MainStreet Bancshares Reports Record Quarter of Organic Growth

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Jul 18, 2017, 10:12 ET

FAIRFAX, Va., July 18, 2017 /PRNewswire/ -- MainStreet Bancshares, Inc. (OTCQB: MNSB), the holding company for MainStreet Bank, reported its best ever quarter of organic growth. Total assets grew 13.4% quarter-on-quarter, from $568 million at March 31, 2017 to $644 million at June 30, 2017. Net loans grew 13.9% to $526 million at June 30, 2017. Year-on-year, total assets grew 25.6% and net loans grew 25.9% from June 30, 2016 to June 30, 2017.

MainStreet Bank Headquarters 10089 Fairfax Blvd Fairfax, Virginia 22030

Total deposits as of June 30, 2017 were $539 million, or $115 million over total deposits of $423 million at June 30, 2016. The component of non-interest bearing deposits grew 41.1% from $98.5 million at June 30, 2016 to $139 million at June 30, 2017. Of significance is the continued rise in the level of non-interest bearing deposits, which represent 25.8% of total deposits at June 30, 2017, up 2.3% from June 30, 2016.

Of course the substantial growth in loans was met with a higher than normal loan provision expense of $425 thousand for the second quarter of 2017, which is more than double the amount required for the first 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 two basis points.

Dialing in the higher than normal loss provision expense, the Company still achieved net income of $950 thousand for the second quarter of 2017, bringing the year-to-date net income to $1.98 million, a 10.6% increase over June 30, 2016.

Net interest income of $9.7 million reported for June 30, 2017 improved $731 thousand over net interest income from June 30, 2016. Non-interest income is up 88.9% from June 30, 2016 to June 30, 2017.

Non-interest expense for the first half of 2017 is $7.5 million compared to $6.8 million for the first half of 2016. The change in salaries over that 12-month period was just $479 thousand, and as a result the efficiency ratio continues to demonstrate improvement.

The book value per common share is $11.30 as of June 30, 2017, up 6.1% from June 30, 2016. The share price closed on June 30, 2017 at $16.05 per common share, or 142% of book value. Per OTCQX Markets, "total share trading increased during the first half of 2017 vs. the same time period last year. Average daily volume in MNSB shares thru June 30, 2017 was 4,700 shares vs. 3,500 shares for the same time period last year. The Company's share price was higher - up 12.92% in the first half of the year as well".

QUOTES: "There is nothing more fulfilling than seeing a plan truly come together," said Jeff W. Dick, Chairman and CEO of MainStreet Bancshares, Inc. and MainStreet Bank. "Our new President Chris Brockett has really hit the ground running – balancing his time between bringing on new talent and new business opportunities. This, combined with the shrinking competition in community banking due to M&A activities, is providing MainStreet with great opportunities without compromising our credit standards."

President Chris Brockett added, "Our first quarter was a bit slower than planned, but our strong second quarter closed that gap and we are on-track with our strategic initiatives. I'm pleased to report that our recently added lenders and business bankers are performing ahead of expectations, and we anticipate a strong finish for 2017."

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.

BALANCE SHEETS
*(Unaudited)*
(In thousands, except ratios)


	6/30/17	3/31/17	12/31/16	9/30/16	6/30/16
ASSETS
Cash and cash equivalents
Cash and due from banks	$ 14,801	$ 11,867	$ 17,273	$ 13,142	$ 17,483
Federal funds sold	4,674	4,856	797	797	―
Total cash and cash equivalents	19,475	16,723	18,070	13,939	17,483
Investment securities available for sale, at fair value	38,274	29,889	36,354	26,434	25,869
Investment securities held to maturity	26,615	26,664	27,714	26,518	24,357
Restricted equity securities, at cost	3,895	3,892	3,426	3,423	3,420
Loans, net of allowance for loan losses	525,989	461,768	463,926	441,335	417,640
Premises and equipment, net	12,008	12,132	12,309	12,500	12,339
Other real estate owned, net	135	135	135	135	135
Accrued interest and other receivables	2,737	2,363	2,261	2,265	2,194
Bank owned life insurance	13,417	13,308	10,202	8,126	8,051
Other assets	1,715	1,388	1,314	1,234	1,437
Total Assets	$ 644,260	$ 568,262	$ 575,711	$ 535,909	$ 512,925

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Non-interest bearing deposits	$ 139,023	$ 114,044	$ 106,050	$ 114,128	$ 98,505
Interest bearing DDA deposits	27,639	17,443	41,611	―	―
Savings and NOW deposits	48,268	44,697	44,833	41,896	40,243
Money market deposits	86,009	79,704	75,670	76,152	59,906
Other time deposits	237,853	207,854	205,402	214,636	224,753
Total deposits	538,792	463,742	473,566	446,812	423,407
Securities sold under agreements to repurchase	―	―	―	2,736	―
Federal Home Loan Bank advances and other borrowings	40,167	40,179	40,192	40,204	44,409
Subordinated Debt	14,733	14,726	14,019	―	―
Other liabilities	1,807	2,011	1,539	872	957
Total Liabilities	595,499	520,658	529,316	490,624	468,773

Stockholders' Equity:
Common stock	16,808	16,792	16,650	16,645	16,634
Capital surplus	22,229	22,126	22,152	21,995	21,913
Retained earnings	9,777	8,827	7,801	6,724	5,712
Accumulated other comprehensive income (loss)	(53)	(141)	(208)	(79)	(107)
Total Stockholders' Equity	48,761	47,604	46,395	45,285	44,152

Total Liabilities and Stockholders' Equity	$ 644,260	$ 568,262	$ 575,711	$ 535,909	$ 512,925

Other Financial Highlights
Annualized return on average assets	0.68%	0.72%	0.76%	0.75%	0.73%
Annualized return on average equity	8.06%	8.74%	8.72%	8.52%	8.25%
Annualized net interest margin	3.64%	3.75%	3.78%	3.79%	3.82%
Efficiency ratio	68.47%	69.40%	69.47%	71.09%	71.02%
Gross loans to deposits	98.45%	100.02%	98.58%	99.16%	99.74%
Allowance for loan losses to total loans	0.84%	0.87%	0.85%	0.82%	0.87%
Past due loans 30-89 days to total gross loans	0.38%	0.02%	0.07%	0.02%	0.01%
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	0.02%	0.02%	0.04%	0.09%	0.09%
Quarterly net loan charge-offs (recoveries)	$ 39	$ 111	$ 30	$ 109	$ 111
Book value per share	$ 11.30	$ 11.09	$ 10.85	$ 10.65	$ 10.39
Closing stock price	$ 16.05	$ 16.55	$ 14.20	$ 12.60	$ 11.90

Regulatory Capital Ratios
Tier 1 risk-based capital ratio	10.74%	11.78%	11.74%	9.67%	10.02%
Common equity tier 1 capital ratio	10.74%	11.78%	11.74%	9.67%	10.02%
Total risk-based capital ratio	11.52%	12.57%	12.53%	10.46%	10.86%
Leverage ratio	10.32%	10.69%	10.95%	8.66%	8.91%


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


	Year-to-Date		Three Months Ended
	6/30/17	6/30/16	6/30/17	3/31/17	12/31/16	9/30/16	6/30/16
INTEREST INCOME:
Interest and fees on loans	$ 11,070	$ 9,814	$ 5,717	$ 5,353	$ 5,267	$ 5,111	$ 4,969
Interest on investment securities	809	597	413	396	351	339	292
Interest on federal funds sold	87	45	47	40	19	29	21
Total interest income	11,966	10,456	6,177	5,789	5,637	5,479	5,282

INTEREST EXPENSE:
Interest on interest bearing DDA deposits	84	―	43	41	11	―	―
Interest on savings and NOW deposits	90	80	47	43	44	43	41
Interest on money market deposits	266	121	150	116	96	83	62
Interest on other time deposits	1,130	1,143	594	536	579	605	589
Interest on Federal Home Loan Bank advances and other borrowings	192	121	108	84	74	71	65
Interest on Subordinated Debt	482	―	241	241	―	―	―
Total interest expense	2,244	1,465	1,183	1,061	804	802	757
Net interest income	9,722	8,991	4,994	4,728	4,833	4,677	4,525
Provision for loan losses	620	220	425	195	335	90	135
Net interest income after provision for loan losses	9,102	8,771	4,569	4,533	4,498	4,587	4,390
OTHER INCOME:
Deposit account service charges	394	348	202	192	183	205	218
Bank owned life insurance income	216	51	110	106	76	75	51
Other fee income	595	239	246	349	194	156	153
Total other income	1,205	638	558	647	453	436	422
OTHER EXPENSES:
Salaries and employee benefits	4,821	4,342	2,449	2,372	2,038	2,208	2,241
Furniture and equipment expenses	592	545	306	286	301	297	267
Advertising and marketing	57	118	26	31	56	102	78
Occupancy expenses	324	376	153	171	158	200	203
Outside services	242	246	113	129	202	167	136
Administrative expenses	188	168	98	90	89	93	99
Other operating expenses	1,258	1,043	605	653	595	571	534
Total other expenses	7,482	6,838	3,750	3,732	3,439	3,638	3,558
INCOME BEFORE INCOME TAXES	2,825	2,571	1,377	1,448	1,512	1,385	1,254
Income tax expense	848	784	427	421	436	373	381
NET INCOME	$ 1,977	$ 1,787	$ 950	$ 1,027	$ 1,076	$ 1,012	$ 873


Net income per common share, basic and diluted	$ 0.46	$ 0.42	$ 0.22	$ 0.24	$ 0.25	$ 0.24	$ 0.20
Weighted average number of shares, basic and diluted	4,315,223	4,252,611	4,315,591	4,314,852	4,260,232	4,260,232	4,261,118