MainStreet Bancshares Inc. Reports First Quarter Results

PR Newswire

Mon, Apr 21, 2025, 6:52 AM 7 min read

FAIRFAX, Va., April 21, 2025 /PRNewswire/ -- MainStreet Bancshares, Inc. (Nasdaq: MNSB & MNSBP), the financial holding company for MainStreet Bank, reported first quarter net income of $2.5 million with a net interest margin of 3.30%, up 34 basis points from the previous quarter. Net interest income after provision for credit losses was $16.5 million, up $3.9 million from the previous quarter and earnings per common share were $0.25 for the first quarter. The Company continues to report strong asset quality and strong capital.

MainStreet Bank Headquarters 10089 Fairfax Blvd Fairfax, Virginia 22030 (PRNewsfoto/MainStreet Bancshares, Inc.)

Total deposits maintained their level at $1.9 billion, with total funding costs improving by 24 basis points from the previous quarter to 3.49%. "Our net interest margin expansion was fueled primarily by an opportunity to replace higher cost deposits," said Alex Vari, Chief Accountant for MainStreet Bank. "We worked diligently to optimize pricing on our deposit stack, while also structuring $211 million of our $578 million in noncore deposits to reprice quickly should rates adjust down." The loan-to-deposit ratio of 96% indicates efficient utilization of deposit funds for lending.

Nonperforming loans held steady at a low level of $21.7 million during the quarter, with another $11.2 million expected to pay off at par in the second quarter based upon a successful court-approved resolution. Chief Credit Officer Chris Johnston said, "The resolution of nonperforming loans is a testament to the team's diligent and creative efforts to work together with borrowers to find positive outcomes in a timely manner."

Total assets were $2.2 billion with gross loans demonstrating stability at $1.8 billion. "We remain cautiously optimistic about the DC Metropolitan market," said Abdul Hersiburane, President of MainStreet Bank. "Our team is steadfast on serving our customers but taking conservative steps as we monitor the early days that come with a new administration."

Banking-as-a-Service

"This quarter saw a change in direction for the Avenu technology initiative, which will not be moving forward," according to Chairman and CEO Jeff W. Dick. "The timeline for the expected return on invested capital extended beyond the Company's plan, and we decided to devote our energy on the core bank."

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 pandemic outbreaks, 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)

	March 31, 2025		December 31, 2024*		September 30, 2024		June 30, 2024		March 31, 2024
ASSETS
Cash and cash equivalents
Cash and due from banks	$	18,385	$	21,351	$	15,319	$	17,112	$	17,270
Interest-bearing deposits at other financial institutions		159,582		161,866		191,637		50,495		76,178
Federal funds sold		24,673		24,491		25,158		23,852		31,293
Total cash and cash equivalents		202,640		207,708		232,114		91,459		124,741
Investment securities available for sale, at fair value		55,935		55,747		58,489		57,605		58,699
Investment securities held to maturity, at amortized cost, net of allowance for credit losses of $0 for all periods		15,657		16,078		16,016		16,036		17,251
Restricted equity securities, at amortized cost		33,611		30,623		26,745		26,797		23,924
Loans, net of allowance for credit losses of $19,460, $19,450, $18,327, $17,098, and $16,531, respectively		1,811,789		1,810,556		1,775,558		1,778,840		1,727,110
Premises and equipment, net		13,020		13,287		13,571		13,787		14,081
Accrued interest and other receivables		9,607		11,311		11,077		11,916		10,727
Computer software, net of amortization		—		—		18,881		17,205		15,691
Bank owned life insurance		39,809		39,507		39,203		38,901		38,609
Other assets		40,777		43,281		32,945		41,200		39,182
Total Assets	$	2,222,845	$	2,228,098	$	2,224,599	$	2,093,746	$	2,070,015
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Non-interest bearing deposits	$	345,319	$	324,307	$	347,575	$	314,636	$	348,945
Interest-bearing demand deposits		106,033		139,780		197,527		179,513		165,331
Savings and NOW deposits		124,049		64,337		61,893		60,867		46,036
Money market deposits		511,925		560,082		451,936		476,396		446,903
Time deposits		820,999		819,288		834,738		723,951		725,520
Total deposits		1,908,325		1,907,794		1,893,669		1,755,363		1,732,735
Subordinated debt, net		72,138		73,039		72,940		72,841		72,741
Other liabilities		32,764		39,274		31,939		40,827		41,418
Total Liabilities		2,013,227		2,020,107		1,998,548		1,869,031		1,846,894
Stockholders' Equity:
Preferred stock		27,263		27,263		27,263		27,263		27,263
Common stock		29,810		29,466		29,463		29,452		29,514
Capital surplus		67,612		67,823		67,083		66,392		65,940
Retained earnings		92,305		91,150		108,616		109,651		108,334
Accumulated other comprehensive loss		(7,372)		(7,711)		(6,374)		(8,043)		(7,930)
Total Stockholders' Equity		209,618		207,991		226,051		224,715		223,121
Total Liabilities and Stockholders' Equity	$	2,222,845	$	2,228,098	$	2,224,599	$	2,093,746	$	2,070,015

*Derived from audited financial statements

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

	Three Months Ended
	March 31, 2025		December 31, 2024		September 30, 2024		June 30, 2024		March 31, 2024
INTEREST INCOME:
Interest and fees on loans	$	31,111	$	31,323	$	31,615	$	31,655	$	30,582
Interest on investment securities
Taxable securities		420		431		397		430		435
Tax-exempt securities		263		262		294		268		270
Interest on interest-bearing deposits at other financial institutions		946		2,826		1,041		806		889
Interest on federal funds sold		223		277		244		277		293
Total interest income		32,963		35,119		33,591		33,436		32,469
INTEREST EXPENSE:
Interest on interest-bearing demand deposits		1,048		2,612		2,117		2,118		1,814
Interest on savings and NOW deposits		221		201		206		190		157
Interest on money market deposits		5,276		5,475		5,277		5,542		5,092
Interest on time deposits		9,031		10,003		9,543		9,010		8,808
Interest on federal funds purchased		65		—		277		191		107
Interest on Federal Home Loan Bank advances		—		—		—		—		46
Interest on subordinated debt		812		787		828		820		820
Total interest expense		16,453		19,078		18,248		17,871		16,844
Net interest income		16,510		16,041		15,343		15,565		15,625
Provision for (recovery of) credit losses		—		3,407		2,913		638		(195)
Net interest income after provision for (recovery of) credit losses		16,510		12,634		12,430		14,927		15,820
NON-INTEREST INCOME:
Deposit account service charges		530		481		557		490		469
Bank owned life insurance income		302		304		302		291		292
Gain on retirement of subordinated debt		60		—		—		—		—
Net loss on securities called or matured		—		—		—		(48)		—
Other non-interest income		47		22		27		31		35
Total non-interest income		939		807		886		764		796
NON-INTEREST EXPENSES:
Salaries and employee benefits		8,385		8,253		7,250		7,484		7,488
Furniture and equipment expenses		1,016		830		931		940		935
Advertising and marketing		481		600		579		566		454
Occupancy expenses		396		358		407		415		435
Outside services		1,173		1,168		845		839		774
Administrative expenses		229		243		215		229		242
Computer software intangible impairment		—		19,721		—		—		—
Other operating expenses		2,634		3,258		2,992		2,362		2,153
Total non-interest expenses		14,314		34,431		13,219		12,835		12,481
Income (loss) before income tax expense (benefit)		3,135		(20,990)		97		2,856		4,135
Income tax expense (benefit)		682		(4,823)		(168)		238		830
Net income (loss)		2,453		(16,167)		265		2,618		3,305
Preferred stock dividends		539		539		539		539		539
Net income (loss) available to common shareholders	$	1,914	$	(16,706)	$	(274)	$	2,079	$	2,766
Earnings (loss) per common share, basic and diluted	$	0.25	$	(2.20)	$	(0.04)	$	0.27	$	0.36
Weighted average number of common shares, basic and diluted		7,636,191		7,603,318		7,601,925		7,608,389		7,611,990

UNAUDITED LOAN, DEPOSIT AND BORROWING DETAIL (In thousands)

	March 31, 2025					December 31, 2024					March 31, 2024					Percentage Change
	$ Amount		% of Total			$ Amount		% of Total			$ Amount		% of Total			Last 3 Mos			Last 12 Mos
LOANS:
Construction and land development loans	$	344,742		18.8	%	$	393,385		21.4	%	$	408,903		23.4	%		-12.4	%		-15.7	%
Residential real estate loans		450,728		24.6	%		439,481		23.9	%		451,991		25.8	%		2.6	%		-0.3	%
Commercial real estate loans		933,947		50.9	%		895,743		48.8	%		813,387		46.5	%		4.3	%		14.8	%
Commercial and industrial loans		105,180		5.6	%		104,815		5.7	%		71,822		4.1	%		0.3	%		46.4	%
Consumer loans		1,331		0.1	%		1,574		0.2	%		2,902		0.2	%		-15.4	%		-54.1	%
Total Gross Loans	$	1,835,928		100.0	%	$	1,834,998		100.0	%	$	1,749,005		100.0	%		0.1	%		5.0	%
Less: Allowance for credit losses		(19,460)					(19,450)					(16,531)
Net deferred loan fees		(4,679)					(4,992)					(5,364)
Net Loans	$	1,811,789				$	1,810,556				$	1,727,110
DEPOSITS:
Non-interest bearing deposits	$	345,319		18.1	%	$	324,307		17.0	%	$	348,945		20.1	%		6.5	%		-1.0	%
Interest-bearing deposits:
Demand deposits		106,033		5.6	%		139,780		7.3	%		165,331		9.5	%		-24.1	%		-35.9	%
Savings and NOW deposits		124,049		6.5	%		64,337		3.4	%		46,036		2.7	%		92.8	%		169.5	%
Money market deposits		511,925		26.8	%		560,082		29.4	%		446,903		25.8	%		-8.6	%		14.5	%
Certificates of deposit $250,000 or more		541,772		28.4	%		535,676		28.1	%		467,892		27.0	%		1.1	%		15.8	%
Certificates of deposit less than $250,000		279,227		14.6	%		283,612		14.8	%		257,628		14.9	%		-1.5	%		8.4	%
Total Deposits	$	1,908,325		100.0	%	$	1,907,794		100.0	%	$	1,732,735		100.0	%		0.0	%		10.1	%
BORROWINGS:
Subordinated debt, net		72,138		100.0	%		73,039		100.0	%		72,741		100.0	%		-1.2	%		-0.8	%
Total Borrowings	$	72,138		100.0	%	$	73,039		100.0	%	$	72,741					-1.2	%		-0.8	%
Total Deposits and Borrowings	$	1,980,463				$	1,980,833				$	1,805,476					0.0	%		9.7	%

Core customer funding sources ⁽¹⁾	$	1,330,390		67.2	%	$	1,439,657		72.7	%	$	1,312,746		72.7	%		-7.6	%		1.3	%
Brokered and listing service sources ⁽²⁾		577,935		29.2	%		468,137		23.6	%		419,989		23.3	%		23.5	%		37.6	%
Subordinated debt, net (3)		72,138		3.6	%		73,039		3.7	%		72,741		4.0	%		-1.2	%		-0.8	%
Total Funding Sources	$	1,980,463		100.0	%	$	1,980,833		100.0	%	$	1,805,476		100.0	%		0.0	%		9.7	%


(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.
	Excludes $87.8 million in core deposits placed in reciprocal networks for FDIC insurance coverage that will be classified as brokered deposits on the call report in pursuant to rule 12 CFR 337.6(e) as of March 31, 2025.
(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 March 31, 2025							For the three months ended March 31, 2024
	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⁾	$	1,838,358	$	31,111		6.86	%	$	1,728,761	$	30,582		7.10	%
Securities:
Taxable		53,143		420		3.21	%		56,001		435		3.12	%
Tax-exempt		35,200		333		3.84	%		37,420		342		3.66	%
Interest-bearing deposits at other financial institutions		86,715		946		4.42	%		66,253		889		5.38	%
Federal funds sold		24,975		223		3.62	%		25,740		293		4.57	%
Total interest-earning assets	$	2,038,391	$	33,033		6.57	%	$	1,914,175	$	32,541		6.82	%
Other assets		117,070							123,294
Total assets	$	2,155,461						$	2,037,469
Liabilities and Stockholders' Equity:
Interest-bearing liabilities:
Interest-bearing demand deposits	$	111,413	$	1,048		3.81	%	$	146,248	$	1,814		4.98	%
Savings and NOW deposits		67,851		221		1.32	%		44,219		157		1.42	%
Money market deposits		537,733		5,276		3.98	%		433,654		5,092		4.71	%
Time deposits		798,007		9,031		4.59	%		710,019		8,808		4.98	%
Total interest-bearing deposits	$	1,515,004	$	15,576		4.17	%	$	1,334,140	$	15,871		4.77	%
Federal funds purchased		5,610		65		4.70	%		7,476		107		5.74	%
FHLB advances		—		—		—			3,297		46		5.60	%
Subordinated debt, net		73,043		812		4.51	%		72,703		820		4.52	%
Total interest-bearing liabilities	$	1,593,657	$	16,453		4.19	%	$	1,417,616	$	16,844		4.77	%
Demand deposits and other liabilities		353,711							397,753
Total liabilities	$	1,947,368						$	1,815,369
Stockholders' Equity		208,093							222,100
Total Liabilities and Stockholders' Equity	$	2,155,461						$	2,037,469
Interest Rate Spread						2.38	%						2.05	%
Net Interest Income			$	16,580						$	15,697
Net Interest Margin						3.30	%						3.29	%


(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 "Unaudited Reconciliation of Certain Non-GAAP Financial Measures" for reconciliation of non-GAAP measures

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

	At or For the Three Months Ended
	March 31,
	2025			2024
*Per share Data and Shares Outstanding*
Earnings per common share (basic and diluted)	$	0.25		$	0.36
Book value per common share	$	23.67		$	25.72
Tangible book value per common share⁽²⁾	$	23.67		$	23.66
Weighted average common shares (basic and diluted)		7,636,191			7,611,990
Common shares outstanding at end of period		7,703,197			7,614,090
*Performance Ratios*
Return on average assets (annualized)		0.46	%		0.65	%
Return on average equity (annualized)		4.78	%		5.97	%
Return on average common equity (annualized)		5.50	%		6.80	%
Yield on earning assets (FTE) ⁽²⁾ (annualized)		6.57	%		6.82	%
Cost of interest bearing liabilities (annualized)		4.19	%		4.77	%
Net interest spread (FTE)⁽²⁾ (annualized)		2.38	%		2.05	%
Net interest margin (FTE)⁽²⁾ (annualized)		3.30	%		3.29	%
Non-interest income as a percentage of average assets (annualized)		0.18	%		0.16	%
Non-interest expense to average assets (annualized)		2.69	%		2.46	%
Efficiency ratio⁽³⁾		82.03	%		76.01	%
*Asset Quality*
Allowance for credit losses (ACL)
Beginning balance, ACL - loans	$	19,450		$	16,506
Add: recoveries		10			2
Less: charge-offs		—			(141)
Add: provision for credit losses - loans		—			164
Ending balance, ACL - loans	$	19,460		$	16,531

Beginning balance, reserve for unfunded commitment (RUC)	$	287		$	1,009
Add: recovery of unfunded commitments, net		—			(359)
Ending balance, RUC	$	287		$	650
Total allowance for credit losses	$	19,747		$	17,181

Allowance for credit losses on loans to total gross loans		1.06	%		0.95	%
Allowance for credit losses on loans to non-performing loans		89.82	%	1.78X
Net charge-offs to average gross loans (annualized)		0.00	%		0.03	%
*Concentration Ratios*
Commercial real estate loans to total capital ⁽⁴⁾		388.24	%		364.65	%
Construction loans to total capital ⁽⁵⁾		115.56	%		130.06	%
*Past due and Non-performing Assets*
Loans 30-89 days past due and accruing to total gross loans		2.19	%		0.22	%
Loans 90 days past due and accruing to total gross loans		0.00	%		0.51	%
Non-accrual loans to total gross loans		1.18	%		0.53	%
Other real estate owned	$	—		$	—
Non-performing loans	$	21,665		$	9,263
Non-performing assets to total assets		0.97	%		0.45	%
*Regulatory Capital Ratios (Bank only)* *⁽¹⁾*
Total risk-based capital ratio		15.83	%		17.05	%
Tier 1 risk-based capital ratio		14.78	%		16.12	%
Leverage ratio		12.90	%		14.54	%
Common equity tier 1 ratio		14.78	%		16.12	%
*Other information*
Common shares closing stock price	$	16.72		$	18.16
Tangible equity / tangible assets ⁽²⁾		9.43	%		10.10	%
Average tangible equity / average tangible assets ⁽²⁾		9.65	%		10.24	%
Number of full time equivalent employees		182			191
Number of full service branch offices		6			6


(1)	Regulatory capital ratios as of March 31, 2025 are preliminary
(2)	Refer to "Unaudited Reconciliation of Certain Non-GAAP Financial Measures" 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, multifamily, 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 March 31,
	2025			2024
Net interest margin (FTE)
Net interest income (GAAP)	$	16,510		$	15,625
FTE adjustment on tax-exempt securities		70			72
Net interest income (FTE) (non-GAAP)		16,580			15,697

Average interest earning assets		2,038,391			1,914,175
Net interest margin (GAAP)		3.28	%		3.27	%
Net interest margin (FTE) (non-GAAP)		3.30	%		3.29	%

	For the three months ended March 31,
	2025			2024
Yield on earning assets (FTE)
Total interest income (GAAP)	$	32,963		$	32,469
FTE adjustment on tax-exempt securities		70			72
Total interest income (FTE) (non-GAAP)		33,033			32,541

Average interest earning assets		2,038,391			1,914,175
Yield on earning assets (GAAP)		6.56	%		6.80	%
Yield on earning assets (FTE) (non-GAAP)		6.57	%		6.82	%

	For the three months ended March 31,
	2025			2024
Net interest spread (FTE)
Yield on earning assets (GAAP)		6.56	%		6.80	%
Yield on earning assets (FTE) (non-GAAP)		6.57	%		6.82	%

Yield on interest-bearing liabilities (GAAP)		4.19	%		4.77	%
Net interest spread (GAAP)		2.37	%		2.03	%
Net interest spread (FTE) (non-GAAP)		2.38	%		2.05	%

	As of March 31,
	2025			2024
Tangible common stockholders' equity
Total stockholders equity (GAAP)	$	209,618		$	223,121
Less: intangible assets		—			(15,691)
Tangible stockholders' equity (non-GAAP)		209,618			207,430
Less: preferred stock		(27,263)			(27,263)
Tangible common stockholders' equity (non-GAAP)		182,355			180,167

Common shares outstanding		7,703,197			7,614,090
Tangible book value per common share (non-GAAP)	$	23.67		$	23.66

	As of March 31,
	2025			2024
Stockholders equity, adjusted
Total stockholders equity (GAAP)	$	209,618		$	223,121
Less: intangible assets		—			(15,691)
Total tangible stockholders equity (non-GAAP)		209,618			207,430

	As of March 31,
	2025			2024
Total tangible assets
Total assets (GAAP)	$	2,222,845		$	2,070,015
Less: intangible assets		—			(15,691)
Total tangible assets (non-GAAP)		2,222,845			2,054,324

	For the three months ended March 31,
	2025			2024
Average tangible stockholders' equity
Total average stockholders' equity (GAAP)	$	208,093		$	222,100
Less: average intangible assets		—			(15,078)
Total average tangible stockholders' equity (non-GAAP)		208,093			207,022

	For the three months ended March 31,
	2025			2024
Average tangible assets
Total average assets (GAAP)	$	2,155,461		$	2,037,469
Less: average intangible assets		—			(15,078)
Total average tangible assets (non-GAAP)		2,155,461			2,022,391