MainStreet Bancshares Inc. Reports a Profitable Second Quarter

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Jul 29, 2024, 08:00 ET

Rise in Core Deposits Fueled an Uptick in Loan Growth

FAIRFAX, Va., July 29, 2024 /PRNewswire/ -- MainStreet Bancshares, Inc. (Nasdaq: MNSB & MNSBP), the holding company for MainStreet Bank, reported net income of $2.6 million for the second quarter of 2024.

Total deposits reached $1.8 billion in the second quarter, an increase of 10.2% from the second quarter of 2023. Loan growth is up 8.6% over the same period, also reaching $1.8 billion.

"We are now nine full quarters into the current interest rate cycle, and the entire industry has felt the effect of higher deposit costs. I'm happy to report that we experienced the softest impact this quarter, with our net interest margin settling in at a healthy 3.15%," said Jeff W. Dick, Chairman and CEO of MainStreet Bancshares, Inc. and MainStreet Bank. "We see signs of an improving net interest margin going forward, but FOMC actions or other unforeseen externalities could affect momentum. Externalities aside, as our strategic initiatives start to bear fruit, we are confident and optimistic that the trail we have blazed to offer Banking as a Service (BaaS) will positively affect our net interest margin and our bottom line."

"We remain focused on caring for our customers and meeting their continuing banking and borrowing needs while judiciously adding promising new relationships," said Abdul Hersiburane, President of MainStreet Bank. "We've built our core customer funding sources up to 78% of total deposits."

Loan growth in the second quarter was driven by a healthy rise in demand for commercial and industrial borrowing and in high-quality owner-occupied commercial real estate lending, a traditional area of strength for MainStreet Bank.

The Bank maintains a strong portfolio of earning assets, with very nominal AOCI exposure. The loan portfolio remains solid with net charge offs representing a mere eight basis points of average gross loans. Nonperforming assets account for 0.99% of total assets.

"We continue to carefully underwrite each loan opportunity and the lending team remains engaged with each borrower throughout their project lifecycle. If a borrower experiences a challenge, we work with them to face that challenge promptly and transparently," said Tom Floyd, EVP and Chief Lending Officer at MainStreet Bank. "We have a meticulous understanding of our loan book and a rigorous risk management mindset."

Banking-as-a-Service
In recent months, the weaknesses of other embedded banking solutions have been exposed—to the detriment of banks, their fintech clients and their end-customers. The Avenu team digested all the lessons that could be learned from these weaknesses and is implementing final enhancements to ensure a scalable and compliance-rich solution. Avenu is live and in limited production until the final enhancements are fully integrated.

Avenu
Avenu is the first and only embedded banking solution that connects our partners and their apps directly and seamlessly to our purpose-built Avenu core solution. We are not a sponsor bank without our own technology, and we are not a middleware software company without our own bank. We are Avenu, a leading financial technology company owned by an established community bank in the heart of Washington, D.C.

Avenu's clients are fintechs, social media, 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 creating 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 is an SBA Preferred Lender. 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)

	June 30, 2024		March 31, 2024		December 31, 2023*		September 30, 2023		June 30, 2023
ASSETS
Cash and cash equivalents
Cash and due from banks	$	41,697	$	49,208	$	53,581	$	44,912	$	67,700
Federal funds sold		49,762		75,533		60,932		76,271		30,341
Total cash and cash equivalents		91,459		124,741		114,513		121,183		98,041
Investment securities available for sale, at fair value		57,605		58,699		59,928		56,726		60,579
Investment securities held to maturity, at amortized cost, net of allowance for credit losses of $0 for all periods		16,036		17,251		17,275		17,565		17,590
Restricted equity securities, at amortized cost		26,797		23,924		24,356		20,619		20,304
Loans, net of allowance for credit losses of $17,098, $16,531, $16,506, $15,626, and $16,047, respectively		1,778,840		1,727,110		1,705,137		1,681,444		1,637,484
Premises and equipment, net		13,787		14,081		13,944		14,275		14,427
Accrued interest and other receivables		11,916		10,727		12,390		11,184		10,256
Computer software, net of amortization		17,205		15,691		14,657		13,373		12,266
Bank owned life insurance		38,901		38,609		38,318		38,035		37,763
Other assets		41,200		39,182		34,914		47,087		40,641
Total Assets	$	2,093,746	$	2,070,015	$	2,035,432	$	2,021,491	$	1,949,351
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Non-interest bearing deposits	$	314,636	$	348,945	$	364,606	$	394,859	$	388,992
Interest bearing demand deposits		179,513		165,331		137,128		76,423		71,308
Savings and NOW deposits		60,867		46,036		45,878		46,550		51,294
Money market deposits		476,396		446,903		442,179		461,398		380,500
Time deposits		723,951		725,520		696,336		703,960		701,289
Total deposits		1,755,363		1,732,735		1,686,127		1,683,190		1,593,383
Federal funds purchased		—		—		15,000		—		30,000
Subordinated debt		72,841		72,741		72,642		72,543		72,444
Other liabilities		40,827		41,418		40,146		52,015		43,016
Total Liabilities		1,869,031		1,846,894		1,813,915		1,807,748		1,738,843
Stockholders' Equity:
Preferred stock		27,263		27,263		27,263		27,263		27,263
Common stock		29,452		29,514		29,198		29,188		29,177
Capital surplus		66,392		65,940		65,985		65,407		64,768
Retained earnings		109,651		108,334		106,549		102,694		97,646
Accumulated other comprehensive loss		(8,043)		(7,930)		(7,478)		(10,809)		(8,346)
Total Stockholders' Equity		224,715		223,121		221,517		213,743		210,508
Total Liabilities and Stockholders' Equity	$	2,093,746	$	2,070,015	$	2,035,432	$	2,021,491	$	1,949,351

*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
	June 30, 2024		June 30, 2023		June 30, 2024		March 31, 2024		December 31, 2023		September 30, 2023		June 30, 2023
INTEREST INCOME:
Interest and fees on loans	$	62,034	$	55,586	$	31,546	$	30,487	$	30,849	$	29,750	$	28,855
Interest on investment securities
Taxable securities		865		926		430		435		451		459		407
Tax-exempt securities		538		529		268		270		268		268		265
Interest on federal funds sold		2,264		2,311		1,083		1,182		1,510		1,217		1,179
Total interest income		65,701		59,352		33,327		32,374		33,078		31,694		30,706
INTEREST EXPENSE:
Interest on interest bearing demand deposits		4,032		594		2,172		1,860		1,058		240		251
Interest on savings and NOW deposits		347		255		190		157		146		145		147
Interest on money market deposits		10,816		4,129		5,638		5,178		5,639		4,156		2,926
Interest on time deposits		17,861		11,221		9,027		8,833		8,257		7,526		7,077
Interest on federal funds purchased		298		239		191		107		25		35		201
Interest on Federal Home Loan Bank advances		46		919		—		46		118		186		13
Interest on subordinated debt		1,640		1,632		820		820		828		828		820
Total interest expense		35,040		18,989		18,038		17,001		16,071		13,116		11,435
Net interest income		30,661		40,363		15,289		15,373		17,007		18,578		19,271
Provision for (recovery of) credit losses		443		921		638		(195)		466		255		638
Net interest income after provision for (recovery of) credit losses		30,218		39,442		14,651		15,568		16,541		18,323		18,633
NON-INTEREST INCOME:
Deposit account service charges		959		1,125		490		469		510		514		535
Bank owned life insurance income		583		514		291		292		283		272		259
Net loss on securities		(48)		—		(48)		—		—		—		—
Other non-interest income		270		174		140		130		68		177		16
Total other income		1,764		1,813		873		891		861		963		810
NON-INTEREST EXPENSES:
Salaries and employee benefits		14,972		14,216		7,484		7,488		7,129		6,924		6,595
Furniture and equipment expenses		1,875		1,270		940		935		804		713		772
Advertising and marketing		1,020		1,495		566		454		271		577		698
Occupancy expenses		849		912		415		435		397		375		426
Outside services		1,614		994		839		774		352		697		504
Administrative expenses		471		426		229		242		219		277		211
Other operating expenses		4,190		3,242		2,195		1,996		1,964		1,866		1,646
Total non-interest expenses		24,991		22,555		12,668		12,324		11,136		11,429		10,852
Income before income tax expense		6,991		18,700		2,856		4,135		6,266		7,857		8,591
Income tax expense		1,068		3,602		238		830		1,120		1,516		1,645
Net income		5,923		15,098		2,618		3,305		5,146		6,341		6,946
Preferred stock dividends		1,078		1,078		539		539		539		539		539
Net income available to common shareholders	$	4,845	$	14,020	$	2,079	$	2,766	$	4,607	$	5,802	$	6,407
Net income per common share, basic and diluted	$	0.64	$	1.86	$	0.27	$	0.36	$	0.61	$	0.77	$	0.85
Weighted average number of common shares, basic and diluted		7,610,188		7,519,949		7,608,389		7,611,990		7,527,327		7,524,332		7,522,764

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

	June 30, 2024					March 31, 2024					June 30, 2023					Percentage Change
	$ Amount		% of Total			$ Amount		% of Total			$ Amount		% of Total			Last 3 Mos			Last 12 Mos
LOANS:
Construction and land development loans	$	410,698		22.8	%	$	408,903		23.4	%	$	421,277		25.4	%		0.4	%		-2.5	%
Residential real estate loans		449,700		25.0	%		451,991		25.8	%		410,550		24.7	%		-0.5	%		9.5	%
Commercial real estate loans		845,030		46.9	%		813,387		46.5	%		727,772		43.9	%		3.9	%		16.1	%
Commercial and industrial loans		93,559		5.2	%		71,822		4.1	%		93,604		5.6	%		30.3	%		0.0	%
Consumer loans		2,232		0.1	%		2,902		0.2	%		5,750		0.4	%		-23.1	%		-61.2	%
Total Gross Loans	$	1,801,219		100.0	%	$	1,749,005		100.0	%	$	1,658,953		100.0	%		3.0	%		8.6	%
Less: Allowance for credit losses		(17,098)					(16,531)					(16,047)
Net deferred loan fees		(5,281)					(5,364)					(5,422)
Net Loans	$	1,778,840				$	1,727,110				$	1,637,484
DEPOSITS:
Non-interest bearing deposits	$	314,636		17.9	%	$	348,945		20.1	%	$	388,992		24.4	%		-9.8	%		-19.1	%
Interest-bearing deposits:
Demand deposits		179,513		10.2	%		165,331		9.5	%		71,308		4.5	%		8.6	%		151.7	%
Savings and NOW deposits		60,867		3.5	%		46,036		2.7	%		51,294		3.2	%		32.2	%		18.7	%
Money market accounts		476,396		27.1	%		446,903		25.8	%		380,500		23.9	%		6.6	%		25.2	%
Certificates of deposit $250,000 or more		473,827		27.0	%		467,892		27.0	%		406,583		25.5	%		1.3	%		16.5	%
Certificates of deposit less than $250,000		250,124		14.3	%		257,628		14.9	%		294,706		18.5	%		-2.9	%		-15.1	%
Total Deposits	$	1,755,363		100.0	%	$	1,732,735		100.0	%	$	1,593,383		100.0	%		1.3	%		10.2	%
BORROWINGS:
Federal funds borrowed		—		0.0	%		—		0.0	%		30,000		29.3	%		-100.0	%		-100.0	%
Subordinated debt		72,841		100.0	%		72,741		100.0	%		72,444		70.7	%		0.1	%		0.5	%
Total Borrowings	$	72,841		100.0	%	$	72,741		100.0	%	$	102,444		100.0	%		0.1	%		-28.9	%
Total Deposits and Borrowings	$	1,828,204				$	1,805,476				$	1,695,827					1.3	%		7.8	%

Core customer funding sources ⁽¹⁾	$	1,376,991		75.3	%	$	1,312,746		72.7	%	$	1,184,958		69.9	%		4.9	%		16.2	%
Brokered and listing service sources ⁽²⁾		378,372		20.7	%		419,989		23.3	%		408,425		24.1	%		-9.9	%		-7.4	%
Federal funds borrowed		—		0.0	%		—		0.0	%		30,000		1.7	%		-100.0	%		-100.0	%
Subordinated debt ⁽³⁾		72,841		4.0	%		72,741		4.0	%		72,444		4.3	%		0.1	%		0.5	%
Total Funding Sources	$	1,828,204		100.0	%	$	1,805,476		100.0	%	$	1,695,827		100.0	%		1.3	%		7.8	%


(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 $290.5 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 June 30, 2024.
(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 June 30, 2024							For the three months ended June 30, 2023
	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⁾	$	1,782,124	$	31,546		7.10	%	$	1,649,300	$	28,855		7.02	%
Securities:
Taxable		55,323		430		3.12	%		54,270		407		3.01	%
Tax-exempt		36,717		339		3.71	%		37,876		335		3.55	%
Federal funds and interest-bearing deposits		84,705		1,083		5.13	%		87,608		1,179		5.40	%
Total interest-earning assets	$	1,958,869	$	33,398		6.84	%	$	1,829,054	$	30,776		6.75	%
Other assets		131,656							83,599
Total assets	$	2,090,525						$	1,912,653
Liabilities and Stockholders' Equity:
Interest-bearing liabilities:
Interest-bearing demand deposits	$	172,221	$	2,172		5.06	%	$	73,800	$	251		1.36	%
Savings and NOW deposits		47,767		190		1.60	%		50,644		147		1.16	%
Money market deposit accounts		463,641		5,638		4.88	%		344,118		2,926		3.41	%
Time deposits		715,777		9,027		5.06	%		723,056		7,077		3.93	%
Total interest-bearing deposits	$	1,399,406	$	17,027		4.88	%	$	1,191,618	$	10,401		3.50	%
Federal funds borrowed		13,298		191		5.76	%		15,174		201		5.31	%
FHLB advances		—		—		—			989		13		5.27	%
Subordinated debt		72,802		820		4.52	%		72,405		820		4.54	%
Total interest-bearing liabilities	$	1,485,506	$	18,038		4.87	%	$	1,280,186	$	11,435		3.58	%
Demand deposits and other liabilities		381,825							424,505
Total liabilities	$	1,867,331						$	1,704,691
Stockholders' Equity		223,194							207,962
Total Liabilities and Stockholders' Equity	$	2,090,525						$	1,912,653
Interest Rate Spread						1.97	%						3.17	%
Net Interest Income			$	15,360						$	19,341
Net Interest Margin						3.15	%						4.24	%


(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 six months ended June 30, 2024							For the six months ended June 30, 2023
	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)	$	1,755,443	$	62,034		7.13	%	$	1,624,664	$	55,586		6.90	%
Securities:
Taxable		55,708		865		3.13	%		56,011		926		3.33	%
Tax-exempt		37,068		681		3.70	%		37,908		670		3.56	%
Federal funds and interest-bearing deposits		88,349		2,264		5.17	%		103,053		2,311		4.52	%
Total interest-earning assets	$	1,936,568	$	65,844		6.86	%	$	1,821,636	$	59,493		6.59	%
Other assets		127,430							77,601
Total assets	$	2,063,998						$	1,899,237
Liabilities and Stockholders' Equity:
Interest-bearing liabilities:
Interest-bearing demand deposits	$	159,234	$	4,032		5.11	%	$	78,568	$	594		1.52	%
Savings and NOW deposits		45,993		347		1.52	%		51,290		255		1.00	%
Money market deposit accounts		448,647		10,816		4.86	%		284,906		4,129		2.92	%
Time deposits		712,898		17,861		5.05	%		698,384		11,221		3.24	%
Total interest-bearing deposits	$	1,366,772	$	33,056		4.88	%	$	1,113,148	$	16,199		2.93	%
Federal funds borrowed		10,386		298		5.79	%		9,103		239		5.29	%
FHLB advances		1,648		46		5.63	%		39,199		919		4.73	%
Subordinated debt		72,752		1,640		4.55	%		72,355		1,632		4.55	%
Total interest-bearing liabilities	$	1,451,558	$	35,040		4.87	%	$	1,233,805	$	18,989		3.10	%
Demand deposits and other liabilities		389,792							535,075
Total liabilities	$	1,841,350						$	1,768,880
Stockholders' Equity		222,648							190,839
Total Liabilities and Stockholders' Equity	$	2,063,998						$	1,959,719
Interest Rate Spread						1.99	%						3.49	%
Net Interest Income			$	30,804						$	40,504
Net Interest Margin						3.21	%						4.48	%


(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 Six Months Ended
	June 30,						June 30,
	2024			2023			2024			2023
*Per share Data and Shares Outstanding*
Earnings per common share (basic and diluted)	$	0.27		$	0.85		$	0.64		$	1.86
Book value per common share	$	25.99		$	24.36		$	25.99		$	24.36
Tangible book value per common share⁽²⁾	$	23.72		$	22.73		$	23.72		$	22.73
Weighted average common shares (basic and diluted)		7,608,389			7,522,764			7,610,188			7,519,949
Common shares outstanding at end of period		7,598,529			7,522,297			7,598,529			7,522,297
*Performance Ratios*
Return on average assets (annualized)		0.50	%		1.46	%		0.58	%		1.60	%
Return on average equity (annualized)		4.70	%		13.40	%		5.36	%		14.87	%
Return on average common equity (annualized)		5.36	%		14.22	%		6.11	%		15.92	%
Yield on earning assets (FTE) (2) (annualized)		6.84	%		6.75	%		6.86	%		6.59	%
Cost of interest-bearing liabilities (annualized)		4.87	%		3.58	%		4.87	%		3.10	%
Net interest spread (FTE) (2)		1.97	%		3.17	%		1.99	%		3.49	%
Net interest margin (FTE) (2) (annualized)		3.15	%		4.24	%		3.21	%		4.48	%
Noninterest income as a percentage of average assets (annualized)		0.17	%		0.17	%		0.17	%		0.19	%
Noninterest expense to average assets (annualized)		2.43	%		2.28	%		2.44	%		2.39	%
Efficiency ratio (3)		78.38	%		54.04	%		77.07	%		53.48	%
*Asset Quality*
Allowance for credit losses (ACL)
Beginning balance, ACL - loans	$	16,531		$	15,435		$	16,506		$	14,114
Add: recoveries		6			1			8			12
Less: charge-offs		(370)			(6)			(511)			(6)
Add: provision for (recovery of) credit losses - loans		931			617			1,095			1,032
Add: current expected credit losses, nonrecurring adoption		—			—			—			895
Ending balance, ACL - loans	$	17,098		$	16,047		$	17,098		$	16,047

Beginning balance, reserve for unfunded commitment (RUC)	$	650		$	1,178		$	1,009		$	—
Add: current expected credit losses, nonrecurring adoption		—			—			—			1,310
Add: provision for (recovery of) unfunded commitments, net		(293)			21			(652)			(111)
Ending balance, RUC	$	357		$	1,199		$	357		$	1,199
Total allowance for credit losses	$	17,455		$	17,246		$	17,455		$	17,246

Allowance for credit losses on loans to total gross loans		0.95	%		0.97	%		0.95	%		0.97	%
Allowance for credit losses to total gross loans		0.97	%		1.04	%		0.97	%		1.04	%
Allowance for credit losses on loans to non-performing loans	84		%		N/A		84		%		N/A
Net charge-offs (recoveries) to average gross loans (annualized)		0.08	%		0.00	%		0.06	%		0.00	%
*Concentration Ratios*
Commercial real estate loans to total capital ⁽⁴⁾		367.24	%		363.70	%		367.24	%		363.70	%
Construction loans to total capital ⁽⁵⁾		130.19	%		139.59	%		130.19	%		139.59	%
*Non-performing Assets*
Loans 30-89 days past due to total gross loans		0.81	%		0.00	%		0.81	%		0.00	%
Loans 90 days past due and accruing to total gross loans		0.00	%		0.00	%		0.00	%		0.00	%
Non-accrual loans to total gross loans		1.15	%		0.00	%		1.15	%		0.00	%
Other real estate owned	$	—		$	—		$	—		$	—
Non-performing loans	$	20,691		$	—		$	20,691		$	—
Non-performing assets to total assets		0.99	%		0.00	%		0.99	%		0.00	%
*Regulatory Capital Ratios (Bank only)* *⁽¹⁾*
Total risk-based capital ratio		16.78	%		16.79	%		16.78	%		16.79	%
Tier 1 risk-based capital ratio		15.85	%		15.83	%		15.85	%		15.83	%
Leverage ratio		14.22	%		14.81	%		14.22	%		14.81	%
Common equity tier 1 ratio		15.85	%		15.83	%		15.85	%		15.83	%
*Other information*
Closing stock price	$	17.73		$	22.66		$	17.73		$	22.66
Tangible equity / tangible assets ⁽²⁾		9.99	%		10.24	%		9.99	%		10.24	%
Average tangible equity / average tangible assets (2)		9.97	%		10.34	%		10.10	%		10.28	%
Number of full time equivalent employees		195			179			195			179
Number of full service branch offices		6			6			6			6


(1)	Regulatory capital ratios as of June 30, 2024 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 June 30,						For the six months ended June 30,
	2024			2023			2024			2023
Net interest margin (FTE)
Net interest income (GAAP)	$	15,289		$	19,271		$	30,661		$	40,363
FTE adjustment on tax-exempt securities		71			70			143			141
Net interest income (FTE) (non-GAAP)		15,360			19,341			30,804			40,504

Average interest earning assets		1,958,869			1,829,054			1,936,568			1,821,636
Net interest margin (GAAP)		3.13	%		4.23	%		3.19	%		4.47	%
Net interest margin (FTE) (non-GAAP)		3.15	%		4.24	%		3.21	%		4.48	%

	For the three months ended June 30,						For the six months ended June 30,
	2024			2023			2024			2023
Yield on earning assets (FTE)
Total interest income	$	33,327		$	30,706		$	65,701		$	59,352
FTE adjustment on tax-exempt securities		71			70			143			141
Total interest income (FTE) (non-GAAP)		33,398			30,776			65,844			59,493

Average interest earning assets		1,958,869			1,829,054			1,936,568			1,821,636
Yield on earning assets (GAAP)		6.82	%		6.73	%		6.84	%		6.57	%
Yield on earning assets (FTE) (non-GAAP)		6.84	%		6.75	%		6.86	%		6.59	%

	For the three months ended June 30,						For the six months ended June 30,
	2024			2023			2024			2023
Net interest spread (FTE)
Yield on earning assets (GAAP)		6.82	%		6.73	%	6.84		%	6.57		%
Yield on earning assets (FTE) (non-GAAP)		6.84	%		6.75	%	6.86		%	6.59		%

Yield on interest-bearing liabilities		4.87	%		3.58	%	4.87		%		3.10	%
Net interest spread (GAAP)		1.95	%		3.15	%	1.97		%	3.47		%
Net interest spread (FTE) (non-GAAP)		1.97	%		3.17	%		1.99	%	3.48		%

	As of June 30,				As of June 30,
	2024		2023		2024		2023
Tangible common stockholders' equity
Total stockholders equity (GAAP)	$	224,715	$	210,508	$	224,715	$	210,508
Less: intangible assets		(17,205)		(12,266)		(17,205)		(12,266)
Tangible stockholders' equity (non-GAAP)		207,510		198,242	$	207,510	$	198,242
Less: preferred stock		(27,263)		(27,263)		(27,263)		(27,263)
Tangible common stockholders' equity (non-GAAP)		180,247		170,979		180,247		170,979

Common shares outstanding		7,598,529		7,522,297		7,598,529		7,522,297
Tangible book value per common share (non-GAAP)	$	23.72	$	22.73	$	23.72	$	22.73

	As of June 30,				As of June 30,
	2024		2023		2024		2023
Stockholders equity, adjusted
Total stockholders equity (GAAP)	$	224,715	$	210,509	$	224,715	$	210,509
Less: intangible assets		(17,205)		(12,266)		(17,205)		(12,266)
Total tangible stockholders equity (non-GAAP)		207,510		198,243		207,510		198,243

	As of June 30,				As of June 30,
	2024		2023		2024		2023
Total tangible assets
Total assets (GAAP)	$	2,093,746	$	1,948,429	$	2,093,746	$	1,948,429
Less: intangible assets		(17,205)		(12,266)		(17,205)		(12,266)
Total tangible assets (non-GAAP)		2,076,541		1,936,163		2,076,541		1,936,163

	For the three months ended June 30,				For the six months ended June 30,
	2024		2023		2024		2023
Average tangible stockholders' equity
Total average stockholders' equity (GAAP)	$	223,194	$	207,962	$	222,648	$	204,800
Less: average intangible assets		(16,386)		(11,284)		(15,732)		(10,585)
Total average tangible stockholders' equity (non-GAAP)		206,808		196,678		206,916		194,215

	For the three months ended June 30,				For the six months ended June 30,
	2024		2023		2024		2023
Average tangible assets
Total average assets (GAAP)	$	2,090,525	$	1,912,653	$	2,063,998	$	1,899,237
Less: average intangible assets		(16,386)		(11,284)		(15,732)		(10,585)
Total average tangible assets (non-GAAP)		2,074,139		1,901,369		2,048,266		1,888,652