PaySii, expects its customers to maintain average balances of $4 million on the platform.

Avenu — Banking Delivered
Avenu is the only embedded banking solution that connects our partners and their apps directly and seamlessly to a banking core — MainStreet Bank's banking core. We are not a sponsor bank without our own technology, and we are not a middleware software company (aggregator) without our own bank. We are Avenu, a leading financial technology company backed by an established community business bank in the heart of Washington, D.C.

Avenu — Serving a Community of Innovation
Our clients are fintechs, application developers, money movers, and entrepreneurs. They all have one thing in common: They are innovating how money moves to solve real-world issues and help communities thrive. We are focused on servicing our community and long-term business relationships.

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 the novel coronavirus (COVID-19) outbreak, 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.

MainStreet Bancshares, Inc.
UNAUDITED CONSOLIDATED BALANCE SHEET INFORMATION
(In thousands)

	December 31, 2023		September 30, 2023		June 30, 2023		March 31, 2023		December 31, 2022*
ASSETS
Cash and cash equivalents
Cash and due from banks	$	53,581	$	44,912	$	67,700	$	225,334	$	48,931
Federal funds sold		60,932		76,271		30,341		—		81,669
Total cash and cash equivalents		114,513		121,183		98,041		225,334		130,600
Investment securities available for sale, at fair value		59,928		56,726		60,579		63,209		62,631
Investment securities held to maturity, at amortized cost, net of allowance for credit losses of $0 for all periods		17,275		17,565		17,590		17,616		17,642
Restricted equity securities, at amortized cost		24,356		20,619		20,304		22,436		24,325
Loans, net of allowance for credit losses of $16,506, $15,626, $16,047, $15,435, and $14,114, respectively		1,705,137		1,681,444		1,637,484		1,617,275		1,579,950
Premises and equipment, net		13,944		14,275		14,427		14,521		14,709
Accrued interest and other receivables		12,390		11,184		10,256		9,744		9,581
Computer software, net of amortization		14,657		13,373		12,266		10,559		9,149
Bank owned life insurance		38,318		38,035		37,763		37,503		37,249
Other assets		34,914		47,087		40,641		36,811		39,915
Total Assets	$	2,035,432	$	2,021,491	$	1,949,351	$	2,055,008	$	1,925,751
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Non-interest bearing deposits	$	364,606	$	394,859	$	388,992	$	487,875	$	550,690
Interest bearing demand deposits		137,128		76,423		71,308		100,522		80,099
Savings and NOW deposits		45,878		46,550		51,294		53,499		51,419
Money market deposits		442,179		461,398		380,500		260,316		222,540
Time deposits		696,336		703,960		701,289		730,076		608,141
Total deposits		1,686,127		1,683,190		1,593,383		1,632,288		1,512,889
Federal funds borrowed		15,000		—		30,000		60,696		—
Federal Home Loan Bank advances		—		—		—		45,000		100,000
Subordinated debt		72,642		72,543		72,444		72,344		72,245
Other liabilities		40,146		52,015		43,016		39,692		42,335
Total Liabilities		1,813,915		1,807,748		1,738,843		1,850,020		1,727,469
Stockholders' Equity:
Preferred stock		27,263		27,263		27,263		27,263		27,263
Common stock		29,198		29,188		29,177		29,185		28,736
Capital surplus		65,985		65,407		64,768		64,213		63,999
Retained earnings		106,549		102,694		97,646		91,991		86,830
Accumulated other comprehensive loss		(7,478)		(10,809)		(8,346)		(7,664)		(8,546)
Total Stockholders' Equity		221,517		213,743		210,508		204,988		198,282
Total Liabilities and Stockholders' Equity	$	2,035,432	$	2,021,491	$	1,949,351	$	2,055,008	$	1,925,751

*Derived from audited financial statements

MainStreet Bancshares, Inc.
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME INFORMATION
(In thousands, except share and per share data)

	Year-to-Date				Three Months Ended
	December 31, 2023		December 31, 2022		December 31, 2023		September 30, 2023		June 30, 2023		March 31, 2023		December 31, 2022
INTEREST INCOME:
Interest and fees on loans	$	116,184	$	78,872	$	30,849	$	29,750	$	28,855	$	26,731	$	23,972
Interest on investment securities
Taxable securities		1,836		1,603		451		459		407		518		467
Tax-exempt securities		1,065		1,058		268		268		265		264		262
Interest on federal funds sold		5,038		2,312		1,510		1,217		1,179		1,132		1,071
Total interest income		124,123		83,845		33,078		31,694		30,706		28,645		25,772
INTEREST EXPENSE:
Interest on interest bearing demand deposits		1,892		601		1,058		240		251		343		256
Interest on savings and NOW deposits		546		203		146		145		147		108		81
Interest on money market deposits		13,924		1,547		5,639		4,156		2,926		1,203		781
Interest on time deposits		27,003		8,202		8,257		7,526		7,077		4,144		2,966
Interest on federal funds borrowed		299		—		25		35		201		38		—
Interest on Federal Home Loan Bank advances		1,224		347		118		186		13		906		264
Interest on subordinated debt		3,288		2,936		828		828		820		812		828
Total interest expense		48,176		13,836		16,071		13,116		11,435		7,554		5,176
Net interest income		75,947		70,009		17,007		18,578		19,271		21,091		20,596
Provision for credit losses		1,642		2,398		466		255		638		283		1,118
Net interest income after provision for credit losses		74,305		67,611		16,541		18,323		18,633		20,808		19,478
NON-INTEREST INCOME:
Deposit account service charges		2,149		2,420		510		514		535		590		610
Bank owned life insurance income		1,069		1,008		283		272		259		255		253
Loan swap fee income		—		619		—		—		—		—		—
Net gain on held-to-maturity securities		—		4		—		—		—		—		—
Net loss on sale of loans		—		(168)		—		—		—		—		—
Other non-interest income		420		951		68		177		16		158		196
Total other income		3,638		4,834		861		963		810		1,003		1,059
NON-INTEREST EXPENSES:
Salaries and employee benefits		28,267		23,801		7,129		6,924		6,595		7,621		6,775
Furniture and equipment expenses		2,787		2,786		804		713		772		498		710
Advertising and marketing		2,343		2,304		271		577		698		797		620
Occupancy expenses		1,684		1,471		397		375		426		486		378
Outside services		2,044		2,075		352		697		504		490		529
Administrative expenses		922		872		219		277		211		215		214
Other operating expenses		7,072		5,748		1,964		1,866		1,646		1,596		1,481
Total non-interest expenses		45,119		39,057		11,136		11,429		10,852		11,703		10,707
Income before income tax expense		32,824		33,388		6,266		7,857		8,591		10,108		9,830
Income tax expense		6,239		6,714		1,120		1,516		1,645		1,957		2,252
Net income		26,585		26,674		5,146		6,341		6,946		8,151		7,578
Preferred stock dividends		2,156		2,156		539		539		539		539		539
Net income available to common shareholders	$	24,429	$	24,518	$	4,607	$	5,802	$	6,407	$	7,612	$	7,039
Net income per common share, basic and diluted	$	3.25	$	3.26	$	0.61	$	0.77	$	0.85	$	1.01	$	0.95
Weighted average number of common shares, basic and diluted		7,522,913		7,529,382		7,527,327		7,524,332		7,522,764		7,517,213		7,433,607

MainStreet Bancshares, Inc.
UNAUDITED LOAN, DEPOSIT AND BORROWING DETAIL
*(In thousands)*

	December 31, 2023					September 30, 2023					December 31, 2022					Percentage Change
	$ Amount		% of Total			$ Amount		% of Total			$ Amount		% of Total			Last 3 Mos			Last 12 Mos
LOANS:
Construction and land development loans	$	429,637		24.9	%	$	426,698		25.1	%	$	393,783		24.6	%		0.7	%		9.1	%
Residential real estate loans		474,602		27.5	%		462,935		27.2	%		394,394		24.7	%		2.5	%		20.3	%
Commercial real estate loans		743,827		43.1	%		734,615		43.1	%		700,728		43.8	%		1.3	%		6.2	%
Commercial and industrial loans		75,415		4.4	%		73,855		4.3	%		97,351		6.1	%		2.1	%		-22.5	%
Consumer loans		3,610		0.1	%		4,598		0.3	%		13,336		0.8	%		-21.5	%		-72.9	%
Total Gross Loans	$	1,727,091		100.0	%	$	1,702,701		100.0	%	$	1,599,592		100.0	%		1.4	%		8.0	%
Less: Allowance for credit losses		(16,506)					(15,626)					(14,114)
Net deferred loan fees		(5,448)					(5,631)					(5,528)
Net Loans	$	1,705,137				$	1,681,444				$	1,579,950
DEPOSITS:
Non-interest bearing deposits	$	364,606		21.6	%	$	394,859		23.5	%	$	550,690		36.4	%		-7.7	%		-33.8	%
Interest-bearing deposits:
Demand deposits		137,128		8.1	%		76,423		4.5	%		80,099		5.3	%		79.4	%		71.2	%
Savings and NOW deposits		45,878		2.7	%		46,550		2.8	%		51,419		3.4	%		-1.4	%		-10.8	%
Money market accounts		442,179		26.2	%		461,398		27.4	%		222,540		14.7	%		-4.2	%		98.7	%
Certificates of deposit $250,000 or more		442,662		26.3	%		432,440		25.7	%		370,005		24.5	%		2.4	%		19.6	%
Certificates of deposit less than $250,000		253,674		15.1	%		271,520		16.1	%		238,136		15.7	%		-6.6	%		6.5	%
Total Deposits	$	1,686,127		100.0	%	$	1,683,190		100.0	%	$	1,512,889		100.0	%		0.2	%		11.5	%
BORROWINGS:
Federal funds borrowed		15,000		17.1	%		—		0.0	%		—		0.0	%		100.0	%		100.0	%
Federal Home Loan Bank advances		—		0.0	%		—		0.0	%		100,000		58.1	%		-100.0	%		-100.0	%
Subordinated debt		72,642		82.9	%		72,543		100.0	%		72,245		41.9	%		0.1	%		0.5	%
Total Borrowings	$	87,642		100.0	%	$	72,543		100.0	%	$	172,245		100.0	%		20.8	%		-49.1	%
Total Deposits and Borrowings	$	1,773,769				$	1,755,733				$	1,685,134					1.0	%		5.3	%

Core customer funding sources ⁽¹⁾	$	1,252,534		70.7	%	$	1,144,513		65.2	%	$	1,157,573		68.7	%		9.4	%		8.2	%
Brokered and listing service sources ⁽²⁾		433,593		24.4	%		538,677		30.7	%		355,316		21.1	%		-19.5	%		22.0	%
Federal funds borrowed		15,000		0.8	%		—		0.0	%		—		0.0	%		100.0	%		100.0	%
Federal Home Loan Bank advances		—		0.0	%		—		0.0	%		100,000		5.9	%		0.0	%		-100.0	%
Subordinated debt ⁽³⁾		72,642		4.1	%		72,543		4.1	%		72,245		4.3	%		0.1	%		0.5	%
Total Funding Sources	$	1,773,769		100.0	%	$	1,755,733		100.0	%	$	1,685,134		100.0	%		1.0	%		5.3	%


(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 $187.2 million in core deposits placed in reciprocal networks for FDIC insurance coverage that will be classified as brokered deposits on the call report in pursuent to rule 12 CFR 337.6(e) as of December 31, 2023.
(3)	Subordinated debt obligation qualifies as Tier 2 capital at the holding company and Tier 1 capital at the Bank

MainStreet Bancshares, Inc.
UNAUDITED AVERAGE BALANCE SHEETS, INTEREST AND RATES
(In thousands)

	For the three months ended December 31, 2023							For the three months ended December 31, 2022
	Average Balance		Interest Income/ Expense (3)(4)		Average Yields/ Rate (annualized) (3)(4)			Average Balance		Interest Income/ Expense (3)(4)		Average Yields/ Rate (annualized) (3)(4)
ASSETS:
Interest-earning assets:
Loans ⁽¹⁾⁽²⁾	$	1,720,790	$	30,849		7.11	%	$	1,510,087	$	23,972		6.30	%
Securities:
Taxable		67,494		451		2.65	%		70,776		467		2.62	%
Tax-exempt		37,614		339		3.58	%		38,007		332		3.46	%
Federal funds and interest-bearing deposits		114,421		1,510		5.24	%		124,865		1,071		3.40	%
Total interest-earning assets	$	1,940,319	$	33,149		6.78	%	$	1,743,735	$	25,842		5.88	%
Other assets		57,877							55,559
Total assets	$	1,998,196						$	1,799,294
Liabilities and Stockholders' Equity:
Interest-bearing liabilities:
Interest-bearing demand deposits	$	98,021	$	1,058		4.28	%	$	81,724	$	256		1.24	%
Savings and NOW deposits		47,142		146		1.23	%		53,570		81		0.60	%
Money market deposit accounts		477,916		5,639		4.68	%		213,530		781		1.45	%
Time deposits		710,026		8,257		4.61	%		613,262		2,966		1.92	%
Total interest-bearing deposits	$	1,333,105	$	15,100		4.49	%	$	962,086	$	4,084		1.68	%
Federal funds borrowed		1,740		25		5.70	%		2		—		—
FHLB advances		8,424		118		5.56	%		23,913		264		4.38	%
Subordinated debt		72,603		828		4.52	%		72,206		828		4.55	%
Total interest-bearing liabilities	$	1,415,872	$	16,071		4.50	%	$	1,058,207	$	5,176		1.94	%
Demand deposits and other liabilities		365,655							546,827
Total liabilities	$	1,781,527						$	1,605,034
Stockholders' Equity		216,669							194,260
Total Liabilities and Stockholders' Equity	$	1,998,196						$	1,799,294
Interest Rate Spread						2.28	%						3.94	%
Net Interest Income			$	17,078						$	20,666
Net Interest Margin						3.49	%						4.70	%


(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 Appendix for reconciliation of non-GAAP measures

MainStreet Bancshares, Inc.
UNAUDITED AVERAGE BALANCE SHEETS, INTEREST AND RATES
(In thousands)

	For the year ended December 31, 2023							For the year ended December 31, 2022
	Average Balance		Interest Income/ Expense (3)(4)		Average Yields/ Rate (annualized) (3)(4)			Average Balance		Interest Income/ Expense (3)(4)		Average Yields/ Rate (annualized) (3)(4)
ASSETS:
Interest-earning assets:
Loans ⁽¹⁾⁽²⁾	$	1,659,179	$	116,184		7.00	%	$	1,442,716	$	78,872		5.47	%
Securities:
Taxable		68,815		1,836		2.67	%		72,809		1,603		2.20	%
Tax-exempt		37,810		1,348		3.57	%		38,528		1,339		3.48	%
Federal funds and interest-bearing deposits		103,840		5,038		4.85	%		122,596		2,312		1.89	%
Total interest-earning assets	$	1,869,644	$	124,406		6.65	%	$	1,676,649	$	84,126		5.02	%
Other assets		62,161							67,380
Total assets	$	1,931,805						$	1,744,029
Liabilities and Stockholders' Equity:
Interest-bearing liabilities:
Interest-bearing demand deposits	$	83,087	$	1,892		2.28	%	$	85,566	$	601		0.70	%
Savings and NOW deposits		49,565		546		1.10	%		63,401		203		0.32	%
Money market deposit accounts		365,815		13,924		3.81	%		137,066		1,547		1.13	%
Time deposits		702,034		27,003		3.85	%		642,918		8,202		1.28	%
Total interest-bearing deposits	$	1,200,501	$	43,365		3.61	%	$	928,951	$	10,553		1.14	%
Federal funds borrowed		5,583		299		5.36	%		2		—		—
FHLB advances		24,959		1,224		4.90	%		23,986		347		1.45	%
Subordinated debt		72,455		3,288		4.54	%		65,176		2,936		4.50	%
Total interest-bearing liabilities	$	1,303,498	$	48,176		3.70	%	$	1,018,115	$	13,836		1.36	%
Demand deposits and other liabilities		418,386							535,075
Total liabilities	$	1,721,884						$	1,553,190
Stockholders' Equity		209,921							190,839
Total Liabilities and Stockholders' Equity	$	1,931,805						$	1,744,029
Interest Rate Spread						2.95	%						3.66	%
Net Interest Income			$	76,230						$	70,290
Net Interest Margin						4.08	%						4.19	%


(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 Appendix for reconciliation of non-GAAP measures

MainStreet Bancshares, Inc.
UNAUDITED SUMMARY FINANCIAL DATA
(Dollars in thousands except per share data)

	At or For the Three Months Ended						At or For the Year Ended
	December 31,						December 31,
	2023			2022			2023			2022
*Per share Data and Shares Outstanding*
Earnings per common share (basic and diluted)	$	0.61		$	0.95		$	3.25		$	3.26
Book value per common share	$	25.81		$	22.98		$	25.81		$	22.98
Tangible book value per common share(2)	$	23.86		$	21.75		$	23.86		$	21.75
Weighted average common shares (basic and diluted)		7,527,327			7,433,607			7,522,913			7,529,382
Common shares outstanding at end of period		7,527,415			7,442,743			7,527,415			7,442,743
*Performance Ratios*
Return on average assets (annualized)		1.02	%		1.67	%		1.38	%		1.53	%
Return on average equity (annualized)		9.42	%		15.48	%		12.66	%		13.98	%
Return on average common equity (annualized)		9.65	%		16.72	%		13.37	%		14.99	%
Yield on earning assets (FTE) (2) (annualized)		6.78	%		5.88	%		6.65	%		5.02	%
Cost of interest bearing liabilities (annualized)		4.50	%		1.94	%		3.70	%		1.36	%
Net interest spread (FTE)(2)		2.28	%		3.94	%		2.95	%		3.66	%
Net interest margin (FTE)(2) (annualized)		3.49	%		4.70	%		4.08	%		4.19	%
Noninterest income as a percentage of average assets (annualized)		0.17	%		0.23	%		0.19	%		0.28	%
Noninterest expense to average assets (annualized)		2.21	%		2.36	%		2.34	%		2.24	%
Efficiency ratio(3)		62.33	%		49.45	%		56.69	%		52.19	%
*Asset Quality*
Allowance for credit losses (ACL)
Beginning balance, ACL - loans	$	15,626		$	12,994		$	14,114		$	11,697
Add: current expected credit losses, nonrecurring adoption		—			—			895			—
Add: recoveries		9			2			22			19
Less: charge-offs		(137)			—			(468)			—
Add: provision for (recovery of) credit losses - loans		1,008			1,118			1,943			2,398
Ending balance, ACL - loans	$	16,506		$	14,114		$	16,506		$	14,114

Beginning balance, reserve for unfunded commitment (RUC)	$	1,552		$	—		$	—		$	—
Add: current expected credit losses, nonrecurring adoption		—			—			1,310			—
Add: provision for (reversal of) unfunded commitments, net		(543)			—			(301)			—
Ending balance, RUC	$	1,009		$	—		$	1,009		$	—
Total allowance for credit losses	$	17,515		$	14,114		$	17,515		$	14,114

Allowance for credit losses on loans to total gross loans		0.96	%		0.88	%		0.96	%		0.88	%
Allowance for credit losses to total gross loans		1.01	%		0.89	%		1.01	%		0.89	%
Allowance for credit losses on loans to non-performing loans		16.44			N/A			16.44			N/A
Net charge-offs (recoveries) to average gross loans (annualized)		0.03	%		0.00	%		0.03	%		0.00	%
*Concentration Ratios*
Commercial real estate loans to total capital (4)		372.50	%		377.54	%		372.50	%		377.54	%
Construction loans to total capital (5)		137.67	%		137.41	%		137.67	%		137.41	%
*Non-performing Assets*
Loans 30-89 days past due to total gross loans		0.04	%		0.00	%		0.04	%		0.00	%
Loans 90 days past due to total gross loans		0.00	%		0.00	%		0.00	%		0.00	%
Non-accrual loans to total gross loans		0.06	%		0.00	%		0.06	%		0.00	%
Non-performing assets	$	1,004		$	—		$	1,004		$	—
Non-performing assets to total assets		0.05	%		0.00	%		0.05	%		0.00	%
*Regulatory Capital Ratios (Bank only) (1)*
Total risk-based capital ratio		17.18	%		16.27	%		17.18	%		16.27	%
Tier 1 risk-based capital ratio		16.22	%		15.47	%		16.22	%		15.47	%
Leverage ratio		14.66	%		15.05	%		14.66	%		15.05	%
Common equity tier 1 ratio		16.22	%		15.47	%		16.22	%		15.47	%
*Other information*
Closing stock price	$	24.81		$	27.49		$	24.81		$	27.49
Tangible equity / tangible assets (2)		10.24	%		9.87	%		10.24	%		9.87	%
Average tangible equity / average tangible assets (2)		10.22	%		10.39	%		10.31	%		10.66	%
Number of full time equivalent employees		186			168			186			168
Number of full service branch offices		6			6			6			6


(1)	Regulatory capital ratios as of December 31, 2023 are preliminary
(2)	Refer to Appendix 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 and construction loans as a percentage of Bank capital
(5)	Construction loans as a percentage of Bank capital

MainStreet Bancshares, Inc.
Unaudited Reconciliation of Certain Non-GAAP Financial Measures
(Dollars In thousands)

	For the three months ended December 31,						For the year ended December 31,
	2023			2022			2023			2022
Net interest margin (FTE)
Net interest income (GAAP)	$	17,007		$	20,596		$	75,947		$	70,009
FTE adjustment on tax-exempt securities		71			70			283			281
Net interest income (FTE) (non-GAAP)		17,078			20,666			76,230			70,290

Average interest earning assets		1,940,319			1,743,735			1,869,644			1,676,649
Net interest margin (GAAP)		3.48	%		4.69	%		4.06	%		4.18	%
Net interest margin (FTE) (non-GAAP)		3.49	%		4.70	%		4.08	%		4.19	%

	For the three months ended December 31,						For the year ended December 31,
	2023			2022			2023			2022
Yield on earning assets (FTE)
Total interest income	$	33,078		$	25,772		$	124,123		$	83,845
FTE adjustment on tax-exempt securities		71			70			283			281
Total interest income (FTE) (non-GAAP)		33,149			25,842			124,406			84,126

Average interest earning assets		1,940,319			1,743,735			1,869,644			1,676,649
Yield on earning assets (GAAP)		6.76	%		5.86	%		6.64	%		5.00	%
Yield on earning assets (FTE) (non-GAAP)		6.78	%		5.88	%		6.65	%		5.02	%

	For the three months ended December 31,						For the year ended D ecember 31,
	2023			2022			2023			2022
Net interest spread (FTE)
Yield on earning assets (GAAP)		6.76	%		5.86	%		6.64	%		5.00	%
Yield on earning assets (FTE) (non-GAAP)		6.78	%		5.88	%		6.65	%		5.02	%

Yield on interest-bearing liabilities		4.50	%		1.94	%		3.70	%		1.36	%
Net interest spread (GAAP)		2.26	%		3.92	%		2.94	%		3.64	%
Net interest spread (FTE) (non-GAAP)		2.28	%		3.94	%		2.95	%		3.66	%

	As of December 31,				As of December 31,
	2023		2022		2023		2022
Stockholders equity, adjusted
Total stockholders equity (GAAP)	$	221,517	$	198,282	$	221,517	$	198,282
Less: intangible assets		14,657		9,149		14,657		9,149
Tangible stockholders equity (non-GAAP)		206,860		189,133	$	206,860	$	189,133
Less: preferred stock		27,263		27,263		27,263		27,263
Tangible common stockholders equity (non-GAAP)		179,597		161,870		179,597		161,870

Common shares outstanding		7,527,415		7,442,743		7,527,415		7,442,743
Tangible book value per common share (non-GAAP)	$	23.86	$	21.75	$	23.86	$	21.75

	As of December 31,				As of December 31,
	2023		2022		2023		2022
Total assets, adjusted
Total assets (GAAP)	$	2,035,432	$	1,925,751	$	2,035,432	$	1,925,751
Less: intangible assets		(14,657)		(9,149)		(14,657)		(9,149)
Total tangible assets (non-GAAP)		2,020,775		1,916,602		2,020,775		1,916,602

	For the three months ended December 31,				For the year ended December 31,
	2023		2022		2023		2022
Average stockholders equity, adjusted
Total average stockholders equity (GAAP)	$	216,669	$	194,225	$	209,921	$	190,839
Less: average intangible assets		(13,929)		(8,143)		(11,996)		(5,471)
Total average tangible stockholders equity (non-GAAP)		202,740		186,082		197,925		185,368

	For the three months ended December 31,				For the year ended December 31,
	2023		2022		2023		2022
Average assets, adjusted
Total average average assets (GAAP)	$	1,998,196	$	1,799,259	$	1,931,805	$	1,744,029
Less: average intangible assets		(13,929)		(8,143)		(11,996)		(5,471)
Total average tangible assets (non-GAAP)		1,984,267		1,791,116		1,919,809		1,738,558