Mainstreet Bancshares, Inc. · NASDAQ:MNSB
Mainstreet Bancshares — Q1 2023 Earnings Presentation
32 slides from Mainstreet Bancshares's earnings presentation, Apr 17, 2023
Slide 1: MainStreet Bancshares, Inc
MainStreet Bancshares, Inc Jeff W. Dick Thomas J. Chmelik Chairman and CEO. Senior EVP and Chief Financial Officer April 17, 2023
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 Bank & MainStreet Bancshares, Inc.
About MainStreet Bank & MainStreet Bancshares, Inc. Bank Established: Headquarters: Branches: Full Time Employees: Assets per Employee ($MM): Common Stock Nasdaq Listing: Close Common Stock Price! Common Shares Outstanding! Market Capitalization (SMM) Preferred Stock Nasdaq Listing Close Preferred S
Slide 4: The markets we serve remain robust
The markets we serve remain robust Strong Employment 360% us Unemployment Rate 340% CMSA Unemsloymont Rate a 100% Historic trend of low unemployment compared to overall U.S., even during downturns = AN Market Analysis Home to >10% of all federal employees Data Center Alley* + More than 70 data cente
Slide 5: Financial metrics are on an excellent path
Financial metrics are on an excellent path EPS Effclency Ratio ROAA ROAE ROATCE Net Interest Margin’ Profitability Net Loans ($000) $1,617,275 $1,579,950 Total Deposits ($000) $1,692,288 $1,512,889 Total Assets ($000) $2,055,008 $1,925,751 ALLL / Gross Loans? 0.94% 0.88% NCOs / Avg Loans 0.00% 0.00%
Slide 6: Performance metrics reflect strong risk management
Performance metrics reflect strong risk management Liquidity Coverage Ratio (LCR)* 118% Loan-to-Depostt Ratio 100% 105% 98% Core Deposit Ratio 70.80% 76.50% 77.84% FDIC Insured / Total Deposits? 60% 63% 40% ‘Secured Line Available Balance $496M $065M 41M Unsecured Line Avallable Balance $120M, s1o4m
Slide 7: Prepared for a rising or flat interest rate environment
Prepared for a rising or flat interest rate environment and readying for a declining rate environment + Whatwe anticipate * Continued tapering to flat rates in 2023 * Stable rates in 2024 + Neutrality between 5% and 6% + Whatwe are preparing for + Balance sheet can accommodate modest rate declines +
Slide 8: Liquidity is well-managed and strong
Liquidity is well-managed and strong Quarterly liquidity monitoring results Highlights Liquidity Coverage , Ratio (LCR)" ese ES High Quality Liquid pean $222M — $242M Securedline availablebalance « S411M_—$410M Unsecuredline $104M $104M available balance Total available funding source 211% $277M $44
Slide 9: Deposit mix remains sturdy
Deposit mix remains sturdy Deposit Mix (SMM) Highlights 70.7% Core deposit ratio" * 30% of Deposits are Non-Interest-Bearing + Nominterest Bearing (NBS), ex (NIB) fesrt = Avenu™ deposits represent 13% of *DDAs NIBs + Since January, approximately 7% of deposit balances have shifted from NIB to intere
Slide 10: Deposit composition shifted due to rising rates
Deposit composition shifted due to rising rates Deposit Composition as a percentage of total deposits Highlights Approximately 24% of total deposits have excess FDIC insurance through the CDARS or ICS programs offered by IntraFi, which is generally consistent quarter-by-quarter 1022 2022 3022 4022 M
Slide 11: Most of the deposit portfolio carries FDIC insurance
Most of the deposit portfolio carries FDIC insurance Deposits & FDIC Insurance! Highlights + Nearly 70% of all deposits are fully insured by the FDIC FDIC Insured 149,659 $1,134,509 $8 69% + Uninsured deposits are diversified Not Insured 614 504,388 3821 31% . e “ . . + 27% of uninsured deposits are
Slide 12: Deposit costs are climbing as anticipated with rising rates
Deposit costs are climbing as anticipated with rising rates Effective Fed Funds Rate & Cost of Deposits Highlights 600% — Cost of Deposits Deposit beta for Q1 was 51%, which sai, * eecernne aan is inline with our 12/31/2022 estimate 400% 300% 2.00% Fi _ Tis 000%
Slide 13: Earning asset stress test results only nominally impact capital
Earning asset stress test results only nominally impact capital Stress test results by asset-type Highlights ‘Component ‘ 5 000) Current capital structure could sustain up to $145 million in losses and remain well-capitalized per CET-1 regulatory Construction Investor CRE 682,078 10,382 requirements
Slide 14: Earning asset stress test results consistent over five quarters
Earning asset stress test results consistent over five quarters Earning assets stress test loss estimates! Highlights Quarterly results are shown on this table, but earning assets (nyestor GRE & —§13,655 $14,439 $12,185 $14,825 $15,161 are stress-tested monthly All Other Loans 13,970 13,571 12,891 1
Slide 15: Loan yields continue to enhance interest income
Loan yields continue to enhance interest income Quarterly Net Interest Income & Net Interest Margin’ Loan portfolio mix by repricing opportunity Floating - Term 2024+ 18% 1022 2022 3022 4022 1023 Components of Net Interest Income! 4.70% toe Lee 0.36% Floating - Immediate 49% loan Other Rew Other NM
Slide 16: Loan portfolio dynamics are consistent
Loan portfolio dynamics are consistent Average loan size’ and legal lending limit by year 1Q23 portfolio composition by loan type 2 (00's) sizga6_$44226 mm Average Loan Size =eLegal Lending Limit $34,104 $23,684 $21,354 $12,519 | oe Billion 45% 2017 2018-2019 -==«2020 «02k 2022 2023, vrD SN terete s
Slide 17: Loan performance metrics are good
Loan performance metrics are good Allowance’ & Non-Performing Assets Highlights + 15% loan growth over trailing 12-months + Zero non-performing assets + Began using the Current Expected Credit Loss 4azr 10222022 a0zz wae g ee arya (CECL) methodology for allowance calculations in 2023 Reconciliation
Slide 18: Allowance for Credit Losses (ACL) is reasonable
Allowance for Credit Losses (ACL) is reasonable Allowance for Credit Losses reconciliation Highlights The Company adopted the Current Expected Credit Losses (CECL) Allowance for Credit Loss (ACL) model in 2023. AE Te) kali E O59 88% of the increase to the ACL during Q1 funded CECL Model ess ie the C
Slide 19: Loan portfolio quality is good
Loan portfolio quality is good Investor CRE as a % of total capital 3679 3706 366.1 370.1 eT NL 372.12 4021 1022 2022 ©3022-4022 «1023 investor CRE m Construction = AN Excellent cumulative credit performance Investor CRE* $3.9bil OtherCommercia? $1.7 bil “$5 mil ~30 bps Consumer & Other $1.4bil $2mi
Slide 20: Capital stack is well structured
Capital stack is well structured Subordinated debt $72,344 3.90% 24.61% Preferred Stock $27,263 7.50% 9.27% Common Stock $202,003" 17.71%? 68.72% AOC! -$7,664 7 -2.60% TOTAL $293,946 | 100.00% * Includes the Allowance for Credit Losses 2 423 Returnon Total Common Equity (ROTCE) = AN
Slide 21: Investor CRE office space is well-diversified
Investor CRE office space is well-diversified Current Balance of Office Portfolio! Cat ($ Miers) De MD vA MixedUse $7 $3 $3 Office Bulking $12 $4 $50 Medical : $20 : Under Construction $31 $9 $12 Tot $50 | $36 | $65 1. As-of 131/23, Investor CRE includes callcodes 1A1, 1A2, 10, and 12 = AN 80% of “U
Slide 22: Data shows continued improvement in home price appreciation
Data shows continued improvement in home price appreciation Home prices are faling inthe West, while pricesin the East are increasing. Highlights + East coast cities seeing home price wate he appreciation over last 12 months a ale en pacieic hard, 2806 + Consistent with anecdotal market feedback Oce
Slide 23: Timeframe and number of finished units is reasonable
Timeframe and number of finished units is reasonable Deliverable Units for finished SFR, Condos, and Townhome projects! # of finished units availabl y quarter 2023 3023 4023 1024 2024 3024 4Q24 1025 After Total Single Family tSFR) mlm) m) 7 |] 4)o)o0)o0)] a] PreSodSFR 30 71 2 Bs 1 16 Condo 119018 1
Slide 24: Assumptions for remainder of 2023
Assumptions for remainder of 2023 * The expense run rate will increase approximately 3-4% per month + Increasing deposit costs are projected to lower NIM in Q2 by 25 — 30bp' but should remain stable thereafter through year-end + Loan growth will be single-digit for the year + Avenu"will start rampin
Slide 25: Avenu™ is currently profitable
Avenu™ is currently profitable Highlights Balance Sheet -@1 2023 | ($000) Computer sofware $10,559 Other assets. $06 * Production site is functioning Totalassets $10,655 Non-interest-bearing deposits $63,820 * One client onboarding Interest-bearing deposits $2,059 Totaldeposits $65,879 * Two new cli
Slide 26: Avenu™ is nearing launch
Avenu™ is nearing launch The Team was focused on a Q1 launch, but one workaround would have been required for the launch to happen. A decision was made to delay and fix rather than set a suboptimal precedent. Given the delay, the Team decided to move the sprint for debit card funding forward, which
Slide 27: Consistent balance sheet growth
Consistent balance sheet growth sg $2,055 $283. $272 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023, ar = AN 7
Slide 28: Common stock continues to outperform the market
Common stock continues to outperform the market Mainstreet Bank Nasdaq Capital Markets 30% —=Russell 2000 —saP 500 KEW Bank Index 20% 10% -3% 0% aii 11% 20% “13% 30% 34% 40% are 50% Ri & & ev 2 PP PEE EP EL EEL gS Graphic isthe percentage change fom March 31,2022 to March 31,2023. f\ Data itm Yahoo
Slide 29: Current price / tangible book value is a bargain
Current price / tangible book value is a bargain sve $9000 soa Contagion Tangible Book Value 29.05 Crisis —varetvave $28.00 © owisena $29.00 $24.00 204 $2222 $22.00 20.76 ‘ —_— 20.94 seat $2049 $2061 $20.00 Dvidend —Dyidend ‘ena —su2e_| $008 $008 $005 uend end = ° = $0.10 $0.10 $12.00 & 2 3 2 ¢ oS P
Slide 30: Abbreviated financial information
Abbreviated financial information Interest income 17348 18,813, Irterast Expense, 21512602 3817 __—$.176__—7.854 Net eterest Income 15197 16,121. 18,008._20,596.21,001 Noreterestlncome 1162 1260«1,348 1,089 1,003 Realized Gains on Securities 0 5 ° 6 4 4 ° 4 ° 0 0 Total Reverue 34408 44208—«SSATO 606
Slide 31: Abbreviated financial information - continued
Abbreviated financial information - continued 2019 2020 Mats) os7 119105132183} 16x] 1321900 tor tg 1038 10791054 12.38 13.98 1517] 11591259 16131548 6.0) 1038 107911131318 16.87 yeas] 1379 «151319561908 19.89 ore ROAA Non GAAP) 097 1.19105 1.82 1.83 ros] 1324301906778 fre ROAE (Non GAAP) 1038 © 107
Slide 32: MainStreet Bancshares, Inc.
MainStreet Bancshares, Inc. 1Q 2023
MainStreet Bancshares — Q1 2023 Earnings Presentation on 6ix