Mainstreet Bancshares, Inc. · NASDAQ:MNSB
Mainstreet Bancshares — FY2023 Earnings Presentation
41 slides from Mainstreet Bancshares's earnings presentation, Jan 22, 2024
Slide 1: 2023 Performance
2023 Performance
Slide 2: Forward-looking statements and additional information
Forward-looking statements and additional information Statements in this presentation which are not historical are “forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private
Slide 3: About MainStreet Bancshares, Inc.
a about MainStreet Bancshares, Inc. - abank - atechnology group - aCommunity Development Entity
Slide 4: Branch lite business model
_——————— Branch lite business model excellent for maintaining low overhead expenses Bank established: Headquarters: Branches: Full time employees: Assets per employee: Holding company established: Headquarters 10089 Fairfax Blvd Fairfax, VA 22030 May 26, 2004 Fairfax, VA 6 187 $10.9 million Feb 11,
Slide 5: Diverse primary market
Diverse primary market Federal government provides stability, doesn’t define market Se PAL Diverse opportunities 360% Us unemployment Rate 360% —ocwsaunempoymes sae im (| 120% Tourism, one hospit conventions NBA, NFL, MLS, NHL Over 70 data centers and 70% of US. internet Historic trend of low unempl
Slide 6: ..our 2023 results are good
a ..our 2023 results are good
Slide 7: Share price moves above book
EE Share price moves above book year-end closing price at 104% of tangible book value ‘As-Of December 31, 2023 Nasdaq Capital Markets: MNSB Market capitalization: $186.8, yw Nasdaq <bosecommonstockprce: $2481 Preferredstock Nasdaq symbol: MNSBP Price / Tangible Book Val 104% Close preferredstock pri
Slide 8: Smart balance sheet growth
EE Smart balance sheet growth sane $236 $240 $283 S072 $277 ss «=o || 2008 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 (Assets in Smillions)
Slide 9: Financial metrics continue strong
_—————— Financial metrics continue strong despite increased rate environment $0.61 62.33% 1.02% 9.42% 9.65% 3.49% $0.77 58.49% 1.30% 11.80% 12.37% 3.97% $0.85 54.04% 1.46% 13.40% 16.44% 4.21% EPS $3.25 Efficiency Ratio 56.69% ROAA? 1.38% ROAE? 12.66% ROATCE? 13.37% Net Interest Margin®23 4.08% Net L
Slide 10: Risk metrics reflect continued vigilance
_——————— Risk metrics reflect continued vigilance Liquidity Coverage Ratio (LCR) ? 164% 124% Loan-to-Deposit Ratio 101% 104% Core Deposit Ratio ? 68% 70% FDIC Insured / Total Deposits * 76% 70% Secured Line Available Balance $560M. $494M Unsecured Line Available Balance $129M $99M Tier 4 Capital ? $
Slide 11: Liquidity continues strong and well-managed
EE Liquidity continues strong and well-managed Quarterly liquidity monitoring results Metric 4023 3Q23,—— 20231023 Liquidity coverage ratio (LCR) 133% 164% = 124% «= 118% 1 3 3 % Core deposit ratio? 74% 68% 70% 71% FDIC insured / total deposits ? 17% 76% 76% 73% LCR (millions) High quality liquid as
Slide 12: ..we executed a solid interest rate strategy
a ..we executed a solid interest rate strategy aimed to maximize profitability ina rising rate environment ..we didn’t plan for the feckless actions of three management teams who brought chaos to the insured deposit markets and caused the collapse of the second, third and fourth largest banks in U.S
Slide 13: Loan beta strong throughout cycle
_—————— Loan beta strong throughout cycle funding beta accelerated after large banks collapsed Performance against effective Fed Funds Rate a cost of Funds —etective Fed Funds Rate 700% © —eVieldon Loans aa 0.00% ee as HH HHH MK LK MK LSS + Cumulative cycle funding beta is the change in interest exp
Slide 14: Deposit shift consistent with rising rates
_—————— Deposit shift consistent with rising rates Deposit type / total deposits Deposits 4Q23 (SMM) Core? $1,253 74% Non-core $433 26% Total $1,686 100% 26%| | 20% nay | | 23% | [21% 36% |1| 309 e 23% | | o4o 30% 39% 35% 38% 27% 24% 29% 24% } 26% 92% 2018 =2019 2020 2021 2022 1023 2Q23 3023 4Q23 $4
Slide 15: Core Deposits
Core Deposits reconciliation of Regulatory accounting to best practice The FDIC Call Report instructions arbitrarily limits the dollar amount of reciprocal deposits that can be reported as “core” to just 20% of our total liabilities. All our reciprocal deposit customers are core customers. Bank-Defi
Slide 16: Non-core deposits are efficiently structured
Non-core deposits are efficiently structured Bank defined value 26% of deposits are non-core es es |) (millions) $183MM in wholesale CDs + Avg maturity is 7 months + Weighted avgrateis 4.32% $121 $183 $121M in Special Customer DDAs + Weighted avg rate of 5.75% WholesaleCDs mCallatle Wholesale CDs =
Slide 17: Loan rates well-positioned
EE Loan rates well-positioned for anticipated future interest rate environment Year-end 2023 Year-end 2022 58% of loans are fixed-rate+ 60% Of the floating rate loans have floors with an average rate of 5.90% 2 Fixed” loans include all loans with a repricing date more than 6-months from quarter-end
Slide 18: Net interest margin outlook is favorable
_——————— Net interest margin outlook is favorable Net interest margin, trailing twelve months? 4.43% 438% = 4.19% A008 3.88% \. 3.80% 3.67% e=MNsB NIM © -MINSB NIM Forecast 1022 2022 3022 4022 1023 2023-3023 4023 1024-2024 + Tax-Equivalent Yield ? Forecast for MNSB is based on flat rates through the
Slide 19: 8% increase in gross loan balances
a 8% increase in gross loan balances for 2023 with good quality and strong performance metrics
Slide 20: Loan portfolio dynamics are stable
Loan portfolio dynamics are stable Average new loan size? and legal lending limit by year 4Q23 composition 2 ——— {003} $46,810 $42,981 mmm Average New Loan Size =9=Legal Lending Limit $34,104 $28,430 “Average loan size excludes PPP & Consumer loans 2 “Other Loans” account for less than 1% and are no
Slide 21: CRE concentration is consistent
CRE concentration is consistent Investor CRE as a % of total capital 370% 377% 372% 364% 373% 373% 3Q22 4022 1023 2023 3023 4023 Investor CRE = Construction
Slide 22: Pure CRE office exposure is nominal
Pure CRE “office” exposure is nominal Current Balance of Office Portfolio ' pees bocation 0 raceme . Mixed Use $1 $3 $3 ‘7 $17 S27 mil Office Building - $2 $8 7 $10 . Exposure to mixed-use Medical = $22. $15 $1 $38 buildings and office Under Construction $1 - - - $1 buildings Office to Residential C
Slide 23: Loan portfolio quality is good
EE Loan portfolio quality is good Criticized & classified loans over five quarters 12/31/2022 3/31/2023 6/30/2023 9/30/2023 12/31/2023 aneeie r) so) ‘o oct, ee oe of «BE » be ° 2 (Smillions) 55 ES Ge | = Be | ie 28 G8 zs os ze G8 Criticized e e = 2 $19.0 Classified 4 $9.6 8 $id 16 $21.2 Criticized &
Slide 24: New Q4 loans are in good sectors
New Q4 loans are in good sectors New loan originations 4Q2023 Residential $21,336 9.01% Construction Healthcare 1 $10,341 9.00% 77 Multi-Family 2 $1,112 9.84% 113 Industrial 3 $14,184 8.44% 36 Other 2 $3,338 8.26% 35 Total 25 $50,311 8.82% 38
Slide 25: ..a Well capitalized Company
a ..a Well capitalized Company able to endure the challenges that lie ahead (micro and macro)
Slide 26: Capital stack is well structured
EE Capital stack is well structured Return on capital components Common Stock $2181 12.18%? 70% Subordinated debt $73 3.90% $ 23% Preferred Stock $27 7.50% 9% AOC! $7 E 2% TOTAL $311 100% 2 Includes the Allowance for Credit Losses (ACL) 2 4023 Return on Total Common Equity (ROTCE) 3 Weighted average
Slide 27: Capital remains strong after stress test results
_——————— Capital remains strong after stress test results for all earning assets December 31, 2023 stress test results Construction Investor CRE All Other Loans HTM Securities AFS Securities Swap Portfolio BOLI Totals $429,637 -$4,606 $732,815 -$7,635 $564,639 -$11,994 $17,275 -$88 $69,666 -$7,478 $
Slide 28: Stress test results good over five quarters
_——————— Stress test results good over five quarters Capital adjusted for stress test results ‘Common Stock 28,892 28,892 28,892 28,892 28,892 Surplus 144441144441 144g 144,441 144,441. Retained Earnings 99,125 104,894 11,225 116,940 121,220 CET4 Capital $272,458 $278,227 $284,558 $290,273. $294,553
Slide 29: AVENU
_—— _ AVENU more important now than ever before -- to generate low-cost deposits
Slide 30: Avenu technology group
cevcastechrocey ue lt (ié‘ Avenu technology group a high-performing team - — Project Chief Technology Manager Engineer 3 project 1 systems managers architect | 5 4 cloud Paplanene engineers supper 5 microservices developers 1scrum master 3 quality assurance engineers Chief Security Officer: 4 cyber
Slide 31: Avenu spend to-date is efficient
EE Avenu spend to-date is efficient and legacy deposits are faring well Assets & liabilities Dec. 31, 2023 es (000’s) Computer software $14,386 eapiolized baa will begin Other assets $82 amortizationin Total capitalized assets $14,468 March 2024 Non-interest-bearing deposits $33,466 Interest-bearing
Slide 32: Avenu legacy performance is good
EE Avenu legacy performance is good Income Statement iLhrough 2023 (00's) Service charge Income $868 Income from deposits ! $2,261 Total income $3,129 Employee compensation $1,415 Other expenses $1,501 Compliance expenses $162 Total non-interest expense $3,078 Net Income before taxes $51 * Determine
Slide 33: Avenu on the horizon
EE Avenu on the horizon Status of fintech partners joining Avenu ss atc in production EY near production i firmly in sandbox 1 ebeseed signed contracts 2 waiting for licenses to proceed z 6 pending decision by fintech 4 nearing decision
Slide 34: Avenu breakeven
Avenu breakeven = Estimated breakeven occurs when we achieve and sustain $225 million in deposits We plan to get Avenu deposits to $225 million before year-end AV AV AV AV A
Slide 35: Looking ahead to 2024
a Looking ahead to 2024 ...a transformative year
Slide 36: Projections for 2024
_——————— Projections for 2024 * Estimated run rate will increase 1.2% per month, which covers: * software amortization * non-interest expenses (including all salaries) * Avenu generated low-cost deposits will reach $225 million in 2024 * Avenu fee income will exceed $2 million in 2024
Slide 37: MainStreet Community Capital, LLC
_——————— MainStreet Community Capital, LLC Is a for-profit entity within the holding company that focuses on Community Reinvestment Act opportunities, including the issuance of new market tax credits (when granted) The New Markets Tax Credits (NMTC) program was enacted in 2000 to stimulate economic
Slide 38: Company performance
a Company performance financial highlights for 2023
Slide 39: Financial highlights
Financial highlights Year-End Financials (Quarter-End Financials, In $000 unless otherwise noted 2019 2020 2021-2022, 2023 Q4’22. Q1'23 Q2'23 Q3'23.Q4'23 Interest Income 58813 62072 64,199 83,845 772 786M «O70 IESE 33.OTB letorest Expense 19.377 16095 10683 __ 13.26] 5176755411435 13.116__ 16071 ‘Ne
Slide 40: Financial highlights - continued
Financial highlights - continued Year-End Financials ‘Quarter-End Financials ‘In $000 unless otherwise noted 2019 2020 2021-2022, 2023 Q4'22, Q1'23. Q2'23. Q3'23._Q4'23 perirmonce Mest) ion 910s ee fos nn ne ne ee ne eo oh 2a fos iam th fae te feo foe isa ss a ROMA Nn. GA) tie tas get terete tat OME
Slide 41: Definitions
———_—"~—S— Definitions GAAP - Generally Accepted Accounting Principles EPS - Earnings-per-Share ROAA - Return on Average Assets ROAE - Return on Average Equity ROATCE - Return on Average Tangible Common Equity ACL - Allowance for Credit Losses NCOs - Net Charge-Offs CET4 - Common-Equity Tier-1 CET1-