MainStreet Bancshares Continues Record Growth

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Oct 30, 2017, 09:31 ET

FAIRFAX, Va., Oct. 30, 2017 /PRNewswire/ -- MainStreet Bancshares, Inc. (OTCQB: MNSB), the holding company for MainStreet Bank, reported its best-ever quarter of organic growth. Total assets grew over 30% year-on-year, from $536 million at September 30, 2016 to $705 million at September 30, 2017. Net loans grew 29% over the same period.

Total deposits as of September 30, 2017 were $596 million, or $149 million over total deposits of $447 million at September 30, 2016. The component of non-interest bearing deposits grew 37% from $114 million at September 30, 2016 to $156 million at September 30, 2017. Non-interest bearing deposits represent 26% of total deposits at September 30, 2017.

The significant growth in loans was met with a higher than normal loan provision expense of $550 thousand for the third quarter of 2017. The loan provision expense is a direct function of the growth in loans. The overall quality of the loan portfolio remains strong, with non-performing loans at just 0.35%.

Including the higher than normal loss provision expense, the Company achieved net income of $1.1 million for the third quarter of 2017, bringing the year-to-date net income to $3.1 million, an 11.5% increase over year-to-date net income reported on September 30, 2016.

Net interest income of $15.3 million reported for September 30, 2017 improved $1.7 million over net interest income from September 30, 2016. Non-interest income of $1.77 million is up 64.9% from September 30, 2016 to September 30, 2017.

Non-interest expense Through September 30, 2017 is $11.4 million compared to $10.5 million through September 30, 2016.

The book value per common share is $11.60 as of September 30, 2017, up 9.5% from September 30, 2016. The share price closed on September 30, 2017 at $16.30 per common share, or 140.5% of book value. Year-to-date through September 30, 2017 a total of 849,590 shares traded for a total of $13.9 million.

QUOTES: "Our focus has always been to build systems and processes that support efficient scale within our core business strategy." said Jeff W. Dick, Chairman and CEO of MainStreet Bancshares, Inc. and MainStreet Bank. "We have been working very hard to grow both the Bank's customer base and employee base as opportunities arise."

President Chris Brockett added, "The Washington, DC metropolitan market remains vibrant and we continue to see opportunities arising from market consolidation. We are experiencing robust growth at this point and with our recent capital raise, we are well positioned to continue this trend into the future."

ABOUT MAINSTREET BANK: MainStreet operates five branches in Herndon, Fairfax, Fairfax City, McLean 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 literally "put our bank" in nearly 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 and leading market expert 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. Additionally, MainStreet 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.

UNAUDITED CONSOLIDATED BALANCE SHEET INFORMATION
*(Unaudited)*
(In thousands, except ratios and per share data)

	9/30/17	6/30/17	3/31/17	12/31/16	9/30/16
ASSETS
Cash and cash equivalents
Cash and due from banks	$ 20,804	$ 14,801	$ 11,867	$ 17,273	$ 13,142
Federal funds sold	―	4,674	4,856	797	797
Total cash and cash equivalents	20,804	19,475	16,723	18,070	13,939
Investment securities available for sale, at fair value	51,854	37,274	28,889	36,354	26,434
Investment securities held to maturity, at carrying value	27,566	27,615	27,664	27,714	26,518
Restricted equity securities, at cost	3,898	3,895	3,892	3,426	3,423
Loans, net of allowance for loan losses	569,137	525,989	461,768	463,926	441,335
Premises and equipment, net	13,997	12,008	12,132	12,309	12,500
Other real estate owned, net	―	135	135	135	135
Accrued interest and other receivables	3,076	2,737	2,363	2,261	2,265
Bank owned life insurance	13,526	13,417	13,308	10,202	8,126
Other assets	1,687	1,715	1,388	1,314	1,234
Total Assets	$ 705,545	$ 644,260	$ 568,262	$ 575,711	$ 535,909

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Non-interest bearing deposits	$ 155,586	$ 139,023	$ 114,044	$ 106,050	$ 114,128
Interest bearing DDA deposits	25,888	27,639	17,443	41,611	―
Savings and NOW deposits	42,908	48,268	44,697	44,833	41,896
Money market deposits	69,425	86,009	79,704	75,670	76,152
Other time deposits	302,689	237,853	207,854	205,402	214,636
Total deposits	596,496	538,792	463,742	473,566	446,812
Securities sold under agreements to repurchase	―	―	―	―	2,736
Federal Home Loan Bank advances and other borrowings	42,604	40,167	40,179	40,192	40,204
Subordinated Debt	14,740	14,733	14,726	14,019	―
Other liabilities	1,647	1,807	2,011	1,539	872
Total Liabilities	655,487	595,499	520,658	529,316	490,624

Stockholders' Equity:
Common stock	16,835	16,808	16,792	16,650	16,645
Capital surplus	22,336	22,229	22,126	22,152	21,995
Retained earnings	10,922	9,777	8,827	7,801	6,724
Accumulated other comprehensive income (loss)	(35)	(53)	(141)	(208)	(79)
Total Stockholders' Equity	50,058	48,761	47,604	46,395	45,285

Total Liabilities and Stockholders' Equity	$ 705,545	$ 644,260	$ 568,262	$ 575,711	$ 535,909

Other Financial Highlights
Annualized return on average assets	0.68%	0.68%	0.73%	0.76%	0.75%
Annualized return on average equity	8.22%	8.26%	8.74%	8.75%	8.54%
Annualized net interest margin	3.52%	3.64%	3.61%	3.78%	3.78%
Efficiency ratio	66.95%	68.47%	69.38%	69.47%	71.06%
Gross loans to deposits	96.25%	98.45%	100.45%	98.80%	99.60%
Allowance for loan losses to total loans	0.87%	0.84%	0.87%	0.85%	0.83%
Past due loans 30-89 days to total gross loans	0.03%	0.37%	0.00%	0.05%	0.00%
Past due loans 90 days or more to total gross loans	0.48%	0.00%	0.00%	0.00%	0.00%
Non-accrual loans to total gross loans	0.35%	0.02%	0.02%	0.04%	0.09%
Quarterly net loan charge-offs (recoveries)	$ 7	$ 39	$ 111	$ 30	$ 109
Book value per share	$ 11.60	$ 11.30	$ 11.06	$ 10.85	$ 10.59
Closing stock price	$ 16.30	$ 16.05	$ 16.55	$ 14.20	$ 12.60

Regulatory Capital Ratios (Bank Only)
Tier 1 risk-based capital ratio	10.08%	10.74%	11.78%	11.74%	9.60%
Common equity tier 1 capital ratio	10.08%	10.74%	11.78%	11.74%	9.60%
Total risk-based capital ratio	10.88%	11.52%	12.57%	12.53%	10.38%
Leverage ratio	9.43%	10.32%	10.69%	10.95%	8.66%

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

	Year-to-Date		Three Months Ended
	9/30/17	9/30/16	9/30/17	6/30/17	3/31/17	12/31/16	9/30/16
INTEREST INCOME:
Interest and fees on loans	$ 17,643	$ 14,925	$ 6,573	$ 5,717	$ 5,353	$ 5,267	$ 5,111
Interest on investment securities	1,233	936	424	413	396	351	339
Interest on federal funds sold	175	74	88	47	40	19	29
Total interest income	19,051	15,935	7,085	6,177	5,789	5,637	5,479

INTEREST EXPENSE:
Interest on interest bearing DDA deposits	124	―	40	43	41	11	―
Interest on savings and NOW deposits	140	123	50	47	43	44	43
Interest on money market deposits	414	204	148	150	116	96	83
Interest on other time deposits	2,005	1,748	875	594	536	579	605
Interest on Federal Home Loan Bank advances and other borrowings	311	192	119	108	84	74	71
Interest on Subordinated Debt	725	―	243	241	241	―	―
Total interest expense	3,719	2,267	1,475	1,183	1,061	804	802
Net interest income	15,332	13,668	5,610	4,994	4,728	4,833	4,677
Provision for loan losses	1,170	310	550	425	195	335	90
Net interest income after provision for loan losses	14,162	13,358	5,060	4,569	4,533	4,498	4,587
OTHER INCOME:
Deposit account service charges	615	553	221	202	192	183	205
Bank owned life insurance income	324	126	108	110	106	76	75
Other fee income	832	395	237	246	349	194	156
Total other income	1,771	1,074	566	558	647	453	436
OTHER EXPENSES:
Salaries and employee benefits	7,252	6,550	2,431	2,449	2,372	2,038	2,208
Furniture and equipment expenses	925	842	333	306	286	301	297
Advertising and marketing	137	220	80	26	31	56	102
Occupancy expenses	462	576	138	153	171	158	200
Outside services	454	413	212	113	129	202	167
Administrative expenses	303	261	115	98	90	89	93
Other operating expenses	1,915	1,614	657	608	650	595	571
Total other expenses	11,448	10,476	3,966	3,753	3,729	3,439	3,638
INCOME BEFORE INCOME TAXES	4,485	3,956	1,660	1,374	1,451	1,512	1,385
Income tax expense	1,364	1,157	516	427	421	436	373
NET INCOME	$ 3,121	$ 2,799	$ 1,144	$ 947	$ 1,030	$ 1,076	$ 1,012


Net income per common share, basic and diluted	$ 0.72	$ 0.66	$ 0.27	$ 0.22	$ 0.24	$ 0.25	$ 0.24
Weighted average number of shares, basic and diluted	4,315,376	4,255,170	4,315,675	4,315,591	4,304,852	4,260,232	4,260,232