MainStreet Bancshares Inc. Reports Third Quarter Results

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Oct 28, 2024, 08:00 ET

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Increase in Core Deposits, a High-Quality Loan Portfolio and Strong Capital

FAIRFAX, Va., Oct. 28, 2024 /PRNewswire/ -- MainStreet Bancshares, Inc. (Nasdaq: MNSB & MNSBP), the financial holding company for MainStreet Bank, reported a loss of -$0.04 per common share for the third quarter of 2024 as it dealt decisively with a small number of nonperforming real estate loans. Year-to-date 2024 earnings per common share are $0.60. The Company remains strongly capitalized.

"Our third quarter annualized net interest margin was impacted by $984,000 in accrued interest income that was reversed in relation to loans placed on nonaccrual status," said Alex Vari, Chief Accountant for MainStreet Bank. "This resulted in a quarterly net interest margin of 3.05% and a year-to-date net interest margin of 3.19%."

The Company charged off $1.9 million of nonperforming loans during the quarter and allocated $1 million to provision expense to augment loan growth and ensure the Allowance for Credit Losses remains directionally consistent for the purposes of growth and quality.

In response to the bank's credit quality, Chris Johnston, Chief Credit Officer for MainStreet Bank, expanded, "this quarter showed the underlying strength of a portfolio shaped by a rigorous credit culture. The total principal losses incurred year-to-date 2024 approximates just 0.1% of total loans. Our lending team has demonstrated great resolve in addressing troubled loans, both by working with borrowers and by finding acceptable solutions minimizing the impact on shareholder value. With that, we expect the level of problem loans to improve from this point."

Total deposits expanded to $1.9 billion. The Bank continues to attract healthy amounts of core deposits, reaching $1.47 billion, or 78% of total deposits.

"The DC Metropolitan area is a vibrant market. Our Business Bankers continue to perform, growing noninterest bearing core deposits by $33 million during the quarter," noted Abdul Hersiburane, President of MainStreet Bank. "In an exercise of foresight, we structured noncore deposits with immediate rate repricing or callable options. We have now $233 million of our $423 million noncore deposits available to reprice as rates fall."

In 2021, the Board and management decided to make an investment in technology that would best serve clients requiring Banking-as-a-Service (BaaS). The Avenu BaaS solution officially launched just prior to the end of the third quarter of 2024. The ability to digitally offer banking services in a safe and compliant manner allows the Company to reach new customer deposit segments, diversify revenue streams and generate additional income. The BaaS market is currently underserved, and the opportunities for a well-developed solution are robust. The Avenu business model is in-line with the Company's physical branch-lite strategy.

"Avenu provides a full-stack embedded banking solution that connects our partners and their apps directly and seamlessly to our purpose-built Avenu core," said Jeff W. Dick, Chairman & CEO of MainStreet Bancshares, Inc. and MainStreet Bank. "With Version 1 of Avenu placed in-service, the team is focused on getting the first fintech to general release in early November, and another four fintechs to follow soon thereafter. Just as with any business expansion opportunity, the expenses associated with launching Avenu will impact profitability until we reach break-even. However, after that point Avenu's ability to digitally scale can far surpass bricks and mortar growth and profitability."

Avenu's clients are fintechs, social media solutions, application developers, money movers, and entrepreneurs. They all have one thing in common: They are in search of a reliable partner to help innovate how money moves - solving real-world issues and helping communities thrive. MainStreet Bank is that reliable partner dedicated to providing a best-in-class solution to sustain 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 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)

	September 30, 2024		June 30, 2024		March 31, 2024		December 31, 2023*		September 30, 2023
ASSETS
Cash and cash equivalents
Cash and due from banks	$	40,955	$	41,697	$	49,208	$	53,581	$	44,912
Federal funds sold		191,159		49,762		75,533		60,932		76,271
Total cash and cash equivalents		232,114		91,459		124,741		114,513		121,183
Investment securities available for sale, at fair value		58,489		57,605		58,699		59,928		56,726
Investment securities held to maturity, at amortized cost, net of allowance for credit losses of $0 for all periods		16,016		16,036		17,251		17,275		17,565
Restricted equity securities, at amortized cost		26,745		26,797		23,924		24,356		20,619
Loans, net of allowance for credit losses of $18,327, $17,098, $16,531, $16,506, and $15,626, respectively		1,775,558		1,778,840		1,727,110		1,705,137		1,681,444
Premises and equipment, net		13,571		13,787		14,081		13,944		14,275
Accrued interest and other receivables		11,077		11,916		10,727		12,390		11,184
Computer software, net of amortization		18,881		17,205		15,691		14,657		13,373
Bank owned life insurance		39,203		38,901		38,609		38,318		38,035
Other assets		32,945		41,200		39,182		34,914		47,087
Total Assets	$	2,224,599	$	2,093,746	$	2,070,015	$	2,035,432	$	2,021,491
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Non-interest bearing deposits	$	347,575	$	314,636	$	348,945	$	364,606	$	394,859
Interest bearing demand deposits		197,527		179,513		165,331		137,128		76,423
Savings and NOW deposits		61,893		60,867		46,036		45,878		46,550
Money market deposits		451,936		476,396		446,903		442,179		461,398
Time deposits		834,738		723,951		725,520		696,336		703,960
Total deposits		1,893,669		1,755,363		1,732,735		1,686,127		1,683,190
Federal funds purchased		—		—		—		15,000		—
Subordinated debt		72,940		72,841		72,741		72,642		72,543
Other liabilities		31,939		40,827		41,418		40,146		52,015
Total Liabilities		1,998,548		1,869,031		1,846,894		1,813,915		1,807,748
Stockholders' Equity:
Preferred stock		27,263		27,263		27,263		27,263		27,263
Common stock		29,463		29,452		29,514		29,198		29,188
Capital surplus		67,083		66,392		65,940		65,985		65,407
Retained earnings		108,616		109,651		108,334		106,549		102,694
Accumulated other comprehensive loss		(6,374)		(8,043)		(7,930)		(7,478)		(10,809)
Total Stockholders' Equity		226,051		224,715		223,121		221,517		213,743
Total Liabilities and Stockholders' Equity	$	2,224,599	$	2,093,746	$	2,070,015	$	2,035,432	$	2,021,491

*Derived from audited financial statements

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

	Year-to-Date				Three Months Ended
	September 30, 2024		September 30, 2023		September 30, 2024		June 30, 2024		March 31, 2024		December 31, 2023		September 30, 2023
INTEREST INCOME:
Interest and fees on loans	$	93,852	$	85,530	$	31,615	$	31,655	$	30,582	$	30,951	$	29,822
Interest on investment securities
Taxable securities		1,262		1,384		397		430		435		451		459
Tax-exempt securities		832		797		294		268		270		268		268
Interest on federal funds sold		3,550		3,528		1,285		1,083		1,182		1,510		1,217
Total interest income		99,496		91,239		33,591		33,436		32,469		33,180		31,766
INTEREST EXPENSE:
Interest on interest bearing demand deposits		6,049		761		2,117		2,118		1,814		1,027		216
Interest on savings and NOW deposits		553		400		206		190		157		146		145
Interest on money market deposits		15,911		8,091		5,277		5,542		5,092		5,538		4,068
Interest on time deposits		27,361		18,719		9,543		9,010		8,808		8,187		7,516
Interest on federal funds purchased		575		274		277		191		107		25		35
Interest on Federal Home Loan Bank advances		46		1,105		—		—		46		118		186
Interest on subordinated debt		2,468		2,460		828		820		820		828		828
Total interest expense		52,963		31,810		18,248		17,871		16,844		15,869		12,994
Net interest income		46,533		59,429		15,343		15,565		15,625		17,311		18,772
Provision for (recovery of) credit losses		3,356		1,176		2,913		638		(195)		466		255
Net interest income after provision for (recovery of) credit losses		43,177		58,253		12,430		14,927		15,820		16,845		18,517
NON-INTEREST INCOME:
Deposit account service charges		1,516		1,639		557		490		469		510		514
Bank owned life insurance income		885		786		302		291		292		283		272
Net loss on securities called or matured		(48)		—		—		(48)		—		—		—
Other non-interest income (loss)		93		158		27		31		35		(34)		105
Total non-interest income		2,446		2,583		886		764		796		759		891
NON-INTEREST EXPENSES:
Salaries and employee benefits		22,222		21,139		7,250		7,484		7,488		7,129		6,924
Furniture and equipment expenses		2,806		1,983		931		940		935		804		713
Advertising and marketing		1,599		2,072		579		566		454		271		577
Occupancy expenses		1,257		1,287		407		415		435		397		375
Outside services		2,458		1,691		845		839		774		352		697
Administrative expenses		686		703		215		229		242		219		277
Other operating expenses		7,508		5,404		2,992		2,362		2,153		2,166		1,988
Total non-interest expenses		38,536		34,279		13,219		12,835		12,481		11,338		11,551
Income before income tax expense (benefit)		7,087		26,557		97		2,856		4,135		6,266		7,857
Income tax expense (benefit)		900		5,119		(168)		238		830		1,120		1,516
Net income		6,187		21,438		265		2,618		3,305		5,146		6,341
Preferred stock dividends		1,617		1,617		539		539		539		539		539
Net income (loss) available to common shareholders	$	4,570	$	19,821	$	(274)	$	2,079	$	2,766	$	4,607	$	5,802
Earnings (loss) per common share, basic and diluted	$	0.60	$	2.64	$	(0.04)	$	0.27	$	0.36	$	0.61	$	0.77
Weighted average number of common shares, basic and diluted		7,607,431		7,521,426		7,601,925		7,608,389		7,611,990		7,527,327		7,524,332

UNAUDITED LOAN, DEPOSIT AND BORROWING DETAIL
(In thousands)

	September 30, 2024					June 30, 2024					September 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	$	373,486		20.8	%	$	410,698		22.8	%	$	426,698		25.1	%		-9.1	%		-12.5	%
Residential real estate loans		446,109		24.8	%		449,700		25.0	%		462,935		27.2	%		-0.8	%		-3.6	%
Commercial real estate loans		871,280		48.4	%		845,030		46.9	%		734,615		43.1	%		3.1	%		18.6	%
Commercial and industrial loans		106,249		5.9	%		93,559		5.2	%		73,855		4.3	%		13.6	%		43.9	%
Consumer loans		1,977		0.1	%		2,232		0.1	%		4,598		0.3	%		-11.4	%		-57.0	%
Total Gross Loans	$	1,799,101		100.0	%	$	1,801,219		100.0	%	$	1,702,701		100.0	%		-0.1	%		5.7	%
Less: Allowance for credit losses		(18,327)					(17,098)					(15,626)
Net deferred loan fees		(5,216)					(5,281)					(5,631)
Net Loans	$	1,775,558				$	1,778,840				$	1,681,444
DEPOSITS:
Non-interest bearing deposits	$	347,575		18.4	%	$	314,636		17.9	%	$	394,859		23.5	%		10.5	%		-12.0	%
Interest-bearing deposits:
Demand deposits		197,527		10.4	%		179,513		10.2	%		76,423		4.5	%		10.0	%		158.5	%
Savings and NOW deposits		61,893		3.3	%		60,867		3.5	%		46,550		2.8	%		1.7	%		33.0	%
Money market deposits		451,936		23.9	%		476,396		27.1	%		461,398		27.4	%		-5.1	%		-2.1	%
Certificates of deposit $250,000 or more		532,201		28.0	%		473,827		27.0	%		432,440		25.7	%		12.3	%		23.1	%
Certificates of deposit less than $250,000		302,537		16.0	%		250,124		14.3	%		271,520		16.1	%		21.0	%		11.4	%
Total Deposits	$	1,893,669		100.0	%	$	1,755,363		100.0	%	$	1,683,190		100.0	%		7.9	%		12.5	%
BORROWINGS:
Subordinated debt		72,940		100.0	%		72,841		100.0	%		72,543		100.0	%		0.1	%		0.5	%
Total Borrowings	$	72,940		100.0	%	$	72,841		100.0	%	$	72,543		100.0	%		0.1	%		0.5	%
Total Deposits and Borrowings	$	1,966,609				$	1,828,204				$	1,755,733					7.6	%		12.0	%

Core customer funding sources ⁽¹⁾	$	1,471,350		74.8	%	$	1,376,991		75.3	%	$	1,144,513		65.2	%		6.9	%		28.6	%
Brokered and listing service sources ⁽²⁾		422,319		21.5	%		378,372		20.7	%		538,677		30.7	%		11.6	%		-21.6	%
Subordinated debt ⁽³⁾		72,940		3.7	%		72,841		4.0	%		72,543		4.1	%		0.1	%		0.5	%
Total Funding Sources	$	1,966,609		100.0	%	$	1,828,204		100.0	%	$	1,755,733		100.0	%		7.6	%		12.0	%


(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 $278.6 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 September 30, 2024.
(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 September 30, 2024							For the three months ended September 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⁾	$	1,807,882	$	31,615		6.94	%	$	1,665,474	$	29,822		7.10	%
Securities:
Taxable		54,523		397		2.89	%		57,981		459		3.14	%
Tax-exempt		35,881		372		4.11	%		37,812		339		3.56	%
Federal funds and interest-bearing deposits		104,459		1,285		4.88	%		94,808		1,217		5.09	%
Total interest-earning assets	$	2,002,745	$	33,669		6.67	%	$	1,856,075	$	31,837		6.81	%
Other assets		123,383							73,415
Total assets	$	2,126,128						$	1,929,490
Liabilities and Stockholders' Equity:
Interest-bearing liabilities:
Interest-bearing demand deposits	$	173,996	$	2,117		4.83	%	$	77,047	$	216		1.11	%
Savings and NOW deposits		61,259		206		1.33	%		48,594		145		1.18	%
Money market deposits		445,730		5,277		4.70	%		413,710		4,068		3.90	%
Time deposits		759,247		9,543		4.99	%		700,405		7,516		4.26	%
Total interest-bearing deposits	$	1,440,232	$	17,143		4.72	%	$	1,239,756	$	11,945		3.82	%
Federal funds purchased		19,001		277		5.78	%		2,501		35		5.55	%
FHLB advances		—		—		—			13,478		186		5.48	%
Subordinated debt		72,901		828		4.51	%		72,504		828		4.53	%
Total interest-bearing liabilities	$	1,532,134	$	18,248		4.73	%	$	1,328,239	$	12,994		3.88	%
Demand deposits and other liabilities		368,349							388,004
Total liabilities	$	1,900,483						$	1,716,243
Stockholders' Equity		225,645							213,247
Total Liabilities and Stockholders' Equity	$	2,126,128						$	1,929,490
Interest Rate Spread						1.94	%						2.93	%
Net Interest Income			$	15,421						$	18,843
Net Interest Margin						3.05	%						4.03	%


(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

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

	For the nine months ended September 30, 2024							For the nine months ended September 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⁾	$	1,773,050	$	93,852		7.08	%	$	1,640,460	$	85,530		6.97	%
Securities:
Taxable		55,478		1,262		3.04	%		60,640		1,384		3.05	%
Tax-exempt		36,670		1,053		3.84	%		37,876		1,009		3.56	%
Federal funds and interest-bearing deposits		93,853		3,550		5.06	%		99,004		3,528		4.76	%
Total interest-earning assets	$	1,959,051	$	99,717		6.81	%	$	1,837,980	$	91,451		6.65	%
Other assets		125,808							71,452
Total assets	$	2,084,859						$	1,909,432
Liabilities and Stockholders' Equity:
Interest-bearing liabilities:
Interest-bearing demand deposits	$	164,192	$	6,049		4.93	%	$	78,018	$	761		1.30	%
Savings and NOW deposits		51,119		553		1.45	%		50,382		400		1.06	%
Money market deposit		447,668		15,911		4.75	%		328,037		8,091		3.30	%
Time deposits		728,459		27,361		5.02	%		699,377		18,719		3.58	%
Total interest-bearing deposits	$	1,391,438	$	49,874		4.79	%	$	1,155,814	$	27,971		3.24	%
Federal funds purchased		13,279		575		5.79	%		6,878		274		5.33	%
FHLB advances		1,095		46		5.62	%		30,531		1,105		4.84	%
Subordinated debt		72,802		2,468		4.53	%		72,405		2,460		4.54	%
Total interest-bearing liabilities	$	1,478,614	$	52,963		4.79	%	$	1,265,628	$	31,810		3.36	%
Demand deposits and other liabilities		382,591							436,157
Total liabilities	$	1,861,205						$	1,701,785
Stockholders' Equity		223,654							207,647
Total Liabilities and Stockholders' Equity	$	2,084,859						$	1,909,432
Interest Rate Spread						2.02	%						3.30	%
Net Interest Income			$	46,754						$	59,641
Net Interest Margin						3.19	%						4.34	%


(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

UNAUDITED SUMMARY FINANCIAL DATA
(Dollars in thousands except share and per share data)

	At or For the Three Months Ended						At or For the Nine Months Ended
	September 30,						September 30,
	2024			2023			2024			2023
*Per share Data and Shares Outstanding*
Earnings (loss) per common share (basic and diluted)	$	(0.04)		$	0.77		$	0.60		$	2.64
Book value per common share	$	26.15		$	24.78		$	26.15		$	24.78
Tangible book value per common share⁽²⁾	$	23.66		$	23.00		$	23.66		$	23.00
Weighted average common shares (basic and diluted)		7,601,925			7,524,332			7,607,431			7,521,426
Common shares outstanding at end of period		7,602,783			7,524,887			7,602,783			7,524,887
*Performance Ratios*
Return on average assets (annualized)		0.05	%		1.30	%		0.40	%		1.50	%
Return on average equity (annualized)		0.47	%		11.80	%		3.70	%		13.80	%
Return on average common equity (annualized)		0.53	%		12.38	%		4.21	%		14.73	%
Yield on earning assets (FTE) ⁽²⁾ (annualized)		6.67	%		6.81	%		6.81	%		6.65	%
Cost of interest bearing liabilities (annualized)		4.73	%		3.88	%		4.79	%		3.36	%
Net interest spread (FTE)⁽²⁾		1.94	%		2.93	%		2.02	%		3.30	%
Net interest margin (FTE)⁽²⁾ (annualized)		3.05	%		4.03	%		3.19	%		4.34	%
Non-interest income as a percentage of average assets (annualized)		0.17	%		0.18	%		0.16	%		0.18	%
Non-interest expense to average assets (annualized)		2.47	%		2.38	%		2.47	%		2.39	%
Efficiency ratio⁽³⁾		81.45	%		58.74	%		78.68	%		54.94	%
*Asset Quality*
Allowance for credit losses (ACL)
Beginning balance, ACL - loans	$	17,098		$	16,047		$	16,506		$	14,114
Add: recoveries		11			1			19			14
Less: charge-offs		(1,907)			(324)			(2,418)			(331)
Add: provision for (recovery of) credit losses - loans		3,125			(98)			4,220			934
Add: current expected credit losses, nonrecurring adoption		—			—			—			895
Ending balance, ACL - loans	$	18,327		$	15,626		$	18,327		$	15,626

Beginning balance, reserve for unfunded commitment (RUC)	$	357		$	1,199		$	1,009		$	—
Add: current expected credit losses, nonrecurring adoption		—			—			—			1,310
Add: provision for (recovery of) unfunded commitments, net		(212)			353			(864)			242
Ending balance, RUC	$	145		$	1,552		$	145		$	1,552
Total allowance for credit losses	$	18,472		$	17,178		$	18,472		$	17,178

Allowance for credit losses on loans to total gross loans		1.02	%		0.92	%		1.02	%		0.92	%
Allowance for credit losses to total gross loans		1.03	%		1.01	%		1.03	%		1.01	%
Allowance for credit losses on loans to non-performing loans		64.84	%		48.08X			64.84	%		48.08X
Net charge-offs (recoveries) to average gross loans (annualized)		0.42	%		0.08	%		0.18	%		0.02	%
*Concentration Ratios*
Commercial real estate loans to total capital ⁽⁴⁾		360.26	%		372.48	%		360.26	%		372.48	%
Construction loans to total capital ⁽⁵⁾		118.15	%		138.79	%		118.15	%		138.79	%
*Non-performing Assets*
Loans 30-89 days past due and accruing to total gross loans		0.61	%		0.05	%		0.61	%		0.05	%
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		1.57	%		0.02	%		1.57	%		0.02	%
Other real estate owned	$	—		$	—		$	—		$	—
Non-performing loans	$	28,264		$	325		$	28,264		$	325
Non-performing assets to total assets		1.27	%		0.02	%		1.27	%		0.02	%
*Regulatory Capital Ratios (Bank only)* *⁽¹⁾*
Total risk-based capital ratio		16.96	%		16.79	%		16.96	%		16.79	%
Tier 1 risk-based capital ratio		15.97	%		15.83	%		15.97	%		15.83	%
Leverage ratio		13.98	%		14.81	%		13.98	%		14.81	%
Common equity tier 1 ratio		15.97	%		15.83	%		15.97	%		15.83	%
*Other information*
Closing stock price	$	18.45		$	20.54		$	18.45		$	20.54
Tangible equity / tangible assets ⁽²⁾		9.39	%		9.98	%		9.39	%		9.98	%
Average tangible equity / average tangible assets ⁽²⁾		9.86	%		10.46	%		10.02	%		10.34	%
Number of full time equivalent employees		201			185			201			185
Number of full service branch offices		6			6			6			6


(1)	Regulatory capital ratios as of September 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, 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 September 30,						For the nine months ended September 30,
	2024			2023			2024			2023
Net interest margin (FTE)
Net interest income (GAAP)	$	15,343		$	18,772		$	46,533		$	59,429
FTE adjustment on tax-exempt securities		78			71			221			212
Net interest income (FTE) (non-GAAP)		15,421			18,843			46,754			59,641

Average interest earning assets		2,002,745			1,856,075			1,959,051			1,837,980
Net interest margin (GAAP)		3.04	%		4.01	%		3.18	%		4.32	%
Net interest margin (FTE) (non-GAAP)		3.05	%		4.03	%		3.19	%		4.34	%

	For the three months ended September 30,						For the nine months ended September 30,
	2024			2023			2024			2023
Yield on earning assets (FTE)
Total interest income (GAAP)	$	33,591		$	31,766		$	99,496		$	91,239
FTE adjustment on tax-exempt securities		78			71			221			212
Total interest income (FTE) (non-GAAP)		33,669			31,837			99,717			91,451

Average interest earning assets		2,002,745			1,856,075			1,959,051			1,837,980
Yield on earning assets (GAAP)		6.65	%		6.79	%		6.79	%		6.64	%
Yield on earning assets (FTE) (non-GAAP)		6.67	%		6.81	%		6.81	%		6.65	%

	For the three months ended September 30,						For the nine months ended September 30,
	2024			2023			2024			2023
Net interest spread (FTE)
Yield on earning assets (GAAP)		6.65	%		6.79	%	6.79		%	6.64		%
Yield on earning assets (FTE) (non-GAAP)		6.67	%		6.81	%	6.81		%	6.65		%

Yield on interest-bearing liabilities (GAAP)		4.73	%		3.88	%	4.79		%		3.36	%
Net interest spread (GAAP)		1.92	%		2.91	%	2.00		%	3.29		%
Net interest spread (FTE) (non-GAAP)		1.94	%		2.93	%		2.02	%	3.30		%

	As of September 30,				As of September 30,
	2024		2023		2024		2023
Tangible common stockholders' equity
Total stockholders equity (GAAP)	$	226,051	$	213,743	$	226,051	$	213,743
Less: intangible assets		(18,881)		(13,373)		(18,881)		(13,373)
Tangible stockholders' equity (non-GAAP)		207,170		200,370	$	207,170		200,370
Less: preferred stock		(27,263)		(27,263)		(27,263)		(27,263)
Tangible common stockholders' equity (non-GAAP)		179,907		173,107		179,907		173,107

Common shares outstanding		7,602,783		7,524,887		7,602,783		7,524,887
Tangible book value per common share (non-GAAP)	$	23.66	$	23.00	$	23.66	$	23.00

	As of September 30,				As of September 30,
	2024		2023		2024		2023
Stockholders equity, adjusted
Total stockholders equity (GAAP)	$	226,051	$	213,743	$	226,051	$	213,743
Less: intangible assets		(18,881)		(13,373)		(18,881)		(13,373)
Total tangible stockholders equity (non-GAAP)		207,170		200,370		207,170		200,370

	As of September 30,				As of September 30,
	2024		2023		2024		2023
Total tangible assets
Total assets (GAAP)	$	2,224,599	$	2,021,491	$	2,224,599	$	2,021,491
Less: intangible assets		(18,881)		(13,373)		(18,881)		(13,373)
Total tangible assets (non-GAAP)		2,205,718		2,008,118		2,205,718		2,008,118

	For the three months ended September 30,				For the nine months ended September 30,
	2024		2023		2024		2023
Average tangible stockholders' equity
Total average stockholders' equity (GAAP)	$	225,645	$	213,247	$	223,654	$	207,647
Less: average intangible assets		(17,738)		(12,841)		(16,405)		(11,345)
Total average tangible stockholders' equity (non-GAAP)		207,907		200,406		207,249		196,302

	For the three months ended September 30,				For the nine months ended September 30,
	2024		2023		2024		2023
Average tangible assets
Total average assets (GAAP)	$	2,126,128	$	1,929,490	$	2,084,859	$	1,909,432
Less: average intangible assets		(17,738)		(12,841)		(16,405)		(11,345)
Total average tangible assets (non-GAAP)		2,108,390		1,916,649		2,068,454		1,898,087