MainStreet Bancshares, Inc. Exceeds $1 Billion in Assets

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Oct 26, 2018, 08:00 ET

FAIRFAX, Va., Oct. 26, 2018 /PRNewswire/ -- MainStreet Bancshares, Inc. (OTCQX: MNSB) (the "Company") reports total assets of $1.06 billion at September 30, 2018, as compared to $705.5 million at September 30, 2017, an increase of 50%. The Company remains strongly capitalized.

The Company reported net income of $5.5 million for the nine months ended September 30, 2018, an increase of 77%, as compared to net income of $3.1 million for the nine months ended September 30, 2017. Fully adjusted earnings per share for both common and diluted shares was $0.90 during the first nine months of 2018, compared to $0.69 for fully adjusted common and diluted shares for the same period in 2017. For the nine months ended September 30, 2018 the Company produced a 0.82% return on average assets and 9.46% on average equity, compared to 0.68% and 8.32% consecutively for the third quarter of 2017.

Fully adjusted earnings per share for both common and diluted shares was $0.35 for the third quarter of 2018, compared to $0.25 for both common and diluted shares for the same period in 2017. For the three months ended September 30, 2018 the Company produced a 0.91% return on average assets and 10.25% on average equity, compared to 0.79% and 10.50% consecutively for the third quarter of 2017.

Net interest income, the Company's primary source of revenue, was $8.0 million for the three months ended September 30, 2018, up 57% from $5.1 million for the three months ended September 30, 2017. The net interest margin was 3.41% for the nine months ended September 30, 2018 as compared to the 3.51% for the nine months ended September 30, 2017.

The $2.6 million in loan loss provisions made thus far in 2018 negatively impacts current earnings. However the strong loan growth that prompted those loss provisions will enhance future earnings. Asset quality remains strong with non-performing assets to total assets at 0.18% as of September 30, 2018, down from 0.29% as of September 30, 2017. Net charge-offs decreased $149 thousand from September 30, 2017 to $8 thousand for the nine months ended September 30, 2018.

As of September 30, 2018, the Company's fully adjusted tangible book value per share was $14.61, up 26% from $11.60 as of September 30, 2017. According to OTCQX, there were 257 trades during the quarter for a total of 166,580 shares traded or $3,498,381. The closing share price was $20.95, for a market cap of $171.4 million.

QUOTES: "We completed an over-sold private placement during the third quarter and are working diligently to put the proceeds to good use," says Chris Brockett, President of MainStreet Bancshares, Inc. and MainStreet Bank. "We continue to see quality growth opportunities in the markets we serve."

"In our most recent private placement stock offering, we committed to use our best efforts to register our common stock with the SEC under the Securities Exchange Act of 1934," said Jeff W. Dick, Chairman and CEO of MainStreet Bancshares, Inc. and MainStreet Bank. "Our goal is to list our common shares on the Nasdaq Capital Market on or before April 30, 2019. We hope to accomplish the registration and listing before the Russell 2000 index is reconstituted for 2019."

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 and a highly experienced team 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.

Contact:	Jeff W. Dick
	(703) 481-4567

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


	9/30/18	6/30/18	3/31/18	12/31/17	9/30/17
ASSETS
Cash and cash equivalents
Cash and due from banks	$ 38,634	$ 27,163	$ 21,597	$ 37,493	$ 20,804
Federal funds sold	21,739	4,104	5,316	―	―
Total cash and cash equivalents	60,373	31,267	26,913	37,493	20,804
Investment securities available for sale, at fair value	79,489	20,806	47,009	51,314	51,854
Investment securities held to maturity, at carrying value	26,221	27,422	27,469	27,517	27,566
Restricted equity securities, at cost	4,209	4,737	5,545	4,241	3,898
Loans, net of allowance for loan losses of $8,327, $7,731
$6,334, $5,671, and $4,993, consecutively	850,822	815,875	702,700	654,339	569,137
Premises and equipment, net	14,414	14,660	14,568	13,965	13,997
Other real estate owned, net	―	―	―	―	―
Accrued interest and other receivables	4,919	4,695	3,938	3,849	3,076
Bank owned life insurance	13,957	13,851	13,743	13,637	13,526
Other assets	2,577	2,842	1,794	1,596	1,687
Total Assets	$ 1,056,981	$ 936,155	$ 843,679	$ 807,951	$ 705,545

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Non-interest bearing deposits	$ 191,986	$ 179,827	$ 164,795	$ 171,572	$ 155,586
Interest-bearing DDA deposits	59,295	60,389	54,097	48,432	25,888
Savings and NOW deposits	52,602	48,659	49,935	47,855	42,908
Money market deposits	109,498	118,194	118,532	82,828	69,425
Other time deposits	476,511	394,433	303,575	316,968	302,689
Total deposits	889,892	801,502	690,934	667,655	596,496
Federal Home Loan Bank advances and other borrowings	30,000	45,117	64,129	53,780	42,604
Subordinated debt	14,769	14,762	14,755	14,747	14,740
Other liabilities	2,785	2,617	3,298	2,968	1,647
Total Liabilities	937,446	863,998	773,116	739,150	655,487

Stockholders' Equity:
Common stock, par value $4 per share, authorized 7,500,000 shares; issued and outstanding, 8,179,871 at 9/30/2018 including 142,457 unvested shares, 5,810,498 shares at 6/30/2018 including 144,626 unvested shares, 5,5,533,605 shares at 3/31/2018 including 138,853 unvested shares, 5,471,892 at 12/31/2017 including 111,358 unvested shares, 5,628,561 and 4,316,072 at 9/30/2017 including 107,288 unvested shares	32,177	22,691	21,579	21,442	16,835
Capital surplus	76,427	40,731	35,769	35,693	22,336
Retained earnings	11,371	9,020	13,368	11,682	10,922
Accumulated other comprehensive loss	(440)	(285)	(153)	(16)	(35)
Total Stockholders' Equity	119,535	72,157	70,563	68,801	50,058
Total Liabilities and Stockholders' Equity	$ 1,056,981	$ 936,155	$ 843,679	$ 807,951	$ 705,545

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME INFORMATION
*(Unaudited)*
(In thousands, except share and per share data)
	Year-to-Date		Three Months Ended
	9/30/18	9/30/17	9/30/18	6/30/18	3/31/18	12/31/17	9/30/17
INTEREST INCOME:
Interest and fees on loans	$ 29,026	$ 17,643	$ 11,061	$ 9,649	$ 8,316	$ 7,437	$ 6,573
Interest on investment securities	1,089	1,233	341	407	341	343	424
Interest on federal funds sold	638	175	423	115	100	122	88
Total interest income	30,753	19,051	11,825	10,171	8,757	7,902	7,085

INTEREST EXPENSE:
Interest on interest bearing DDA deposits	629	124	245	222	164	70	40
Interest on savings and NOW deposits	174	140	65	63	46	42	50
Interest on money market deposits	1,109	414	432	414	264	151	148
Interest on other time deposits	5,283	2,005	2,677	1,513	1,091	1,109	875
Interest on Federal Home Loan Bank advances and other borrowings	589	311	199	210	179	141	119
Interest on subordinated debt	722	725	243	241	238	239	243
Total interest expense	8,506	3,719	3,861	2,663	1,982	1,752	1,475
Net interest income	22,247	15,332	7,964	7,508	6,775	6,150	5,610
Provision for loan losses	2,630	1,170	600	1,395	635	715	550
Net interest income after provision for loan losses	19,617	14,162	7,364	6,113	6,140	5,435	5,060
OTHER INCOME:
Deposit account service charges	792	615	320	259	213	221	221
Bank owned life insurance income	320	324	105	109	106	111	108
Other fee income	665	832	261	215	189	174	237
Total other income	1,777	1,771	686	583	508	506	566
OTHER EXPENSES:
Salaries and employee benefits	8,578	7,252	3,018	2,811	2,749	2,400	2,431
Furniture and equipment expenses	1,325	925	493	451	381	347	333
Advertising and marketing	468	137	171	141	156	127	80
Occupancy expenses	515	462	206	159	151	143	138
Outside services	675	454	239	240	196	209	212
Administrative expenses	434	303	161	155	118	145	115
Other operating expenses	2,611	1,915	872	912	826	838	657
Total other expenses	14,606	11,448	5,160	4,869	4,577	4,209	3,966
INCOME BEFORE INCOME TAXES	6,788	4,485	2,890	1,827	2,071	1,732	1,660
Income tax expense	1,248	1,364	539	324	385	971	516
NET INCOME	$ 5,540	$ 3,121	$ 2,351	$ 1,503	$ 1,686	$ 761	$ 1,144


Net income per common share, basic and diluted (1)	$ 0.90	$ 0.69	$ 0.35	$ 0.26	$ 0.29	$ 0.14	$ 0.25
Weighted average number of shares, basic and diluted (1)	6,131,987	4,525,815	6,782,106	5,803,967	5,799,496	5,502,419	4,526,114

(1) Amounts for all periods presented are adjusted to reflect a 5% stock dividend effective April 9, 2018.

UNAUDITED LOAN, DEPOSIT AND BORROWING DETAIL
*(Unaudited)*
*(In thousands)*


	September 30, 2018		June 30, 2018		September 30, 2017		Percentage Change
	$ Amount	% of Total	$ Amount	% of Total	$ Amount	% of Total	Last 3 Mos	Last 12 Mos
LOANS:
Construction and land development loans	$ 162,233	18.9%	$ 125,475	15.2%	$ 66,015	11.5%	3.6%	145.6%
Residential real estate loans	124,906	14.5%	124,253	15.1%	110,114	19.2%	0.5%	13.4%
Commercial real estate loans	343,923	40.0%	342,757	41.6%	224,799	39.1%	0.4%	56.9%
Commercial industrial loans	125,011	14.5%	127,678	15.5%	86,047	15.0%	-0.3%	44.0%
Consumer loans	104,067	12.1%	104,286	12.6%	87,442	15.2%	0.8%	13.1%
Total Gross Loans	$ 860,140	100.0%	$ 824,449	100.0%	$ 574,417	100.0%	4.3%	49.8%
Less: Allowance for loan losses	(8,327)		(7,731)		(4,993)
Net deferred loan fees	(991)		843)		(287)
Net Loans	$ 850,822		$ 815,875		$ 569,137


DEPOSITS:
Non-interest bearing demand deposits	$ 191,986	21.6%	$ 179,827	22.4%	$ 155,586	26.2%	5.9%	21.7%
Interest-bearing demand deposits:
Demand deposits	59,295	6.7%	60,372	8.0%	25,888	4.3%	-1.4%	129.9%
Savings and NOW deposits	52,602	5.9%	48,659	6.1%	42,908	7.2%	8.1%	22.6%
Money market accounts	109,498	12.3%	118,194	14.6%	69,425	11.6%	-7.4%	57.7%
Certificates of deposit
$100,000 or more	379,355	42.6%	308,698	38.4%	245,261	41.1%	23.5%	54.8%
Less than $100,000	97,156	10.9%	85,752	10.5%	57,428	9.6%	13.3%	69.2%
Total Deposits	$ 889,892	100.0%	$ 801,502	100.0%	$ 596,496	100.0%	11.5%	49.4%


BORROWINGS:
Federal funds purchased	$ ―	0.0%	$ ―	0.0%	$ 2,450	4.3%	0.0%	-100.0%
Federal Home Loan Bank advances	30,000	67.0%	45,117	-75.3%	40,154	70.0%	-33.5%	25.3%
Subordinated debt	14,769	33.0%	14,762	24.7%	14,740	25.7%	0.0%	0.2%
Total Borrowings	$ 44,769	100.0%	$ 59,879	100.0%	$ 57,344	100.0%	-25.2%	-21.2%

Total Deposits and Borrowings	$ 934,661		$ 861,381		$ 655,579		8.5%	27.3%

Core customer funding sources (1)	$ 569,842	61.0%	$ 497,953	57.8%	$ 481,287	73.7%	15.2%	19.2%
Brokered and listing service sources (2)	320,050	34.2%	303,549	35.2%	117,058	17.9%	5.4%	173.4%
Federal Home Loan Bank Advances	30,000	3.2%	45,117	5.3%	40,154	6.1%	-33.5%	-25.3%
Subordinated debt (3)	14,769	1.6%	14,762	1.7%	14,740	2.3%	0.0%	0.2%
Total Funding Sources	$ 934,661	100.0%	$ 861,381	100.0%	$ 653,239	100.0%	9.0%	43.7%

(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.
(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
*(Unaudited)*
(000's except percentages)


	Nine Months Ended September 30, 2018			Nine Months Ended September 30, 2017
	Average Balance	Interest Income/ Expense	Average Yields/ Rate (annualized)	Average Balance	Interest Income/ Expense	Average Yields/ Rate (annualized)
ASSETS:
Interest earning assets:
Loans ⁽¹⁾	$ 762,031	$ 29,026	5.08%	$ 504,804	$ 17,643	4.66%
Investment securities	55,235	1,089	2.63%	54,466	1,233	3.02%
Federal funds and interest -
bearing deposits	51,884	638	1.64 %	23,460	175	0.99%
Total interest earning assets	$ 869,150	$ 30,753	4.72%	$ 582,730	$ 19,051	4.36%
Other assets	36,885			28,100
Total assets	$ 906,035			$ 610,830

Liabilities and Stockholders' Equity:
Interest-bearing liabilities:
Interest-bearing demand deposits	$ 63,395	$ 629	1.32%	$ 27,494	$ 124	0.60%
Money market deposit accounts	104,365	1,109	1.42%	77,389	414	0.71%
Savings and NOW deposits	49,923	174	0.46%	46,268	140	0.40%
Time deposits	377,376	5,283	1.87%	228,316	2,005	1.17%
Total interest-bearing deposits	595,059	7,195	1.61%	$ 379,467	$ 2,683	0.94%
Federal funds and repos purchased	609	12	2.63%	172	2	1.51%
Subordinated debt	14,759	722	6.52%	14,740	725	6.56%
FHLB borrowings	41,810	577	1.84%	43,031	309	0.96%
Total interest-bearing liabilities	$ 652,237	$ 8,506	1.74%	$ 437,410	$ 3,719	1.13%

Demand deposits and other liabilities	175,916			112,318
Total liabilities	$ 828,153			549,728
Stockholders' Equity	77,882			61,102
Total Liabilities and Stockholders' Equity	$ 906,035			$ 610,830

Interest Rate Spread			2.98%			3.23%
Net Interest Income and Margin		$ 22,247	3.41%		$ 15,332	3.51%

(1) Includes loans classified as non-accrual.

UNAUDITED AVERAGE BALANCE SHEETS, INTEREST AND RATES
*(Unaudited)*
(000's except percentages)


	At or For Three Months Ended		At or For Nine Months Ended
	September 31,		September 31,
	2018	2017	2018	2017
*Per share Data and Shares Outstanding (1)*
Earnings per share – (basic and diluted)	$ 0.35	$ 0.25	$ 0.90	$ 0.69
Tangible book value per share	$ 14.61	$ 11.60	$ 14.61	$ 11.60
Weighted average common shares (basic and diluted)	6,782,106	4,526,114	6,131,987	4,525,815
Common shares outstanding at end of period	8,179,871	4,316,072	8,179,871	4,316,072

*Performance Ratios*
Return on average assets (annualized)	0.91%	0.79%	0.82%	0.68%
Return on average equity (annualized)	10.25%	10.50%	9.46%	8.32%
Yield on earning assets (annualized)	4.76%	4.44%	4.72%	4.36%
Cost of interest bearing liabilities (annualized)	2.05%	1.04%	1.74%	1.14%
Net interest spread	2.71%	3.40%	2.98%	3.23%
Net interest margin (annualized)	3.20%	3.67%	3.41%	3.51%
Noninterest income as a percentage of average assets (annualized)	0.27%	0.34%	0.26%	0.39%
Noninterest expense to average assets (annualized)	2.00%	2.37%	2.15%	2.50%
Efficiency ratio	59.65%	61.75%	60.79%	66.95%

*Asset Quality*
Loans 30-89 days past due to total gross loans	0.01%	0.03%	0.01%	0.03%
Loans 90 days past due to total gross loans	0.00%	0.14%	0.00%	0.00%
Non-accrual loans to total gross loans	0.23%	0.35%	0.23%	0.35%
Other real estate owned	-	-	-	-
Non-performing assets	$ 1,939	$ 2,030	$ 1,939	$ 2,030
Non-performing assets to total assets	0.18%	0.29%	0.18%	0.29%
Allowance for loan losses to total gross loans	0.97%	0.87%	0.97%	0.87%
Allowance for loan losses to non-performing loans	4.29	1.05	4.29	1.05
Net loan charge-offs	$ 8	$ 157	$ 8	$ 157
Net charge-offs to average loans (annualized)	0.00%	0.03%	0.00%	0.03%
Troubled debt restructurings (total)
Performing in accordance with modified terms	$ 1,521	$ 1,554	$ 1,521	$ 1,554
Not performing in accordance with modified terms	$ 1,939	$ 1,957	$ 1,939	$ 1,957

*Regulatory Capital Ratios (Bank only)*
Total risk-based capital ratio	14.58%	10.62%	14.58%	10.62%
Tier 1 risk-based capital ratio	13.70%	9.84%	13.70%	9.84%
Leverage ratio	12.57%	9.43%	12.57%	9.43%
Common equity tier 1 ratio	13.70%	9.84%	13.70%	9.84%

*Other information*
Closing stock price	$ 20.95	$ 16.30	$ 20.95	$ 16.30
Tangible equity / tangible assets	11.31%	7.10%	11.31%	7.10%
Average tangible equity / average tangible assets	8.89%	7.48%	8.62%	8.20%
Number of full time equivalent employees	105	90	105	90
# Full service branch offices	6	5	6	5

(1) Amounts for all periods presented are adjusted to reflect a 5% stock dividend effective April 9, 2018