MainStreet Bank Reports Another Record Year

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Jan 21, 2016, 08:00 ET

FAIRFAX, Va., Jan. 21, 2016 /PRNewswire/ -- MainStreet Bank (OTCQB: MNSB) reported a 39% increase in its share trading price for 2015 with an average daily volume of 3,550 shares traded. The Bank's stock started the year at $8.90 per share and ended at $12.35 per share.

MainStreet's annual balance sheet growth was 39% for calendar year 2015 with total assets of $478 million against total assets of $345 million at the start of the year. The Bank completed an $80 million indirect consumer loan portfolio purchase on July 27, 2015.

Net income after tax for the year is up 24% even with the one-time $775 thousand loss provision that was necessary to book the indirect consumer loan portfolio purchase. The Bank reported net income for the fourth quarter of $946 thousand against the prior year's fourth quarter net income of $588 thousand, a 61% increase.

Fully diluted earnings per share through December 31, 2015 were 51 cents as compared with 64 cents for the same period in 2014. However, the weighted average shares outstanding increased by 1,504,401 between the two periods, largely due to a capital raise that occurred at the end of 2014.

Net interest income of $15.645 million reported for December 31, 2015 improved $3.474 million over net interest income from December 31, 2014. The net interest margin fell slightly to 3.96%, largely due to the indirect consumer loan portfolio, which is a lower-yielding short-term asset.

Net loans outstanding increased by $129 million during the twelve months ending December 31, 2015, from $269 million on Dec. 31, 2014 to $398 million on December 31, 2015.

Total deposits increased by $83 million during the twelve months ending December 31, 2015 reaching $386 million. Year-over-year demand account balances increased by $17 million while money market and interest checking accounts increased by $29 million, increases of 33% and 43% respectively. Time deposits increased by $37 million, or 20%, during the same period. The increased deposit growth was used to fund liquidity and the indirect consumer loan portfolio purchase. An additional source of funding for the portfolio was Federal Home Loan Bank advances, which increased $48 million year over year.

Asset quality remains very strong. Nonperforming loans were 0.17 percent of total loans on December 31, 2015.

Non-interest income was $1.265 million for the twelve months ending December 31, 2015 compared to $1.017 million for the same period in 2014. Non-interest expense for the twelve months ending December 31, 2015 was $12.346 million, compared to $10.097 million for the same period in 2014. The increase was driven primarily by personnel related expenses associated with the growth and expansion during 2015, which allowed the company to experience high quality growth.

QUOTES: "MainStreet Bank had a good 2015. The purchase of the $80 million indirect consumer loan portfolio in July was a great opportunity which essentially kick-starting the indirect lending team's portfolio. We are building a diversified loan portfolio and are experiencing good growth for all areas of the Bank," says Jeff W. Dick, Chairman, CEO and President of MainStreet Bank. "Our share price has shown a consistent positive trend for the year, and we ended the year trading at nearly 124% of book value. Our plan for continued growth should result in building strong shareholder value."

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 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 750 businesses in the Metropolitan area.

MainStreet Bank is always looking for ways to improve its customer experience, and now has the ability to instantly issue new and replacement Debit Cards - which is especially important for customers if their Cards are compromised or lost.

MainStreet Bank also continues to refine and improve its mobile banking App for iPads, iPhones and Androids. Additionally, MainStreet Bank 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)

	12/31/15	9/30/15	6/30/15	3/31/15	12/31/14
ASSETS

Cash and cash equivalents
Cash and due from banks	$ 7,211	$ 17,736	$ 7,283	$ 11,082	$ 7,171
Federal funds sold	-	779	-	803	-
Total cash and cash equivalents	7,211	18,515	7,283	11,885	7,171
Investment securities available for sale, at fair value	33,657	36,317	29,852	27,582	38,643
Investment securities held to maturity	18,857	17,282	15,910	15,934	13,866
Subordinated Debt	1,000	-	-	-	-
Restricted equity securities, at cost	3,508	3,718	1,596	1,594	1,166
Loans, net of allowance for loan losses	398,291	389,327	305,401	287,111	269,094
Premises and equipment, net	12,526	12,616	12,796	12,918	12,902
Other real estate owned, net	135	234	234	234	234
Accrued interest and other receivables	1,857	1,411	1,306	1,185	1,143
Other assets	1,208	1,552	1,201	830	757
Total Assets	$ 478,250	$ 480,972	$ 375,579	$ 359,273	$ 344,976

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Non-interest bearing deposits	$ 68,409	$ 72,659	$ 72,244	$ 65,178	$ 51,562
Savings and NOW deposits	38,770	37,683	38,364	35,963	34,208
Money market deposits	59,580	58,023	47,387	36,774	34,741
Other time deposits	218,795	220,057	174,698	179,354	181,844
Total deposits	385,554	388,422	332,693	317,269	302,355
Securities sold under agreements to repurchase	19	521	717	495	411
Federal Home Loan Bank advances and other borrowings	49,509	50,254	455	279	1,493
Other liabilities	1,044	660	1,055	1,020	954
Total Liabilities	436,126	439,857	334,920	319,063	305,213

Stockholders' Equity:
Common stock	16,515	16,508	16,491	16,491	16,391
Capital surplus	21,837	21,757	21,690	21,602	21,626
Retained earnings	3,924	2,980	2,626	2,221	1,755
Accumulated other comprehensive income (loss)	(152)	(130)	(148)	(104)	(9)
Total Stockholders' Equity	42,124	41,115	40,659	40,210	39,763

Total Liabilities and Stockholders' Equity	$ 478,250	$ 480,972	$ 375,579	$ 359,273	$ 344,976


Other Financial Highlights
Annualized return on average assets	0.53%	0.42%	0.49%	0.53%	0.56%
Annualized return on average equity	5.33%	4.01%	4.33%	4.65%	6.62%
Annualized net interest margin	3.96%	4.03%	4.25%	4.32%	4.13%
Efficiency ratio	73.01%	73.99%	75.95%	74.91%	77.17%
Gross loans to deposits	104.57%	101.54%	92.79%	91.47%	90.00%
Allowance for loan losses to total loans	0.91%	0.95%	0.99%	1.00%	1.01%
Past due loans 30-89 days to total gross loans	0.03%	0.03%	0.00%	0.00%	0.00%
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	0.17%	0.21%	0.14%	0.14%	0.19%
Quarterly net loan charge-offs (recoveries)	$ 208	$ 91	$ 105	$ 172	$ 46
Book value per share	$ 10.00	$ 9.78	$ 9.64	$ 9.52	$ 9.44
Closing stock price	$ 12.35	$ 11.59	$ 10.20	$ 9.40	$ 8.90

Regulatory Capital Ratios
Tier 1 risk-based capital ratio	10.27%	10.29%	13.30%	14.34%	13.68%
Common equity tier 1 capital ratio	10.27%	10.29%	13.30%	14.34%	13.68%
Total risk-based capital ratio	11.17%	11.22%	14.30%	15.37%	14.63%
Leverage ratio	8.90%	9.12%	11.14%	11.54%	13.68%

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

	Year Ended		Three Months Ended
	12/31/15	12/31/14	12/31/15	9/30/15	6/30/15	3/31/15	12/31/14
INTEREST INCOME:

Interest and fees on loans	$ 17,010	$ 13,325	$ 4,793	$ 4,438	$ 3,924	$ 3,855	$ 3,601
Interest on investment securities	932	891	245	231	220	236	244
Interest on federal funds sold	45	25	15	14	9	7	5
Total interest income	17,987	14,241	5,053	4,683	4,153	4,098	3,850

INTEREST EXPENSE:
Interest on savings and NOW deposits	150	140	40	40	36	34	37
Interest on money market deposits	170	104	55	52	34	29	29
Interest on other time deposits	1,929	1,808	528	478	444	479	478
Interest on Federal Home Loan Bank advances and other borrowings	93	18	45	41	3	4	5
Total interest expense	2,342	2,070	668	611	517	546	549

Net interest income	15,645	12,171	4,385	4,072	3,636	3,552	3,301
Provision for loan losses	1,500	586	145	775	278	302	123
Net interest income after provision for loan losses	14,145	11,585	4,240	3,297	3,358	3,250	3,178
OTHER INCOME:
Deposit account service charges	487	429	135	130	123	99	107
Gain on securities available for sale	214	105	-	-	-	214	-
Other fee income	564	483	125	232	95	112	79
Total other income	1,265	1,017	260	362	218	425	186
OTHER EXPENSES:
Salaries and employee benefits	7,526	5,679	1,873	1,965	1,822	1,866	1,445
Furniture and equipment expenses	1,114	1,050	290	282	277	265	281
Advertising and marketing	394	175	157	99	81	57	71
Occupancy expenses	684	834	162	162	169	191	154
Outside services	387	321	156	74	79	78	93
Administrative expenses	327	345	84	87	79	77	98
Other operating expenses	1,914	1,693	549	458	462	445	411
Total other expenses	12,346	10,097	3,271	3,127	2,969	2,979	2,553

INCOME BEFORE INCOME TAXES	3,064	2,505	1,229	532	607	696	811

Income tax expense	894	752	283	179	201	231	223
NET INCOME	$ 2,170	$ 1,753	$ 946	$ 353	$ 406	$ 465	$ 588


Net income per common share, basic and diluted	$ 0.51	$ 0.64	$ 0.22	$ 0.08	$ 0.10	$ 0.11	$ 0.21
Weighted average number of shares, basic and diluted	4,230,717	2,726,316	4,226,098	4,232,811	4,235,755	4,226,685	2,803,216