MainStreet Bancshares (MNSB) 8-K MainStreet Bancshares, Inc. Reports Record Annual Earnings for 2019

Exhibit 99.1

PRESS RELEASE		Contact: Jeff W. Dick
HOLD FOR RELEASE:	January 21, 2020, 8:00 AM ET	(703) 481-4567

MainStreet Bancshares, Inc. Reports Record Annual Earnings for 2019

Fairfax, Virginia – January 21, 2020 - MainStreet Bancshares, Inc. (Nasdaq: MNSB) reported net income of $14.0 million for 2019, which represents a 1.19% return on average assets, a 10.79% return on average equity and which equates to $1.69 per share of common stock.  

Net interest income was $39.4 million for the twelve months ended December 31, 2019, up 27% from the twelve months ended December 31, 2018.  Noninterest income of $4.9 million for the year ended December 31, 2019 saw an increase of 50% from the year ended December 31, 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.  We anticipate that these sources should continue in a similar manner going forward.

Loan loss provisions of $1.6 million for the year ended December 31, 2019 are down 48% from the year ended December 31, 2018. The decrease in loan loss provisions was consistent with the Company’s strategic decision to moderate net loan growth to 12% for 2019 as compared to 40% net loan growth in 2018.  

Total assets were $1.3 billion at December 31, 2019, up 16% from the previous year-end. Net loans at December 31, 2019 total $1.0 billion and asset quality remains solid with non-performing assets to total assets at 0.09% as of December 31, 2019.  Capital levels for the Company remain strong.  

Non-interest-bearing deposits increased to $252.7 million as of December 31, 2019, up 19% from December 31, 2018.  Non-interest-bearing deposits represent 24% of total deposits at December 31, 2019.  Total deposits as of December 31, 2019 were $1.1 billion an increase of $152.1 million from December 31, 2018.

As of December 31, 2019, the Company’s tangible book value per share was $16.59, up 12% from $14.83 as of December 31, 2018.  According to Nasdaq, there were 7,746 trades during the quarter totaling 792,485 shares traded. The closing share price was $23.00, or 139% of book value. The market cap was $190.0 million as of December 31, 2019.

QUOTES: “We had a fantastic year of good growth and opportunity,” says Chris Brockett, President of MainStreet Bancshares, Inc. and MainStreet Bank. “We are excited to bring the branch at 1130 Connecticut Avenue in DC online in February and look forward to developing more business opportunities with some of our new DC partnerships.”

“The current rate environment is challenging but it is providing good opportunities for business expansion and development in our market,” says Jeff W. Dick, Chairman and CEO of MainStreet Bancshares, Inc. and MainStreet Bank. “We’ve been able to sustain a good net interest margin and we are intensely focused on improving both our net interest margin and fee income through the generation of new core deposits and building on our base of transactional payment processing businesses.”

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, D.C. will open in February 2020.  

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, 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 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)

	December 31, 2019		September 30, 2019		June 30, 2019		March 31, 2019			December 31, 2018
ASSETS
Cash and cash equivalents
Cash and due from banks	$	53,376	$	52,580	$	44,976	$	29,741		$	27,886
Federal funds sold		11,468		19,432		19,835		30,034			30,190
Total cash and cash equivalents		64,844		72,012		64,811		59,775			58,076
Investment securities available for sale, at fair value		92,791		88,198		60,079		69,308			55,979
Investment securities held to maturity, at carrying value		23,914		24,410		24,946		25,487			26,178
Restricted equity securities, at cost		6,157		4,882		5,307		5,732			5,894
Loans, net of allowance for loan losses of $9,584, $9,370, $9,185, $9,189, and $8,831, respectively		1,030,425		992,609		983,574		943,735			917,125
Premises and equipment, net		14,153		14,109		14,208		14,226			14,222
Other real estate owned, net		1,207		1,207		1,207		—			—
Accrued interest and other receivables		5,420		5,373		5,681		5,644			5,148
Bank owned life insurance		24,562		19,381		14,275		14,169			14,064
Other assets		14,516		12,095		10,676		8,005			3,927
Total Assets	$	1,277,989	$	1,234,276	$	1,184,764	$	1,146,081		$	1,100,613
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Non-interest bearing deposits	$	252,707	$	218,087	$	201,405	$	193,744		$	211,749
Interest-bearing DDA deposits		53,707		54,438		65,117		59,639			60,588
Savings and NOW deposits		63,015		63,746		61,945		61,537			51,371
Money market deposits		141,337		125,716		115,641		147,655			138,153
Time deposits		561,488		602,577		567,023		504,252			458,276
Total deposits		1,072,254		1,064,564		1,011,131		966,827			920,137
Federal Home Loan Bank advances and other borrowings		40,000		10,000		20,000		30,000			40,000
Subordinated debt		14,805		14,798		14,791		14,783			14,776
Other liabilities		13,896		11,697		9,806		9,488			4,449
Total Liabilities		1,140,955		1,101,059		1,055,728		1,021,098			979,362
Stockholders’ Equity:
Common stock, par value $4 per share, authorized 10,000,000    shares; issued and outstanding, 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 shares at June 30, 2019    including 153,586 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.		32,397		32,397		32,387		32,387			32,177
Capital surplus		75,117		74,860		74,609		74,353			74,256
Retained earnings		29,097		25,535		21,826		18,395			15,185
Accumulated other comprehensive gain (loss)		423		425		214		(152	)		(367	)
Total Stockholders’ Equity		137,034		133,217		129,036		124,983			121,251
Total Liabilities and Stockholders’ Equity	$	1,277,989	$	1,234,276	$	1,184,764	$	1,146,081		$	1,100,613

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME INFORMATION

(Unaudited)

(In thousands, except share and per share data)

	Year-to-Date				Three Months Ended
	December 31, 2019		December 31, 2018		December 31, 2019		September 30, 2019		June 30, 2019		March 31, 2019		December 31, 2018
INTEREST INCOME:
Interest and fees on loans	$	55,208	$	41,270	$	14,223	$	14,192	$	13,877	$	12,916	$	12,244
Interest on investment securities		2,202		1,470		534		497		615		556		381
Interest on federal funds sold		1,403		1,095		271		412		375		345		457
Total interest income		58,813		43,835		15,028		15,101		14,867		13,817		13,082
INTEREST EXPENSE:
Interest on interest bearing DDA deposits		998		900		195		275		283		245		269
Interest on savings and NOW deposits		289		251		71		71		74		73		77
Interest on money market deposits		2,379		1,708		489		539		587		763		598
Interest on time deposits		14,196		8,065		3,730		3,900		3,635		2,931		2,784
Interest on Federal Home Loan Bank    advances and other borrowings		549		776		92		76		162		219		188
Interest on subordinated debt		966		966		244		244		241		238		244
Total interest expense		19,377		12,666		4,821		5,105		4,982		4,469		4,160
Net interest income		39,436		31,169		10,207		9,996		9,885		9,348		8,922
Provision for loan losses		1,618		3,126		358		185		750		325		496
Net interest income after provision    for loan losses		37,818		28,043		9,849		9,811		9,135		9,023		8,426
NON-INTEREST INCOME:
Deposit account service charges		1,668		1,103		460		392		446		370		311
Bank owned life insurance income		498		427		180		106		106		105		107
Loan swap fee income		989		713		111		407		181		290		713
Net gain on available-for-sale securities		5		—		—		—		5		—		—
Net gains on sale of loans		566		—		—		303		263		—		—
Other fee income		1,136		995		407		228		340		161		331
Total other income		4,862		3,238		1,158		1,436		1,341		926		1,462
NON-INTEREST EXPENSES:
Salaries and employee benefits		15,776		11,845		4,179		3,890		3,847		3,860		3,267
Furniture and equipment expenses		1,728		1,859		457		451		435		385		534
Advertising and marketing		906		614		375		235		191		105		146
Occupancy expenses		864		736		221		214		217		213		220
Outside services		863		839		169		306		161		227		164
Administrative expenses		731		575		198		190		176		167		142
Other operating expenses		4,508		3,510		1,104		1,203		1,150		1,051		900
Total other expenses		25,376		19,978		6,703		6,489		6,177		6,008		5,373
INCOME BEFORE INCOME TAXES		17,304		11,303		4,304		4,758		4,299		3,941		4,515
Income tax expense		3,354		2,094		742		1,049		868		694		846
NET INCOME	$	13,950	$	9,209	$	3,562	$	3,709	$	3,431	$	3,247	$	3,669
Net income per common share,    basic and diluted (1)	$	1.69	$	1.38	$	0.43	$	0.45	$	0.42	$	0.39	$	0.45
Weighted average number of shares,    basic and diluted (1)		8,251,302		6,652,979		8,260,259		8,251,672		8,250,210		8,242,873		8,178,888

(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)

	December 31, 2019						September 30, 2019						December 31, 2018						Percentage Change
	$ Amount			% of Total			$ Amount			% of Total			$ Amount			% of Total			Last 3 Mos			Last 12 Mos
LOANS:
Construction and land development loans	$	272,620			26.2	%	$	207,441			20.7	%	$	183,551			19.8	%		31.4	%		48.5	%
Residential real estate loans		150,848			14.5	%		162,801			16.2	%		149,628			16.2	%		-7.3	%		0.8	%
Commercial real estate loans		421,870			40.5	%		434,735			43.3	%		377,760			40.7	%		-3.0	%		11.7	%
Commercial industrial loans		121,225			11.6	%		115,902			11.5	%		114,221			12.3	%		4.6	%		6.1	%
Consumer loans		75,583			7.2	%		83,013			8.3	%		102,277			11.0	%		-9.0	%		-26.1	%
Total Gross Loans	$	1,042,146			99.9	%	$	1,003,892			100.0	%	$	927,437			100.0	%		3.8	%		12.4	%
Less: Allowance for loan losses		(9,584	)					(9,370	)					(8,831	)
Net deferred loan fees		(2,137	)					(1,913	)					(1,481	)
Net Loans	$	1,030,425					$	992,609					$	917,125
DEPOSITS:
Non-interest bearing demand deposits	$	252,707			23.6	%	$	218,087			20.5	%	$	211,749			23.0	%		15.9	%		19.3	%
Interest-bearing demand deposits:
Demand deposits		53,707			5.0	%		54,438			5.1	%		60,588			6.6	%		-1.3	%		-11.4	%
Savings and NOW deposits		63,015			5.9	%		63,746			6.0	%		51,371			5.6	%		-1.1	%		22.7	%
Money market accounts		141,337			13.2	%		125,716			11.8	%		138,152			15.0	%		12.4	%		2.3	%
Certificates of deposit $250,000 or more		211,935			19.8	%		239,719			22.5	%		111,325			12.1	%		-11.6	%		90.4	%
Certificates of deposit less than $250,000		349,553			32.5	%		362,858			34.1	%		346,952			37.7	%		-3.7	%		0.7	%
Total Deposits	$	1,072,254			100.0	%	$	1,064,564			100.0	%	$	920,137			100.0	%		0.7	%		16.5	%
BORROWINGS:
Federal Home Loan Bank advances		40,000			73.0	%		10,000			57.5	%		40,000			73.0	%		300.0	%		0.0	%
Subordinated debt		14,805			27.0	%		14,798			42.5	%		14,776			27.0	%		0.0	%		0.2	%
Total Borrowings	$	54,805			100.0	%	$	24,798			100.0	%	$	54,776			100.0	%		121.0	%		0.1	%
Total Deposits and Borrowings	$	1,127,059					$	1,089,362					$	974,913						3.5	%		15.6	%
Core customer funding sources (1)	$	654,213			58.1	%	$	655,631			60.2	%	$	586,001			60.1	%		-0.2	%		11.6	%
Brokered and listing service sources (2)		418,041			37.1	%		408,933			37.5	%		334,136			34.3	%		2.2	%		25.1	%
Federal Home Loan Bank advances		40,000			3.5	%		10,000			0.9	%		40,000			4.1	%		300.0	%		0.0	%
Subordinated debt (3)		14,805			1.3	%		14,798			1.4	%		14,776			1.5	%		0.0	%		0.2	%
Total Funding Sources	$	1,127,059			100.0	%	$	1,089,362			100.0	%	$	974,913			100.0	%		3.5	%		15.6	%

(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 December 31, 2019							For the three months ended December 31, 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)	$	1,023,614	$	14,223		5.56	%	$	893,352	$	12,244		5.48	%
Investment securities		71,387		534		2.99	%		55,642		381		2.74	%
Federal funds and interest-bearing deposits		74,519		271		1.45	%		90,092		457		2.03	%
Total interest earning assets	$	1,169,520	$	15,028		5.14	%	$	1,039,086	$	13,082		5.03	%
Other assets		55,251							37,855
Total assets	$	1,224,771						$	1,076,941
Liabilities and Stockholders’ Equity:
Interest-bearing liabilities:
Interest-bearing demand deposits	$	54,176	$	195		1.44	%	$	58,233	$	269		1.85	%
Money market deposit accounts		134,011		489		1.46	%		130,892		598		1.83	%
Savings and NOW deposits		63,916		71		0.44	%		52,249		77		0.59	%
Time deposits		570,794		3,730		2.61	%		470,738		2,784		2.37	%
Total interest-bearing deposits	$	822,897	$	4,485		2.18	%	$	712,112	$	3,728		2.09	%
Federal funds and repos purchased		11		-		0.00	%	$	32	$	-		0.00	%
Subordinated debt		14,802		244		6.59	%		14,773		244		6.61	%
FHLB borrowings		15,370		92		2.39	%		30,826		188		2.44	%
Total interest-bearing liabilities	$	853,080	$	4,821		2.26	%	$	757,743	$	4,160		2.19	%
Demand deposits and other liabilities		236,396							198,365
Total liabilities	$	1,089,476						$	956,108
Stockholders’ Equity		135,295							120,833
Total Liabilities and Stockholders’ Equity	$	1,224,771						$	1,076,941
Interest Rate Spread						2.88	%						2.84	%
Net Interest Income and Margin			$	10,207		3.49	%			$	8,922		3.43	%

(1) Includes loans classified as non-accrual.

UNAUDITED AVERAGE BALANCE SHEETS, INTEREST AND RATES

(Unaudited)

(In thousands)

	For the year ended December 31, 2019							For the year ended December 31, 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)	$	984,014	$	55,208		5.61	%	$	795,130	$	41,270		5.19	%
Investment securities		71,149		2,202		3.09	%		55,219		1,470		2.66	%
Federal funds and interest-bearing deposits		72,643		1,403		1.93	%		63,536		1,095		1.72	%
Total interest earning assets	$	1,127,806	$	58,813		5.21	%	$	913,885	$	43,835		4.80	%
Other assets		45,282							35,159
Total assets	$	1,173,088						$	949,044
Liabilities and Stockholders’ Equity:
Interest-bearing liabilities:
Interest-bearing demand deposits	$	56,675	$	998		1.76	%	$	57,357	$	900		1.57	%
Money market deposit accounts		129,606		2,379		1.84	%		115,846		1,708		1.47	%
Savings and NOW deposits		62,047		289		0.47	%		50,509		251		0.50	%
Time deposits		544,084		14,196		2.61	%		401,259		8,065		2.01	%
Total interest-bearing deposits	$	792,412	$	17,862		2.25	%	$	624,971	$	10,924		1.75	%
Federal funds and repos purchased		37		1		2.70	%		463		12		2.59	%
Subordinated debt		14,791		966		6.53	%		14,762		966		6.54	%
FHLB borrowings		21,162		548		2.59	%		39,042		764		1.96	%
Total interest-bearing liabilities	$	828,402	$	19,377		2.34	%	$	679,238	$	12,666		1.86	%
Demand deposits and other liabilities		215,405							181,098
Total liabilities	$	1,043,807						$	860,336
Stockholders’ Equity		129,281							88,708
Total Liabilities and Stockholders’ Equity	$	1,173,088						$	949,044
Interest Rate Spread						2.88	%						2.94	%
Net Interest Income and Margin			$	39,436		3.50	%			$	31,169		3.41	%

(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						At or For the Year Ended
	December 31,						December 31,
	2019			2018			2019			2018
Per share Data and Shares Outstanding (1)
Earnings per share – (basic and diluted)	$	0.43		$	0.45		$	1.69		$	1.38
Tangible book value per share	$	16.59		$	14.83		$	16.59		$	14.83
Weighted average common shares (basic and diluted)		8,260,259			8,178,888			8,251,302			6,652,979
Common shares outstanding at end of period		8,260,259			8,177,978			8,260,259			8,177,978
Performance Ratios
Return on average assets (annualized)		1.16	%		1.36	%		1.19	%		0.97	%
Return on average equity (annualized)		10.53	%		12.15	%		10.79	%		10.38	%
Yield on earning assets (annualized)		5.14	%		5.03	%		5.21	%		4.80	%
Cost of interest bearing liabilities (annualized)		2.26	%		2.19	%		2.34	%		1.86	%
Net interest spread		2.88	%		2.84	%		2.88	%		2.94	%
Net interest margin (annualized)		3.49	%		3.43	%		3.50	%		3.41	%
Noninterest income as a percentage of average assets (annualized)		0.38	%		0.54	%		0.41	%		0.34	%
Noninterest expense to average assets (annualized)		2.19	%		2.00	%		2.16	%		2.11	%
Efficiency ratio		58.98	%		51.75	%		57.28	%		58.07	%
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	%		0.21	%		0.00	%		0.21	%
Other real estate owned	$	1,207		$	—		$	1,207		$	—
Non-performing assets	$	1,207		$	1,939		$	1,207		$	1,939
Non-performing assets to total assets		0.09	%		0.18	%		0.09	%		0.18	%
Allowance for loan losses to total gross loans		0.92	%		0.95	%		0.92	%		0.95	%
Allowance for loan losses to non-performing assets		7.94			4.53			7.94			4.53
Net loan charge-offs (recoveries)	$	144		$	1		$	865		$	1
Net charge-offs to average loans (annualized)		0.06	%		0.00	%		0.09	%		0.00	%
Troubled debt restructurings (total)
Performing in accordance with modified terms	$	1,482		$	1,510		$	1,482		$	1,510
Not performing in accordance with modified terms	$	—		$	1,939		$	—		$	1,939
Regulatory Capital Ratios (Bank only) (2)
Total risk-based capital ratio		13.74	%		13.75	%		13.74	%		13.75	%
Tier 1 risk-based capital ratio		12.91	%		12.90	%		12.91	%		12.90	%
Leverage ratio		12.65	%		12.41	%		12.65	%		12.41	%
Common equity tier 1 ratio		12.91	%		12.90	%		12.91	%		12.90	%
Other information
Closing stock price	$	23.00		$	17.06		$	23.00		$	17.06
Tangible equity / tangible assets		10.73	%		11.02	%		10.73	%		11.02	%
Average tangible equity / average tangible assets		11.05	%		11.22	%		11.02	%		9.35	%
Number of full time equivalent employees		126			110			126			110
# 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 December 31, 2019 are preliminary.