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Steady Loan and Deposit Growth Fuel 8% Rise in Quarter-to-Quarter Net Income
FAIRFAX, Va., April 17, 2023 /PRNewswire/ -- MainStreet Bancshares, Inc. (Nasdaq: MNSB & MNSBP), the holding company for MainStreet Bank, reported record net income of $8.2 million for the quarter-ended March 31, 2023. This represents a 50% increase from the net income reported in the 1st quarter of 2022. First-quarter results represent:
(ROAA – Return on Average Assets; NIM – Net Interest Margin; EPS – Earnings Per Share common basic and diluted; TBV – Tangible Book Value per common share; ROAE – Return on Average Total Equity.)
The Company has a solid risk management foundation and once again reports record earnings for the first quarter of 2023"In light of the recent banking tensions, we'd be remiss if we didn't address the important issues on the table," said Jeff W. Dick, Chairman and CEO of MainStreet Bancshares, Inc. and MainStreet Bank. "We've taken the opportunity to re-evaluate our risk management processes along with our current balance sheet strategy. The result of that review is that we remain comfortable and confident with our risk profile - given the current and anticipated economic environment. Our deposit base is stable and growing. Currently nearly 70% of our outstanding deposits are insured by the FDIC and we offer all depositors access to additional FDIC insurance coverage through IntraFi. Our systems for managing liquidity risk, interest rate risk, and credit risk, along with all the other risks we manage daily, continue to give us an accurate assessment of the Bank and allow us to manage to our approved risk tolerance. Our primary objective is to ensure the ongoing safety and soundness of the Bank and the protection of depositor's money. We have demonstrated the ability to do just that while pursuing good opportunities and rewarding investors with high quality performance."
The Company has a solid risk management foundation. The leadership team built the Bank with good risk management systems and procedures in place from the start. Mr. Dick's strong background in risk management started with his first career as a prudential banking supervisor in the U.S. and then in the U.K. While in the U.K., Mr. Dick was an adviser to the Bank of England on modernizing their approach to risk-based banking supervision.
Net interest income reached $21.1 million in the quarter ended March 31, 2023, up 38.8% from the year-earlier first quarter's $15.2 million. MainStreet Bank benefited from having an asset-sensitive balance sheet during a 12-month period in which the Federal Reserve undertook nine interest rate increases, beginning in March 2022. This propelled the average net interest margin (NIM) higher by 76 basis points to 4.69% for the quarter ended March 31, 2023, versus 3.93% a year earlier.
"Implementing the Current Expected Credit Losses (CECL) accounting standard in the first quarter of 2023 resulted in a 15.6% increase in credit reserves. In all, we increased our credit reserves to $16.6 million, a 17.6% increase that also reflects loan growth," said Thomas J. Chmelik, Chief Financial Officer of MainStreet Bancshares Inc. and MainStreet Bank. He noted that the level of Accumulated Other Comprehensive Income (AOCI) for the Company remains low, at -3.7% of total capital.
The loan portfolio grew 14.4% to $1.62 billion as of March 31, 2023, up from $1.41 billion in the year-earlier first quarter. Loan quality remained pristine, with zero nonperforming assets. Total deposits climbed 13.8% to $1.63 billion, up from $1.43 billion a year earlier. Non-interest-bearing deposits represent 29.9% of the total, and 63.9% of total deposits are core deposits. There was significant growth in time deposits, which rose to $730.1 million, up 58.4% from a year earlier. The bank's total assets grew 16.6% to reach $2.06 billion as of March 31, 2023, versus $1.76 billion a year earlier.
"While all banks are experiencing some runoff in non-interest-bearing deposits, we were able to attract approximately $30 million in fresh deposits during a period of market upheaval in March, and loan demand and core deposit growth continue to be solid in our DC Metro market," said Abdul Hersiburane, President of MainStreet Bank. "Pressure on deposit pricing is to be expected in a rising-rate environment, and we are responding with products that carry yields and terms calibrated to our assessment of the interest rate outlook, such as a 15-month CD."
The Company's efficiency ratio stood at 53% for the quarter ended March 31, 2023, from 55% a year earlier. This improvement occurred even as the Company was making significant investments in Avenu™, with the hiring process accelerating as the division moves toward being fully operational in 2023.
Avenu™ Makes Major Strides, Onboards First ClientAvenu™ is tracking to an April 30 launch as our designers and engineers complete final sprints to harden our multitenancy and cyber architecture and to accelerate implementation of a debit card for funding. Avenu™ connects our fintech partners and their apps directly and seamlessly to MainStreet Bank's banking core. Avenu™ is expected to accelerate MainStreet Bank's deposit growth to support expanded lending.
"With three companies now signed up to proceed, we are inches away from going live with Avenu™, which will be a gateway to fast, simple secure payments for our end-users," said Todd Youngren, president of Avenu™. "When you are developing a platform from the ground up, you have to address challenges as they arise, and that's exactly what we've been doing as our team works full tilt toward our launch."
Chairman and CEO Jeff W. Dick elaborated: "We are committed to a seamless launch for Avenu™, and in the current environment we feel strongly that time is on our side. We are unwilling to cut corners because reliability and compliance are critical features of Avenu™. We are very proud of creating an innovative system that allows partners to connect to the core system of a reliable bank with sharp instincts about risks and compliance."
ABOUT AVENU™ Avenu™ — Banking DeliveredAvenu™ is the only embedded banking solution that connects our partners and their apps directly and seamlessly to a banking core — MainStreet Bank's banking core. We are not a sponsor bank without our own technology, and we are not a middleware software company (aggregator) without our own bank. We are Avenu™, a leading financial technology company backed by an established community business bank in the heart of Washington, D.C.
Avenu™ — Serving a Community of InnovationOur clients are fintechs, application developers, money movers, and entrepreneurs. They all have one thing in common: They are innovating how money moves to solve real-world issues and help communities thrive. We are focused on servicing our community and long-term business relationships.
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 excess FDIC insurance through IntraFi. 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 the novel coronavirus (COVID-19) outbreak, 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.
Contact: Debra CopeDirector of Corporate Communications(703) 481-4599
UNAUDITED CONSOLIDATED BALANCE SHEET INFORMATION | ||||||||||||||||||||
(In thousands) | ||||||||||||||||||||
March 31,2023 | December 31,2022 | September 30,2022 | June 30,2022 | March 31,2022 | ||||||||||||||||
ASSETS | ||||||||||||||||||||
Cash and cash equivalents | ||||||||||||||||||||
Cash and due from banks | $ | 225,334 | $ | 48,931 | $ | 50,636 | $ | 55,636 | $ | 63,986 | ||||||||||
Federal funds sold | — | 81,669 | 54,098 | 47,013 | 37,756 | |||||||||||||||
Total cash and cash equivalents | 225,334 | 130,600 | 104,734 | 102,649 | 101,742 | |||||||||||||||
Investment securities available for sale, at fair value | 63,209 | 62,631 | 162,319 | 143,240 | 123,802 | |||||||||||||||
Investment securities held to maturity, at amortizedcost | 17,616 | 17,642 | 17,670 | 17,698 | 18,769 | |||||||||||||||
Restricted equity securities, at amortized cost | 22,436 | 24,325 | 16,436 | 16,485 | 17,209 | |||||||||||||||
Loans, net of allowance for loan losses of $15,435,$14,114, $12,994,$12,982, and $12,500,respectively | 1,617,275 | 1,579,950 | 1,448,071 | 1,416,875 | 1,413,238 | |||||||||||||||
Premises and equipment, net | 14,521 | 14,709 | 14,523 | 14,756 | 14,833 | |||||||||||||||
Accrued interest and other receivables | 9,744 | 9,581 | 8,273 | 7,313 | 6,980 | |||||||||||||||
Computer software, net of amortization | 10,559 | 9,149 | 7,258 | 4,956 | 3,906 | |||||||||||||||
Bank owned life insurance | 37,503 | 37,249 | 36,996 | 36,742 | 36,492 | |||||||||||||||
Other assets | 36,811 | 39,915 | 43,835 | 32,665 | 24,777 | |||||||||||||||
Total Assets | $ | 2,055,008 | $ | 1,925,751 | $ | 1,860,115 | $ | 1,793,379 | $ | 1,761,748 | ||||||||||
LIABILITIES AND STOCKHOLDERS'EQUITY | ||||||||||||||||||||
Liabilities: | ||||||||||||||||||||
Non-interest bearing deposits | $ | 487,875 | $ | 550,690 | $ | 566,016 | $ | 535,591 | $ | 514,160 | ||||||||||
Interest bearing DDA deposits | 100,522 | 80,099 | 93,695 | 99,223 | 76,286 | |||||||||||||||
Savings and NOW deposits | 53,499 | 51,419 | 54,240 | 58,156 | 81,817 | |||||||||||||||
Money market deposits | 260,316 | 222,540 | 254,190 | 231,207 | 301,842 | |||||||||||||||
Time deposits | 730,076 | 608,141 | 585,783 | 575,950 | 460,839 | |||||||||||||||
Total deposits | 1,632,288 | 1,512,889 | 1,553,924 | 1,500,127 | 1,434,944 | |||||||||||||||
Federal funds borrowed | 60,696 | — | — | — | — | |||||||||||||||
Federal Home Loan Bank advances | 45,000 | 100,000 | — | — | 40,000 | |||||||||||||||
Subordinated debt | 72,344 | 72,245 | 72,146 | 72,047 | 71,955 | |||||||||||||||
Other liabilities | 39,692 | 42,335 | 44,045 | 32,801 | 26,053 | |||||||||||||||
Total Liabilities | 1,850,020 | 1,727,469 | 1,670,115 | 1,604,975 | 1,572,952 | |||||||||||||||
Stockholders' Equity: | ||||||||||||||||||||
Preferred stock | 27,263 | 27,263 | 27,263 | 27,263 | 27,263 | |||||||||||||||
Common stock | 29,185 | 28,736 | 28,728 | 29,178 | 29,642 | |||||||||||||||
Capital surplus | 64,213 | 63,999 | 63,231 | 64,822 | 66,798 | |||||||||||||||
Retained earnings | 91,991 | 86,830 | 80,534 | 73,702 | 68,691 | |||||||||||||||
Accumulated other comprehensive loss | (7,664) | (8,546) | (9,756) | (6,561) | (3,598) | |||||||||||||||
Total Stockholders' Equity | 204,988 | 198,282 | 190,000 | 188,404 | 188,796 | |||||||||||||||
Total Liabilities and Stockholders' Equity | $ | 2,055,008 | $ | 1,925,751 | $ | 1,860,115 | $ | 1,793,379 | $ | 1,761,748 | ||||||||||
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME INFORMATION | ||||||||||||||||||||||||||||
(In thousands, except share and per share data) | ||||||||||||||||||||||||||||
Year-to-Date | Three Months Ended | |||||||||||||||||||||||||||
March 31, 2023 | March 31, 2022 | March 31, 2023 | December 31, 2022 | September 30, 2022 | June 30,2022 | March 31, 2022 | ||||||||||||||||||||||
INTEREST INCOME: | ||||||||||||||||||||||||||||
Interest and fees on loans | $ | 26,731 | $ | 16,685 | $ | 26,731 | $ | 23,972 | $ | 20,261 | $ | 17,954 | $ | 16,685 | ||||||||||||||
Interest on investment securities | ||||||||||||||||||||||||||||
Taxable securities | 518 | 357 | 518 | 467 | 378 | 401 | 357 | |||||||||||||||||||||
Tax-exempt securities | 264 | 272 | 264 | 262 | 261 | 263 | 272 | |||||||||||||||||||||
Interest on federal funds sold | 1,132 | 34 | 1,132 | 1,071 | 1,013 | 195 | 34 | |||||||||||||||||||||
Total interest income | 28,645 | 17,348 | 28,645 | 25,772 | 21,913 | 18,813 | 17,348 | |||||||||||||||||||||
INTEREST EXPENSE: | ||||||||||||||||||||||||||||
Interest on interest bearing DDA deposits | 343 | 65 | 343 | 256 | 175 | 105 | 65 | |||||||||||||||||||||
Interest on savings and NOW deposits | 108 | 37 | 108 | 81 | 43 | 42 | 37 | |||||||||||||||||||||
Interest on money market deposits | 1,203 | 119 | 1,203 | 781 | 496 | 151 | 119 | |||||||||||||||||||||
Interest on time deposits | 4,144 | 1,431 | 4,144 | 2,966 | 2,275 | 1,530 | 1,431 | |||||||||||||||||||||
Interest on federal funds borrowed | 38 | — | 38 | — | — | — | — | |||||||||||||||||||||
Interest on Federal Home Loan Bank advances | 906 | 31 | 906 | 264 | — | 52 | 31 | |||||||||||||||||||||
Interest on subordinated debt | 812 | 468 | 812 | 828 | 828 | 812 | 468 | |||||||||||||||||||||
Total interest expense | 7,554 | 2,151 | 7,554 | 5,176 | 3,817 | 2,692 | 2,151 | |||||||||||||||||||||
Net interest income | 21,091 | 15,197 | 21,091 | 20,596 | 18,096 | 16,121 | 15,197 | |||||||||||||||||||||
Provision for credit losses | 283 | 800 | 283 | 1,118 | — | 480 | 800 | |||||||||||||||||||||
Net interest income after provision forloan losses | 20,808 | 14,397 | 20,808 | 19,478 | 18,096 | 15,641 | 14,397 | |||||||||||||||||||||
NON-INTEREST INCOME: | ||||||||||||||||||||||||||||
Deposit account service charges | 590 | 611 | 590 | 610 | 601 | 597 | 611 | |||||||||||||||||||||
Bank owned life insurance income | 255 | 251 | 255 | 253 | 254 | 250 | 251 | |||||||||||||||||||||
Loan swap fee income | — | — | — | — | 518 | 101 | — | |||||||||||||||||||||
Net gain on held-to-maturity securities | — | — | — | — | — | 4 | — | |||||||||||||||||||||
Net gain (loss) on sale of loans | — | 43 | — | — | (211) | — | 43 | |||||||||||||||||||||
Other non-interest income | 158 | 257 | 158 | 196 | 186 | 312 | 257 | |||||||||||||||||||||
Total other income | 1,003 | 1,162 | 1,003 | 1,059 | 1,348 | 1,264 | 1,162 | |||||||||||||||||||||
NON-INTEREST EXPENSES: | ||||||||||||||||||||||||||||
Salaries and employee benefits | 7,621 | 5,548 | 7,621 | 6,775 | 5,874 | 5,604 | 5,548 | |||||||||||||||||||||
Furniture and equipment expenses | 498 | 657 | 498 | 710 | 760 | 659 | 657 | |||||||||||||||||||||
Advertising and marketing | 797 | 406 | 797 | 620 | 704 | 574 | 406 | |||||||||||||||||||||
Occupancy expenses | 486 | 341 | 486 | 378 | 400 | 352 | 341 | |||||||||||||||||||||
Outside services | 490 | 368 | 490 | 529 | 611 | 567 | 368 | |||||||||||||||||||||
Administrative expenses | 215 | 210 | 215 | 214 | 253 | 195 | 210 | |||||||||||||||||||||
Other operating expenses | 1,596 | 1,433 | 1,596 | 1,481 | 1,291 | 1,543 | 1,433 | |||||||||||||||||||||
Total non-interest expenses | 11,703 | 8,963 | 11,703 | 10,707 | 9,893 | 9,494 | 8,963 | |||||||||||||||||||||
Income before income tax expense | 10,108 | 6,596 | 10,108 | 9,830 | 9,551 | 7,411 | 6,596 | |||||||||||||||||||||
Income tax expense | 1,957 | 1,173 | 1,957 | 2,252 | 1,808 | 1,481 | 1,173 | |||||||||||||||||||||
Net income | 8,151 | 5,423 | 8,151 | 7,578 | 7,743 | 5,930 | 5,423 | |||||||||||||||||||||
Preferred stock dividends | 539 | 539 | 539 | 539 | 539 | 539 | 539 | |||||||||||||||||||||
Net income available to common shareholders | $ | 7,612 | $ | 4,884 | $ | 7,612 | $ | 7,039 | $ | 7,204 | $ | 5,391 | $ | 4,884 | ||||||||||||||
Net income per common share, basic and diluted | $ | 1.01 | $ | 0.64 | $ | 1.01 | $ | 0.95 | $ | 0.97 | $ | 0.71 | $ | 0.64 | ||||||||||||||
Weighted average number of common shares, basic and diluted | 7,517,213 | 7,647,519 | 7,517,213 | 7,433,607 | 7,463,719 | 7,575,484 | 7,647,519 | |||||||||||||||||||||
UNAUDITED LOAN, DEPOSIT AND BORROWING DETAIL | ||||||||||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||||||
March 31, 2023 | December 31, 2022 | March 31, 2022 | PercentageChange | |||||||||||||||||||||||||||||
$ Amount | % ofTotal | $ Amount | % ofTotal | $ Amount | % ofTotal | Last 3Mos | Last 12Mos | |||||||||||||||||||||||||
LOANS: | ||||||||||||||||||||||||||||||||
Construction and land developmentloans | $ | 415,078 | 25.3 | % | $ | 393,783 | 24.6 | % | $ | 344,605 | 24.0 | % | 5.4 | % | 20.5 | % | ||||||||||||||||
Residential real estate loans | 391,648 | 23.9 | % | 394,394 | 24.7 | % | 367,138 | 25.7 | % | -0.7 | % | 6.7 | % | |||||||||||||||||||
Commercial real estate loans | 737,019 | 45.0 | % | 700,728 | 43.8 | % | 588,005 | 41.1 | % | 5.2 | % | 25.3 | % | |||||||||||||||||||
Commercial and industrial loans | 86,937 | 5.3 | % | 97,351 | 6.1 | % | 111,183 | 7.8 | % | -10.7 | % | -21.8 | % | |||||||||||||||||||
Consumer loans | 7,534 | 0.5 | % | 13,336 | 0.8 | % | 19,711 | 1.4 | % | -43.5 | % | -61.8 | % | |||||||||||||||||||
Total Gross Loans | $ | 1,638,216 | 100.0 | % | $ | 1,599,592 | 100.0 | % | $ | 1,430,642 | 100.0 | % | 2.4 | % | 14.5 | % | ||||||||||||||||
Less: Allowance for credit losses | (15,435) | (14,114) | (12,500) | |||||||||||||||||||||||||||||
Net deferred loan fees | (5,506) | (5,528) | (4,904) | |||||||||||||||||||||||||||||
Net Loans | $ | 1,617,275 | $ | 1,579,950 | $ | 1,413,238 | ||||||||||||||||||||||||||
DEPOSITS: | ||||||||||||||||||||||||||||||||
Non-interest bearing demand deposits | $ | 487,875 | 29.9 | % | $ | 550,690 | 36.4 | % | $ | 514,160 | 35.9 | % | -11.4 | % | -5.1 | % | ||||||||||||||||
Interest-bearing demand deposits: | ||||||||||||||||||||||||||||||||
Demand deposits | 100,522 | 6.2 | % | 80,099 | 5.3 | % | 76,286 | 5.3 | % | 25.5 | % | 31.8 | % | |||||||||||||||||||
Savings and NOW deposits | 53,499 | 3.3 | % | 51,419 | 3.4 | % | 81,817 | 5.7 | % | 4.0 | % | -34.6 | % | |||||||||||||||||||
Money market accounts | 260,316 | 15.9 | % | 222,540 | 14.7 | % | 301,842 | 21.0 | % | 17.0 | % | -13.8 | % | |||||||||||||||||||
Certificates of deposit $250,000or more | 458,683 | 28.1 | % | 370,005 | 24.5 | % | 292,978 | 20.4 | % | 24.0 | % | 56.6 | % | |||||||||||||||||||
Certificates of deposit less than $250,000 | 271,393 | 16.6 | % | 238,136 | 15.7 | % | 167,861 | 11.7 | % | 14.0 | % | 61.7 | % | |||||||||||||||||||
Total Deposits | $ | 1,632,288 | 100.0 | % | $ | 1,512,889 | 100.0 | % | $ | 1,434,944 | 100.0 | % | 7.9 | % | 13.8 | % | ||||||||||||||||
BORROWINGS: | ||||||||||||||||||||||||||||||||
Federal funds borrowed | 60,696 | 34.1 | % | — | — | — | — | — | — | |||||||||||||||||||||||
Federal Home Loan Bank advances | 45,000 | 25.3 | % | 100,000 | 58.1 | % | 40,000 | 35.7 | % | -55.0 | % | 12.5 | % | |||||||||||||||||||
Subordinated debt | 72,344 | 40.6 | % | 72,245 | 41.9 | % | 71,955 | 64.3 | % | 0.1 | % | 0.5 | % | |||||||||||||||||||
Total Borrowings | $ | 178,040 | 100.0 | % | $ | 172,245 | 100.0 | % | $ | 111,955 | 100.0 | % | 3.4 | % | 59.0 | % | ||||||||||||||||
Total Deposits and Borrowings | $ | 1,810,328 | $ | 1,685,134 | $ | 1,546,899 | 7.4 | % | 17.0 | % | ||||||||||||||||||||||
Core customer funding sources (1) | $ | 1,156,279 | 63.9 | % | $ | 1,157,573 | 68.7 | % | $ | 1,135,503 | 73.4 | % | -0.1 | % | 1.8 | % | ||||||||||||||||
Brokered and listing service sources (2) | 476,009 | 26.3 | % | 355,316 | 21.1 | % | 299,441 | 19.4 | % | 34.0 | % | 59.0 | % | |||||||||||||||||||
Federal funds borrowed | 60,696 | 3.3 | % | — | — | — | — | — | — | |||||||||||||||||||||||
Federal Home Loan Bank advances | 45,000 | 2.5 | % | 100,000 | 5.9 | % | 40,000 | 2.6 | % | -55.0 | % | 12.5 | % | |||||||||||||||||||
Subordinated debt (3) | 72,344 | 4.0 | % | 72,245 | 4.3 | % | 71,955 | 4.6 | % | 0.1 | % | 0.5 | % | |||||||||||||||||||
Total Funding Sources | $ | 1,810,328 | 100.0 | % | $ | 1,685,134 | 100.0 | % | $ | 1,546,899 | 100.0 | % | 7.4 | % | 17.0 | % | ||||||||||||||||
(1) | Includes ICS, CDARS, and reciprocal deposits maintained by customers, which represent sweep accounts tied to customeroperating accounts |
(2) | Consists of certificates of deposit (CD) through multiple listing services and multiple brokered deposit services, as well as ICSand 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 | ||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||
For the three months ended March 31,2023 | For the three months ended March 31,2022 | |||||||||||||||||||||||
AverageBalance | Interest Income/Expense(3)(4) | AverageYields/ Rate (annualized)(3)(4) | AverageBalance | Interest Income/Expense(3)(4) | AverageYields/ Rate(annualized) (3)(4) | |||||||||||||||||||
ASSETS: | ||||||||||||||||||||||||
Interest earning assets: | ||||||||||||||||||||||||
Loans (1)(2) | $ | 1,599,756 | $ | 26,731 | 6.78 | % | $ | 1,377,723 | $ | 16,685 | 4.91 | % | ||||||||||||
Securities: | ||||||||||||||||||||||||
Taxable | 71,933 | 518 | 2.92 | % | 73,413 | 357 | 1.97 | % | ||||||||||||||||
Tax-exempt | 37,941 | 334 | 3.57 | % | 39,545 | 344 | 3.53 | % | ||||||||||||||||
Federal funds and interest-bearing deposits | 118,670 | 1,132 | 3.87 | % | 83,754 | 34 | 0.16 | % | ||||||||||||||||
Total interest earning assets | $ | 1,828,300 | $ | 28,715 | 6.37 | % | $ | 1,574,435 | $ | 17,420 | 4.49 | % | ||||||||||||
Other assets | 57,371 | 88,386 | ||||||||||||||||||||||
Total assets | $ | 1,885,671 | $ | 1,662,821 | ||||||||||||||||||||
Liabilities and Stockholders' Equity: | ||||||||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||||||
Interest-bearing demand deposits | $ | 83,388 | $ | 343 | 1.67 | % | $ | 70,403 | $ | 65 | 0.37 | % | ||||||||||||
Savings and NOW deposits | 51,943 | 108 | 0.84 | % | 82,758 | 37 | 0.18 | % | ||||||||||||||||
Money market deposit accounts | 225,037 | 1,203 | 2.17 | % | 267,905 | 119 | 0.18 | % | ||||||||||||||||
Time deposits | 673,441 | 4,144 | 2.50 | % | 456,782 | 1,431 | 1.27 | % | ||||||||||||||||
Total interest-bearing deposits | $ | 1,033,809 | $ | 5,798 | 2.27 | % | $ | 877,848 | $ | 1,652 | 0.76 | % | ||||||||||||
Federal funds purchased | 2,965 | 38 | 5.20 | % | 1 | — | — | |||||||||||||||||
Subordinated debt | 72,306 | 812 | 4.55 | % | 43,995 | 468 | 4.31 | % | ||||||||||||||||
FHLB borrowings | 77,833 | 906 | 4.72 | % | 37,167 | 31 | 0.34 | % | ||||||||||||||||
Total interest-bearing liabilities | $ | 1,186,913 | $ | 7,554 | 2.58 | % | $ | 959,011 | $ | 2,151 | 0.91 | % | ||||||||||||
Demand deposits and other liabilities | 497,155 | 514,101 | ||||||||||||||||||||||
Total liabilities | $ | 1,684,068 | $ | 1,473,112 | ||||||||||||||||||||
Stockholders' Equity | 201,603 | 189,709 | ||||||||||||||||||||||
Total Liabilities and Stockholders' Equity | $ | 1,885,671 | $ | 1,662,821 | ||||||||||||||||||||
Interest Rate Spread | 3.79 | % | 3.58 | % | ||||||||||||||||||||
Net Interest Income | $ | 21,161 | $ | 15,269 | ||||||||||||||||||||
Net Interest Margin | 4.69 | % | 3.93 | % | ||||||||||||||||||||
(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 Appendix for reconciliation of non-GAAP measures |
UNAUDITED SUMMARY FINANCIAL DATA | ||||||||
(Dollars in thousands except per share data) | ||||||||
At or For the Three Months Ended | ||||||||
March 31, | ||||||||
2023 | 2022 | |||||||
Per share Data and Shares Outstanding | ||||||||
Earnings per common share (basic and diluted) | $ | 1.01 | $ | 0.64 | ||||
Book value per common share | $ | 23.62 | $ | 21.12 | ||||
Tangible book value per common share(2) | $ | 22.22 | $ | 20.61 | ||||
Weighted average common shares (basic and diluted) | 7,517,213 | 7,647,519 | ||||||
Common shares outstanding at end of period | 7,524,277 | 7,648,973 | ||||||
Performance Ratios | ||||||||
Return on average assets (annualized) | 1.75 | % | 1.32 | % | ||||
Return on average equity (annualized) | 16.40 | % | 11.59 | % | ||||
Return on average common equity (annualized) | 17.71 | % | 12.19 | % | ||||
Yield on earning assets (FTE) (2) (annualized) | 6.37 | % | 4.49 | % | ||||
Cost of interest bearing liabilities (annualized) | 2.58 | % | 0.91 | % | ||||
Net interest spread (FTE)(2) | 3.79 | % | 3.58 | % | ||||
Net interest margin (FTE)(2) (annualized) | 4.69 | % | 3.93 | % | ||||
Noninterest income as a percentage of average assets (annualized) | 0.22 | % | 0.28 | % | ||||
Noninterest expense to average assets (annualized) | 2.52 | % | 2.19 | % | ||||
Efficiency ratio(3) | 52.97 | % | 54.79 | % | ||||
Asset Quality | ||||||||
Allowance for credit losses (ACL) | ||||||||
Beginning balance, allowance for loan and lease losses (ALLL) | $ | 14,114 | $ | 11,697 | ||||
Add: recoveries | 11 | 3 | ||||||
Less: charge-offs | — | — | ||||||
Add: provision for loan losses | 415 | 800 | ||||||
Add: current expected credit losses, nonrecurring adoption | 895 | — | ||||||
Ending balance, ALLL | $ | 15,435 | $ | 12,500 | ||||
Beginning balance, reserve for unfunded commitment (RUC) | $ | — | $ | — | ||||
Add: current expected credit losses, nonrecurring adoption | 1,310 | — | ||||||
Add: recovery of unfunded commitments | (132) | — | ||||||
Ending balance, RUC | $ | 1,178 | $ | — | ||||
Total allowance for credit losses | $ | 16,613 | $ | 12,500 | ||||
Allowance for loan losses to total gross loans | 0.94 | % | 0.87 | % | ||||
Allowance for credit losses to total gross loans | 1.01 | % | 0.87 | % | ||||
Allowance for loan losses to non-performing assets | N/A | N/A | ||||||
Net charge-offs (recoveries) to average gross loans (annualized) | 0.00 | % | 0.00 | % | ||||
Concentration Ratios | ||||||||
Commercial real estate loans to total capital (4) | 372.12 | % | 370.35 | % | ||||
Construction loans to total capital (5) | 140.78 | % | 136.19 | % | ||||
Nonperforming Assets | ||||||||
Loans 30-89 days past due to total gross loans | 0.00 | % | 0.00 | % | ||||
Loans 90 days past due to total gross loans | 0.00 | % | 0.00 | % | ||||
Non-accrual loans to total gross loans | 0.00 | % | 0.00 | % | ||||
Other real estate owned | $ | — | $ | — | ||||
Non-performing assets | $ | — | $ | — | ||||
Non-performing assets to total assets | 0.00 | % | 0.00 | % | ||||
Regulatory Capital Ratios (Bank only) (1) | ||||||||
Total risk-based capital ratio | 16.35 | % | 16.44 | % | ||||
Tier 1 risk-based capital ratio | 15.49 | % | 15.63 | % | ||||
Leverage ratio | 14.69 | % | 14.47 | % | ||||
Common equity tier 1 ratio | 15.49 | % | 15.63 | % | ||||
Other information | ||||||||
Closing stock price | $ | 23.49 | $ | 24.31 | ||||
Tangible equity / tangible assets (2) | 9.51 | % | 10.52 | % | ||||
Average tangible equity / average tangible assets (2) | 10.22 | % | 11.25 | % | ||||
Number of full time equivalent employees | 170 | 141 | ||||||
# Full service branch offices | 6 | 6 | ||||||
(1) | Regulatory capital ratios as of March 31, 2023 are preliminary | ||||||||
(2) | Refer to Appendix 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 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, | ||||||||
2023 | 2022 | |||||||
Net interest margin (FTE) | ||||||||
Net interest income (GAAP) | $ | 21,091 | $ | 15,197 | ||||
FTE adjustment on tax-exempt securities | 70 | 72 | ||||||
Net interest income (FTE) (non-GAAP) | 21,161 | 15,269 | ||||||
Average interest earning assets | 1,828,300 | 1,574,435 | ||||||
Net interest margin (GAAP) | 4.68 % | 3.91 % | ||||||
Net interest margin (FTE) (non-GAAP) | 4.69 % | 3.93 % | ||||||
For the three months ended March31, | ||||||||
2023 | 2022 | |||||||
Stockholders equity, adjusted | ||||||||
Total stockholders equity (GAAP) | $ | 204,988 | $ | 188,796 | ||||
Less: preferred stock | (27,263) | (27,263) | ||||||
Total common stockholders equity (GAAP) | 177,725 | 161,533 | ||||||
Less: intangible assets | 10,559 | 3,906 | ||||||
Tangible common stockholders equity (non-GAAP) | 167,166 | 157,627 | ||||||
Shares outstanding | 7,524,277 | 7,648,973 | ||||||
Tangible book value per common share (non-GAAP) | $ | (0.01) | $ | (0.00) | ||||
For the three months ended March31, | ||||||||
2023 | 2022 | |||||||
Stockholders equity, adjusted | ||||||||
Total stockholders equity (GAAP) | $ | 204,988 | $ | 188,796 | ||||
Less: intangible assets | (10,559) | (3,906) | ||||||
Total tangible stockholders equity (non-GAAP) | 194,429 | 184,890 | ||||||
For the three months ended March31, | ||||||||
2023 | 2022 | |||||||
Total assets, adjusted | ||||||||
Total assets (GAAP) | $ | 2,056,494 | $ | 1,761,748 | ||||
Less: intangible assets | (10,559) | (3,906) | ||||||
Total tangible assets (non-GAAP) | 2,045,935 | 1,757,842 | ||||||
For the three months ended March31, | ||||||||
2023 | 2022 | |||||||
Average stockholders equity, adjusted | ||||||||
Total average stockholders equity (GAAP) | $ | 201,603 | $ | 189,709 | ||||
Less: average intangible assets | (9,879) | (2,972) | ||||||
Total average tangible stockholders equity (non-GAAP) | 191,724 | 186,737 | ||||||
For the three months ended March31, | ||||||||
2023 | 2022 | |||||||
Average assets, adjusted | ||||||||
Total average average assets (GAAP) | $ | 1,885,671 | $ | 1,662,821 | ||||
Less: average intangible assets | (9,879) | (2,972) | ||||||
Total average tangible assets (non-GAAP) | 1,875,792 | 1,659,849 | ||||||
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SOURCE MainStreet Bancshares, Inc.
