MainStreet Bank Reports Excellent Balance Sheet Growth

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Oct 29, 2015, 08:00 ET

FAIRFAX, Va., Oct. 29, 2015 /PRNewswire/ -- MainStreet Bank (OTCQB: MNSB) reported balance sheet growth of 49% through the nine months ending September 30, 2015 with total assets of $481 million against total assets of $322 million at the same period in 2014. The Bank completed an $80 million indirect consumer loan portfolio purchase on July 27, 2015.

Net income is down slightly for the third quarter of 2015 due to the anticipated loan loss provision necessary to book the indirect consumer loan portfolio purchase. The Bank reported net income for the quarter of $353 thousand against the prior quarter net income of $406 thousand, a 13% decline. The loan loss provision for the third quarter totaled $775 thousand.

Year-to-date net income through September 30, 2015 of $1.224 million is up five percent from the same period last year. Fully diluted earnings per share through September 30^th were 29 cents as compared with 43 cents for the same period in 2014. However, the weighted average shares outstanding increased by 1,531,372 between the two periods, largely due to a capital raise that occurred at the end of 2014.

Net interest income increased by $2.39 million during the nine months ending September 30, 2015 compared to the same period in 2014. Net interest income totaled $11.26 million during the period, representing a net interest margin of 4.03%.

Loans outstanding increased by $120.23 million during the nine months ending September 30, 2015, from $269.1 million on Dec. 31, 2014 to $389.2 million on September 30, 2015

Total deposits increased by $86.1 million during the nine months ending September 30, 2015 reaching $388.4 million. Total deposits increased by $100 million, or 34.68%, since the same period in 2014. Year-over-year demand account balances increased by $23.6 million, while money market and interest checking accounts increased by $20.5 million, increases of 48.1% and 27.3% respectively. Time deposits increased by $55.9 million, or 34%, during the same period. The increased deposit growth was used to fund liquidity and the indirect consumer loan portfolio purchase. An additional source of funding for the portfolio was Federal Home Loan Bank advances, which increased $44.3 million year over year.

Asset quality remains very strong. Nonperforming loans were 0.21 percent of total loans on September 30, 2015. As a comparison, the average for the 1,239 banks in MainStreet's national peer group is 0.98% as of June 30, 2015.

For the nine months ending September 30, 2015, non-interest income was $1 million, compared to $831 thousand for the same period in 2014. Non-interest expense for the nine months ending September 30, 2015 was $9.08 million, compared to $7.54 million for the same period in 2014. The increase was driven primarily by personnel related expenses associated with the growth and expansion during 2014, which allowed the company to experience high quality growth.

QUOTES: "The purchase of the $80 million indirect consumer loan portfolio in late July has been a great opportunity for MainStreet, essentially kick-starting the portfolio for the team we acquired late in 2014. That acquisition, in addition to the good growth we continue to experience in the commercial loan portfolio, is the primary reason for our continued high quality performance," says Jeff W. Dick, Chairman, CEO and President of MainStreet Bank. "As of the nine months ending September 30, 2015, we were trading at approximately 118.5% of book value, and our plan for continued growth should result in building strong shareholder value."

ABOUT MAINSTREET BANK: MainStreet operates five branches in Herndon, Fairfax, Fairfax City, McLean and Clarendon. In addition, MainStreet has 55,000 free ATMs and an online banking solution called "Airbanking^®". 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 literally "put our bank" in well over 600 businesses in the Metropolitan area.

MainStreet Bank is always looking for ways to improve its customer experience, and now has the ability to instantly issue new and replacement Debit Cards - which is especially important for customers if their Cards are compromised or lost.

MainStreet Bank also continues to refine and improve its mobile banking App, which works on iPads, iPhones and Androids. Additionally, MainStreet Bank released Aircharity^® in 2012. Aircharity^® is a unique solution that empowers people and organizations to raise money via email, websites and social media. The product allows a customer to open an account and accept donations from debit cards, credit cards and electronic checks.

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.


BALANCE SHEETS
*(Unaudited)*
(In thousands, except ratios)

			9/30/15		6/30/15		3/31/15		12/31/14		9/30/14
ASSETS
Cash and cash equivalents
Cash and due from banks			$ 17,736		$ 7,283		$ 11,082		$ 7,171		$ 8,863
Federal funds sold			779		―		803		―		―
Total cash and cash equivalents			18,515		7,283		11,885		7,171		8,863
Investment securities available for sale, at fair value			36,317		29,852		27,582		38,643		32,703
Investment securities held to maturity			17,282		15,910		15,934		13,866		11,876
Restricted equity securities, at cost			3,718		1,596		1,594		1,166		1,165
Loans, net of allowance for loan losses			389,327		305,401		287,111		269,094		253,164
Premises and equipment, net			12,616		12,796		12,918		12,902		12,456
Other real estate owned, net			234		234		234		234		234
Accrued interest and other receivables			1,411		1,306		1,185		1,143		990
Other assets			1,552		1,201		830		757		913
Total Assets			$ 480,972		$ 375,579		$ 359,273		$ 344,976		$ 322,364

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Non-interest bearing deposits			$ 72,659		$ 72,244		$ 65,178		$ 51,562		$ 49,047
Savings and NOW deposits			37,683		38,364		35,963		34,208		36,900
Money market deposits			58,023		47,387		36,774		34,741		38,280
Other time deposits			220,057		174,698		179,354		181,844		164,170
Total deposits			388,422		332,693		317,269		302,355		288,397
Securities sold under agreements to repurchase			521		717		495		411		378
Federal Home Loan Bank advances and other borrowings			50,254		455		279		1,493		5,923
Other liabilities			660		1,055		1,020		954		821
Total Liabilities			439,857		334,920		319,063		305,213		295,519

Stockholders' Equity:
Common stock			16,508		16,491		16,491		16,391		10,379
Capital surplus			21,757		21,690		21,602		21,626		15,426
Retained earnings			2,980		2,626		2,221		1,755		1,167
Accumulated other comprehensive income (loss)			(130)		(148)		(104)		(9)		(127)
Total Stockholders' Equity			41,115		40,659		40,210		39,763		26,845

Total Liabilities and Stockholders' Equity			$ 480,972		$ 375,579		$ 359,273		$ 344,976		$ 322,364


Other Financial Highlights
Annualized return on average assets			0.42%		0.49%		0.53%		0.56%		0.51%
Annualized return on average equity			4.01%		4.33%		4.65%		6.62%		8.97%
Annualized net interest margin			4.03%		4.25%		4.32%		4.13%		4.12%
Efficiency ratio			73.99%		75.95%		74.91%		77.17%		78.61%
Gross loans to deposits			101.54%		92.79%		91.47%		90.00%		88.73%
Allowance for loan losses to total loans			0.95%		0.99%		1.00%		1.01%		1.05%
Past due loans 30-89 days to total gross loans			0.58%		0.00%		0.00%		0.00%		0.00%
Past due loans 90 days or more to total gross loans			0.00%		0.00%		0.00%		0.00%		0.00%
Non-accrual loans to total gross loans			0.21%		0.14%		0.14%		0.19%		0.82%
Quarterly net loan charge-offs (recoveries)			$ 91		$ 105		$ 172		$ 46		$ 3
Book value per share			$ 9.78		$ 9.64		$ 9.52		$ 9.44		$ 9.98
Closing stock price			$ 11.59		$ 10.20		$ 9.40		$ 8.90		$ 8.00

Regulatory Capital Ratios
Tier 1 risk-based capital ratio			10.42%		13.30%		14.34%		13.68%		9.69%
Common equity tier 1 capital ratio			10.42%		13.30%		14.34%		13.68%		9.69%
Total risk-based capital ratio			11.37%		14.30%		15.37%		14.63%		10.66%
Leverage ratio			9.13%		11.14%		11.54%		13.68%		9.76%




	STATEMENTS OF INCOME
	*(Unaudited)*
	(In thousands, except share data)

		Nine Months Ended		Three Months Ended
		9/30/15	9/30/14	9/30/15		6/30/15		3/31/15		12/31/14		9/30/14
	INTEREST INCOME:
	Interest and fees on loans	$ 12,217	$ 9,724	$ 4,438		$ 3,924		$ 3,855		$ 3,601		$ 3,353
	Interest on investment securities	687	647	231		220		236		244		212
	Interest on federal funds sold	30	20	14		9		7		5		6
	Total interest income	12,934	10,391	4,683		4,153		4,098		3,850		3,571

	INTEREST EXPENSE:
	Interest on savings and NOW deposits	110	103	40		36		34		37		37
	Interest on money market deposits	115	76	52		34		29		29		27
	Interest on other time deposits	1,401	1,330	478		444		479		478		459
	Interest on Federal Home Loan Bank advances and other borrowings	48	13	41		3		4		5		4
	Total interest expense	1,674	1,522	611		517		546		549		527
	Net interest income	11,260	8,869	4,072		3,636		3,552		3,301		3,044
	Provision for loan losses	1,355	463	775		278		302		123		―
	Net interest income after provision for loan losses	9,905	8,406	3,297		3,358		3,250		3,178		3,044
	OTHER INCOME:
	Deposit account service charges	352	322	130		123		99		107		109
	Gain on securities available for sale	214	105	―		―		214		―		105
	Other fee income	439	404	232		95		112		79		231
	Total other income	1,005	831	362		218		425		186		445
	OTHER EXPENSES:
	Salaries and employee benefits	5,653	4,233	1,965		1,822		1,866		1,445		1,493
	Furniture and equipment expenses	824	769	282		277		265		281		269
	Advertising and marketing	237	99	99		81		57		71		46
	Occupancy expenses	522	680	162		169		191		154		203
	Outside services	231	228	74		79		78		93		90
	Administrative expenses	243	247	87		79		77		98		89
	Other operating expenses	1,365	1,287	458		462		445		411		423
	Total other expenses	9,075	7,543	3,127		2,969		2,979		2,553		2,613
	INCOME BEFORE INCOME TAXES	1,835	1,694	532		607		696		811		876
	Income tax expense	611	529	179		201		231		223		248
	NET INCOME	$ 1,224	$ 1,165	$ 353		$ 406		$ 465		$ 588		$ 628


	Net income per common share, basic and diluted	$ 0.29	$ 0.43	$ 0.08		$ 0.10		$ 0.11		$ 0.21		$ 0.23
	Weighted average number of shares, basic and diluted	4,231,773	2,700,401	4,232,811		4,235,755		4,226,685		2,803,216		2,701,107