Steady Loan and Deposit Growth Fuel 8% Rise in Quarter-to-Quarter Net Income

FAIRFAX, Va., April 17, 2023 /PRNewswire/ -- MainStreet Bancshares, Inc. (Nasdaq: MNSB & MNSBP), the holding company for MainStreet Bank, reported record net income of $8.2 million for the quarter-ended March 31, 2023.  This represents a 50% increase from the net income reported in the 1^st quarter of 2022.  First-quarter results represent:

• 1.75% ROAA
• 4.69% NIM
• $1.01 EPS
• $22.22 TBV
• 16.4% ROAE

(ROAA – Return on Average Assets; NIM – Net Interest Margin; EPS – Earnings Per Share common basic and diluted; TBV – Tangible Book Value per common share; ROAE – Return on Average Total Equity.)

"In light of the recent banking tensions, we'd be remiss if we didn't address the important issues on the table," said Jeff W. Dick, Chairman and CEO of MainStreet Bancshares, Inc. and MainStreet Bank. "We've taken the opportunity to re-evaluate our risk management processes along with our current balance sheet strategy.  The result of that review is that we remain comfortable and confident with our risk profile - given the current and anticipated economic environment. Our deposit base is stable and growing. Currently nearly 70% of our outstanding deposits are insured by the FDIC and we offer all depositors access to additional FDIC insurance coverage through IntraFi. Our systems for managing liquidity risk, interest rate risk, and credit risk, along with all the other risks we manage daily, continue to give us an accurate assessment of the Bank and allow us to manage to our approved risk tolerance. Our primary objective is to ensure the ongoing safety and soundness of the Bank and the protection of depositor's money. We have demonstrated the ability to do just that while pursuing good opportunities and rewarding investors with high quality performance."

The Company has a solid risk management foundation. The leadership team built the Bank with good risk management systems and procedures in place from the start. Mr. Dick's strong background in risk management started with his first career as a prudential banking supervisor in the U.S. and then in the U.K. While in the U.K., Mr. Dick was an adviser to the Bank of England on modernizing their approach to risk-based banking supervision.

Net interest income reached $21.1 million in the quarter ended March 31, 2023, up 38.8% from the year-earlier first quarter's $15.2 million. MainStreet Bank benefited from having an asset-sensitive balance sheet during a 12-month period in which the Federal Reserve undertook nine interest rate increases, beginning in March 2022. This propelled the average net interest margin (NIM) higher by 76 basis points to 4.69% for the quarter ended March 31, 2023, versus 3.93% a year earlier.

"Implementing the Current Expected Credit Losses (CECL) accounting standard in the first quarter of 2023 resulted in a 15.6% increase in credit reserves. In all, we increased our credit reserves to $16.6 million, a 17.6% increase that also reflects loan growth," said Thomas J. Chmelik, Chief Financial Officer of MainStreet Bancshares Inc. and MainStreet Bank. He noted that the level of Accumulated Other Comprehensive Income (AOCI) for the Company remains low, at -3.7% of total capital.

The loan portfolio grew 14.4% to $1.62 billion as of March 31, 2023, up from $1.41 billion in the year-earlier first quarter. Loan quality remained pristine, with zero nonperforming assets. Total deposits climbed 13.8% to $1.63 billion, up from $1.43 billion a year earlier. Non-interest-bearing deposits represent 29.9% of the total, and 63.9% of total deposits are core deposits. There was significant growth in time deposits, which rose to $730.1 million, up 58.4% from a year earlier. The bank's total assets grew 16.6% to reach $2.06 billion as of March 31, 2023, versus $1.76 billion a year earlier.

"While all banks are experiencing some runoff in non-interest-bearing deposits, we were able to attract approximately $30 million in fresh deposits during a period of market upheaval in March, and loan demand and core deposit growth continue to be solid in our DC Metro market," said Abdul Hersiburane, President of MainStreet Bank. "Pressure on deposit pricing is to be expected in a rising-rate environment, and we are responding with products that carry yields and terms calibrated to our assessment of the interest rate outlook, such as a 15-month CD."

The Company's efficiency ratio stood at 53% for the quarter ended March 31, 2023, from 55% a year earlier. This improvement occurred even as the Company was making significant investments in Avenu™, with the hiring process accelerating as the division moves toward being fully operational in 2023.

Avenu™ Makes Major Strides, Onboards First Client
Avenu™ is tracking to an April 30 launch as our designers and engineers complete final sprints to harden our multitenancy and cyber architecture and to accelerate implementation of a debit card for funding. Avenu™ connects our fintech partners and their apps directly and seamlessly to MainStreet Bank's banking core. Avenu™ is expected to accelerate MainStreet Bank's deposit growth to support expanded lending.

"With three companies now signed up to proceed, we are inches away from going live with Avenu™, which will be a gateway to fast, simple secure payments for our end-users," said Todd Youngren, president of Avenu™. "When you are developing a platform from the ground up, you have to address challenges as they arise, and that's exactly what we've been doing as our team works full tilt toward our launch."

Chairman and CEO Jeff W. Dick elaborated: "We are committed to a seamless launch for Avenu™, and in the current environment we feel strongly that time is on our side. We are unwilling to cut corners because reliability and compliance are critical features of Avenu™. We are very proud of creating an innovative system that allows partners to connect to the core system of a reliable bank with sharp instincts about risks and compliance."

ABOUT AVENU™
Avenu™ — Banking Delivered
Avenu™ is the only embedded banking solution that connects our partners and their apps directly and seamlessly to a banking core — MainStreet Bank's banking core. We are not a sponsor bank without our own technology, and we are not a middleware software company (aggregator) without our own bank. We are Avenu™, a leading financial technology company backed by an established community business bank in the heart of Washington, D.C.

Avenu™ — Serving a Community of Innovation
Our clients are fintechs, application developers, money movers, and entrepreneurs. They all have one thing in common: They are innovating how money moves to solve real-world issues and help communities thrive. We are focused on servicing our community and long-term business relationships.

ABOUT MAINSTREET BANK: MainStreet operates six branches in Herndon, Fairfax, 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 thousands of businesses in the metropolitan area.

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 also works with the SBA to offer 7A and 504 lending solutions. From sophisticated cash management to enhanced mobile banking and instant-issue Debit Cards, MainStreet Bank is always looking for ways to improve our customer's 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 excess FDIC insurance through IntraFi. 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, future impacts of the novel coronavirus (COVID-19) outbreak, 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. 

Contact: Debra Cope
Director of Corporate Communications
(703) 481-4599