MainStreet Bancshares Reports Record Balance Sheet Growth in Second Quarter

Fairfax, VA ⎯ MainStreet Bancshares, Inc. (OTCQX: MNSB), the holding company for MainStreet Bank, reported a growth in total assets for the first six months of 2018 of $128.2 million, or 15.9%.

Year-on-year asset growth increased $291.9 million, or 45.3%. The Company reported total assets of $936.2 million at June 30, 2018.
Net loans were $815.9 at June 30, 2018. During the first six months of 2018 net loans increased $161.5 million or 24.7%. Year over year net loans increased $289.9 million or 55.1% from June 30, 2017 to June 30, 2018. During the first six months of 2018 loan originations continued to be very strong. Asset quality is good with nonperforming loans at 0.24% of total gross loans on June 30, 2018.

Non-interest-bearing deposits increased to $180 million as of June 30, 2018, a 29% increase from June 30, 2017. Non-interest-bearing deposits represent 22.4% of total deposits at June 30, 2018. Total deposits as of June 30, 2018 were $802 million an increase of $263 million from June 30, 2017.

Net income was $1.5 million for the second quarter of 2018, which is 59% higher than second quarter 2017 net income of $947 thousand. Net income was $3.2 million for the six months ended June 30, 2018, an increase of $1.2 million or 61.3% as compared to net income of $2.0 million for the six months ended June 30, 2017. Earnings per share for the second quarter 2018 were $0.26 versus $0.21 for second quarter 2017. Net income per diluted share was $0.55 during the first six months of 2018 compared to $0.44 per diluted share during the same period in 2017. The earnings per share are adjusted for a 5% dividend paid on April 30, 2018.

Net interest income was $7.5 million for the three months ended June 30, 2018 up 50.3% from $4.9 million for the three months ended June 30, 2018. Net interest income was $14.3 million for the six months ended June 30, 2018 up 46.9% from $9.7 million for the six months ended June 30, 2018. The net interest margin was 3.57% for the six months ended June 30, 2018 as compared to 3.55% for the six months ended June 30, 2017. The yield on average net loans increased 37 basis points year over year from June 30, 2017 to June 30, 2018. The average cost of interest bearing liabilities increased 48 basis points year over year from June 30, 2017 to June 30, 2018. The increase in cost of loans and deposits was primarily related to overall increase in market rates. During the past twelve months, the Federal Reserve Bank increased rates by 125 basis points to a target rate of 2.0% as of June 14, 2018.

The Company recognized a provision for loan losses of $2.0 million for the six months ended June 30, 2018 compared to a provision expense of $620 thousand for the same period in 2017.The company reported net loan charge-offs of $5 thousand in the first six months of 2018 compared to net charge-offs of $150 thousand for the first six months of 2017. The primary increase in provision expense is the net increase of the bank’s loan portfolio.

Non-interest income excluding securities gains is down 9.46% for first six months of 2018 versus 2017 for two key reasons: 1) a decline in mortgage originations for the first quarter of 2018, and 2) a sizeable loan prepayment penalty earned in the first quarter of 2017.

Non-interest expense for the second quarter of 2018 is $4.9 million compared to $3.8 million for the second quarter of 2017. This is primarily due to an increase in employees and salaries in support of balance sheet growth. The efficiency ratio improved to 61.44% for the first six months of 2018 compared to 68.47% for the same period in 2017.

The book value per common share is $12.42 as of June 30, 2018. According to OTC Markets, the share price closed the quarter at $20.75 per common share, or 167% of book value. During the six months there were 648 trades for a total volume of 326,008 common shares totaling $6.4 million.

QUOTES: “Our team has a strong reputation in the markets we serve, and we have had the great fortune to capitalize on that reputation. We are very pleased to add Leesburg/Loudoun County as our newest banking office.” Says Chris Brockett, President of MainStreet Bancshares, Inc. and MainStreet Bank.

“Our significant growth is backstopped by a very robust and scalable infrastructure,” says Jeff W. Dick, Chairman and CEO of MainStreet Bancshares, Inc. and MainStreet Bank. “As a result, I am confident that our balance sheet growth is well-structured and of good quality.

ABOUT MAINSTREET BANK: MainStreet operates six branches in Herndon, Fairfax, Fairfax City, McLean, Leesburg and Clarendon. In addition, MainStreet 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 has a full complement of payment system services for third party payment providers. MainStreet has a nationally known market leader on-staff ready to help payment providers create a solution perfect for their needs.

MainStreet 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 also works with the SBA to offer 7A 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, DC 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 multi-million-dollar FDIC insurance. Further information on the Bank can be obtained by visiting its website at mstreetbank.com.

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This release contains forward-looking statements, including our expectations with respect to future events that are subject to various risks and uncertainties. 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. Other risks that can affect the Bank are detailed from time to time in our annual reports. 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.

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