MainStreet Bank Reports Solid Performance for First Half of 2015

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Jul 21, 2015, 05:55 ET

FAIRFAX, Va., July 21, 2015 /PRNewswire/ -- MainStreet Bank (OTCQB: MNSB) completed the first half of 2015 with net income of $871 thousand, up 63% from the first half of 2014 reported earnings of $536 thousand. The increase was primarily driven by an increase in net interest income as a result of period-over-period growth. Fully diluted earnings per share for the first half of 2015 were 21 cents as compared with 20 cents for the first half of 2014. However, the weighted average shares outstanding increased by 1,531,203 between the two periods, largely due to a capital raise that occurred at the end of 2014.

Net interest income increased by approximately $1.4 million during the first half of 2015 compared to 2014. Net interest income totaled approximately $7.2 million during the period, representing a net interest margin of 4.25%.

Total assets on June 30, 2015 were $375.6 million, compared to $345 million at the end of 2014.

Loans outstanding increased by $36.3 million during the first half, from $269.1 million on Dec. 31, 2014 to $305.4 million on June 30, 2015. Loans have increased by $58.2 million in the year since June 30, 2014.

Total deposits increased by $30.3 million during the first half of 2015 reaching $332.7 million. Total deposits increased by $44.5 million, or 15%, since the same period in 2014. Year over year demand account balances increased by $20.7 million, while money market and interest checking accounts increased by $14.5 million, increases of 55% and 20% respectively. Conversely, time deposits only increased by $4.2 million, or 2%, during the same period.

MainStreet recorded a loan loss provision of $580 thousand in the first half of 2015, compared to $123 thousand in 2014. The difference is primarily attributable to loan growth and the balance has remained consistently near 1% with only nominal losses.

Asset quality remains very strong. Nonperforming loans were 0.14 percent of total loans on June 30, 2015. As a comparison, the average for the 1,239 banks in MainStreet's national peer group is 1.05% as of March 31, 2015, or 7.5 times higher than MainStreet's loan portfolio.

For the first half of 2015, non-interest income was $643 thousand, compared to $387 thousand for the same period in 2014. Non-interest expense in the first half of 2015 was $5.9 million, compared to $4.9 million in the first half of 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: "We have made solid progress during the past two years. We are a bank that has an established infrastructure that can support good quality growth going forward," says Jeff W. Dick, Chairman, CEO and President of MainStreet Bank. "As we grow, we will reap the benefits of that infrastructure and continue to improve the efficiency of the organization."

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)

	6/30/15	3/31/15	12/31/14	9/30/14	6/30/14
ASSETS
Cash and cash equivalents
Cash and due from banks	$ 7,283	$ 11,082	$ 7,171	$ 8,863	$ 8,015
Federal funds sold	―	803	―	―	50
Total cash and cash equivalents	7,283	11,885	7,171	8,863	8,065
Investment securities available for sale, at fair value	29,852	27,582	38,643	32,703	35,781
Investment securities held to maturity	15,910	15,934	13,866	11,876	8,949
Restricted equity securities, at cost	1,596	1,594	1,166	1,165	1,151
Loans, net of allowance for loan losses	305,401	287,111	269,094	253,164	247,230
Premises and equipment, net	12,796	12,918	12,902	12,456	12,477
Other real estate owned, net	234	234	234	234	234
Accrued interest and other receivables	1,306	1,185	1,143	990	1,022
Other assets	1,201	830	757	913	952
Total Assets	$ 375,579	$ 359,273	$ 344,976	$ 322,364	$ 315,861

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Non-interest bearing deposits	$ 72,244	$ 65,178	$ 51,562	$ 49,047	$ 46,419
Savings and NOW deposits	38,364	35,963	34,208	36,900	36,132
Money market deposits	47,387	36,774	34,741	38,280	35,133
Other time deposits	174,698	179,354	181,844	164,170	170,511
Total deposits	332,693	317,269	302,355	288,397	288,195
Securities sold under agreements to repurchase	717	495	411	378	477
Federal Home Loan Bank advances and other borrowings	455	279	1,493	5,923	518
Other liabilities	1,055	1,020	954	821	458
Total Liabilities	334,920	319,063	305,213	295,519	289,648

Stockholders' Equity:
Common stock	16,491	16,491	16,391	10,379	10,379
Capital surplus	21,690	21,602	21,626	15,426	15,378
Retained earnings	2,626	2,221	1,755	1,167	539
Accumulated other comprehensive income (loss)	(148)	(104)	(9)	(127)	(83)
Total Stockholders' Equity	40,659	40,210	39,763	26,845	26,213

Total Liabilities and Stockholders' Equity	$ 375,579	$ 359,273	$ 344,976	$ 322,364	$ 315,861


Other Financial Highlights
Annualized return on average assets	0.49%	0.53%	0.56%	0.51%	0.36%
Annualized return on average equity	4.33%	4.65%	6.62%	8.97%	4.18%
Annualized net interest margin	4.25%	4.32%	4.13%	4.12%	4.18%
Efficiency ratio	75.95%	74.91%	77.17%	78.61%	79.38%
Gross loans to deposits	92.79%	91.47%	90.00%	88.73%	86.73%
Allowance for loan losses to total loans	0.99%	1.00%	1.01%	1.05%	1.07%
Past due loans 30-89 days to total gross loans	0.00%	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	0.14%	0.14%	0.19%	0.82%	0.85%
Quarterly net loan charge-offs (recoveries)	$ 105	$ 172	$ 46	$ 3	$ 248
Book value per share	$ 9.64	$ 9.52	$ 9.44	$ 9.98	$ 9.74
Closing stock price	$ 10.20	$ 9.40	$ 8.90	$ 8.00	$ 8.50

Regulatory Capital Ratios
Tier 1 risk-based capital ratio	13.30%	14.34%	13.68%	9.69%	9.93%
Common equity tier 1 capital ratio	13.30%	14.34%	13.68%	9.69%	9.93%
Total risk-based capital ratio	14.30%	15.37%	14.63%	10.66%	10.94%
Leverage ratio	11.14%	11.54%	13.68%	9.76%	9.76%


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

	Six Months Ended		Three Months Ended
	6/30/15	6/30/14	6/30/15	3/31/15	12/31/14	9/30/14	6/30/14
INTEREST INCOME:
Interest and fees on loans	$ 7,779	$ 6,371	$ 3,924	$ 3,855	$ 3,601	$ 3,353	$ 3,364
Interest on investment securities	456	435	220	236	244	212	238
Interest on federal funds sold	16	14	9	7	5	6	8
Total interest income	8,251	6,820	4,153	4,098	3,850	3,571	3,610

INTEREST EXPENSE:
Interest on savings and NOW deposits	70	67	36	34	37	37	34
Interest on money market deposits	63	49	34	29	29	27	25
Interest on other time deposits	923	871	444	479	478	459	457
Interest on Federal Home Loan Bank advances and other borrowings	7	9	3	4	5	4	4
Total interest expense	1,063	996	517	546	549	527	520
Net interest income	7,188	5,824	3,636	3,552	3,301	3,044	3,090
Provision for loan losses	580	464	278	302	123	―	75
Net interest income after provision for loan losses	6,608	5,360	3,358	3,250	3,178	3,044	3,015
OTHER INCOME:
Deposit account service charges	222	213	123	99	107	109	113
Gain on securities available for sale	214	―	―	214	―	105	―
Other fee income	207	174	95	112	79	231	118
Total other income	643	387	218	425	186	445	231
OTHER EXPENSES:
Salaries and employee benefits	3,688	2,741	1,822	1,866	1,445	1,493	1,427
Furniture and equipment expenses	542	499	277	265	281	269	246
Advertising and marketing	138	53	81	57	71	46	27
Occupancy expenses	360	476	169	191	154	203	236
Outside services	157	139	79	78	93	90	69
Administrative expenses	156	158	79	77	98	89	83
Other operating expenses	907	864	462	445	411	423	445
Total other expenses	5,948	4,930	2,969	2,979	2,553	2,613	2,533
INCOME BEFORE INCOME TAXES	1,303	817	607	696	811	876	713
Income tax expense	432	281	201	231	223	248	244
NET INCOME	$ 871	$ 536	$ 406	$ 465	$ 588	$ 628	$ 469


Net income per common share, basic and diluted	$ 0.21	$ 0.20	$ 0.10	$ 0.11	$ 0.21	$ 0.23	$ 0.17
Weighted average number of shares, basic and diluted	4,231,245	2,700,042	4,235,755	4,226,685	2,803,216	2,701,107	2,700,938