Mainstreet Bancshares, Inc. · NASDAQ:MNSB
Mainstreet Bancshares — Q4 2024 Earnings Presentation
39 slides from Mainstreet Bancshares's earnings presentation, Jan 27, 2025
Slide 1: 2024 year-end & quarterly earnings
• MainStreetBancshares,lnc. 2024 year-end & quarterly earnings January 27, 2025
Slide 2: Forward-looking statements and additional information
Forward-looking statements and additional information Statements in this presentation which are not As such, actual results could differ materially from historical are “forward-looking statements” within the those expressed or implied by forward-looking meaning of Section 27A of the Securities Act o
Slide 3: Thriving DC metro market
Thriving DC metro market Major universities Federal hub ● Georgetown ● Defense contracting ● GW ● CACI ● American ● Lockheed Martin ● Howard ● FTI ● George Mason ● SAIC ● Gallaudet ● Catholic ● UMUC ● Marymount Resident fortune 500 Other notable ● Under Armour ● Historic trend of low ● Amazon unempl
Slide 4: Strategic balance sheet growth
Strategic balance sheet growth March 2022 April 2021 $44M Sub-Debt Sept. 2020 $30M Offering April 2019 $28.75M Sub-Debt Depository Offering $2,228 Became SEC Share August 2018 Registrant Offering and Began $2,035 January 2017 $45M Trading on $1,926 Private NASDAQ $15M Sub- Placement Capital July 201
Slide 5: 20+ years of banking innovation
20+ years of banking Innovation ● Bank established: May 26th 2004 ● Headquarters: Fairfax, VA ● Number of branches: 6 ● Full-time employees: 204 ● Assets per employee: $10.9m Q42024 6 Branches ● 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 7,603,765 outstanding Market capitalization $138 million Tangible book value $23.77 Nasdaq capital market: MNSBP Close preferred stock price $24.18 $XAV
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 2024 4Q24 3Q24 2Q24 1Q24 Profitability EPS ($1.60) ($2.20) ($0.04) $0.27 $0.36 ROAA2 (0.47%) (2.80%) 0.05% 0.50% 0.65% ROAE2 (4.44%) (28.19%) 0.47% 4.70% 5.97% ROATCE2 (6.15%) (33.09%) (0.60%) 4.64% 6.17% Net interest margin1,2,3 3.13% 2.96% 3.05% 3.20% 3.29% Net loans ($000)
Slide 9: Impact of nonrecurring adjustments on 2024 performance
Impact of nonrecurring adjustments on 2024 performance Nonrecurring adjustments 2024 Credit Capital 2024 without actual issues impairment 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 1,2 3.13% 3.21% - 3.21% 1 tax-equivalent yield 2 annua
Slide 10: Tangible book value per common share
Tangible book value per common share Pre-impairment $23.29 Post-impairment $23.77 ($000’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)1 164% 217% 122% 125% Core deposit ratio 2 76% 78% 78% 76% Loan / Deposit Ratio 96% 95% 102% 101% FDIC insured / total deposits 3 77% 77% 78% 78% (millions) High quality liquid a
Slide 12: Deposit structure is consistent
Deposit structure is consistent Chart Title Our Business Banking team 35% 33% 40% 41% 42% 41% 44% 43% continues to build new 26% 38% 21% 20% 18% 18% 17% relationships 36% and gain 39% 38% 38% 41% 38% 40% 29% market share 24% 2020 2021 2022 2023 1Q24 2Q24 3Q24 4Q24 ■ Interest-bearing DDAs ■ Non-inter
Slide 13: Deposit costs are challenging
Deposit costs are challenging 3.13% Quarterly net interest margin 1 4.75% Cumulative net 4.25% interest margin through December 3.75% 31, 2024 3.25% 2.75% 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24 4Q24 Net Interest Margin 1 Tax-equivalent yield $XAV
Slide 14: Core deposit growth for the year is meaningful
Core deposit growth for the year is meaningful Balance Percent Weighted Weighted Type (millions) of total avg. rate maturity Non-interest-bearing DDA $324 23% Low-cost transactional 1 $52 4% 0.22% Interest bearing $611 42% 3.91% Term $452 31% 4.57% 8 mos Total core deposits $1,439 100% 3.09% Money m
Slide 15: First quarter 2025 projections
First quarter 2025 projections 83 bp We estimate that the first quarter 2025 run rate based upon normalized year-end Monthly run 2024 operating expenses will rate for Q1 2025 be 83 basis points per month $XAV
Slide 16: Loan rate structure positioned for stable or falling rates
Loan rate structure positioned for stable or falling rates 61% Rate resets beyond 39% Rate resets within 55% with a weighted average floor rate of 6.34% 6 months1 6 months2 December 31, 2024 – Total Loans of $1.8B 1 Loans include all fixed-rate and floating loans with a rate repricing date more than
Slide 17: Good loan metrics
Good loan metrics The average - Average New Loan Size Legal Lending Limit $42,986 $46,810 $44,488 new loan size is $34,104 indicative of $28,430 well-distributed $23,684 $3,323 $21,354 credit risk $2,330 $2,309 management $12,519 $2,045 $1,911 $1,403 $1,397 process $1,008 2017 2018 2019 2020 2021 20
Slide 18: Diversified loan portfolio
Diversified loan portfolio 91% Non-Owner Residential Real Estate 11% of construction Occupied CRE 30% $1.8B Construction loans have a 21% payment or interest reserve C&I Owner- 6% Occupied CRE Multi-Family held at the bank. 19% 13% $XAV
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 Current balance of office portfolio 13M 394% 372% 364% 373% 373% 365% 367% 360% 141% 140% 139% 138% 130% 130% 118% 132% $ 231% 224% 234% 235% 235% 237% 242% 262% Only $13 million loans for pure
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 15.8% 15.8% 16.1% 15.9% 16.0% 15.5% 15.4% 14.6% 14.6% 14.9% 14.9% 14.0% 13.6% 13.7% 13.4% 12.5% 7.0% 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24 4Q24 Stress Loss Estimates ($0
Slide 21: Aggressively resolving nonperforming loans
Aggressively resolving nonperforming loans Nonperforming loans during 2024 % of ($millions) $57.3 62% total Resolved loans: -$29.5 51% Write down for resolved loans: -$3.3 6% Reduction in non- Write down for remaining loans: -$1.2 2% performing loans Normal paydowns: -$1.6 3% during 2024 December 31
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% 5.00% 4.00% 4.32% 4.00% 3.00% 3.00% 2.95% 2.00% 2.00% 1.85% 1.00% 1.00% 1.57% 1.20% 0.53% 1.18% 1.15% 0.00% 0.00% Q1 2024 Q2 2024 Q3 2024
Slide 23: Positive trend in past due loans
Positive trend in past due loans Loans 30+ days past due / Total Past due gross loans 0.90% loan trends 0.80% 0.70% 0.81% are a good 0.60% 0.61% leading 0.50% 0.40% indicator of future 0.30% 0.20% 0.22% 0.10% 0.00% 0.00% performance Q1 2024 Q2 2024 Q3 2024 Q4 2024
Slide 24: Allowance for credit losses consistent with recent performance
The allowance for credit losses is directionally consistent with recent performance Allowance for credit losses on loans / gross loans We 1.16 1.06 anticipate this trend will normalize in 0.85 early covid 0.88 2025 adj. 2016 2017 2018 2019 2020 2021 2022 2023 2024 $XAV
Slide 25: Expect improvements in 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 completion. Paid as agreed. $11.2 liquidation. Bank expects full $24.1 High probabilit
Slide 26: DC launches "Offices to Anything" conversion tax incentive
DC launches “Offices to Anything” conversion tax incentive 1 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-
Slide 27: Balanced 5-year loan growth
Balanced 5-year loan growth 12% CAGR Loan $1,834,988 Growth 1 $1,727,091 $1,599,592 $1,358,935 $1,249,435 $1,042,146 2019 2020 2021 2022 2023 2024 Net Loans ($000) 1. Compound Annual Growth Rate between 2019 & 2024 $XAV
Slide 28: Avenu & Venu balance sheet
Avenu & Venu balance sheet Assets & liabilities December 31, 2024 ($000’s) Computer software (capitalized) $0 Other assets $62 Total assets $62 Non interest-bearing deposits $27,617 Low interest deposits $13,318 Total deposits $40,935
Slide 29: Avenu & Venu income statement
Avenu & Venu income statement Income statement December 31, 2024 ($000’s) Service charge income $698 Deposit income1 $1,463 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) 1 Determined by using the w
Slide 30: Avenu pipeline
Avenu pipeline Contract Phase Fintechs signed General release Paysii Yes Five Beta Venu Yes Alpha 1 Yes Fintechs Sandbox 2 Yes under Negotiating contract Waiting for licenses 1 2 1 No No contract Pipeline 7 No 1 We’ve approved the Fintech to go forward on our solution. They are waiting for their Cal
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 opp 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. (Cannabiz media January 23, 2025) State 2024 Sales Per Store Stores 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 Illinois $8. 7 Million 231 beginni
Slide 34: The Venu opportunity
Venu market The Venu opportunity penetration is key to creating revenue and shareholder Interchange fee income value Average monthly Trans- Number of balance action Annual fee merchants processed 1 fee income 100 $100,000 2.0% $2.4 million 250 $100,000 2.0% $6 million Total 500 $150,000 2.0% $18 mil
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) Scon 8arcode Transaction Outcome TR.ANSACTION APPROVED APf'"l'"'dArnc:luntStS..1t _____ ____ _ OS___ ..,., _ .... S51-'CI
Slide 36: Looking forward: 2025 Avenu & Venu projections
Looking forward Venu is quick and hassle free 2025 Avenu & Venu projections The cannabis Income market lacks & fees (million) an easy Average deposits for $5.1 2025 of $135 million digital Avenu fees $3.9 payment Venu fees $2.4 solution. TOTAL $11.4 1 Assumes a 3.75% effective fed funds rate for tra
Slide 37: Financial Highlights
Financial Highlights Year-End Financials Quarter-End Financials In $000 unless otherwise noted 2020 2021 2022 2023 2024 Q4’23 Q1’24 Q2’24 Q3’24 Q4’24 Interest Income 62,072 64,199 83,845 124,421 134,615 33,180 32,469 33,436 33,591 35,119 Interest Expense 16,095 10,663 13,836 47,679 72,041 15,869 16,
Slide 38: Financial Highlights Cont.
Financial Highlights Cont. Year-End Financials Quarter-End Financials In $000 unless otherwise noted 2020 2021 2022 2023 2024 Q4’23 Q1’24 Q2’24 Q3’24 Q4’24 Performance Metrics (%) ROAA 1.05 1.32 1.53 1.38 -0.47 1.02 0.65 0.50 0.05 -2.80 ROAE 10.54 12.38 13.98 12.67 -4.44 9.42 5.97 4.70 0.47 -28.19 R
Slide 39: Definitions
Definitions ACL Allowance for Credit Losses LTM Last-Twelve-Months AOCI Accumulated Other Comprehensive Income $MM Millions of Dollars CET1 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 Return
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