MainStreet Bancshares, Inc. : Reports Record Annual Earnings for 2019

FAIRFAX, Va., Jan. 21, 2020 /PRNewswire/ -- MainStreet Bancshares, Inc. (Nasdaq: MNSB) reported net income of $14.0 million for 2019, which represents a 1.19% return on average assets, a 10.79% return on average equity and which equates to $1.69 per share of common stock.  

Net interest income was $39.4 million for the twelve months ended December 31, 2019, up 27% from the twelve months ended December 31, 2018.  Noninterest income of $4.9 million for the year ended December 31, 2019 saw an increase of 50% from the year ending December 31, 2018.  The increase is due to an increase in deposit account fees, interest rate swap fees related to loan transactions, and gains recorded for the sale of the guaranteed portion of Small Business Administration ("SBA") loans.  We anticipate that these sources should continue in a similar manner going forward.

Loan loss provisions of $1.6 million for the year ended December 31, 2019 are down 48% from the year ended December 31, 2018. The decrease in loan loss provisions was consistent with the Company's strategic decision to moderate net loan growth to 12% for 2019 as compared to 40% net loan growth in 2018. 

Total assets were $1.3 billion at December 31, 2019, up 16% from the previous year-end. Net loans at December 31, 2019 total $1.0 billion and asset quality remains solid with non-performing assets to total assets at 0.09% as of December 31, 2019.  Capital levels for the Company remain strong. 

Non-interest-bearing deposits increased to $252.7 million as of December 31, 2019, up 19% from December 31, 2018.  Non-interest-bearing deposits represent 24% of total deposits at December 31, 2019.  Total deposits as of December 31, 2019 were $1.1 billion an increase of $152.1 million from December 31, 2018.

As of December 31, 2019, the Company's tangible book value per share was $16.59, up 12% from $14.83 as of December 31, 2018.  According to Nasdaq, there were 7,746 trades during the quarter totaling 792,485 shares traded. The closing share price was $23.00, or 139% of book value. The market cap was $190.0 million as of December 31, 2019.

QUOTES: "We had a fantastic year of good growth and opportunity," says Chris Brockett, President of MainStreet Bancshares, Inc. and MainStreet Bank. "We are excited to bring the branch at 1130 Connecticut Avenue in DC online in February and look forward to developing more business opportunities with some of our new DC partnerships."

"The current rate environment is challenging but it is providing good opportunities for business expansion and development in our market," says Jeff W. Dick, Chairman and CEO of MainStreet Bancshares, Inc. and MainStreet Bank.  "We've been able to sustain a good net interest margin and we are intensely focused on improving both our net interest margin and fee income through the generation of new core deposits and building on our base of transactional payment processing businesses."

ABOUT MAINSTREET BANK:  MainStreet operates six branches in Herndon, Fairfax, Fairfax City, McLean, Leesburg and Clarendon.  A seventh branch on 1130 Connecticut Avenue in Washington, D.C. will open in February 2020. 

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, 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, 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
(Unaudited)
(In thousands, except share data)
		December 31, 2019				September 30, 2019				June 30, 2019				March 31, 2019				December 31, 2018
ASSETS
Cash and cash equivalents
Cash and due from banks		$	53,376			$	52,580			$	44,976			$	29,741			$	27,886
Federal funds sold			11,468				19,432				19,835				30,034				30,190
Total cash and cash equivalents			64,844				72,012				64,811				59,775				58,076
Investment securities available for sale, at fair value			92,791				88,198				60,079				69,308				55,979
Investment securities held to maturity, at carrying value			23,914				24,410				24,946				25,487				26,178
Restricted equity securities, at cost			6,157				4,882				5,307				5,732				5,894
Loans, net of allowance for loan losses of $9,584, $9,370, $9,185, $9,189, and $8,831, respectively			1,030,425				992,609				983,574				943,735				917,125
Premises and equipment, net			14,153				14,109				14,208				14,226				14,222
Other real estate owned, net			1,207				1,207				1,207				—				—
Accrued interest and other receivables			5,420				5,373				5,681				5,644				5,148
Bank owned life insurance			24,562				19,381				14,275				14,169				14,064
Other assets			14,516				12,095				10,676				8,005				3,927
Total Assets		$	1,277,989			$	1,234,276			$	1,184,764			$	1,146,081			$	1,100,613
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Non-interest bearing deposits		$	252,707			$	218,087			$	201,405			$	193,744			$	211,749
Interest-bearing DDA deposits			53,707				54,438				65,117				59,639				60,588
Savings and NOW deposits			63,015				63,746				61,945				61,537				51,371
Money market deposits			141,337				125,716				115,641				147,655				138,153
Time deposits			561,488				602,577				567,023				504,252				458,276
Total deposits			1,072,254				1,064,564				1,011,131				966,827				920,137
Federal Home Loan Bank advances and other borrowings			40,000				10,000				20,000				30,000				40,000
Subordinated debt			14,805				14,798				14,791				14,783				14,776
Other liabilities			13,896				11,697				9,806				9,488				4,449
Total Liabilities			1,140,955				1,101,059				1,055,728				1,021,098				979,362
Stockholders' Equity:
Common stock, par value $4 per share, authorized 10,000,000    shares; issued and outstanding, 8,260,259 shares at December 31, 2019    including 160,961 unvested shares, 8,260,259 shares at September 30, 2019    including 160,961 unvested shares, 8,250,259 shares at June 30, 2019    including 153,586 unvested shares, 8,249,759 at March 31, 2019    including 153,086 unvested shares, 8,177,978 shares at    December 31, 2018 including 133,869 unvested shares.			32,397				32,397				32,387				32,387				32,177
Capital surplus			75,117				74,860				74,609				74,353				74,256
Retained earnings			29,097				25,535				21,826				18,395				15,185
Accumulated other comprehensive gain (loss)			423				425				214				(152)				(367)
Total Stockholders' Equity			137,034				133,217				129,036				124,983				121,251
Total Liabilities and Stockholders' Equity		$	1,277,989			$	1,234,276			$	1,184,764			$	1,146,081			$	1,100,613

 

 

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME INFORMATION
(Unaudited)
(In thousands, except share and per share data)
		Year-to-Date								Three Months Ended
		December 31, 2019				December 31, 2018				December 31, 2019				September 30, 2019				June 30, 2019				March 31, 2019				December 31, 2018
INTEREST INCOME:
Interest and fees on loans		$	55,208			$	41,270			$	14,223			$	14,192			$	13,877			$	12,916			$	12,244
Interest on investment securities			2,202				1,470				534				497				615				556				381
Interest on federal funds sold			1,403				1,095				271				412				375				345				457
Total interest income			58,813				43,835				15,028				15,101				14,867				13,817				13,082
INTEREST EXPENSE:
Interest on interest bearing DDA deposits			998				900				195				275				283				245				269
Interest on savings and NOW deposits			289				251				71				71				74				73				77
Interest on money market deposits			2,379				1,708				489				539				587				763				598
Interest on time deposits			14,196				8,065				3,730				3,900				3,635				2,931				2,784
Interest on Federal Home Loan Bank    advances and other borrowings			549				776				92				76				162				219				188
Interest on subordinated debt			966				966				244				244				241				238				244
Total interest expense			19,377				12,666				4,821				5,105				4,982				4,469				4,160
Net interest income			39,436				31,169				10,207				9,996				9,885				9,348				8,922
Provision for loan losses			1,618				3,126				358				185				750				325				496
Net interest income after provision     for loan losses			37,818				28,043				9,849				9,811				9,135				9,023				8,426
NON-INTEREST INCOME:
Deposit account service charges			1,668				1,103				460				392				446				370				311
Bank owned life insurance income			498				427				180				106				106				105				107
Loan swap fee income			989				713				111				407				181				290				713
Net gain on available-for-sale securities			5				—				—				—				5				—				—
Net gains on sale of loans			566				—				—				303				263				—				—
Other fee income			1,136				995				407				228				340				161				331
Total other income			4,862				3,238				1,158				1,436				1,341				926				1,462
NON-INTEREST EXPENSES:
Salaries and employee benefits			15,776				11,845				4,179				3,890				3,847				3,860				3,267
Furniture and equipment expenses			1,728				1,859				457				451				435				385				534
Advertising and marketing			906				614				375				235				191				105				146
Occupancy expenses			864				736				221				214				217				213				220
Outside services			863				839				169				306				161				227				164
Administrative expenses			731				575				198				190				176				167				142
Other operating expenses			4,508				3,510				1,104				1,203				1,150				1,051				900
Total other expenses			25,376				19,978				6,703				6,489				6,177				6,008				5,373
INCOME BEFORE INCOME TAXES			17,304				11,303				4,304				4,758				4,299				3,941				4,515
Income tax expense			3,354				2,094				742				1,049				868				694				846
NET INCOME		$	13,950			$	9,209			$	3,562			$	3,709			$	3,431			$	3,247			$	3,669
Net income per common share,    basic and diluted (1)		$	1.69			$	1.38			$	0.43			$	0.45			$	0.42			$	0.39			$	0.45
Weighted average number of shares,    basic and diluted (1)			8,248,284				6,652,979				8,260,259				8,251,672				8,250,210				8,242,873				8,178,888
(1) Amounts for all periods reflect the effect of the 5% stock dividend on April 30, 2018.

 

 

UNAUDITED LOAN, DEPOSIT AND BORROWING DETAIL
(Unaudited)
(In thousands)
		December 31, 2019								September 30, 2019								December 31, 2018								Percentage Change
		$ Amount				% of Total				$ Amount				% of Total				$ Amount				% of Total				Last 3 Mos				Last 12 Mos
LOANS:
Construction and land development loans		$	272,620				26.2	%		$	207,441				20.7	%		$	183,551				19.8	%			31.4	%			48.5	%
Residential real estate loans			150,848				14.5	%			162,801				16.2	%			149,628				16.2	%			-7.3	%			0.8	%
Commercial real estate loans			421,870				40.5	%			434,735				43.3	%			377,760				40.7	%			-3.0	%			11.7	%
Commercial industrial loans			121,225				11.6	%			115,902				11.5	%			114,221				12.3	%			4.6	%			6.1	%
Consumer loans			75,583				7.2	%			83,013				8.3	%			102,277				11.0	%			-9.0	%			-26.1	%
Total Gross Loans		$	1,042,146				99.9	%		$	1,003,892				100.0	%		$	927,437				100.0	%			3.8	%			12.4	%
Less: Allowance for loan losses			(9,584)								(9,370)								(8,831)
Net deferred loan fees			(2,137)								(1,913)								(1,481)
Net Loans		$	1,030,425							$	992,609							$	917,125
DEPOSITS:
Non-interest bearing demand deposits		$	252,707				23.6	%		$	218,087				20.5	%		$	211,749				23.0	%			15.9	%			19.3	%
Interest-bearing demand deposits:
Demand deposits			53,707				5.0	%			54,438				5.1	%			60,588				6.6	%			-1.3	%			-11.4	%
Savings and NOW deposits			63,015				5.9	%			63,746				6.0	%			51,371				5.6	%			-1.1	%			22.7	%
Money market accounts			141,337				13.2	%			125,716				11.8	%			138,152				15.0	%			12.4	%			2.3	%
Certificates of deposit $250,000 or more			211,935				19.8	%			239,719				22.5	%			111,325				12.1	%			-11.6	%			90.4	%
Certificates of deposit less than $250,000			349,553				32.5	%			362,858				34.1	%			346,952				37.7	%			-3.7	%			0.7	%
Total Deposits		$	1,072,254				100.0	%		$	1,064,564				100.0	%		$	920,137				100.0	%			0.7	%			16.5	%
BORROWINGS:
Federal Home Loan Bank advances			40,000				73.0	%			10,000				57.5	%			40,000				73.0	%			300.0	%			0.0	%
Subordinated debt			14,805				27.0	%			14,798				42.5	%			14,776				27.0	%			0.0	%			0.2	%
Total Borrowings		$	54,805				100.0	%		$	24,798				100.0	%		$	54,776				100.0	%			121.0	%			0.1	%
Total Deposits and Borrowings		$	1,127,059							$	1,089,362							$	974,913								3.5	%			15.6	%
Core customer funding sources (1)		$	654,213				58.1	%		$	655,631				60.2	%		$	586,001				60.1	%			-0.2	%			11.6	%
Brokered and listing service sources (2)			418,041				37.1	%			408,933				37.5	%			334,136				34.3	%			2.2	%			25.1	%
Federal Home Loan Bank advances			40,000				3.5	%			10,000				0.9	%			40,000				4.1	%			300.0	%			0.0	%
Subordinated debt (3)			14,805				1.3	%			14,798				1.4	%			14,776				1.5	%			0.0	%			0.2	%
Total Funding Sources		$	1,127,059				100.0	%		$	1,089,362				100.0	%		$	974,913				100.0	%			3.5	%			15.6	%
(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)
(In thousands)
		For the three months ended December 31, 2019												For the three months ended December 31, 2018
		Average Balance				Interest Income/ Expense				Average Yields/ Rate (annualized)				Average Balance				Interest Income/ Expense				Average Yields/ Rate (annualized)
ASSETS:
Interest earning assets:
Loans (1)		$	1,023,614			$	14,223				5.56	%		$	893,352			$	12,244				5.48	%
Investment securities			71,387				534				2.99	%			55,642				381				2.74	%
Federal funds and interest-bearing deposits			74,519				271				1.45	%			90,092				457				2.03	%
Total interest earning assets		$	1,169,520			$	15,028				5.14	%		$	1,039,086			$	13,082				5.03	%
Other assets			55,251												37,855
Total assets		$	1,224,771											$	1,076,941
Liabilities and Stockholders' Equity:
Interest-bearing liabilities:
Interest-bearing demand deposits		$	54,176			$	195				1.44	%		$	58,233			$	269				1.85	%
Money market deposit accounts			134,011				489				1.46	%			130,892				598				1.83	%
Savings and NOW deposits			63,916				71				0.44	%			52,249				77				0.59	%
Time deposits			570,794				3,730				2.61	%			470,738				2,784				2.37	%
Total interest-bearing deposits		$	822,897			$	4,485				2.18	%		$	712,112			$	3,728				2.09	%
Federal funds and repos purchased			11				-				0.00	%		$	32			$	-				0.00	%
Subordinated debt			14,802				244				6.59	%			14,773				244				6.61	%
FHLB borrowings			15,370				92				2.39	%			30,826				188				2.44	%
Total interest-bearing liabilities		$	853,080			$	4,821				2.26	%		$	757,743			$	4,160				2.19	%
Demand deposits and other liabilities			236,396												198,365
Total liabilities		$	1,089,476											$	956,108
Stockholders' Equity			135,295												120,833
Total Liabilities and Stockholders' Equity		$	1,224,771											$	1,076,941
Interest Rate Spread											2.88	%											2.84	%
Net Interest Income and Margin						$	10,207				3.49	%						$	8,922				3.43	%
(1)  Includes loans classified as non-accrual.

 

 

UNAUDITED AVERAGE BALANCE SHEETS, INTEREST AND RATES
(Unaudited)
(In thousands)
		For the year ended December 31, 2019												For the year ended December 31, 2018
		Average Balance				Interest Income/ Expense				Average Yields/ Rate (annualized)				Average Balance				Interest Income/ Expense				Average Yields/ Rate (annualized)
ASSETS:
Interest earning assets:
Loans (1)		$	984,014			$	55,208				5.61	%		$	795,130			$	41,270				5.19	%
Investment securities			71,149				2,202				3.09	%			55,219				1,470				2.66	%
Federal funds and interest-bearing deposits			72,643				1,403				1.93	%			63,536				1,095				1.72	%
Total interest earning assets		$	1,127,806			$	58,813				5.21	%		$	913,885			$	43,835				4.80	%
Other assets			45,282												35,159
Total assets		$	1,173,088											$	949,044
Liabilities and Stockholders' Equity:
Interest-bearing liabilities:
Interest-bearing demand deposits		$	56,675			$	998				1.76	%		$	57,357			$	900				1.57	%
Money market deposit accounts			129,606				2,379				1.84	%			115,846				1,708				1.47	%
Savings and NOW deposits			62,047				289				0.47	%			50,509				251				0.50	%
Time deposits			544,084				14,196				2.61	%			401,259				8,065				2.01	%
Total interest-bearing deposits		$	792,412			$	17,862				2.25	%		$	624,971			$	10,924				1.75	%
Federal funds and repos purchased			37				1				2.70	%			463				12				2.59	%
Subordinated debt			14,791				966				6.53	%			14,762				966				6.54	%
FHLB borrowings			21,162				548				2.59	%			39,042				764				1.96	%
Total interest-bearing liabilities		$	828,402			$	19,377				2.34	%		$	679,238			$	12,666				1.86	%
Demand deposits and other liabilities			215,405												181,098
Total liabilities		$	1,043,807											$	860,336
Stockholders' Equity			129,281												88,708
Total Liabilities and Stockholders' Equity		$	1,173,088											$	949,044
Interest Rate Spread											2.88	%											2.94	%
Net Interest Income and Margin						$	39,436				3.50	%						$	31,169				3.41	%
(1) Includes loans classified as non-accrual.

 

 

UNAUDITED SUMMARY FINANCIAL DATA
(Unaudited)
(Dollars in thousands except per share data)
		At or For the Three Months Ended							At or For the Year Ended
		December 31,							December 31,
		2019				2018			2019				2018
Per share Data and Shares Outstanding (1)
Earnings per share – (basic and diluted)		$	0.43			$	0.45		$	1.69			$	1.38
Tangible book value per share		$	16.59			$	14.83		$	16.59			$	14.83
Weighted average common shares (basic and diluted)			8,260,259				8,178,888			8,251,302				6,652,979
Common shares outstanding at end of period			8,260,259				8,177,978			8,260,259				8,177,978
Performance Ratios
Return on average assets (annualized)			1.16	%			1.36	%		1.19	%			0.97	%
Return on average equity (annualized)			10.53	%			12.15	%		10.79	%			10.38	%
Yield on earning assets (annualized)			5.14	%			5.03	%		5.21	%			4.80	%
Cost of interest bearing liabilities (annualized)			2.26	%			2.19	%		2.34	%			1.86	%
Net interest spread			2.88	%			2.84	%		2.88	%			2.94	%
Net interest margin (annualized)			3.49	%			3.43	%		3.50	%			3.41	%
Noninterest income as a percentage of average assets (annualized)			0.38	%			0.54	%		0.41	%			0.34	%
Noninterest expense to average assets (annualized)			2.19	%			2.00	%		2.16	%			2.11	%
Efficiency ratio			58.98	%			51.75	%		57.28	%			58.07	%
Asset Quality
Loans 30-89 days past due to total gross loans			0.03	%			0.01	%		0.03	%			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	%			0.21	%		0.00	%			0.21	%
Other real estate owned		$	1,207			$	—		$	1,207			$	—
Non-performing assets		$	1,207			$	1,939		$	1,207			$	1,939
Non-performing assets to total assets			0.09	%			0.18	%		0.09	%			0.18	%
Allowance for loan losses to total gross loans			0.92	%			0.95	%		0.92	%			0.95	%
Allowance for loan losses to non-performing assets			7.94				4.53			7.94				4.53
Net loan charge-offs (recoveries)		$	144			$	1		$	865			$	1
Net charge-offs to average loans (annualized)			0.06	%			0.00	%		0.09	%			0.00	%
Troubled debt restructurings (total)
Performing in accordance with modified terms		$	1,482			$	1,510		$	1,482			$	1,510
Not performing in accordance with modified terms		$	—			$	1,939		$	—			$	1,939
Regulatory Capital Ratios (Bank only) (2)
Total risk-based capital ratio			13.74	%			13.75	%		13.74	%			13.75	%
Tier 1 risk-based capital ratio			12.91	%			12.90	%		12.91	%			12.90	%
Leverage ratio			12.65	%			12.41	%		12.65	%			12.41	%
Common equity tier 1 ratio			12.91	%			12.90	%		12.91	%			12.90	%
Other information
Closing stock price		$	23.00			$	17.06		$	23.00			$	17.06
Tangible equity / tangible assets			10.73	%			11.02	%		10.73	%			11.02	%
Average tangible equity / average tangible assets			11.05	%			11.22	%		11.02	%			9.35	%
Number of full time equivalent employees			126				110			126				110
# Full service branch offices			6				6			6				6
(1) Amounts for all periods presented are adjusted to reflect a 5% stock dividend effective April 30, 2018
(2) Regulatory capital ratios as of December 31, 2019 are preliminary.

 

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SOURCE MainStreet Bancshares, Inc.