Mainstreet Bancshares, Inc. · NASDAQ:MNSB
Mainstreet Bancshares — FY2024 Earnings Presentation
39 slides from Mainstreet Bancshares's earnings presentation, Jan 27, 2025
Slide 1: 2024 year-end & quarterly earnings
= MainStreetBancshares, Inc. ¢ 2024 year-end & quarterly earnings January 27, 2025 =x<AV
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: Thriving DC metro market
Thriving DC metro market Major universities Federal hub * Georgetown . sting © American © Lockheed Martin © Howard ea © George Mason © saic * Gallaudet * Catholic © uMuc © Marymount Resident fortune 500 Other notable Under Armour © Historic trend of low Amazon unemployment compared to © Google overa
Slide 4: Strategic balance sheet growth
Strategic balance sheet growth March 2022 Apritzaz1 $44M Sub-Debt Sept 2020 oom, Offering April209 — s26754 ——-Sub-Dabt Depositary fering $2228 Becamestc Shore August2018 Registrant a “st andeegon — OMtering $2,098 onuary 207 ss) Trading on #1928 Private NASOAG ae Placement Capital Juty20¥8 Debt ofc
Slide 5: Total Assets
$2.28 Total Assets Branches 20+ years of banking Innovation e¢ Bankestablished: May 26th 2004 e Headquarters: Fairfax, VA e Number of branches: 6 e Full-time employees: 204 e Assets per employee: $10.9m e Holding company established: Sept. 18th, 2016 =xAV
Slide 6: Share performance
Share performance Nasdaq capital market: MNSB Close common stock price $18.10 Price / tangible book value 76% Common shares outstanding Wi0377.65 Market capitalization $138 million Tangible book value $23.77 Nasdaq capital market Close preferred stock price $2418 =x<AV
Slide 7: Intangible asset impairment
Intangible asset impairment ASC 350-40-35 The Avenu Software-as-a-Service platform was placed into service on October 1, 2024. Year-end 2024 was the first time management could conduct an impairment assessment for the capitalized intangible assets. Using the income approach, management and the Board
Slide 8: 2024 financial results
2024 financial results £ EPS ($1.60) ($2.20) ($0.04) $0.27 $0.36 Mm ROAR (0.47%) (280%) 0.05% +=» 0.50% +=» 0.65% S ier (4.44%) (28.19%) 0.47% = 4.70% = 5.97% SY ROATCE? (6.15%) (33.09%) (0.60%) 4.64% = 6.17% a Net interest margin'2 3.13% 2.96% 3.05% 3.20% 3.29% Net loans ($000) $1,810,556 $1,810,55
Slide 9: Impact of nonrecurring adjustments on 2024 performance
Impact of nonrecurring adjustments on 2024 performance Nonrecurring adjustments EPS ($1.60) $0.67 $2.14 $1.21 ROAA (0.47%) 0.24% 0.76% 0.53% ROAE (4.44%) 2.24% 7.24% 5.04% NIM'2 3.13% 3.21% - 3.21% ' tax-equivalent yield 2 annualized =xAV
Slide 10: Tangible book value per common share
Tangible book value per common share Pre-impairment $23.29 Post-impairment $23.77 (sooo's) Tangible common equity pre-impairment $177,091 Impairment tax benefit to capital $3,637 Tangible common equity post-impairment $180,728 Common shares outstanding 7,603,765 =xAV
Slide 11: Good liquidity management
Good liquidity management Quarterly liquidity monitoring results Metric 4Q24 3Q24 2Q24 1Q24 Liquidity coverage ratio (LCR)! 164% 217% 122% 125% Core deposit ratio 2 76% 78% 78% 76% Loan / Deposit Ratio 96% 95% 102% 101% FDIC insured / total deposits * 77% 77% 78% 78% (millions) High quality liquid a
Slide 12: Our Business
Our Business Banking team continues to build new relationships and gain market share Deposit structure is consistent 35% 959% Tom | aim 20% T a0% 21% 36% 30% J 38% | 3 29% T 24% 2020 2021 2022«- 2023 «1024 «2024-3024 4024 interest-bearing DDAs = Non-interest bearing DDAs- = Time =xAV
Slide 13: Deposit costs are challenging
Deposit costs are challenging 3 T 3 Quarterly net interest margin! e /o 478% Cumulative net ; interest margin bi through December 3.75% 31, 2024 3.25% 278% 1Q22 2922 3Q22 4Q22 1923 2% 3 4Q23 1924 2924 3Q24 4924 —eNet Interest Margin
Slide 14: Core deposit growth for the year is meaningful
Core deposit growth for the year is meaningful Non-interest-bearing DDA Low-cost transactional ! Interest bearing Term Total core deposits Money market deposits Term with call option ? Term Total non-core deposits ‘Interest bearing deposits with rates at or below 1% Balance | Percent | Weighted | We
Slide 15: First quarter 2025 projections
First quarter 2025 projections We estimate that the first 8 3 bp quarter 2025 run rate based upon normalized year-end Monthly run 2024 operating expenses will rate for QI 2025 be 83 basis points per month “ >
Slide 16: Loan rate structure positioned for stable or falling rates
Loan rate structure positioned for stable or falling rates 55%with a —> | weighted average floor rate of 6.34% December 31, 2024 - Total Loans of $1.8B * Loans include all fixed-rate and floating loans with a rate repricing date more than 6-months from quarter-end 2 Loans are loans that can reprice
Slide 17: Good loan metrics
Good loan metrics mm Averoge New Loan size $46810 The average Legal Lending Umit izes $44488 new loan size is $34,104, indicative of $28,430 well-distributed $23,684 $3,323 $21354 credit risk $2,330 management si2si9 mus process q J $1397 ne $2309 [] sign 2017 2018 «= 2019S 2020 2021: 2022 2023-2024
Slide 18: Diversified loan portfolio
91 of construction loans have a payment or interest reserve held at the bank. Diversified loan portfolio ‘Multi-Family 13% = —> <x AV
Slide 19: CRE concentration is well managed with low exposure to office space
CRE concentration is well managed with low exposure to office space. Investor CRE as a % of total capital 394% 37: oe min CRE mConstruction 141% Hao 138% 130%) nex 231% fl 2zaxcf 234% I 235% 237% 242%] 252% 1Q23 2Q23 3Q23 4Q23 1924 2Q24 3924 4Q24 Current balance of office portfolio 2 FV Only $13 mil
Slide 20: Earning asset stress-test shows continued strong capital ratios
Earning asset stress-test shows continued strong capital ratios post stress loss estimates. Pre-stress and post-stress capital ratios 155% 158% 16.1% 15.9% 16.0% 14.6% 14.9% 14.9% 13.4% siaes 13.6% 13.7% 12.5% 70% 1928 2923 3Q28 4923 1924 2924 3Q24 4924 Stress Loss Estimates ($000) $29,350 $32,539 $
Slide 21: Aggressively resolving nonperforming loans
Aggressively resolving nonperforming loans Nonperforming loans during 2024 ($mill % Resolved loans: 62% Write down for resolved loans: Reduction in non- Write down for remaining loans: performing loans during 2024 Normal paydowns: December 31, 2024:| $57.3 total -$29.5 51% -$3.3 6% ~$12 2% -$1.6 3%
Slide 22: Classified & Past Due Loans trending favorably
Classified & Past Due Loans trending favorably Quarterly change in credit metrics Classified Loans / Total Gross Loans Nonaccrual loans / total gross loans 5.00% 4.00% 3.00% 2.00% 1.85% 1.20% 0.53% 100% 157% 115% 118% 0.00% 12024 Q22024 Q32024 Q42024 Q12024 Q22024 Q3.2024 Q42024
Slide 23: Positive trend in past due loans
Positive trend in past due loans Loans 30+ days past due / Total gross loans 0.00% 12024 Q22024 32024 Q42024
Slide 24: The allowance for credit losses is directionally consistent with recent performance
The allowance for credit losses is directionally consistent with recent performance Allowance for credit losses on loans / gross loans We anticipate this trend will normalize in 2025 2016 2017 2018 2019 2020 2021 2022 2023 2024 =x<AV
Slide 25: Expect to see improvements in trend of classified and nonaccrual loans
Expect to see improvements in trend of classified and nonaccrual loans Classified loans Nonaccrual loans millions | Probable outcome millions | Probable outcome Multi-Family project near Property in process of orderly $24.1 completion. Paid as agreed. $11.2 _ liquidation. Bank expects full High prob
Slide 26: DC launches "Offices to Anything" conversion tax incentive
DC launches “Offices to Anything” conversion tax incentive! By Ben Peters — Staff Reporter, Washington Business Journal January 14, 2025 “D.C. Mayor Muriel Bowser opened up the application window for a new program aimed at revitalizing obsolete offices in or near downtown, offering developers a 15-y
Slide 27: Balanced 5-year loan growth
Balanced 5-year loan growth 1042146 2019 2020 2021 2022 2023 2024 Net Loans ($000) 1. Compound Annual Growth Rate between 2019 & 2024
Slide 28: Avenu & Venu balance sheet
Avenu & Venu balance sheet Assets & liab December 31, 2024 Computer software (capitalized) Other assets Total assets Non interest-bearing deposits Low interest deposits Total deposits (so00's) $0 $62 $62 $27,617 $13,318 $40,935 =xAV
Slide 29: Avenu & Venu income statement
Avenu & Venu income statement Income statement December 31, 2024 (so00's) Service charge income $698 Deposit income! $1463 Total income $2,161 Employee compensation $2,268 Compliance expense $153 Other expense $3,391 Total expenses $5,812 Net income before taxes ($3,651) 'Determined by using the wei
Slide 30: Avenu pipeline
Five Fintechs under contract Avenu pipeline General release Beta Alpha Sandbox Negotiating contract Waiting for licenses! Pipeline Contract signed Yes Yes Yes Yes No No No 1 We've approved the Fintech to go forward on our solution. They are waiting for their California money transmission license bef
Slide 31: An overview of Venu
An overview of Venu Cannabis payments Venu, a cashless payment solution Venu is an end-to-end payment solution delivered on MainStreet Bank's secure private network. The Venu app allows users to open and fund directly from their bank account. Payments are simple, fast and secure via a uniquely gener
Slide 32: Cannabis market
Cannabis market “As part of the annual forecast refresh process, the firm examined industry trends, the effectiveness and pace of state ramps, the level of influence of the illicit market on a state, previous cannabis revenues in the state, as well as regulatory and legislative policy. It also looks
Slide 33: Cannabis retail sales
Cannabis retail sales 12,452 active licenses in the U.S. (connabiz media January 23, 2025) 024 ore Store Rhode Island $16.8 Million 7 Maryland $11.8 Million 96 “the 10 states that launched Pennsylvania $9.2 Million 184 adult-use sales since the Winois $8.7 Million 231 beginning of 2022 are still Nev
Slide 34: Venu market
Venu market penetration is key to creating revenue and shareholder value Total addressable market ° 12,452 active licenses + Over $1 billion in monthly sales The Venu opportunity ¢ Interchange fee income ‘Average monthly | Trans- Numberof | balance action | Annualfee merchants | processed’ fee incom
Slide 35: Venu sales channels
Venu sales channels 1. Internal sales 2.Independent sales organizations (ISO's) 3.Direct to financial institutions 4.Associations (banking and cannabis) Process payments quickly, and hassle free. =xAV
Slide 36: Venu is quick and hassle free; 2025 Avenu & Venu projections
Venu is quick and hassle free Venu is Bank owned and controlled from front to back Looking forward 2025 Avenu & Venu projections Average deposits for 2025 of $135 million Avenu fees Venu fees TOTAL Income &fees (million) $5.1 $3.9 $2.4 $11.4 Assumes a 375% effective fed funds rate for transfer prici
Slide 37: Financial Highlights
Financial Highlights End Financials Quarter-End Financials ) unless otherwise noted 2021 2022 2023 2024 Q4'23 QI'24 Q2'24 Q3'24 Q4'24 Interestincome 62072 «649 83845 2A ggieo 3246993496858 Interest Expense 16095 1966313836 __47879| 15989 t6saa 87118248 Net interest income 45977 93836 7001076742 van
Slide 38: Financial Highlights Cont.
Financial Highlights Cont. Performance Metrics (%) ROAA ORE ROATCE toCommon shareholders Core ROA (Non-GAAP) Core ROAE (Non-GAAP) Core ROATCE to Common Shareholders (Won-caap) Net interest Margin (%) Net terest Morgn- Tax Equvotent vets thion-eaae) Cn commen Equty Lose Total intangible Assets TTngib
Slide 39: Definitions
Definitions ACL Allowance for Credit Losses umm Last-Twelve-Months AOC! Accumulated Other Comprehensive Income $MM _ Millions of Dollars cen ‘Common Equity Tier-1 NCOs —_Net Charge-Offs CET1-RBC Common Equity Tier-1 Risk-Based Capital ROAA _ Return on Average Assets CRE Commercial Real Estate ROAE R