MainStreet Bancshares (MNSB) 8-K MainStreet Bancshares, Inc. Reports Record Second Quarter Earnings

Exhibit 99.1

PRESS RELEASE	Contact: Jeff W. Dick
July 15, 2019	(703) 481-4567

MainStreet Bancshares, Inc. Reports Record Second Quarter Earnings

Fairfax, Virginia – MainStreet Bancshares, Inc. (NASDAQ: MNSB) reported record net income of $3.4 million for the second quarter of 2019; more than double the amount from the second quarter of 2018.

The Company recorded net income of $6.7 million for the first half of 2019; slightly more than double that earned in the first half of 2018.  Earnings per share for both common and diluted shares was $0.81 for the six months ending June 30, 2019, compared to $0.55 for both common and diluted shares for the six months ended June 30, 2018.  The Company produced a 1.18% return on average assets and 10.67% return on average equity for the six months ended June 30, 2019, compared to a 0.76% return on average assets and a 9.03% return on average equity for the first six months ended June 30, 2018.

Net interest income was $19.2 million for the six months ending June 30, 2019, nearly double the amount for the six months ending June 30, 2018.  Loan loss provisions of $1.1 million for the six months ending June 30, 2019 decreased 47% from the six months ending June 30, 2018.  The decrease in loan loss provisions is largely tied to the Company’s strategic decision to moderate loan growth.  

Noninterest income of $2.3 million for the six months ending June 30, 2019 was more than double the amount from the six months ending June 30, 2018.  The increase is due to an increase in deposit account fees, interest rate swap fees related to loan transactions, and gains recorded for the sale of the guaranteed portion of Small Business Administration (“SBA”) loans.  These sources are expected to continue in a consistent manner going forward.

Total assets were $1.2 billion at June 30, 2019, as compared to $936.1 million at June 30, 2018, an increase of 27%. Net loans at June 30, 2019 total $983.6 million against net loans outstanding at June 30, 2018 of $815.9 million, an increase of 21%.  Asset quality remains solid with non-performing assets to total assets at 0.10% as of June 30, 2019, down from 0.21% as of June 30, 2018. Capital levels for the Company remain strong.  

Non-interest-bearing deposits increased to $201.4 million as of June 30, 2019, a 12% increase from June 30, 2018.  Non-interest-bearing deposits represent 20% of total deposits at June 30, 2019.  Total deposits as of June 30, 2019 were $1.0 billion an increase of $209.6 million from June 30, 2018.

As of June 30, 2019, the Company’s tangible book value per share was $15.64, up 26% from $12.42 as of June 30, 2018.  According to NASDAQ, there were 12,179 trades during the quarter totaling 2.0 million shares traded. The closing share price was $22.79, or 146% of book value. The market cap was $188.0 million as of June 30, 2019.

QUOTES: “We are excited with the opportunity to expand our branch network into Washington, DC later this year,” says Chris Brockett, President of MainStreet Bancshares, Inc. and MainStreet Bank. “With nearly a quarter of our outstanding loans originating from the DC corridor, we feel confident that we can have a strong presence in the District that will complement our overall footprint.”

“Our goal for 2019 is to moderate growth in order to increase core deposits and enhance our net interest margin,” says Jeff W. Dick, Chairman and CEO of MainStreet Bancshares, Inc. and MainStreet Bank. “Balance sheet growth for the first half of 2019 is 7.6%, which is down from 15.9% for the first half of 2018.  While core deposit growth remains a challenge, our Business Bankers are making good inroads and we continue to build our Payments team, which should further enhance core deposit growth as well as fee income.”

ABOUT MAINSTREET BANK:  MainStreet operates six branches in Herndon, Fairfax, Fairfax City, McLean, Leesburg and Clarendon.  A seventh branch on 1130 Connecticut Avenue in Washington, DC will open late in the third quarter of 2019.  

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 and a highly experienced team 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.  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)

	June 30, 2019		March 31, 2019			December 31, 2018			September 30, 2018			June 30, 2018
ASSETS
Cash and cash equivalents
Cash and due from banks	$	44,976	$	29,741		$	27,886		$	38,634		$	27,163
Federal funds sold		19,835		30,034			30,190			21,739			4,104
Total cash and cash equivalents		64,811		59,775			58,076			60,373			31,267
Investment securities available for sale, at fair value		60,079		69,308			55,979			79,489			20,806
Investment securities held to maturity, at carrying value		24,946		25,487			26,178			26,221			27,422
Restricted equity securities, at cost		5,307		5,732			5,894			4,209			4,737
Loans, net of allowance for loan losses of $9,185, $9,189, $8,831, $8,327, and $7,731, consecutively		983,574		943,735			917,125			850,822			815,875
Premises and equipment, net		14,208		14,226			14,222			14,414			14,660
Other real estate owned, net		1,207		-			-			-			-
Accrued interest and other receivables		5,681		5,644			5,148			4,919			4,695
Bank owned life insurance		14,275		14,169			14,064			13,957			13,851
Other assets		10,676		8,005			3,927			2,577			2,842
Total Assets	$	1,184,764	$	1,146,081		$	1,100,613		$	1,056,981		$	936,155
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Non-interest bearing deposits	$	201,405	$	193,744		$	211,749		$	191,986		$	179,827
Interest-bearing DDA deposits		65,117		59,639			60,588			59,295			60,389
Savings and NOW deposits		61,945		61,537			51,371			52,602			48,659
Money market deposits		115,641		147,655			138,153			109,498			118,194
Time deposits		567,023		504,252			458,276			476,511			394,433
Total deposits		1,011,131		966,827			920,137			889,892			801,502
Federal Home Loan Bank advances and other borrowings		20,000		30,000			40,000			30,000			45,117
Subordinated debt		14,791		14,783			14,776			14,769			14,762
Other liabilities		9,806		9,488			4,449			2,785			2,617
Total Liabilities		1,055,728		1,021,098			979,362			937,446			863,998
Stockholders’ Equity:
Common stock, par value $4 per share, authorized 10,000,000    shares; issued and outstanding, 8,250,259 shares at June 30, 2019    including 170,359 unvested shares, 8,249,759 at March 31, 2019    including 153,086 unvested shares, 8,177,978 shares at    December 31, 2018 including 133,869 unvested shares, 8,179,871    shares at September 30, 2018 including 142,457 unvested shares,    5,810,498 at June 30, 2018 including 144,626 unvested shares.		32,387		32,387			32,177			32,177			22,691
Capital surplus		74,609		74,353			74,256			76,427			40,731
Retained earnings		21,826		18,395			15,185			11,371			9,020
Accumulated other comprehensive gain (loss)		214		(152	)		(367	)		(440	)		(285	)
Total Stockholders’ Equity		129,036		124,983			121,251			119,535			72,157
Total Liabilities and Stockholders’ Equity	$	1,184,764	$	1,146,081		$	1,100,613		$	1,056,981		$	936,155

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME INFORMATION

(Unaudited)

(In thousands, except share and per share data)

	Year-to-Date				Three Months Ended
	June 30, 2019		June 30, 2018		June 30, 2019		March 31, 2019		December 31, 2018		September 30, 2018		June 30, 2018
INTEREST INCOME:
Interest and fees on loans	$	26,793	$	17,965	$	13,877	$	12,916	$	12,244	$	11,061	$	9,649
Interest on investment securities		1,171		748		615		556		381		341		407
Interest on federal funds sold		720		215		375		345		457		423		115
Total interest income		28,684		18,928		14,867		13,817		13,082		11,825		10,171
INTEREST EXPENSE:
Interest on interest bearing DDA deposits		528		386		283		245		269		245		222
Interest on savings and NOW deposits		147		109		74		73		77		65		63
Interest on money market deposits		1,350		678		587		763		598		432		414
Interest on time deposits		6,566		2,604		3,635		2,931		2,784		2,677		1,513
Interest on Federal Home Loan Bank    advances and other borrowings		381		389		162		219		188		199		210
Interest on subordinated debt		479		479		241		238		244		243		241
Total interest expense		9,451		4,645		4,982		4,469		4,160		3,861		2,663
Net interest income		19,233		14,283		9,885		9,348		8,922		7,964		7,508
Provision for loan losses		1,075		2,030		750		325		496		600		1,395
Net interest income after provision    for loan losses		18,158		12,253		9,135		9,023		8,426		7,364		6,113
OTHER INCOME:
Deposit account service charges		816		472		446		370		311		320		259
Bank owned life insurance income		211		215		106		105		107		105		109
Loan swap fee income		471		—		181		290		713		—		—
Net gains on sale of loans		263		—		263		—		—		—		—
Other fee income		506		404		345		161		331		261		215
Total other income		2,267		1,091		1,341		926		1,462		686		583
OTHER EXPENSES:
Salaries and employee benefits		7,707		5,560		3,847		3,860		3,267		3,018		2,811
Furniture and equipment expenses		820		832		435		385		534		493		451
Advertising and marketing		296		297		191		105		146		171		141
Occupancy expenses		430		310		217		213		220		206		159
Outside services		388		436		161		227		164		239		240
Administrative expenses		343		273		176		167		142		161		155
Other operating expenses		2,201		1,738		1,150		1,051		900		872		912
Total other expenses		12,185		9,446		6,177		6,008		5,373		5,160		4,869
INCOME BEFORE INCOME TAXES		8,240		3,898		4,299		3,941		4,515		2,890		1,827
Income tax expense		1,562		709		868		694		846		539		324
NET INCOME	$	6,678	$	3,189	$	3,431	$	3,247	$	3,669	$	2,351	$	1,503
Net income per common share,    basic and diluted (1)	$	0.81	$	0.55	$	0.42	$	0.39	$	0.45	$	0.35	$	0.26
Weighted average number of shares,    basic and diluted (1)		8,246,562		5,801,541		8,250,210		8,242,873		8,178,888		6,788,868		5,810,383

(1) Amounts for all periods reflect the effect of the 5% stock dividend on April 30, 2018.

UNAUDITED LOAN, DEPOSIT AND BORROWING DETAIL

(Unaudited)

(In thousands)

	June 30, 2019						March 31, 2019						June 30, 2018						Percentage Change
	$ Amount			% of Total			$ Amount			% of Total			$ Amount			% of Total			Last 3 Mos			Last 12 Mos
LOANS:
Construction and land development loans	$	203,873			20.5	%	$	192,494			20.2	%	$	125,475			15.2	%		5.9	%		62.5	%
Residential real estate loans		158,406			15.9	%		151,884			15.9	%		124,253			15.1	%		4.3	%		27.5	%
Commercial real estate loans		425,862			42.8	%		409,522			42.9	%		342,757			41.6	%		4.0	%		24.2	%
Commercial industrial loans		117,905			11.9	%		105,391			11.0	%		127,678			15.5	%		11.9	%		-7.7	%
Consumer loans		88,421			8.9	%		95,299			10.0	%		104,286			12.6	%		-7.2	%		-15.2	%
Total Gross Loans	$	994,467			100.0	%	$	954,590			100.0	%	$	824,449			100.0	%		4.2	%		20.6	%
Less: Allowance for loan losses		(9,185	)					(9,189	)					(7,731	)
Net deferred loan fees		(1,708	)					(1,666	)					(843	)
Net Loans	$	983,574					$	943,735					$	815,875
DEPOSITS:
Non-interest bearing demand deposits	$	201,405			19.9	%	$	193,744			20.0	%	$	179,827			22.4	%		4.0	%		12.0	%
Interest-bearing demand deposits:
Demand deposits		65,117			6.5	%		59,639			6.2	%		60,389			7.6	%		9.2	%		7.8	%
Savings and NOW deposits		61,945			6.1	%		61,537			6.4	%		48,659			6.1	%		0.7	%		27.3	%
Money market accounts		115,641			11.4	%		147,655			15.3	%		118,194			14.7	%		-21.7	%		-2.2	%
Certificates of deposit $250,000 or more		222,292			22.0	%		129,671			13.4	%		81,456			10.2	%		71.4	%		172.9	%
Certificates of deposit less than $250,000		344,731			34.1	%		374,581			38.7	%		312,977			39.0	%		-8.0	%		10.1	%
Total Deposits	$	1,011,131			100.0	%	$	966,827			100.0	%	$	801,502			100.0	%		4.6	%		26.2	%
BORROWINGS:
Federal Home Loan Bank advances		20,000			57.5	%		30,000			67.0	%		45,117			75.3	%		-33.3	%		-55.7	%
Subordinated debt		14,791			42.5	%		14,783			33.0	%		14,762			24.7	%		0.1	%		0.2	%
Total Borrowings	$	34,791			100.0	%	$	44,783			100.0	%	$	59,879			100.0	%		-22.3	%		-41.9	%
Total Deposits and Borrowings	$	1,045,922					$	1,011,610					$	861,381						3.4	%		21.4	%
Core customer funding sources (1)	$	605,484			57.9	%	$	566,398			56.0	%	$	579,848			67.3	%		6.9	%		4.4	%
Brokered and listing service sources (2)		405,647			38.8	%		400,429			39.5	%		221,654			25.8	%		1.3	%		83.0	%
Federal Home Loan Bank advances		20,000			1.9	%		30,000			3.0	%		45,117			5.2	%		-33.3	%		-55.7	%
Subordinated debt (3)		14,791			1.4	%		14,783			1.5	%		14,762			1.7	%		0.1	%		0.2	%
Total Funding Sources	$	1,045,922			100.0	%	$	1,011,610			100.0	%	$	861,381			100.0	%		3.4	%		21.4	%

(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 June 30, 2019							For the three months ended June 30, 2018
	Average Balance		Interest Income/ Expense		Average Yields/ Rate (annualized)			Average Balance		Interest Income/ Expense		Average Yields/ Rate (annualized)
ASSETS:
Interest earning assets:
Loans (1)	$	978,282	$	13,877		5.67	%	$	760,531	$	9,649		5.07	%
Investment securities		73,218		615		3.36	%		54,803		407		2.97	%
Federal funds and interest-bearing deposits		73,494		375		2.04	%		33,136		115		1.39	%
Total interest earning assets	$	1,124,994	$	14,867		5.29	%	$	848,470	$	10,171		4.79	%
Other assets		40,842							35,756
Total assets	$	1,165,836						$	884,226
Liabilities and Stockholders’ Equity:
Interest-bearing liabilities:
Interest-bearing demand deposits	$	57,299	$	283		1.98	%	$	58,220	$	223		1.53	%
Money market deposit accounts		123,110		587		1.91	%		122,938		413		1.34	%
Savings and NOW deposits		62,613		74		0.47	%		50,024		62		0.50	%
Time deposits		548,669		3,635		2.65	%		344,900		1,514		1.76	%
Total interest-bearing deposits	$	791,691	$	4,579		2.31	%	$	576,082	$	2,212		1.54	%
Federal funds and repos purchased		-		-		-			850		5		2.35	%
Subordinated debt		14,788		241		6.52	%		14,759		241		6.53	%
FHLB borrowings		23,956		162		2.70	%		47,135		205		1.74	%
Total interest-bearing liabilities	$	830,435	$	4,982		2.40	%	$	638,826	$	2,663		1.67	%
Demand deposits and other liabilities		208,405							173,941
Total liabilities	$	1,038,840						$	812,767
Stockholders’ Equity		126,996							71,459
Total Liabilities and Stockholders’ Equity	$	1,165,836						$	884,226
Interest Rate Spread						2.89	%						3.12	%
Net Interest Income and Margin			$	9,885		3.51	%			$	7,508		3.54	%

(1) Includes loans classified as non-accrual.

UNAUDITED AVERAGE BALANCE SHEETS, INTEREST AND RATES

(Unaudited)

(In thousands)

	For the six months ended June 30, 2019							For the six months ended June 30, 2018
	Average Balance		Interest Income/ Expense		Average Yields/ Rate (annualized)			Average Balance		Interest Income/ Expense		Average Yields/ Rate (annualized)
ASSETS:
Interest earning assets:
Loans (1)	$	957,457	$	26,793		5.60	%	$	721,101	$	17,965		4.98	%
Investment securities		70,897		1,171		3.30	%		55,453		748		2.70	%
Federal funds and interest-bearing deposits		69,242		720		2.08	%		29,338		215		1.47	%
Total interest earning assets	$	1,097,596	$	28,684		5.23	%	$	805,892	$	18,928		4.70	%
Other assets		38,827							35,765
Total assets	$	1,136,423						$	841,657
Liabilities and Stockholders’ Equity:
Interest-bearing liabilities:
Interest-bearing demand deposits	$	57,013	$	528		1.85	%	$	54,728	$	386		1.41	%
Money market deposit accounts		133,410		1,350		2.02	%		109,671		678		1.24	%
Savings and NOW deposits		60,626		147		0.48	%		48,922		109		0.45	%
Time deposits		508,421		6,566		2.58	%		326,276		2,604		1.60	%
Total interest-bearing deposits	$	759,470	$	8,591		2.26	%	$	539,597	$	3,777		1.40	%
Federal funds and repos purchased		69		1		2.89	%		885		12		2.71	%
Subordinated debt		14,784		479		6.48	%		14,755		479		6.49	%
FHLB borrowings		29,006		380		2.62	%		45,589		377		1.65	%
Total interest-bearing liabilities	$	803,329	$	9,451		2.35	%	$	600,826	$	4,645		1.55	%
Demand deposits and other liabilities		207,925							170,177
Total liabilities	$	1,011,254						$	771,003
Stockholders’ Equity		125,169							70,654
Total Liabilities and Stockholders’ Equity	$	1,136,423						$	841,657
Interest Rate Spread						2.88	%						3.15	%
Net Interest Income and Margin			$	19,233		3.50	%			$	14,283		3.54	%

(1) Includes loans classified as non-accrual.

UNAUDITED AVERAGE BALANCE SHEETS, INTEREST AND RATES

(Unaudited)

(Dollars in thousands except per share data)

	At or For the Three Months Ended						At or For the Six Months Ended
	June 30,						June 30,
	2019			2018			2019			2018
Per share Data and Shares Outstanding (1)
Earnings per share – (basic and diluted)	$	0.42		$	0.26		$	0.81		$	0.55
Tangible book value per share	$	15.64		$	12.42		$	15.64		$	12.42
Weighted average common shares (basic and diluted)		8,250,210			5,810,383			8,246,562			5,801,541
Common shares outstanding at end of period		8,250,259			5,810,498			8,250,259			5,810,498
Performance Ratios
Return on average assets (annualized)		1.18	%		0.68	%		1.18	%		0.76	%
Return on average equity (annualized)		10.81	%		8.90	%		10.67	%		9.03	%
Yield on earning assets (annualized)		5.29	%		4.79	%		5.23	%		4.70	%
Cost of interest bearing liabilities (annualized)		2.40	%		1.67	%		2.35	%		1.55	%
Net interest spread		2.89	%		3.12	%		2.88	%		3.15	%
Net interest margin (annualized)		3.51	%		3.54	%		3.50	%		3.54	%
Noninterest income as a percentage of average assets (annualized)		0.46	%		0.26	%		0.40	%		0.26	%
Noninterest expense to average assets (annualized)		2.12	%		2.20	%		2.14	%		2.24	%
Efficiency ratio		55.02	%		60.18	%		56.67	%		61.44	%
Asset Quality
Loans 30-89 days past due to total gross loans		0.03	%		0.01	%		0.03	%		0.01	%
Loans 90 days past due to total gross loans		0.00	%		0.00	%		0.00	%		0.00	%
Non-accrual loans to total gross loans		0.00	%		0.24	%		0.00	%		0.24	%
Non-performing assets	$	1,242		$	1,939		$	1,242		$	1,939
Non-performing assets to total assets		0.10	%		0.21	%		0.10	%		0.21	%
Allowance for loan losses to total gross loans		0.92	%		0.94	%		0.92	%		0.94	%
Allowance for loan losses to non-performing loans	N/A				3.92		N/A				3.92
Net loan charge-offs (recoveries)	$	754		$	(2	)	$	721		$	5
Net charge-offs to average loans (annualized)		0.31	%		0.00	%		0.15	%		0.00	%
Troubled debt restructurings (total)
Performing in accordance with modified terms	$	1,494		$	1,526		$	1,494		$	1,526
Not performing in accordance with modified terms	$	-		$	1,939		$	-		$	1,939
Regulatory Capital Ratios (Bank only) (2)
Total risk-based capital ratio		13.34	%		10.10	%		13.34	%		10.10	%
Tier 1 risk-based capital ratio		12.52	%		9.25	%		12.52	%		9.25	%
Leverage ratio		12.38	%		9.64	%		12.38	%		9.64	%
Common equity tier 1 ratio		12.52	%		9.25	%		12.52	%		9.25	%
Other information
Closing stock price	$	22.79		$	20.75		$	22.79		$	20.75
Tangible equity / tangible assets		10.89	%		7.71	%		10.89	%		7.71	%
Average tangible equity / average tangible assets		10.89	%		8.09	%		11.01	%		8.39	%
Number of full time equivalent employees		120			103			120			103
# Full service branch offices		6			6			6			6

(1) Amounts for all periods presented are adjusted to reflect a 5% stock dividend effective April 30, 2018

(2) Regulatory capital ratios as of June 30, 2019 are preliminary.