MainStreet Bancshares Reports Strong First Quarter

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Apr 23, 2018, 09:50 ET

FAIRFAX, Va., April 23, 2018 /PRNewswire/ -- MainStreet Bancshares, Inc. (OTCQX: MNSB), the holding company for MainStreet Bank, reports net income of $1.69 million for the first quarter of 2018, which is 64% higher than first quarter 2017 net income of $1.03 million. Earnings per share for the first quarter 2017 were $0.30 versus $0.24 for first quarter 2017.

Net interest income of $6.78 million for the first quarter of 2018 exceeds the first quarter of 2017 by $2.05 million. The first quarter 2018 net interest margin fell four basis points to 3.57% against the first quarter of 2017.

Non-interest income excluding securities gains is down 21% for first quarter 2018 versus 2017 for two key reasons: 1) a decline in mortgage originations for the first quarter of 2018, and 2) a sizeable loan prepayment penalty earned in the first quarter of 2017.

Non-interest expense for the first quarter of 2018 is $4.6 million compared to $3.7 million for the first quarter of 2017. This is primarily due to an increase in employees and salaries in support of balance sheet growth. The efficiency ratio improved to 62.9% for the first quarter of 2018 compared to 69.4% for first quarter 2017.

MainStreet Bancshares's balance sheet grew 48% to $844 million for first quarter 2018 versus first quarter 2017. Net loans at March 31, 2018 total $703 million against net loans outstanding at March 31, 2018 of $462 million, an increase of 52%. Asset quality remains very strong with nonperforming loans at 0.27% of total gross loans on March 31, 2018.

Non-interest-bearing deposits increased to $165 million as of March 31, 2018, a 45% increase from March 31, 2017. Non-interest-bearing deposits represent 24% of total deposits at March 31, 2018. Total deposits as of March 31, 2018 were $691 million an increase of $227 million from March 31, 2017.

The book value per common share is $12.75 as of March 31, 2018. According to OTC Markets, the share price closed the quarter at $20.95 per common share, or 164% of book value. During the first quarter there were 362 trades for a total volume of 228,161 common shares totaling $4.3 million.

QUOTES: "2018 is off to a good start," says Jeff W. Dick, Chairman and CEO of MainStreet Bancshares, Inc. and MainStreet Bank. "Our growth is coming from relationships with customers who expect excellent service; and our team consistently delivers."

ABOUT MAINSTREET BANK: MainStreet operates six branches in Herndon, Fairfax, Fairfax City, McLean, Leesburg and Clarendon. In addition, MainStreet has 55,000 free ATMs and a fully integrated online and mobile banking solution. The Bank is not restricted by a conventional branching system, as it can offer business customers the ability to Put Our Bank in Your Office^®. With robust and easy-to-use online business banking technology, MainStreet has "put our bank" in well over 1,000 businesses in the Metropolitan area.

MainStreet has a full complement of payment system services for third party payment providers. MainStreet has a nationally known market leader on-staff ready to help payment providers create a solution perfect for their needs.

MainStreet has a robust line of business and professional lending products, including government contracting lines of credit, commercial lines and term loans, residential and commercial construction and commercial real estate. MainStreet also works with the SBA to offer 7A and 504 lending solutions. From mobile banking and Apple Pay to instant-issue Debit Cards, MainStreet Bank is always looking for ways to improve its customer experience.

MainStreet Bank was the first community bank in the Washington, DC Metropolitan area to offer a full online business banking solution. MainStreet Bank was also the first bank headquartered in the Commonwealth of Virginia to offer CDARS – a solution that provides multi-million-dollar FDIC insurance. Further information on the Bank can be obtained by visiting its website at mstreetbank.com.

This release contains forward-looking statements, including our expectations with respect to future events that are subject to various risks and uncertainties. Factors that could cause actual results to differ materially from management's projections, forecasts, estimates and expectations include: fluctuation in market rates of interest and loan and deposit pricing, adverse changes in the overall national economy as well as adverse economic conditions in our specific market areas, maintenance and development of well-established and valued client relationships and referral source relationships, and acquisition or loss of key production personnel. Other risks that can affect the Bank are detailed from time to time in our annual reports. 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
*(Unaudited)*
(In thousands, except ratios and per share data)

	3/31/18	12/31/17	9/30/17	6/30/17	3/31/17
ASSETS
Cash and cash equivalents
Cash and due from banks	$ 21,597	$ 37,493	$ 20,804	$ 14,801	$ 11,867
Federal funds sold	5,316	―	―	4,674	4,856
Total cash and cash equivalents	26,913	37,493	20,804	19,475	16,723
Investment securities available for sale, at fair value	47,009	51,314	51,854	37,274	28,889
Investment securities held to maturity, at carrying value	27,469	27,517	27,566	27,615	27,664
Restricted equity securities, at cost	5,545	4,241	3,898	3,895	3,892
Loans, net of allowance for loan losses	702,700	654,339	569,137	525,989	461,768
Premises and equipment, net	14,568	13,965	13,997	12,008	12,132
Other real estate owned, net	―	―	―	135	135
Accrued interest and other receivables	3,938	3,849	3,076	2,737	2,363
Bank owned life insurance	13,743	13,637	13,526	13,417	13,308
Other assets	1,794	1,596	1,687	1,715	1,388
Total Assets	$ 843,679	$ 807,951	$ 705,545	$ 644,260	$ 568,262

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Non-interest bearing deposits	$ 164,795	$ 171,572	$ 155,586	$ 139,023	$ 114,044
Interest bearing DDA deposits	54,097	48,432	25,888	27,639	17,443
Savings and NOW deposits	49,935	47,855	42,908	48,268	44,697
Money market deposits	118,532	82,828	69,425	86,009	79,704
Other time deposits	303,575	316,968	302,689	237,853	207,854
Total deposits	690,934	667,655	596,496	538,792	463,742
Federal Home Loan Bank advances and other borrowings	64,129	53,780	42,604	40,167	40,179
Subordinated Debt	14,755	14,747	14,740	14,733	14,726
Other liabilities	3,298	2,968	1,647	1,807	2,011
Total Liabilities	773,116	739,150	655,487	595,499	520,658

Stockholders' Equity:
Common stock	21,579	21,442	16,835	16,808	16,792
Capital surplus	35,769	35,693	22,336	22,229	22,126
Retained earnings	13,368	11,682	10,922	9,777	8,827
Accumulated other comprehensive income (loss)	(153)	(16)	(35)	(53)	(141)
Total Stockholders' Equity	70,563	68,801	50,058	48,761	47,604

Total Liabilities and Stockholders' Equity	$ 843,679	$ 807,951	$ 705,545	$ 644,260	$ 568,262

Other Financial Highlights
Annualized return on average assets	0.84%	0.60%	0.68%	0.68%	0.73%
Annualized return on average equity	9.64%	7.44%	8.22%	8.26%	8.74%
Annualized net interest margin	3.57%	3.49%	3.52%	3.64%	3.61%
Efficiency ratio	62.85%	66.90%	66.95%	68.47%	69.38%
Gross loans to deposits	102.69%	98.86%	96.25%	98.45%	100.45%
Allowance for loan losses to total loans	0.89%	0.86%	0.87%	0.84%	0.87%
Past due loans 30-89 days to total gross loans	0.02%	0.03%	0.03%	0.37%	0.00%
Past due loans 90 days or more to total gross loans	0.00%	0.00%	0.48%	0.00%	0.00%
Non-accrual loans to total gross loans	0.27%	0.31%	0.35%	0.02%	0.02%
Quarterly net loan charge-offs (recoveries)	$ 7	$ 3	$ 7	$ 39	$ 111
Book value per share	$ 12.75	$ 12.57	$ 11.60	$ 11.30	$ 11.06
Closing stock price	$ 20.95	$ 17.52	$ 16.30	$ 16.05	$ 16.55

Regulatory Capital Ratios (Bank Only)
Tier 1 risk-based capital ratio	10.62%	10.65%	10.08%	10.74%	11.78%
Common equity tier 1 capital ratio	10.62%	10.65%	10.08%	10.74%	11.78%
Total risk-based capital ratio	11.42%	11.43%	10.88%	11.52%	12.57%
Leverage ratio	10.44%	10.42%	9.43%	10.32%	10.69%



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

	Year-to-Date		Three Months Ended
	3/31/18	3/31/17	3/31/18	12/31/17	9/30/17	6/30/17	3/31/17
INTEREST INCOME:
Interest and fees on loans	$ 8,316	$ 5,353	$ 8,316	$ 7,437	$ 6,573	$ 5,717	$ 5,353
Interest on investment securities	341	396	341	343	424	413	396
Interest on federal funds sold	100	40	100	122	88	47	40
Total interest income	8,757	5,789	8,757	7,902	7,085	6,177	5,789

INTEREST EXPENSE:
Interest on interest bearing DDA deposits	164	41	164	70	40	43	41
Interest on savings and NOW deposits	46	43	46	42	50	47	43
Interest on money market deposits	264	116	264	151	148	150	116
Interest on other time deposits	1,091	536	1,091	1,109	875	594	536
Interest on Federal Home Loan Bank advances and other borrowings	179	84	179	141	119	108	84
Interest on Subordinated Debt	238	241	238	239	243	241	241
Total interest expense	1,982	1,061	1,982	1,752	1,475	1,183	1,061
Net interest income	6,775	4,728	6,775	6,150	5,610	4,994	4,728
Provision for loan losses	635	195	635	715	550	425	195
Net interest income after provision for loan losses	6,140	4,533	6,140	5,435	5,060	4,569	4,533
OTHER INCOME:
Deposit account service charges	213	192	213	221	221	202	192
Bank owned life insurance income	106	106	106	111	108	110	106
Other fee income	189	349	189	174	237	246	349
Total other income	508	647	508	506	566	558	647
OTHER EXPENSES:
Salaries and employee benefits	2,749	2,372	2,749	2,400	2,431	2,449	2,372
Furniture and equipment expenses	381	286	381	347	333	306	286
Advertising and marketing	156	31	156	127	80	26	31
Occupancy expenses	151	171	151	143	138	153	171
Outside services	196	129	196	209	212	113	129
Administrative expenses	118	90	118	145	115	98	90
Other operating expenses	826	653	826	838	657	608	650
Total other expenses	4,577	3,732	4,577	4,209	3,966	3,753	3,729
INCOME BEFORE INCOME TAXES	2,071	1,448	2,071	1,732	1,660	1,374	1,451
Income tax expense	385	421	385	971	516	427	421
NET INCOME	$ 1,686	$ 1,027	$ 1,686	$ 761	$ 1,144	$ 947	$ 1,030


Net income per common share, basic and diluted	$ 0.30	$ 0.24	$ 0.30	$ 0.14	$ 0.27	$ 0.22	$ 0.24
Weighted average number of shares, basic and diluted	5,529,758	4,314,852	5,529,758	5,234,392	4,315,675	4,315,591	4,304,852