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MainStreet Bancshares Reports Record Balance Sheet Growth in Second Quarter

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MainStreet Bancshares Reports Record Balance Sheet Growth in Second Quarter

PR Newswire

FAIRFAX, Va., July 20, 2018 /PRNewswire/ -- 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%. 

MainStreet Bank Headquarters 10089 Fairfax Blvd Fairfax, Virginia  22030 (PRNewsfoto/MainStreet Bancshares, Inc.)

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.

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. 

Contact:

Jeff W. Dick


(703) 481-4567

 

UNAUDITED CONSOLIDATED BALANCE SHEET INFORMATION

(Unaudited)

(In thousands, except ratios and per share data)








6/30/18

3/31/18

12/31/17

9/30/17

6/30/17

ASSETS






Cash and cash equivalents






  Cash and due from banks

$    27,163

$    21,597

$    37,493

$    20,804

$    14,801

  Federal funds sold

4,104

5,316

             ―

             ―

4,674

      Total cash and cash equivalents

31,267

26,913

37,493

20,804

19,475

Investment securities available for sale, at fair value

20,806

47,009

51,314

51,854

37,274

Investment securities held to maturity, at carrying value

27,422

27,469

27,517

27,566

27,615

Restricted equity securities, at cost

4,737

5,545

4,241

3,898

3,895

Loans, net of allowance for loan losses

815,875

702,700

654,339

569,137

525,989

Premises and equipment, net

14,660

14,568

13,965

13,997

12,008

Other real estate owned, net

             ―

             ―

             ―

             ―

135

Accrued interest and other receivables

4,695

3,938

3,849

3,076

2,737

Bank owned life insurance

13,851

13,743

13,637

13,526

13,417

Other assets

2,842

1,794

1,596

1,687

1,715

   Total Assets

$  936,155

$  843,679

$  807,951

$  705,545

$  644,260







LIABILITIES AND STOCKHOLDERS' EQUITY






Liabilities:






Non-interest bearing deposits

$  179,827

$  164,795

$  171,572

$  155,586

$  139,023

Interest bearing DDA deposits

60,389

54,097

48,432

25,888

27,639

Savings and NOW deposits

48,659

49,935

47,855

42,908

48,268

Money market deposits

118,194

118,532

82,828

69,425

86,009

Other time deposits

394,433

303,575

316,968

302,689

237,853

   Total deposits

801,502

690,934

667,655

596,496

538,792

Federal Home Loan Bank advances and other borrowings

45,117

64,129

53,780

42,604

40,167

Subordinated Debt

14,762

14,755

14,747

14,740

14,733

Other liabilities

2,617

3,298

2,968

1,647

1,807

   Total Liabilities

863,998

773,116

739,150

655,487

595,499







Stockholders' Equity:






Common stock

22,691

21,579

21,442

16,835

16,808

Capital surplus

40,731

35,769

35,693

22,336

22,229

Retained earnings

9,020

13,368

11,682

10,922

9,777

Accumulated other comprehensive income (loss)

(285)

(153)

(16)

(35)

(53)

   Total Stockholders' Equity

72,157

70,563

68,801

50,058

48,761







   Total Liabilities and Stockholders' Equity

$  936,155

$  843,679

$  807,951

$  705,545

$  644,260







Other Financial Highlights






   Annualized return on average assets

0.76%

0.84%

0.60%

0.68%

0.68%

   Annualized return on average equity

8.90%

9.64%

7.44%

8.22%

8.26%

   Annualized net interest margin

3.57%

3.57%

3.49%

3.52%

3.64%

   Efficiency ratio

61.44%

62.85%

66.90%

66.95%

68.47%

   Gross loans to deposits

103.10%

102.69%

98.86%

96.25%

98.45%

   Allowance for loan losses to total loans

0.94%

0.89%

0.86%

0.87%

0.84%

   Past due loans 30-89 days to total gross loans

0.01%

0.02%

0.03%

0.03%

0.37%

   Past due loans 90 days or more to total gross loans

0.00%

0.00%

0.00%

0.48%

0.00%

   Non-accrual loans to total gross loans

0.24%

0.27%

0.31%

0.35%

0.02%

   Quarterly net loan charge-offs (recoveries)

$         (2)

$           7

$           3

$           7

$         39

   Book value per share (1)

$    12.42

$    12.16

$    11.99

$    10.91

$    10.63

   Closing stock price

$    20.75

$    20.95

$    17.52

$    16.30

$    16.05







Regulatory Capital Ratios (Bank Only)






   Tier 1 risk-based capital ratio

9.25%

10.62%

10.65%

10.08%

10.74%

   Common equity tier 1 capital ratio

9.25%

10.62%

10.65%

10.08%

10.74%

   Total risk-based capital ratio

10.10%

11.42%

11.43%

10.88%

11.52%

   Leverage ratio

9.64%

10.44%

10.42%

9.43%

10.32%







          (1)     Amounts for all periods presented are adjusted to reflect a 5% stock dividend effective April 9, 2018.



 


UNAUDITED CONSOLIDATED STATEMENTS OF INCOME INFORMATION


(Unaudited)


(In thousands, except share and per share data)

 

 







Year-to-Date

Three Months Ended



6/30/18

6/30/17

6/30/18

3/31/18

12/31/17

9/30/17

6/30/17


INTEREST INCOME:









Interest and fees on loans

$  17,965

$  11,070

$    9,649

$    8,316

$    7,437

$    6,573

$    5,717


Interest on investment securities

748

809

407

341

343

424

413


Interest on federal funds sold

215

87

115

100

122

88

47


   Total interest income

18,928

11,966

10,171

8,757

7,902

7,085

6,177











INTEREST EXPENSE:









Interest on interest bearing DDA deposits

386

84

222

164

70

40

43


Interest on savings and NOW deposits

109

90

63

46

42

50

47


Interest on money market deposits

678

266

414

264

151

148

150


Interest on other time deposits

2,604

1,130

1,513

1,091

1,109

875

594


Interest on Federal Home Loan Bank    

   advances and other borrowings

 

389

 

192

 

210

 

179

 

141

 

119

 

108


Interest on Subordinated Debt

479

482

241

238

239

243

241


     Total interest expense

4,645

2,244

2,663

1,982

1,752

1,475

1,183


 

Net interest income

 

14,283

 

9,722

 

7,508

 

6,775

 

6,150

 

5,610

 

4,994


Provision for loan losses

2,030

620

1,395

635

715

550

425


     Net interest income after provision

        for loan losses

 

12,253

 

9,102

 

6,113

 

6,140

 

5,435

 

5,060

 

4,569


OTHER INCOME:









Deposit account service charges

472

394

259

213

221

221

202


Bank owned life insurance income

215

216

109

106

111

108

110


Other fee income

404

595

215

189

174

237

246


     Total other income

1,091

1,205

583

508

506

566

558


OTHER EXPENSES:









Salaries and employee benefits

5,560

4,821

2,811

2,749

2,400

2,431

2,449


Furniture and equipment expenses

832

592

451

381

347

333

306


Advertising and marketing

297

57

141

156

127

80

26


Occupancy expenses

310

324

159

151

143

138

153


Outside services

436

242

240

196

209

212

113


Administrative expenses

273

188

155

118

145

115

98


Other operating expenses

1,738

1,258

912

826

838

657

608


     Total other expenses

9,446

7,482

4,869

4,577

4,209

3,966

3,753


 

INCOME BEFORE INCOME TAXES

 

 

3,898

 

2,825

 

1,827

 

2,071

 

1,732

 

1,660

 

1,374


Income tax expense

709

848

324

385

971

516

427


NET INCOME

$  3,189

$  1,977

$  1,503

$  1,686

$     761

$  1,144

$     947




















Net income per common share,

   basic and diluted (1)

$    0.55

$    0.44

$    0.26

$    0.29

$    0.14

$    0.25

$    0.21


Weighted average number of shares,

   basic and diluted (1)

5,801,541

4,525,320

5,803,967

5,799,496

5,502,419

4,526,114

4,525,688











(1)     Amounts for all periods presented are adjusted to reflect a 5% stock dividend effective April 9, 2018.















 

UNAUDITED LOAN, DEPOSIT AND BORROWING DETAIL

(Unaudited)

(In thousands)








June 30, 2018

March 31, 2018

June 30, 2017

Percentage Change


$ Amount

% of Total

$ Amount

% of Total

$ Amount

% of Total

Last 3 Mos

Last 12 Mos

LOANS:









Construction and land development loans

$ 125,475

15.2%

$ 105,192

14.8%

$   61,038

11.5%

19.3%

105.6%

Residential real estate loans

124,253

15.1%

118,295

16.7%

103,085

19.4%

5.0%

20.5%

Commercial real estate loans

342,757

41.6%

278,127

39.2%

208,298

39.2%

23.2%

64.6%

Commercial industrial loans

127,678

15.5%

110,068

15.5%

71,545

13.5%

16.0%

78.5%

Consumer loans

104,286

12.6%

97,821

13.8%

86,781

16.4%

6.6%

20.2%

       Total Gross Loans

$ 824,449

100.0%

$ 709,503

100.0%

$ 530,747

100.0%

16.2%

55.3%

Less: Allowance for loan losses

(7,731)


(6,334)


(4,450)




         Net deferred loan fees

(843)


(469)


(308)




       Net Loans

$ 815,875


$ 702,700


$ 525,989






















DEPOSITS:









Non-interest bearing demand deposits

$ 179,827

22.4%

$ 164,795

23.9%

$ 139,082

25.8%

9.1%

29.3%

Interest bearing demand deposits:









  Savings and NOW deposits

48,660

6.1%

49,935

7.2%

48,268

9.0%

-2.6%

0.8%

  Money market accounts

108,182

13.5%

113,528

16.4%

86,009

16.0%

-4.7%

25.8%

  Certificates of deposit:









    $100,000 or more

135,322

16.9%

92,727

13.4%

76,684

14.2%

45.9%

76.5%

    Less than $100,000

29,410

3.7%

22,785

3.3%

19,501

3.6%

29.1%

50.8%

    Third party public funds

69,942

8.7%

85,030

12.3%

52,408

9.7%

-17.7%

33.5%

    CD Rateline

51,632

6.4%

45,490

6.6%

66,709

12.4%

13.5%

-22.6%

    QwickRate certificates of deposit

51,809

6.5%

7,440

1.1%

           ―

0.0%

596.4%

        N/M

    ICS

25,359

3.2%

24,075

3.5%

27,639

5.1%

5.3%

-8.2%

    CDARS

53,088

6.6%

50,103

7.2%

22,492

4.2%

6.0%

136.0%

    Brokered deposits

48,271

6.0%

35,026

5.1%

           ―

0.0%

37.8%

        N/M

       Total Deposits 

$ 801,502

100.0%

$ 690,934

100.0%

$ 538,792

100.0%

16.1%

48.8%



















BORROWINGS:









Federal funds purchased

$         ―

0.0%

$         ―

0.0%

$         ―

0.0%

0.0%

-100.0%

Federal Home Loan Bank advances

45,117

75.3%

64,129

81.3%

40,167

73.2%

-29.6%

12.3%

Subordinated debt

14,762

24.7%

14,755

18.7%

14,733

26.8%

0.1%

0.2%

       Total Borrowings

$  59,879

100.0%

$   78,884

100.0%

$   54,900

100.0%

-24.1%

9.1%










Total Deposits and Borrowings

$ 861,381


$ 769,818


$ 593,692


11.9%

45.1%










Core customer funding sources (1)

$ 579,848

67.3%

$ 517,948

67.3%

$ 419,675

70.7%

12.0%

38.2%

Wholesale funding sources (2)

266,771

31.0%

237,115

30.8%

159,284

26.8%

12.5%

67.5%

Subordinated debt (3)

14,762

1.7%

14,755

1.9%

14,733

2.5%

0.1%

0.2%

       Total Funding Sources

$ 861,381

100.0%

$ 769,818

100.0%

$ 593,692

100.0%

11.9%

45.1%



















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

(2)Consists of CD Rateline and QwickRate certificates of deposit, third party public funds, brokered deposits and Federal Home Loan Bank advances.

(3)Subordinated debt obligation qualifies as Tier 2 capital.










 

UNAUDITED AVERAGE BALANCE SHEETS, INTEREST AND RATES

(Unaudited)

(000's except percentages)



Six Months Ended June 30, 2018


Six Months Ended June 30, 2017


Average Balance 

Interest Income/ Expense

Average
Yields/ Rate


Average
Balance
 

Interest
Income/
Expense

Average
Yields/ Rate

ASSETS:








Interest earning assets:








  Loans (1)

$   721,101

$  17,965

5.02%


$   478,493

$  11,070

4.67%

  Investment securities

55,453

748

2.72%


54,041

809

3.02%

  Federal funds and repos sold

29,338

215

1.48%


19,667

87

0.89%

     Total interest earning assets

$   805,892

$  18,928

4.74%


$   552,201

$  11,966

4.37%

Other assets

35,765




28,872



Total assets

$   841,657




$   581,073











Liabilities and Stockholders' Equity:








Interest-bearing liabilities:








  Interest-bearing demand deposits

$     54,728

$    386

1.42%


$    27,474

$        84

0.62%

  Money market deposit accounts

109,671

678

1.24%


78,776

266

0.68%

  Savings and NOW deposits

48,922

109

0.45%


45,609

90

0.40%

  Time deposits

326,276

2,604

1.61%


208,216

1,130

1.09%

Total interest-bearing deposits

539,597

3,777

1.41%


$  360,075

$   1,570

0.88%

  Federal funds and repos purchased

885

12

2.73%


226

2

1.78%

  Subordinated debt

14,755

479

6.55%


14,914

482

6.52%

  FHLB borrowings

45,589

377

1.67%


44,490

190

0.86%

Total interest-bearing liabilities

$   600,826

$  4,645

1.56%


$  419,705

$    2,244

1.08%









Demand deposits and other liabilities

170,177




101,209



Total liabilities

$  771,003




520,914



Stockholders' Equity

70,654




60,340



Total Liabilities and Stockholders' Equity

$  841,657




$  581,254











Interest Rate Spread



3.18%




3.29%

Net Interest Income and Margin


$  14,283

3.57%



$  9,722

3.55%

















          (1) Includes loans classified as non-accrual.









 

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SOURCE MainStreet Bancshares, Inc.

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