MainStreet Bancshares, Inc. - FORM 8-K - EX-99.1

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8-K - MARCH 31, 2020 8-K EARNINGS RELEASE - MainStreet Bancshares, Inc.	mnsb-8k_20200414.htm

Exhibit 99.1




PRESS RELEASE		Contact: Jeff W. Dick
HOLD FOR RELEASE:	April 14, 2020, 8:00 AM ET	(703) 481-4567

MainStreet Bancshares, Inc. Reports First Quarter Earnings

Fairfax, Virginia – April 14, 2020 - MainStreet Bancshares, Inc. (Nasdaq: MNSB) reported net income of $3.5 million for the first quarter of 2020, which represents a 1.04% return on average assets, and a 9.97% return on average equity, or $0.42 per share of common stock (basic and diluted) for the quarter-ended March 31, 2020.

Net interest income of $10.3 million and noninterest income of $1.4 million continued to trend favorably and consistently for the quarter ended March 31, 2020. Loan loss provisions of $350,000 for the quarter ended March 31, 2020 were primarily driven by loan growth.

Total assets were $1.3 billion and net loans were $1.1 billion as of March 31, 2020. Asset quality remained solid with non-performing assets to total assets at 0.10% as of March 31, 2020. Non-interest-bearing deposits were $241.0 million, representing just over 21% of total deposits at March 31, 2020. Total deposits as of March 31, 2020 were $1.1 billion. Capital levels for the Company remain strong.

As of March 31, 2020, the Company’s tangible book value per share was $16.98, up 12.1% from $15.15 as of March 31, 2019. According to Nasdaq, there were 12,093 trades during the quarter totaling 749,744 shares traded. The closing share price of the Company’s common stock on March 31, 2020 was $16.76, or 98.7% of book value. The market cap was $138.4 million as of March 31, 2020. In reaction to the significant drop in share price, the Company repurchased 60,000 shares (0.7% of shares outstanding) on March 13, 2020 at a price of $16.54 per share under its previously announced share repurchase program. The Company does not intend to repurchase additional shares at this time.


COVID-19 Timeline

12/31/2019	1/23/2020	2/29/2020	3/13/2020	3/16/2020
WHO reports mysterious illness in China	WHO declares global health emergency	1^st death reported in U.S.	President Trump declares national emergency	MainStreet Bank adopts work from home strategy

The coronavirus (COVID-19) changed from a relatively unknown status at the start of the year to “pandemic” status in the United States by mid-March. The Company’s first quarter performance was not significantly impacted by the effects of the coronavirus pandemic.

QUOTES: “We had a good first quarter, but from mid-March onward, we’ve been focused on preventative measures to help our customers,” said Chris Brockett, President of MainStreet Bancshares, Inc. and MainStreet Bank. “Our team created meaningful loan forbearance programs for consumers, professionals and small businesses, with the goal of helping to preserve their liquidity. And, when President Trump signed H.R 748, The CARES Act, into law on March 26th, our team worked around the clock to implement the Paycheck Protection Program for our customers.”

“Our technology has been a gamechanger,” said Jeff W. Dick, Chairman & CEO of MainStreet Bancshares, Inc. and MainStreet Bank. “We made the decision to work from home on a Sunday and the next day, Monday March 16^th, all but the limited branch team were up and working from home. Since most of our customers were already comfortable using our online banking platform, we temporarily closed two of our seven locations and reduced the hours of the remaining locations. We set the loan forbearance documents and Paycheck Protection Program documents up for DocuSign digital signature(s) for ease of execution, and we hold all meetings by video calls to

keep our teams ‘in the know’. Finally, we increased the average hourly wage of our dedicated customer-facing branch staff by upwards of 50% as they are literally on the front line of this pandemic.”

ABOUT MAINSTREET BANK: MainStreet operates seven branches in Herndon, Fairfax, Fairfax City, 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 well over 1,000 businesses in the metropolitan area.

MainStreet Bank has a full complement of payment system services for third party payment providers. MainStreet has a known market leader and a highly experienced team ready to help payment providers create a solution perfect for their needs.

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 Bank is an SBA Preferred Lender, offering SBA 7(a) and 504 lending solutions. From mobile banking and Apple Pay to instant-issue Debit Cards, MainStreet Bank is always looking for ways to improve its customer 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 CDARS – a solution that provides up to $55 million in FDIC insurance. 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, 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.

UNAUDITED CONSOLIDATED BALANCE SHEET INFORMATION

(Unaudited)

(In thousands, except share data)

	March 31, 2020		December 31, 2019		September 30, 2019		June 30, 2019		March 31, 2019
ASSETS
Cash and cash equivalents
Cash and due from banks	$	62,098	$	53,376	$	52,580	$	44,976	$	29,741
Federal funds sold		10,677		11,468		19,432		19,835		30,034
Total cash and cash equivalents		72,775		64,844		72,012		64,811		59,775
Investment securities available for sale, at fair value		102,191		92,791		88,198		60,079		69,308
Investment securities held to maturity, at carrying value		23,878		23,914		24,410		24,946		25,487
Restricted equity securities, at cost		5,041		6,157		4,882		5,307		5,732
Loans, net of allowance for loan losses of $9,898, $9,584, $9,370, $9,185, and $9,189, respectively		1,059,628		1,030,425		992,609		983,574		943,735
Premises and equipment, net		14,666		14,153		14,109		14,208		14,226
Other real estate owned, net		1,207		1,207		1,207		1,207		—
Accrued interest and other receivables		4,809		5,420		5,373		5,681		5,644
Bank owned life insurance		24,761		24,562		19,381		14,275		14,169
Other assets		20,786		13,885		11,414		9,945		7,824
Total Assets	$	1,329,742	$	1,277,358	$	1,233,595	$	1,184,033	$	1,145,900
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Non-interest bearing deposits	$	240,979	$	252,707	$	218,087	$	201,405	$	193,744
Interest-bearing DDA deposits		16,846		53,707		54,438		65,117		59,639
Savings and NOW deposits		60,454		63,015		63,746		61,945		61,537
Money market deposits		265,443		141,337		125,716		115,641		147,655
Time deposits		559,489		560,857		601,896		566,292		504,071
Total deposits		1,143,211		1,071,623		1,063,883		1,010,400		966,646
Federal Home Loan Bank advances and other borrowings		10,000		40,000		10,000		20,000		30,000
Subordinated debt		14,812		14,805		14,798		14,791		14,783
Other liabilities		21,424		13,896		11,697		9,806		9,488
Total Liabilities		1,189,447		1,140,324		1,100,378		1,054,997		1,020,917
Stockholders’ Equity:
Common stock, par value $4 per share, authorized 10,000,000 shares; issued and outstanding, 8,260,231 shares at March 31, 2020 including 155,742 unvested shares, 8,260,259 shares at December 31, 2019 including 160,961 unvested shares, 8,260,259 shares at September 30, 2019 including 160,961 unvested shares, 8,250,259 at June 30, 2019 including 153,586 unvested shares, 8,249,759 shares at March 31, 2019 including 153,086 unvested shares.		32,418		32,397		32,397		32,387		32,387
Capital surplus		74,482		75,117		74,860		74,609		74,353
Retained earnings		32,567		29,097		25,535		21,826		18,395
Accumulated other comprehensive gain (loss)		828		423		425		214		(152	)
Total Stockholders’ Equity		140,295		137,034		133,217		129,036		124,983
Total Liabilities and Stockholders’ Equity	$	1,329,742	$	1,277,358	$	1,233,595	$	1,184,033	$	1,145,900

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME INFORMATION

(Unaudited)

(In thousands, except share and per share data)

	Year-to-Date				Three Months Ended
	March 31, 2020		March 31, 2019		March 31, 2020		December 31, 2019		September 30, 2019		June 30, 2019		March 31, 2019
INTEREST INCOME:
Interest and fees on loans	$	14,220	$	12,916	$	14,220	$	14,223	$	14,192	$	13,877	$	12,916
Interest on investment securities		501		556		501		534		497		615		556
Interest on federal funds sold		395		345		395		271		412		375		345
Total interest income		15,116		13,817		15,116		15,028		15,101		14,867		13,817
INTEREST EXPENSE:
Interest on interest bearing DDA deposits		117		245		117		195		275		283		245
Interest on savings and NOW deposits		64		73		64		71		71		74		73
Interest on money market deposits		778		763		778		489		539		587		763
Interest on time deposits		3,566		2,931		3,566		3,730		3,900		3,635		2,931
Interest on Federal Home Loan Bank advances and other borrowings		50		219		50		92		76		162		219
Interest on subordinated debt		241		238		241		244		244		241		238
Total interest expense		4,816		4,469		4,816		4,821		5,105		4,982		4,469
Net interest income		10,300		9,348		10,300		10,207		9,996		9,885		9,348
Provision for loan losses		350		325		350		358		185		750		325
Net interest income after provision for loan losses		9,950		9,023		9,950		9,849		9,811		9,135		9,023
NON-INTEREST INCOME:
Deposit account service charges		487		370		487		460		392		446		370
Bank owned life insurance income		199		105		199		181		106		106		105
Loan swap fee income		403		290		403		111		407		181		290
Net gain on available-for-sale securities		—		—		—		—		—		5		—
Net gains on sale of loans		—		—		—		—		303		263		—
Other fee income		325		161		325		407		228		340		161
Total other income		1,414		926		1,414		1,158		1,436		1,341		926
NON-INTEREST EXPENSES:
Salaries and employee benefits		4,433		3,860		4,433		4,179		3,890		3,847		3,860
Furniture and equipment expenses		454		385		454		457		451		435		385
Advertising and marketing		256		105		256		375		235		191		105
Occupancy expenses		267		213		267		221		214		217		213
Outside services		276		227		276		169		306		161		227
Administrative expenses		164		167		164		198		190		176		167
Other operating expenses		1,293		1,051		1,293		1,104		1,203		1,150		1,051
Total other expenses		7,143		6,008		7,143		6,703		6,489		6,177		6,008
INCOME BEFORE INCOME TAXES		4,221		3,941		4,221		4,304		4,758		4,299		3,941
Income tax expense		751		694		751		742		1,049		868		694
NET INCOME	$	3,470	$	3,247	$	3,470	$	3,562	$	3,709	$	3,431	$	3,247
Net income per common share, basic and diluted	$	0.42	$	0.39	$	0.42	$	0.43	$	0.45	$	0.42	$	0.39
Weighted average number of shares, basic and diluted		8,287,317		8,242,873		8,287,317		8,260,259		8,251,672		8,250,210		8,242,873

UNAUDITED LOAN, DEPOSIT AND BORROWING DETAIL

(Unaudited)

(In thousands)

	March 31, 2020						December 31, 2019						March 31, 2019						Percentage Change
	$ Amount			% of Total			$ Amount			% of Total			$ Amount			% of Total			Last 3 Mos			Last 12 Mos
LOANS:
Construction and land development loans	$	286,756			26.7	%	$	272,620			26.2	%	$	192,494			20.2	%		5.2	%		49.0	%
Residential real estate loans		149,173			13.9	%		150,848			14.5	%		151,884			15.9	%		-1.1	%		-1.8	%
Commercial real estate loans		449,786			42.0	%		421,870			40.5	%		409,522			42.9	%		6.6	%		9.8	%
Commercial industrial loans		118,258			11.0	%		121,225			11.6	%		105,391			11.0	%		-2.4	%		12.2	%
Consumer loans		68,159			6.4	%		75,583			7.2	%		95,299			10.0	%		-9.8	%		-28.5	%
Total Gross Loans	$	1,072,132			100.0	%	$	1,042,146			100.0	%	$	954,590			100.0	%		2.9	%		12.3	%
Less: Allowance for loan losses		(9,898	)					(9,584	)					(9,189	)
Net deferred loan fees		(2,606	)					(2,137	)					(1,666	)
Net Loans	$	1,059,628					$	1,030,425					$	943,735
DEPOSITS:
Non-interest bearing demand deposits	$	240,979			21.1	%	$	252,707			23.6	%	$	193,744			20.0	%		-4.6	%		24.4	%
Interest-bearing demand deposits:
Demand deposits		16,846			1.5	%		53,707			5.0	%		59,639			6.2	%		-68.6	%		-71.8	%
Savings and NOW deposits		60,454			5.3	%		63,015			5.9	%		61,537			6.4	%		-4.1	%		-1.8	%
Money market accounts		265,443			23.2	%		141,337			13.1	%		147,655			15.3	%		87.8	%		79.8	%
Certificates of deposit $250,000 or more		213,409			18.7	%		217,200			20.3	%		124,921			12.9	%		-1.7	%		70.8	%
Certificates of deposit less than $250,000		346,080			30.2	%		343,657			32.1	%		379,150			39.2	%		0.7	%		-8.7	%
Total Deposits	$	1,143,211			100.0	%	$	1,071,623			100.0	%	$	966,646			100.0	%		6.7	%		18.3	%
BORROWINGS:
Federal Home Loan Bank advances		10,000			40.3	%		40,000			73.0	%		30,000			67.0	%		-75.0	%		-66.7	%
Subordinated debt		14,812			59.7	%		14,805			27.0	%		14,783			33.0	%		0.0	%		0.2	%
Total Borrowings	$	24,812			100.0	%	$	54,805			100.0	%	$	44,783			100.0	%		-54.7	%		-44.6	%
Total Deposits and Borrowings	$	1,168,023					$	1,126,428					$	1,011,429						3.7	%		15.5	%

Core customer funding sources ⁽¹⁾	$	785,661			67.2	%	$	654,213			58.1	%	$	566,398			56.0	%		20.1	%		38.7	%
Brokered and listing service sources ⁽²⁾		357,550			30.6	%		417,410			37.1	%		400,248			39.6	%		-14.3	%		-10.7	%
Federal Home Loan Bank advances		10,000			0.9	%		40,000			3.6	%		30,000			3.0	%		-75.0	%		-66.7	%
Subordinated debt ⁽³⁾		14,812			1.3	%		14,805			1.2	%		14,783			1.4	%		0.0	%		0.2	%
Total Funding Sources	$	1,168,023			100.0	%	$	1,126,428			100.0	%	$	1,011,429			100.0	%		3.7	%		15.5	%

(1)	Includes ICS, CDARS, and reciprocal deposits maintained by customers, which represent sweep accounts tied to customer operating accounts.

(2)	Consists of certificates of deposit (CD) through multiple listing services and multiple brokered deposit services, as well as ICS and 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

(Unaudited)

(In thousands)

	For the three months ended March 31, 2020							For the three months ended March 31, 2019
	Average Balance		Interest Income/ Expense		Average Yields/ Rate (annualized)			Average Balance		Interest Income/ Expense		Average Yields/ Rate (annualized)
ASSETS:
Interest earning assets:
Loans ⁽¹⁾	$	1,058,738	$	14,220		5.37	%	$	936,401	$	12,916		5.52	%
Investment securities		73,838		501		2.71	%		68,550		556		3.24	%
Federal funds and interest-bearing deposits		136,314		395		1.16	%		64,944		345		2.12	%
Total interest earning assets	$	1,268,890	$	15,116		4.77	%	$	1,069,895	$	13,817		5.17	%
Other assets		59,363							36,788
Total assets	$	1,328,253						$	1,106,683
Liabilities and Stockholders’ Equity:
Interest-bearing liabilities:
Interest-bearing demand deposits	$	33,558	$	117		1.39	%	$	56,701	$	245		1.73	%
Money market deposit accounts		230,158		778		1.35	%		143,825		763		2.12	%
Savings and NOW deposits		62,699		64		0.41	%		58,616		73		0.50	%
Time deposits		567,112		3,566		2.52	%		468,009		2,931		2.51	%
Total interest-bearing deposits	$	893,527	$	4,525		2.03	%	$	727,151	$	4,012		2.21	%
Federal funds and repos purchased		—		—		—		$	139	$	1		2.88	%
Subordinated debt		14,809		241		6.51	%		14,780		238		6.44	%
FHLB borrowings		10,330		50		1.94	%		34,111		218		2.56	%
Total interest-bearing liabilities	$	918,666	$	4,816		2.10	%	$	776,181	$	4,469		2.30	%
Demand deposits and other liabilities		270,422							207,180
Total liabilities	$	1,189,088						$	983,361
Stockholders’ Equity		139,165							123,322
Total Liabilities and Stockholders’ Equity	$	1,328,253						$	1,106,683
Interest Rate Spread						2.67	%						2.87	%
Net Interest Income and Margin			$	10,300		3.25	%			$	9,348		3.50	%

(1)	Includes loans classified as non-accrual.

UNAUDITED SUMMARY FINANCIAL DATA

(Unaudited)

(Dollars in thousands except per share data)

	At or For the Three Months Ended
	March 31,
	2020			2019
Per share Data and Shares Outstanding
Earnings per share (basic and diluted)	$	0.42		$	0.39
Tangible book value per share	$	16.98		$	15.15
Weighted average common shares (basic and diluted)		8,287,317			8,242,873
Common shares outstanding at end of period		8,260,231			8,249,759
Performance Ratios
Return on average assets (annualized)		1.04	%		1.17	%
Return on average equity (annualized)		9.97	%		10.53	%
Yield on earning assets (annualized)		4.77	%		5.17	%
Cost of interest bearing liabilities (annualized)		2.10	%		2.30	%
Net interest spread		2.67	%		2.87	%
Net interest margin (annualized)		3.25	%		3.50	%
Noninterest income as a percentage of average assets (annualized)		0.43	%		0.33	%
Noninterest expense to average assets (annualized)		2.15	%		2.17	%
Efficiency ratio		60.98	%		58.48	%
Asset Quality
Loans 30-89 days past due to total gross loans		0.19	%		0.01	%
Loans 90 days past due to total gross loans		0.01	%		0.00	%
Non-accrual loans to total gross loans		0.01	%		0.20	%
Other real estate owned	$	1,207		$	—
Non-performing assets	$	1,265		$	1,973
Non-performing assets to total assets		0.10	%		0.17	%
Allowance for loan losses to total gross loans		0.93	%		0.96	%
Allowance for loan losses to non-performing assets		7.82			4.66
Net loan charge-offs (recoveries)	$	36		$	(33	)
Net charge-offs to average loans (annualized)		0.01	%		0.00	%
Troubled debt restructurings (total)
Performing in accordance with modified terms	$	1,477		$	1,502
Not performing in accordance with modified terms	$	—		$	1,939
Regulatory Capital Ratios (Bank only) (1)
Total risk-based capital ratio		12.44	%		13.45	%
Tier 1 risk-based capital ratio		11.68	%		12.61	%
Leverage ratio		11.45	%		12.38	%
Common equity tier 1 ratio		11.68	%		12.61	%
Other information
Closing stock price	$	16.76		$	21.60
Tangible equity / tangible assets		10.55	%		10.91	%
Average tangible equity / average tangible assets		10.48	%		11.14	%
Number of full time equivalent employees		125			113
# Full service branch offices		7			6

(1)	Regulatory capital ratios as of March 31, 2020 are preliminary.

MainStreet Bancshares, Inc. - FORM 8-K - EX-99.1 - April 14, 2020

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MainStreet Bancshares, Inc. Reports