MainStreet Bancshares, Inc. Reports Record 2016 Performance

News provided by

Jan 18, 2017, 08:07 ET

FAIRFAX, Va., Jan. 18, 2017 /PRNewswire/ -- MainStreet Bancshares, Inc. (OTCQB: MNSB), the holding company for MainStreet Bank, reported record performance for the Bank's year-end 2016 earnings. Net income of $3.9 million for 2016 was 77% higher than 2015 net income of $2.2 million. Earnings per share for year-end 2016 is $0.91 versus $0.51 for 2015.

Net Interest income of $18.5 million for 2016 improved $2.9 million over net interest income for 2015. The net interest margin for 2016 held strong at 3.78% compared to 3.96% for 2015, only a 4.5% decline, due mainly to continued industry interest rate compression.

Non-interest income increased 45% for the year. Non-interest income (no securities gains) was $1.53 million for 2016 compared to $1.05 million (net of securities gains) for 2015. This increase is attributable primarily to the new payment systems group and secondarily to increased fee income on deposit accounts.

Non-interest expense for 2016 was $13.9 million compared to $12.4 million for 2015. This is primarily due to an increase in salaries in support of balance sheet growth. The efficiency ratio continues to show marked improvement, trending down to 69% for 2016 compared to 73% for 2015. The efficiency ratio continues to improve each month for the Bank.

MainStreet Bancshares's balance sheet grew 20% to $576 million during 2016, against December 2015 total assets of $478 million.

Net loans outstanding at year-end 2016 total $464 million against net loans outstanding at year-end 2015 of $398 million, an increase of $66 million, or a nearly 17% improvement. Asset quality remains very strong. Nonperforming loans were a mere four basis points of total gross loans on December 31, 2016.

Non-interest bearing deposits increased to $107.7 million as of year-end 2016, with another $41.6 million of very low cost deposits. This is up substantially from the balance of $68.4 million of no-cost deposits carried at year-end 2015. Non-interest deposits represent 23% of total deposits and very low cost deposits represent another 8.8% of total deposits. Total deposits as of year-end 2016 were $475.2 million an increase of $89.6 million from year-end 2015 deposits of $385.6 million.

MainStreet Bancshares successfully issued $14.3 million in Subordinated Debt as of December 31, 2016. The holding company immediately down streamed $12.5 million to the Bank which is treated as Tier one capital. This capital will be used for general corporate purposes to and support the future growth of the Bank.

The book value per common share was $10.85 as of December 31, 2016. According to OTC Markets, the share price closed on December 31, 2016 at $14.20 per share, or 131% of book value. During 2016, there were 753 trades totaling 987,141 shares with a dollar value of $12,131,702. The high share price for 2016 was $14.20 and the low was $11.02 per share. The mean price was $12.30 and the median was $12.20.

QUOTES: "We had another great year of growth and opportunity," says Jeff W. Dick, Chairman and CEO of MainStreet Bank. "We experienced a significant improvement in non-or-low interest bearing deposit account balances, which aid greatly in funding our balance sheet growth. We continue to make headway in our assets per employee, which is a direct correlation to efficiency. This continuous improvement, combined with the improvements made in fee income and other revenue streams, will make MainStreet an even stronger and higher performing community bank going forward."

Chris Brockett, MainStreet Bank President added, "I spent several months evaluating the local banking market and the various institutions within it. I couldn't be more pleased to be a part of MainStreet Bank - especially with where we are today. The current momentum of the Bank, the additional capital, and the market disruption created by mergers should allow us to further bolster growth and profitability."

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 well over 800 businesses in the Metropolitan area.

MainStreet also offers 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 offers a full complement 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.



BALANCE SHEETS
*(Bank-only Unaudited)*
(In thousands, except ratios)

	12/31/16	9/30/16	6/30/16	3/31/16	12/31/15
ASSETS
Cash and cash equivalents
Cash and due from banks	$ 17,273	$ 13,142	$ 17,483	$ 9,463	$ 7,211
Federal funds sold	797	797	―	805	―
Total cash and cash equivalents	18,070	13,939	17,483	10,268	7,211
Investment securities available for sale, at fair value	37,354	26,434	25,869	33,111	33,657
Investment securities held to maturity	26,714	26,518	24,357	21,955	19,857
Restricted equity securities, at cost	3,426	3,423	3,420	3,843	3,508
Loans, net of allowance for loan losses	463,926	441,335	417,640	412,685	398,291
Premises and equipment, net	12,309	12,500	12,339	12,449	12,526
Other real estate owned, net	135	135	135	135	135
Accrued interest and other receivables	2,261	2,265	2,194	2,076	1,857
Bank owned life insurance	10,202	8,126	8,051	―	―
Other assets	1,314	1,234	1,437	1,286	1,208
Total Assets	$ 575,711	$ 535,909	$ 512,925	$ 497,808	$ 478,250

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Non-interest bearing deposits	$ 107,669	$ 114,128	$ 98,505	$ 81,072	$ 68,409
Interest bearing DDA deposits	41,611	―	―	―	―
Savings and NOW deposits	44,833	41,896	40,243	38,877	38,770
Money market deposits	75,670	76,152	59,906	54,455	59,580
Other time deposits	205,402	214,636	224,753	228,819	218,795
Total deposits	475,185	446,812	423,407	403,223	385,554
Securities sold under agreements to repurchase	―	2,736	―	―	19
Federal Home Loan Bank advances and other borrowings	40,192	40,204	44,409	50,229	49,509
Other liabilities	1,540	872	957	1,209	1,044
Total Liabilities	516,917	490,624	468,773	454,661	436,126

Stockholders' Equity:
Common stock	16,650	16,645	16,634	16,624	16,515
Capital surplus	34,652	21,995	21,913	21,814	21,837
Retained earnings	7,700	6,724	5,712	4,839	3,924
Accumulated other comprehensive income (loss)	(208)	(79)	(107)	(130)	(152)
Total Stockholders' Equity	58,794	45,285	44,152	43,147	42,124

Total Liabilities and Stockholders' Equity	$ 575,511	$ 535,909	$ 512,925	$ 497,808	$ 478,250


Other Financial Highlights
Annualized return on average assets	0.76%	0.75%	0.73%	0.76%	0.53%
Annualized return on average equity	8.72%	8.52%	8.25%	8.56%	5.33%
Annualized net interest margin	3.78%	3.79%	3.82%	3.84%	3.96%
Efficiency ratio	69.47%	71.09%	71.02%	70.06%	73.01%
Gross loans to deposits	98.58%	99.16%	99.74%	103.52%	104.57%
Allowance for loan losses to total loans	0.85%	0.82%	0.87%	0.88%	0.91%
Past due loans 30-89 days to total gross loans	0.07%	0.02%	0.01%	0.01%	0.03%
Past due loans 90 days or more to total gross loans	0.00%	0.00%	0.00%	0.01%	0.00%
Non-accrual loans to total gross loans	0.04%	0.09%	0.09%	0.17%	0.17%
Quarterly net loan charge-offs (recoveries)	$ 30	$ 109	$ 111	$ 97	$ 208
Book value per share	$ 10.85	$ 10.65	$ 10.39	$ 10.16	$ 10.00
Closing stock price	$ 14.20	$ 12.60	$ 11.90	$ 11.95	$ 12.35

Regulatory Capital Ratios
Tier 1 risk-based capital ratio	11.74%	9.67%	10.02%	10.22%	10.27%
Common equity tier 1 capital ratio	11.74%	9.67%	10.02%	10.22%	10.27%
Total risk-based capital ratio	12.53%	10.46%	10.86%	11.09%	11.17%
Leverage ratio	10.95%	8.66%	8.91%	8.98%	8.90%


STATEMENTS OF INCOME
*(Bank-only)*


	Year-to-Date		Three Months Ended
	12/31/16	12/31/15	12/31/16	9/30/16	6/30/16	3/31/16	12/31/15
INTEREST INCOME:
Interest and fees on loans	$ 20,192	$ 17,010	$ 5,267	$ 5,111	$ 4,969	$ 4,845	$ 4,793
Interest on investment securities	1,287	932	351	339	292	305	245
Interest on federal funds sold	93	45	19	29	21	24	15
Total interest income	21,572	17,987	5,637	5,479	5,282	5,174	5,053

INTEREST EXPENSE:
Interest on interest bearing DDA deposits	11	―	11	―	―	―	―
Interest on savings and NOW deposits	167	150	44	43	41	39	40
Interest on money market deposits	300	170	96	83	62	59	55
Interest on other time deposits	2,327	1,929	579	605	589	554	528
Interest on Federal Home Loan Bank advances and other borrowings	266	93	74	71	65	56	45
Total interest expense	3,071	2,342	804	802	757	708	668
Net interest income	18,501	15,645	4,833	4,677	4,525	4,466	4,385
Provision for loan losses	645	1,500	335	90	135	85	145
Net interest income after provision for loan losses	17,856	14,145	4,498	4,587	4,390	4,381	4,240
OTHER INCOME:
Deposit account service charges	736	487	183	205	218	130	135
Gain on securities available for sale	―	214	―	―	―	―	―
Bank owned life insurance income	202	―	76	75	51	―	―
Other fee income	589	564	194	156	153	86	125
Total other income	1,527	1,265	453	436	422	216	260
OTHER EXPENSES:
Salaries and employee benefits	8,588	7,526	2,038	2,208	2,241	2,101	1,873
Furniture and equipment expenses	1,143	1,114	301	297	267	278	290
Advertising and marketing	276	394	56	102	78	40	157
Occupancy expenses	734	684	158	200	203	173	162
Outside services	615	387	202	167	136	110	156
Administrative expenses	350	327	89	93	99	69	84
Other operating expenses	2,209	1,914	595	571	534	509	549
Total other expenses	13,915	12,346	3,439	3,638	3,558	3,280	3,271
INCOME BEFORE INCOME TAXES	5,468	3,064	1,512	1,385	1,254	1,317	1,229
Income tax expense	1,593	894	436	373	381	403	283
NET INCOME	$ 3,875	$ 2,170	$ 1,076	$ 1,012	$ 873	$ 914	$ 946


Net income per common share, basic and diluted	$ 0.91	$ 0.51	$ 0.25	$ 0.24	$ 0.20	$ 0.22	$ 0.22
Weighted average number of shares, basic and diluted	4,256,442	4,230,717	4,260,232	4,260,232	4,261,118	4,244,104	4,226,098