MainStreet Bancshares, Inc., Reports Continued Strong Financial Performance for 2nd Quarter 2023

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Jul 24, 2023, 08:00 ET

Net Interest Margin Continues to Outperform

FAIRFAX, Va., July 24, 2023 /PRNewswire/ -- MainStreet Bancshares, Inc. (Nasdaq: MNSB & MNSBP), the holding company for MainStreet Bank, reported net income of $6.9 million for the quarter ended June 30, 2023, in line with expectations. This represents a 17.1% increase from the year-earlier second quarter.

Performance through the first half of 2023 remains very strong (returns are annualized):

Return on average assets:	1.60 %
Return on average equity:	14.87 %
Net interest margin (tax equivalent):	4.45 %
Efficiency ratio:	53.48 %
Allowance for credit losses:	1.04 %
Liquidity coverage ratio:	124 %
Core deposit ratio:	74 %
FDIC insured deposits / total deposits:	76 %
Net charge-offs:	$0
Earnings per common share:	$1.86
Tangible book value per common share:	$22.73

"The MainStreet team has done an extraordinary job of maximizing the Company's financial performance while staying true-to-form with proper risk management practices. We were well-prepared for a rising rate environment," said Jeff W. Dick, Chairman and CEO of MainStreet Bancshares, Inc. and MainStreet Bank. "And the recent collapse of a few badly managed regional banks shook the industry but ultimately gave us the opportunity to tell our risk management story."

"Spurred by the FOMC rate increases, the collapse of Silicon Valley Bank also prompted an immediate jump in deposit costs for the industry," Dick explained. "It appears that the FOMC will increase rates an additional 25 basis points when it meets on July 26^th, but the industry is sensing a slowdown in future rises thereafter."

The Company's loan book totaled $1.66 billion at the end of the second quarter, up 15.7% from $1.43 billion one year earlier and up 1.3% from the first quarter.

"We are working hard for our customers and sticking to our strong underwriting standards. Our asset quality remains pristine," said Abdul Hersiburane, president of MainStreet Bank. "Our business bankers and lenders are redoubling their efforts to gain deposit share in our market, and we continue to benefit from a flight to quality as discerning depositors seek the security of federal insurance for their operating funds and other large deposits."

ABOUT AVENU™

Avenu™ onboarded its first client while designers and engineers completed final sprints to harden our multitenancy and cyber architecture and to accelerate implementation of a debit card for funding. Avenu™ connects partners and their apps directly and seamlessly to MainStreet Bank's banking core. Avenu™ is expected to accelerate MainStreet Bank's deposit growth to support expanded lending.

Avenu™ — Banking Delivered
Avenu™ is the only embedded banking solution that connects fintechs and their apps directly and seamlessly to a bank — MainStreet Bank. We are not a sponsor bank without our own technology, and we are not a middleware software company (aggregator) without our own bank. We are Avenu™, a leading financial technology company backed by an established community business bank in the heart of Washington, D.C.

Avenu™ — Serving a Community of Innovation
Our clients are fintechs, application developers, money movers, and entrepreneurs. They all have one thing in common: They are innovating how money moves to solve real-world issues and help communities thrive. We are focused on servicing our community and long-term business relationships.

ABOUT MAINSTREET BANK: MainStreet operates six branches in Herndon, Fairfax, McLean, Leesburg, Clarendon, and Washington, D.C. MainStreet Bank 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 thousands of businesses in the metropolitan area.

MainStreet Bank 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 sophisticated cash management to enhanced mobile banking and instant-issue Debit Cards, MainStreet Bank is always looking for ways to improve our customer's experience.

MainStreet Bank was the first community bank in the Washington, D.C., 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. The statements contained in this release that are not historical facts are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Words such as "may," "will," "could," "should," "expect," "plan," "project," "intend," "anticipate," "believe," "estimate," "predict," "potential," "pursuant," "target," "continue," and similar expressions are intended to identify such forward-looking statements. 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, future impacts of the novel coronavirus (COVID-19) outbreak, maintenance and development of well-established and valued client relationships and referral source relationships, and acquisition or loss of key production personnel. 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
(In thousands)

	June 30, 2023		March 31, 2023		December 31, 2022		September 30, 2022		June 30, 2022
ASSETS
Cash and cash equivalents
Cash and due from banks	$	67,700	$	225,334	$	48,931	$	50,636	$	55,636
Federal funds sold		30,341		—		81,669		54,098		47,013
Total cash and cash equivalents		98,041		225,334		130,600		104,734		102,649
Investment securities available for sale, at fair value		60,579		63,209		62,631		162,319		143,240
Investment securities held to maturity, at amortized cost, net of allowance for credit losses of $0 for all periods		17,590		17,616		17,642		17,670		17,698
Restricted equity securities, at amortized cost		20,304		22,436		24,325		16,436		16,485
Loans, net of allowance for credit losses of $16,047, $15,435, $14,114, $12,994, and $12,982, respectively		1,637,484		1,617,275		1,579,950		1,448,071		1,416,875
Premises and equipment, net		14,427		14,521		14,709		14,523		14,756
Accrued interest and other receivables		10,256		9,744		9,581		8,273		7,313
Computer software, net of amortization		12,266		10,559		9,149		7,258		4,956
Bank owned life insurance		37,763		37,503		37,249		36,996		36,742
Other assets		40,641		36,811		39,915		43,835		32,665
Total Assets	$	1,949,351	$	2,055,008	$	1,925,751	$	1,860,115	$	1,793,379
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Non-interest bearing deposits	$	388,992	$	487,875	$	550,690	$	566,016	$	535,591
Interest bearing demand deposits		71,308		100,522		80,099		93,695		99,223
Savings and NOW deposits		51,294		53,499		51,419		54,240		58,156
Money market deposits		380,500		260,316		222,540		254,190		231,207
Time deposits		701,289		730,076		608,141		585,783		575,950
Total deposits		1,593,383		1,632,288		1,512,889		1,553,924		1,500,127
Federal funds borrowed		30,000		60,696		—		—		—
Federal Home Loan Bank advances		—		45,000		100,000		—		—
Subordinated debt		72,444		72,344		72,245		72,146		72,047
Other liabilities		43,016		39,692		42,335		44,045		32,801
Total Liabilities		1,738,843		1,850,020		1,727,469		1,670,115		1,604,975
Stockholders' Equity:
Preferred stock		27,263		27,263		27,263		27,263		27,263
Common stock		29,177		29,185		28,736		28,728		29,178
Capital surplus		64,768		64,213		63,999		63,231		64,822
Retained earnings		97,646		91,991		86,830		80,534		73,702
Accumulated other comprehensive loss		(8,346)		(7,664)		(8,546)		(9,756)		(6,561)
Total Stockholders' Equity		210,508		204,988		198,282		190,000		188,404
Total Liabilities and Stockholders' Equity	$	1,949,351	$	2,055,008	$	1,925,751	$	1,860,115	$	1,793,379

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

	Year-to-Date				Three Months Ended
	June 30, 2023		June 30, 2022		June 30, 2023		March 31, 2023		December 31, 2022		September 30, 2022		June 30, 2022
INTEREST INCOME:
Interest and fees on loans	$	55,586	$	34,639	$	28,855	$	26,731	$	23,972	$	20,261	$	17,954
Interest on investment securities
Taxable securities		926		758		407		518		467		378		401
Tax-exempt securities		529		535		265		264		262		261		263
Interest on federal funds sold		2,311		229		1,179		1,132		1,071		1,013		195
Total interest income		59,352		36,161		30,706		28,645		25,772		21,913		18,813
INTEREST EXPENSE:
Interest on interest bearing demand deposits		594		170		251		343		256		175		105
Interest on savings and NOW deposits		255		79		147		108		81		43		42
Interest on money market deposits		4,129		270		2,926		1,203		781		496		151
Interest on time deposits		11,221		2,961		7,077		4,144		2,966		2,275		1,530
Interest on federal funds borrowed		239		—		201		38		—		—		—
Interest on Federal Home Loan Bank advances		919		83		13		906		264		—		52
Interest on subordinated debt		1,632		1,280		820		812		828		828		812
Total interest expense		18,989		4,843		11,435		7,554		5,176		3,817		2,692
Net interest income		40,363		31,318		19,271		21,091		20,596		18,096		16,121
Provision for credit losses		921		1,280		638		283		1,118		-		480
Net interest income after provision for credit losses		39,442		30,038		18,633		20,808		19,478		18,096		15,641
NON-INTEREST INCOME:
Deposit account service charges		1,125		1,209		535		590		610		601		597
Bank owned life insurance income		514		500		259		255		253		254		250
Loan swap fee income		—		101		—		—		—		518		101
Net gain on held-to-maturity securities		—		4		—		—		—		—		4
Net gain (loss) on sale of loans		—		43		—		—		—		(211)		—
Other non-interest income		174		568		16		158		196		186		312
Total other income		1,813		2,425		810		1,003		1,059		1,348		1,264
NON-INTEREST EXPENSES:
Salaries and employee benefits		14,216		11,152		6,595		7,621		6,775		5,874		5,604
Furniture and equipment expenses		1,270		1,316		772		498		710		760		659
Advertising and marketing		1,495		980		698		797		620		704		574
Occupancy expenses		912		693		426		486		378		400		352
Outside services		994		935		504		490		529		611		567
Administrative expenses		426		405		211		215		214		253		195
Other operating expenses		3,242		2,976		1,646		1,596		1,481		1,291		1,543
Total non-interest expenses		22,555		18,457		10,852		11,703		10,707		9,893		9,494
Income before income tax expense		18,700		14,006		8,591		10,108		9,830		9,551		7,411
Income tax expense		3,602		2,654		1,645		1,957		2,252		1,808		1,481
Net income		15,098		11,352		6,946		8,151		7,578		7,743		5,930
Preferred stock dividends		1,078		1,078		539		539		539		539		539
Net income available to common shareholders	$	14,020	$	10,274	$	6,407	$	7,612	$	7,039	$	7,204	$	5,391
Net income per common share, basic and diluted	$	1.86	$	1.35	$	0.85	$	1.01	$	0.95	$	0.97	$	0.71
Weighted average number of common shares, basic and diluted		7,519,949		7,611,303		7,522,764		7,517,213		7,433,607		7,463,719		7,575,484

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

	June 30, 2023					March 31, 2023					June 30, 2022					Percentage Change
	$ Amount		% of Total			$ Amount		% of Total			$ Amount		% of Total			Last 3 Mos			Last 12 Mos
LOANS:
Construction and land development loans	$	421,277		25.4	%	$	415,078		25.3	%	$	358,062		25.0	%		1.5	%		17.7	%
Residential real estate loans		410,550		24.7	%		391,648		23.9	%		366,758		25.6	%		4.8	%		11.9	%
Commercial real estate loans		727,772		43.9	%		737,019		45.0	%		599,683		41.8	%		-1.3	%		21.4	%
Commercial and industrial loans		93,604		5.6	%		86,937		5.3	%		92,672		6.5	%		7.7	%		1.0	%
Consumer loans		5,750		0.4	%		7,534		0.5	%		17,223		1.1	%		-23.7	%		-66.6	%
Total Gross Loans	$	1,658,953		100.0	%	$	1,638,216		100.0	%	$	1,434,398		100.0	%		1.3	%		15.7	%
Less: Allowance for credit losses		(16,047)					(15,435)					(12,982)
Net deferred loan fees		(5,422)					(5,506)					(4,541)
Net Loans	$	1,637,484				$	1,617,275				$	1,416,875
DEPOSITS:
Non-interest bearing deposits	$	388,992		24.4	%	$	487,875		29.9	%	$	535,591		35.7	%		-20.3	%		-27.4	%
Interest-bearing deposits:
Demand deposits		71,308		4.5	%		100,522		6.2	%		99,223		6.6	%		-29.1	%		-28.1	%
Savings and NOW deposits		51,294		3.2	%		53,499		3.3	%		58,156		3.9	%		-4.1	%		-11.8	%
Money market accounts		380,500		23.9	%		260,316		15.9	%		231,207		15.4	%		46.2	%		64.6	%
Certificates of deposit $250,000 or more		406,583		25.5	%		458,683		28.1	%		383,340		25.6	%		-11.4	%		6.1	%
Certificates of deposit less than $250,000		294,706		18.5	%		271,393		16.6	%		192,610		12.8	%		8.6	%		53.0	%
Total Deposits	$	1,593,383		100.0	%	$	1,632,288		100.0	%	$	1,500,127		100.0	%		-2.4	%		6.2	%
BORROWINGS:
Federal funds borrowed		30,000		29.3	%		60,696		34.1	%		—		0.0	%		-50.6	%		0.0	%
Federal Home Loan Bank advances		—		0.0	%		45,000		25.3	%		—		0.0	%		-100.0	%		0.0	%
Subordinated debt		72,444		70.7	%		72,344		40.6	%		72,047		100.0	%		0.1	%		0.6	%
Total Borrowings	$	102,444		100.0	%	$	178,040		100.0	%	$	72,047		100.0	%		-42.5	%		42.2	%
Total Deposits and Borrowings	$	1,695,827				$	1,810,328				$	1,572,174					-6.3	%		7.9	%

Core customer funding sources ⁽¹⁾	$	1,184,958		69.9	%	$	1,156,279		63.9	%	$	1,094,493		69.6	%		2.5	%		8.3	%
Brokered and listing service sources ⁽²⁾		408,425		24.1	%		476,009		26.3	%		405,634		25.8	%		-14.2	%		0.7	%
Federal funds borrowed		30,000		1.7	%		60,696		3.3	%		—		0.0	%		-50.6	%		0.0	%
Federal Home Loan Bank advances		—		0.0	%		45,000		2.5	%		—		0.0	%		-100.0	%		0.0	%
Subordinated debt ⁽³⁾		72,444		4.3	%		72,344		4.0	%		72,047		4.6	%		0.1	%		0.6	%
Total Funding Sources	$	1,695,827		100.0	%	$	1,810,328		100.0	%	$	1,572,174		100.0	%		-6.3	%		7.9	%


(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
(In thousands)

	For the three months ended June 30, 2023							For the three months ended June 30, 2022
	Average Balance		Interest Income/ Expense (3)(4)		Average Yields/ Rate (annualized) (3)(4)			Average Balance		Interest Income/ Expense (3)(4)		Average Yields/ Rate (annualized) (3)(4)
ASSETS:
Interest earning assets:
Loans ⁽¹⁾⁽²⁾	$	1,649,300	$	28,855		7.02	%	$	1,434,877	$	17,954		5.02	%
Securities:
Taxable		68,381		407		2.39	%		73,153		401		2.20	%
Tax-exempt		37,876		335		3.55	%		38,507		333		3.47	%
Federal funds and interest-bearing deposits		87,608		1,179		5.40	%		98,326		195		0.80	%
Total interest earning assets	$	1,843,165	$	30,776		6.70	%	$	1,644,863	$	18,883		4.60	%
Other assets		69,488							65,225
Total assets	$	1,912,653						$	1,710,088
Liabilities and Stockholders' Equity:
Interest-bearing liabilities:
Interest-bearing demand deposits	$	73,800	$	251		1.36	%	$	96,352	$	105		0.44	%
Savings and NOW deposits		50,644		147		1.16	%		62,588		42		0.27	%
Money market deposit accounts		344,118		2,926		3.41	%		234,097		151		0.26	%
Time deposits		723,056		7,077		3.93	%		499,734		1,530		1.23	%
Total interest-bearing deposits	$	1,191,618	$	10,401		3.50	%	$	892,771	$	1,828		0.82	%
Federal funds purchased		15,174		201		5.31	%		1		—		—
FHLB borrowings		989		13		5.27	%		35,275		52		0.59	%
Subordinated debt		72,405		820		4.54	%		72,009		812		4.52	%
Total interest-bearing liabilities	$	1,280,186	$	11,435		3.58	%	$	1,000,056	$	2,692		1.08	%
Demand deposits and other liabilities		424,505							521,130
Total liabilities	$	1,704,691						$	1,521,186
Stockholders' Equity		207,962							188,902
Total Liabilities and Stockholders' Equity	$	1,912,653						$	1,710,088
Interest Rate Spread						3.12	%						3.52	%
Net Interest Income			$	19,341						$	16,191
Net Interest Margin						4.21	%						3.95	%


(1)	Includes loans classified as non-accrual
(2)	Total loan interest income includes amortization of deferred loan fees, net of deferred loan costs
(3)	Income and yields for all periods presented are reported on a tax-equivalent basis using the federal statutory rate of 21%
(4)	Refer to Appendix for reconciliation of non-GAAP measures

UNAUDITED AVERAGE BALANCE SHEETS, INTEREST AND RATES
(In thousands)

	For the six months ended June 30, 2023							For the six months ended June 30, 2022
	Average Balance		Interest Income/ Expense (3)(4)		Average Yields/ Rate (annualized) (3)(4)			Average Balance		Interest Income/ Expense (3)(4)		Average Yields/ Rate (annualized) (3)(4)
ASSETS:
Interest earning assets:
Loans ⁽¹⁾⁽²⁾	$	1,624,664	$	55,586		6.90	%	$	1,406,457	$	34,639		4.97	%
Securities:
Taxable		70,147		926		2.66	%		73,283		758		2.09	%
Tax-exempt		37,908		670		3.56	%		39,023		677		3.50	%
Federal funds and interest-bearing deposits		103,053		2,311		4.52	%		91,081		229		0.51	%
Total interest earning assets	$	1,835,772	$	59,493		6.54	%	$	1,609,844	$	36,303		4.55	%
Other assets		63,465							76,387
Total assets	$	1,899,237						$	1,686,231
Liabilities and Stockholders' Equity:
Interest-bearing liabilities:
Interest-bearing demand deposits	$	78,568	$	594		1.52	%	$	83,450	$	170		0.41	%
Savings and NOW deposits		51,290		255		1.00	%		72,617		79		0.22	%
Money market deposit accounts		284,906		4,129		2.92	%		250,908		270		0.22	%
Time deposits		698,384		11,221		3.24	%		478,376		2,961		1.25	%
Total interest-bearing deposits	$	1,113,148	$	16,199		2.93	%	$	885,351	$	3,480		0.79	%
Federal funds purchased		9,103		239		5.29	%		1		—		—
FHLB borrowings		39,199		919		4.73	%		36,215		83		0.46	%
Subordinated debt		72,355		1,632		4.55	%		58,079		1,280		4.44	%
Total interest-bearing liabilities	$	1,233,805	$	18,989		3.10	%	$	979,646	$	4,843		1.00	%
Demand deposits and other liabilities		460,632							517,281
Total liabilities	$	1,694,437						$	1,496,927
Stockholders' Equity		204,800							189,304
Total Liabilities and Stockholders' Equity	$	1,899,237						$	1,686,231
Interest Rate Spread						3.44	%						3.55	%
Net Interest Income			$	40,504						$	31,460
Net Interest Margin						4.45	%						3.94	%


(1)	Includes loans classified as non-accrual
(2)	Total loan interest income includes amortization of deferred loan fees, net of deferred loan costs
(3)	Income and yields for all periods presented are reported on a tax-equivalent basis using the federal statutory rate of 21%
(4)	Refer to Appendix for reconciliation of non-GAAP measures

UNAUDITED SUMMARY FINANCIAL DATA
(Dollars in thousands except per share data)

	At or For the Three Months Ended						At or For the Six Months Ended
	June 30,						June 30,
	2023			2022			2023			2022
*Per share Data and Shares Outstanding*
Earnings per common share (basic and diluted)	$	0.85		$	0.71		$	1.86		$	1.35
Book value per common share	$	24.36		$	21.41		$	24.36		$	21.41
Tangible book value per common share (2)	$	22.73		$	20.75		$	22.73		$	20.75
Weighted average common shares (basic and diluted)		7,522,764			7,575,484			7,519,949			7,611,303
Common shares outstanding at end of period		7,522,297			7,526,463			7,522,297			7,526,463
*Performance Ratios*
Return on average assets (annualized)		1.46	%		1.39	%		1.60	%		1.36	%
Return on average equity (annualized)		13.40	%		12.59	%		14.87	%		12.09	%
Return on average common equity (annualized)		14.22	%		13.38	%		15.92	%		12.79	%
Yield on earning assets (FTE) (2) (annualized)		6.70	%		4.60	%		6.54	%		4.55	%
Cost of interest-bearing liabilities (annualized)		3.58	%		1.08	%		3.10	%		1.00	%
Net interest spread (FTE) (2)		3.12	%		3.52	%		3.44	%		3.55	%
Net interest margin (FTE) (2) (annualized)		4.21	%		3.95	%		4.45	%		3.94	%
Noninterest income as a percentage of average assets (annualized)		0.17	%		0.30	%		0.19	%		0.29	%
Noninterest expense to average assets (annualized)		2.28	%		2.23	%		2.39	%		2.21	%
Efficiency ratio (3)		54.04	%		54.61	%		53.48	%		54.70	%
*Asset Quality*
Allowance for credit losses (ACL)
Beginning balance, ACL - loans	$	15,435		$	12,500		$	14,114		$	11,697
Add: recoveries		1			2			12			5
Less: charge-offs		(6)			—			(6)			—
Add: provision for credit losses		617			480			1,032			1280
Add: current expected credit losses, nonrecurring adoption		—			—			895			—
Ending balance, ACL - loans	$	16,047		$	12,982		$	16,047		$	12,982

Beginning balance, reserve for unfunded commitment (RUC)	$	1,178		$	—		$	—		$	—
Add: current expected credit losses, nonrecurring adoption		—			—			1,310			—
Add: provision for unfunded commitments		21			—			21			—
Less: recovery of unfunded commitments		—			—			-132			—
Ending balance, RUC	$	1,199		$	—		$	1,199		$	—
Total allowance for credit losses	$	17,246		$	12,982		$	17,246		$	12,982

Allowance for credit losses on loans to total gross loans		0.97	%		0.91	%		0.97	%		0.91	%
Allowance for credit losses to total gross loans		1.04	%		0.91	%		1.04	%		0.91	%
Allowance for credit losses on loans to non-performing assets		N/A			N/A			N/A			N/A
Net charge-offs (recoveries) to average gross loans (annualized)		0.00	%		0.00	%		0.00	%		0.00	%
*Concentration Ratios*
Commercial real estate loans to total capital (4)		363.43	%		366.10	%		363.43	%		366.10	%
Construction loans to total capital (5)		139.59	%		138.16	%		139.59	%		138.16	%
*Non-performing Assets*
Loans 30-89 days past due to total gross loans		0.00	%		0.01	%		0.00	%		0.01	%
Loans 90 days past due to total gross loans		0.00	%		0.00	%		0.00	%		0.00	%
Non-accrual loans to total gross loans		0.00	%		0.00	%		0.00	%		0.00	%
Other real estate owned	$	—		$	—		$	—		$	—
Non-performing assets	$	—		$	—		$	—		$	—
Non-performing assets to total assets		0.00	%		0.00	%		0.00	%		0.00	%
*Regulatory Capital Ratios (Bank only) (1)*
Total risk-based capital ratio		16.79	%		16.23	%		16.79	%		16.23	%
Tier 1 risk-based capital ratio		15.83	%		15.42	%		15.83	%		15.42	%
Leverage ratio		14.81	%		14.34	%		14.81	%		14.34	%
Common equity tier 1 ratio		15.83	%		15.42	%		15.83	%		15.42	%
*Other information*
Closing stock price	$	22.66		$	22.77		$	22.66		$	22.77
Tangible equity / tangible assets (2)		10.24	%		10.26	%		10.24	%		10.26	%
Average tangible equity / average tangible assets (2)		10.34	%		10.81	%		10.28	%		11.03	%
Number of full-time equivalent employees		179			146			179			146
Number of full-service branch offices		6			6			6			6


(1)	Regulatory capital ratios as of June 30, 2023 are preliminary
(2)	Refer to Appendix for reconciliation of non-GAAP measures
(3)	Efficiency ratio is calculated as non-interest expense as a percentage of net interest income and non-interest income
(4)	Commercial real estate includes only non-owner occupied and construction loans as a percentage of Bank capital
(5)	Construction loans as a percentage of Bank capital

Unaudited Reconciliation of Certain Non-GAAP Financial Measures
(Dollars In thousands)

	For the three months ended June 30,						For the six months ended June 30,
	2023			2022			2023			2022
Net interest margin (FTE)
Net interest income (GAAP)	$	19,271		$	16,121		$	40,363		$	31,318
FTE adjustment on tax-exempt securities		70			70			141			142
Net interest income (FTE) (non-GAAP)		19,341			16,191			40,504			31,460

Average interest earning assets		1,843,165			1,644,863			1,835,772			1,609,844
Net interest margin (GAAP)		4.19	%		3.93	%		4.43	%		3.92	%
Net interest margin (FTE) (non-GAAP)		4.21	%		3.95	%		4.45	%		3.94	%

	As of June 30,						As of June 30,
	2023			2022			2023			2022
Stockholders equity, adjusted
Total stockholders equity (GAAP)	$	210,508		$	188,404		$	210,508		$	188,404
Less: intangible assets		12,266			4,956			12,266			4,956
Tangible stockholders equity (non-GAAP)		198,242			183,448		$	198,242		$	183,448
Less: preferred stock		27,263			27,263			27,263			27,263
Tangible common stockholders equity (non-GAAP)		170,979			156,185			170,979			156,185

Shares outstanding		7,522,297			7,526,463			7,522,297			7,526,463
Tangible book value per common share (non-GAAP)	$	22.73		$	20.75		$	22.73		$	20.75

	As of June 30,						As of June 30,
	2023			2022			2023			2022
Total assets, adjusted
Total assets (GAAP)	$	1,949,351		$	1,793,379		$	1,949,351		$	1,793,379
Less: intangible assets		(12,266)			(4,956)			(12,266)			(4,956)
Total tangible assets (non-GAAP)		1,937,085			1,788,423			1,937,085			1,788,423

	For the three months ended June 30,						For the six months ended June 30,
	2023			2022			2023			2022
Average stockholders equity, adjusted
Total average stockholders equity (GAAP)	$	207,962		$	188,902		$	204,800		$	189,304
Less: average intangible assets		(11,284)			(4,512)			(10,585)			(3,746)
Total average tangible stockholders equity (non-GAAP)		196,678			184,390			194,215			185,558

	For the three months ended June 30,						For the six months ended June 30,
	2023			2022			2023			2022
Average assets, adjusted
Total average average assets (GAAP)	$	1,912,653		$	1,710,088		$	1,899,237		$	1,686,231
Less: average intangible assets		(11,284)			(4,512)			(10,585)			(3,746)
Total average tangible assets (non-GAAP)		1,901,369			1,705,576			1,888,652			1,682,485