MainStreet Bancshares, Inc. : Reports Good Earnings Trend

FAIRFAX, Va., Jan. 23, 2019 /PRNewswire/ -- MainStreet Bancshares, Inc. (OTCQX: MNSB) (the "Company") reported a strong quarter-on-quarter earnings trend.  Fully adjusted earnings per share for both common and diluted shares was $0.45 for the fourth quarter of 2018, compared to $0.14 for both common and diluted shares for the same period in 2017.  For the three months ended December 31, 2018 the Company produced a 1.36% return on average assets and 12.15% on average equity, compared to 0.41% and 4.76% consecutively for the fourth quarter of 2017.

The Company reported net income of $9.2 million for year-end December 31, 2018, an increase of 137.2%, as compared to net income of $3.9 million for year-end December 31, 2017. Fully adjusted earnings per share for both common and diluted shares was $1.38 during the twelve months of 2018, compared to $0.81 for fully adjusted common and diluted shares for the same period in 2017. For year-end December 31, 2018 the Company produced a 0.97% return on average assets and 10.38% on average equity, compared to 0.60% and 7.45% consecutively for year-end 2017.

Net interest income, the Company's primary source of revenue, was $8.9 million for the fourth quarter of 2018, up 45.1% from $6.2 million for the same period in 2017. The net interest margin was 3.41% for year-end December 31, 2018 as compared to the 3.48% for year-end December 31, 2017. 

Loan loss provisions of $3.1 million were necessary to balance the strong net loan growth for 2018.  Asset quality remains solid with non-performing assets to total assets at 0.18% as of December 31, 2018, down from 0.25% as of December 31, 2017. Net charge-offs decreased $159,000 from December 31, 2017 to $1,000 for year-end December 31, 2018.

Fee income of $3.2 million was up 42% from December 31, 2017, due primarily to an increase in deposit account and third party payment service fees, and interest rate swap fees related to loan transactions.  Both sources are expected to continue in a directionally consistent manner going forward.

Total assets were $1.1 billion at December 31, 2018, as compared to $808.0 million at December 31, 2017, an increase of 36.2%. Capital levels for the Company remain strong. 

As of December 31, 2018, the Company's fully adjusted tangible book value per share was $14.83, up 18.0% from $12.57 as of December 31, 2017.  According to OTCQX, there were 384 trades during the quarter for a total of 181,807 shares traded or $3,464,197.  The closing share price was $17.06, for a market cap of $139.5 million.

QUOTES: "We were very excited to achieve a 1.05% Return on Average Assets at the Bank level for 2018 and 0.97% at the Company level," says Chris Brockett, President of MainStreet Bancshares, Inc. and MainStreet Bank. "The Leesburg branch had a great first year of deposit growth.  Loan opportunities remain strong and we continue to expand the Business Banking Team in our efforts to grow relationships and core deposits."

"We focused on improving fee income in order to close the gap on earnings," says Jeff W. Dick, Chairman and CEO of MainStreet Bancshares, Inc. and MainStreet Bank.  "In addition, our earning assets are responding well to the increasing interest rate environment.  A key focus going forward is to replace marginal cost wholesale deposits with core deposits in order to improve the net interest margin."

ABOUT MAINSTREET BANK:  MainStreet operates six branches in Herndon, Fairfax, Fairfax City, McLean, Leesburg 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 "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, 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. 

Contact:  
Jeff W. Dick
[phone]

 

UNAUDITED CONSOLIDATED BALANCE SHEET INFORMATION
(Unaudited)
(In thousands, except share data)
	12/31/18	9/30/18	6/30/18	3/31/18	12/31/17
ASSETS
Cash and cash equivalents
Cash and due from banks	$    27,886	$    38,634	$    27,163	$    21,597	$    37,493
Federal funds sold	30,190	21,739	4,104	5,316	―
Total cash and cash equivalents	58,076	60,373	31,267	26,913	37,493
Investment securities available for sale, at fair value	55,979	79,489	20,806	47,009	51,314
Investment securities held to maturity, at carrying value	26,178	26,221	27,422	27,469	27,517
Restricted equity securities, at cost	5,894	4,209	4,737	5,545	4,241
Loans, net of allowance for loan losses of $8,831, $8,327
$7,731, $6,334, and $5,705, consecutively	917,125	850,822	815,875	702,700	654,339
Premises and equipment, net	14,222	14,414	14,660	14,568	13,965
Accrued interest and other receivables	5,148	4,919	4,695	3,938	3,849
Bank owned life insurance	14,064	13,957	13,851	13,743	13,637
Other assets	3,927	2,577	2,842	1,794	1,596
Total Assets	$ 1,100,613	$ 1,056,981	$  936,155	$  843,679	$  807,951
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Non-interest bearing deposits	$    211,749	$    191,986	$  179,827	$  164,795	$  171,572
Interest-bearing DDA deposits	60,588	59,295	60,389	54,097	48,432
Savings and NOW deposits	51,371	52,602	48,659	49,935	47,855
Money market deposits	138,153	109,498	118,194	118,532	82,828
Other time deposits	458,276	476,511	394,433	303,575	316,968
Total deposits	920,137	889,892	801,502	690,934	667,655
Federal Home Loan Bank advances and other borrowings	40,000	30,000	45,117	64,129	53,780
Subordinated debt	14,776	14,769	14,762	14,755	14,747
Other liabilities	4,449	2,785	2,617	3,298	2,968
Total Liabilities	979,362	937,446	863,998	773,116	739,150
Stockholders' Equity:
Common stock, par value $4 per share, authorized 10,000,000         shares; issued and outstanding, 8,177,978 at 12/31/2018 including 133,869 unvested shares, 8,179,871 at 9/30/2018 including 142,457 unvested shares, 5,810,498 shares at 6/30/2018 including 144,626 unvested shares, 5,533,605 shares at 3/31/2018 including 138,853 unvested shares, 5,471,892 at 12/31/2017 including 111,358 unvested shares.	32,177	32,177	22,691	21,579	21,442
Capital surplus	74,256	76,427	40,731	35,769	35,693
Retained earnings	15,185	11,371	9,020	13,368	11,682
Accumulated other comprehensive loss	(367)	(440)	(285)	(153)	(16)
Total Stockholders' Equity	121,251	119,535	72,157	70,563	68,801
Total Liabilities and Stockholders' Equity	$ 1,100,613	$ 1,056,981	$  936,155	$  843,679	$  807,951

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME INFORMATION
(Unaudited)
(In thousands, except share and per share data)
	Year-to-Date		Three Months Ended
	12/31/18	12/31/17	12/31/18	9/30/18	6/30/18			3/31/18		12/31/17
INTEREST INCOME:
Interest and fees on loans	$  41,270	$  25,081	$  12,244	$  11,061	$    9,649			$    8,316		$    7,437
Interest on investment securities	1,470	1,576	381	341	407			341		343
Interest on federal funds sold	1,095	297	457	423	115			100		122
Total interest income	43,835	26,954	13,082	11,825	10,171			8,757		7,902
INTEREST EXPENSE:
Interest on interest bearing DDA deposits	900	194	269	245	222			164		70
Interest on savings and NOW deposits	251	182	77	65	63			46		42
Interest on money market deposits	1,708	565	598	432	414			264		151
Interest on other time deposits	8,065	3,114	2,784	2,677	1,513			1,091		1,109
Interest on Federal Home Loan Bank        advances and other borrowings	776	452	188	199	210			179		141
Interest on subordinated debt	966	964	244	243	241			238		239
Total interest expense	12,666	5,471	4,160	3,861	2,663			1,982		1,752
Net interest income	31,169	21,483	8,922	7,964	7,508			6,775		6,150
Provision for loan losses	3,126	1,885	496	600	1,395			635		715
Net interest income after provision         for loan losses	28,043	19,598	8,426	7,364	6,113			6,140		5,435
OTHER INCOME:
Deposit account service charges	1,103	836	311	320	259			213		221
Bank owned life insurance income	427	435	107	105	109			106		111
Other fee income	1,708	1,006	1,044	261	215			189		174
Total other income	3,238	2,277	1,462	686	583			508		506
OTHER EXPENSES:
Salaries and employee benefits	11,845	9,652	3,267	3,018	2,811			2,749		2,400
Furniture and equipment expenses	1,859	1,272	534	493	451			381		347
Advertising and marketing	614	264	146	171	141			156		127
Occupancy expenses	736	605	220	206	159			151		143
Outside services	839	663	164	239	240			196		209
Administrative expenses	575	448	142	161	155			118		145
Other operating expenses	3,510	2,754	900	872	912			826		838
Total other expenses	19,978	15,658	5,373	5,160	4,869			4,577		4,209
INCOME BEFORE INCOME TAXES	11,303	6,217	4,515	2,890	1,827			2,071		1,732
Income tax expense	2,094	2,335	846	539	324			385		971
NET INCOME	$  9,209	$  3,882	$   3,669	$   2,351	$   1,503			$   1,686		$      761
Net income per common share,    basic and diluted (1)	$    1.38	$    0.81	$     0.45	$     0.35	$     0.26			$     0.29		$     0.14
Weighted average number of shares,    basic and diluted (1)	6,652,979	4,778,748	8,178,888	6,788,868	5,810,383			5,806,246		5,496,112
(1)  All share and per share amounts for 2018 and 2017 reflect the effect of the 5% stock dividend on April 30, 2018.

 

 

UNAUDITED LOAN, DEPOSIT AND BORROWING DETAIL
(Unaudited)
(In thousands)
	December 31, 2018		September 30, 2018		December 31, 2017		Percentage Change
	$ Amount	% of Total	$ Amount	% of Total	$ Amount	% of Total	Last 3 Mos	Last 12 Mos
LOANS:
Construction and land development loans	$ 183,551	19.8%	$ 162,233	18.9%	$ 103,592	15.7%	13.1%	77.2%
Residential real estate loans	149,628	16.2%	124,906	14.5%	125,795	19.1%	19.8%	18.9%
Commercial real estate loans	377,760	40.7%	343,923	40.0%	250,335	37.9%	9.8%	50.9%
Commercial industrial loans	114,221	12.3%	125,011	14.5%	90,152	13.6%	-8.6%	26.7%
Consumer loans	102,277	11.0%	104,067	12.1%	90,759	13.7%	-1.7%	12.7%
Total Gross Loans	$ 927,437	100.0%	$ 860,140	100.0%	$ 660,633	100.0%	7.8%	40.4%
Less: Allowance for loan losses	(8,831)		(8,327)		(5,705)
Net deferred loan fees	(1,481)		(991)		(589)
Net Loans	$ 917,125		$ 850,822		$ 654,339
DEPOSITS:
Non-interest bearing demand deposits	$ 211,749	23.0%	$ 191,986	21.6%	$ 171,572	25.7%	10.3%	23.4%
Interest-bearing demand deposits:
Demand deposits	60,588	6.6%	59,295	6.7%	48,432	7.3%	2.2%	25.1%
Savings and NOW deposits	51,371	5.6%	52,602	5.9%	47,855	7.2%	-2.3%	7.3%
Money market accounts	138,152	15.0%	109,498	12.3%	82,828	12.4%	26.2%	66.8%
Certificates of deposit
$100,000 or more	348,225	37.8%	379,355	42.6%	243,322	36.4%	-8.2%	43.1%
Less than $100,000	110,052	12.0%	97,156	10.9%	73,646	11.0%	13.3%	49.4%
Total Deposits	$ 920,137	100.0%	$ 889,892	100.0%	$ 667,655	100.0%	3.4%	37.8%
BORROWINGS:
Federal funds purchased	$         ―	0.0%	$         ―	0.0%	$     5,638	8.2%	0.0%	-100.0%
Federal Home Loan Bank advances	40,000	73.0%	30,000	67.0%	48,142	70.3%	33.3%	-16.9%
Subordinated debt	14,776	27.0%	14,769	33.0%	14,748	21.5%	0.0%	0.2%
Total Borrowings	$  54,776	100.0%	$  44,769	100.0%	$   68,528	100.0%	22.4%	-20.1%
Total Deposits and Borrowings	$ 974,913		$ 934,661		$ 736,183		4.3%	32.4%
Core customer funding sources (1)	$ 586,001	60.1%	$ 569,842	61.0%	$ 430,485	58.9%	2.8%	36.1%
Brokered and listing service sources (2)	334,136	34.3%	320,050	34.2%	237,170	32.5%	4.4%	40.9%
Federal Home Loan Bank Advances	40,000	4.1%	30,000	3.2%	48,142	6.6%	33.3%	-16.9%
Subordinated debt (3)	14,776	1.5%	14,769	1.6%	14,748	2.0%	0.0%	0.2%
Total Funding Sources	$ 974,913	100.0%	$ 934,661	100.0%	$ 730,545	100.0%	4.3%	33.5%
(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)
(000's except percentages)
	Twelve Months Ended December 31, 2018				Twelve Months Ended December 31, 2017
	Average Balance	Interest Income/ Expense	Average Yields/ Rate (annualized)		Average Balance	Interest Income/ Expense	Average Yields/ Rate (annualized)
ASSETS:
Interest earning assets:
Loans (1)	$      795,130	$  41,270	5.19%		$   531,271	$  25,081	4.72%
Investment securities	55,219	1,471	2.66%		54,564	1,576	2.89%
Federal funds and interest -
bearing deposits	63,536	1,095	1.72%		31,535	297	0.94%
Total interest earning assets	$      913,885	$  43,836	4.80%		$   617,370	$  26,954	4.37%
Other assets	35,159				27,292
Total assets	$   949,044				$   644,662
Liabilities and Stockholders' Equity:
Interest-bearing liabilities:
Interest-bearing demand deposits	$     57,357	$    900	1.57%		$    28,484	$      194	0.68%
Money market deposit accounts	115,846	1,708	1.47%		76,732	565	0.74%
Savings and NOW deposits	50,509	251	0.50%		45,777	182	0.40%
Time deposits	401,259	8,065	2.01%		249,715	3,114	1.25%
Total interest-bearing deposits	624,971	10,924	1.75%		$  400,708	$   4,055	1.01%
Federal funds and repos purchased	463	12	2.59%		185	3	1.62%
Subordinated debt	14,762	966	6.54%		14,691	964	6.56%
FHLB borrowings	39,042	764	1.96%		42,371	449	1.06%
Total interest-bearing liabilities	$   679,238	$  12,666	1.86%		$  457,955	$    5,471	1.19%
Demand deposits and other liabilities	181,098				134,603
Total liabilities	$  860,336				592,558
Stockholders' Equity	88,708				52,104
Total Liabilities and Stockholders' Equity	$  949,044				$  644,662
Interest Rate Spread			2.94%				3.18%
Net Interest Income and Margin		$  31,170	3.41%			$  21,483	3.48%
(1) Includes loans classified as non-accrual.

 

                                                            

UNAUDITED AVERAGE BALANCE SHEETS, INTEREST AND RATES (Unaudited) (000's except percentages)
	At or For Three Months Ended			At or For Twelve Months Ended
	December 31,			December 31,
	2018	2017		2018	2017
Per share Data and Shares Outstanding (1)
Earnings per share – (basic and diluted)	$                       0.45	$                       0.14		$                       1.38	$                       0.81
Tangible book value per share	$                     14.83	$                     12.57		$                     14.83	$                     12.57
Weighted average common shares (basic and diluted)	8,178,888	5,496,112		6,652,979	4,778,748
Common shares outstanding at end of period	8,177,978	5,471,892		8,177,978	5,471,892
Performance Ratios
Return on average assets (annualized)	1.36%	0.41%		0.97%	0.60%
Return on average equity (annualized)	12.15%	4.76%		10.38%	7.45%
Yield on earning assets (annualized)	5.03%	4.42%		4.80%	4.37%
Cost of interest bearing liabilities (annualized)	2.19%	1.35%		1.86%	1.19%
Net interest spread	2.83%	3.06%		2.94%	3.18%
Net interest margin (annualized)	3.43%	3.44%		3.41%	3.48%
Noninterest income as a percentage of average assets (annualized)	0.54%	0.27%		0.34%	0.35%
Noninterest expense to average assets (annualized)	2.00%	2.26%		2.11%	2.43%
Efficiency ratio	51.75%	63.28%		58.07%	65.90%
Asset Quality
Loans 30-89 days past due to total gross loans	0.01%	0.03%		0.01%	0.03%
Loans 90 days past due to total gross loans	0.00%	0.00%		0.00%	0.00%
Non-accrual loans to total gross loans	0.21%	0.31%		0.21%	0.31%
Other real estate owned	-	-		-	-
Non-performing assets	$                     1,939	$                     2,030		$                     1,939	$                      2,030
Non-performing assets to total assets	0.18%	0.25%		0.18%	0.25%
Allowance for loan losses to total gross loans	0.95%	0.86%		0.95%	0.86%
Allowance for loan losses to non-performing loans	4.53	2.79		4.53	2.79
Net loan charge-offs	$                            1	$                        160		$                            1	$                         160
Net charge-offs to average loans (annualized)	0.00%	0.03%		0.00%	0.03%
Troubled debt restructurings (total)
Performing in accordance with modified terms	$                     1,510	$                     1,542		$                     1,510	$                     1,542
Not performing in accordance with modified terms	$                     1,939	$                     1,939		$                     1,939	$                     1,939
Regulatory Capital Ratios (Bank only)
Total risk-based capital ratio	13.75%	11.43%		13.75%	11.43%
Tier 1 risk-based capital ratio	12.90%	10.65%		12.90%	10.65%
Leverage ratio	12.41%	10.42%		12.41%	10.42%
Common equity tier 1 ratio	12.90%	10.65%		12.90%	10.65%
Other information
Closing stock price	$                     17.06	$                     16.69		$                     17.06	$                     16.69
Tangible equity / tangible assets	11.02%	8.52%		11.02%	8.52%
Average tangible equity / average tangible assets	11.22%	8.45%		9.35%	8.08%
Number of full time equivalent employees	110	96		110	96
# Full service branch offices	6	5		6	5
(1)  Amounts for all periods presented are adjusted to reflect a 5% stock dividend effective April 9, 2018

 

 

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SOURCE MainStreet Bancshares, Inc.