MainStreet Bancshares Inc.

10/28/2024 | Press release | Distributed by Public on 10/28/2024 06:02

MainStreet Bancshares Inc. Reports Third Quarter Results Form 8 K

MainStreet Bancshares Inc. Reports Third Quarter Results

Increase in Core Deposits, a High Quality Loan Portfolio and Strong Capital

Fairfax, VA., October 28, 2024 - MainStreet Bancshares, Inc. (Nasdaq: MNSB & MNSBP), the financial holding company for MainStreet Bank, reported a loss of -$0.04 per common share for the third quarter of 2024 as it dealt decisively with a small number of nonperforming real estate loans. Year-to-date 2024 earnings per common share are $0.60. The Company remains strongly capitalized.

"Our third quarter annualized net interest margin was impacted by $984,000 in accrued interest income that was reversed in relation to loans placed on nonaccrual status," said Alex Vari, Chief Accountant for MainStreet Bank. "This resulted in a quarterly net interest margin of 3.05% and a year-to-date net interest margin of 3.19%."

The Company charged off $1.9 million of nonperforming loans during the quarter and allocated $1 million to provision expense to augment loan growth and ensure the Allowance for Credit Losses remains directionally consistent for the purposes of growth and quality.

In response to the bank's credit quality, Chris Johnston, Chief Credit Officer for MainStreet Bank, expanded, "this quarter showed the underlying strength of a portfolio shaped by a rigorous credit culture. The total principal losses incurred year-to-date 2024 approximates just 0.1% of total loans. Our lending team has demonstrated great resolve in addressing troubled loans, both by working with borrowers and by finding acceptable solutions minimizing the impact on shareholder value. With that, we expect the level of problem loans to improve from this point."

Total deposits expanded to $1.9 billion. The Bank continues to attract healthy amounts of core deposits, reaching $1.47 billion, or 78% of total deposits.

"The DC Metropolitan area is a vibrant market. Our Business Bankers continue to perform, growing noninterest bearing core deposits by $33 million during the quarter," noted Abdul Hersiburane, President of MainStreet Bank. "In an exercise of foresight, we structured noncore deposits with immediate rate repricing or callable options. We have now $233 million of our $423 million noncore deposits available to reprice as rates fall."

In 2021, the Board and management decided to make an investment in technology that would best serve clients requiring Banking-as-a-Service (BaaS). The Avenu BaaS solution officially launched just prior to the end of the third quarter of 2024. The ability to digitally offer banking services in a safe and compliant manner allows the Company to reach new customer deposit segments, diversify revenue streams and generate additional income. The BaaS market is currently underserved, and the opportunities for a well-developed solution are robust. The Avenu business model is in-line with the Company's physical branch-lite strategy.

"Avenu provides a full-stack embedded banking solution that connects our partners and their apps directly and seamlessly to our purpose-built Avenu core," said Jeff W. Dick, Chairman & CEO of MainStreet Bancshares, Inc. and MainStreet Bank. "With Version 1 of Avenu placed in-service, the team is focused on getting the first fintech to general release in early November, and another four fintechs to follow soon thereafter. Just as with any business expansion opportunity, the expenses associated with launching Avenu will impact profitability until we reach break-even. However, after that point Avenu's ability to digitally scale can far surpass bricks and mortar growth and profitability."

Avenu's clients are fintechs, social media solutions, application developers, money movers, and entrepreneurs. They all have one thing in common: They are in search of a reliable partner to help innovate how money moves - solving real-world issues and helping communities thrive. MainStreet Bank is that reliable partner dedicated to providing a best-in-class solution to sustain 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 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, future impacts of pandemic outbreaks, 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

(In thousands)

September 30, 2024

June 30, 2024

March 31, 2024

December 31, 2023*

September 30, 2023

ASSETS

Cash and cash equivalents

Cash and due from banks

$ 40,955 $ 41,697 $ 49,208 $ 53,581 $ 44,912

Federal funds sold

191,159 49,762 75,533 60,932 76,271

Total cash and cash equivalents

232,114 91,459 124,741 114,513 121,183

Investment securities available for sale, at fair value

58,489 57,605 58,699 59,928 56,726

Investment securities held to maturity, at amortized cost, net of allowance for credit losses of $0 for all periods

16,016 16,036 17,251 17,275 17,565

Restricted equity securities, at amortized cost

26,745 26,797 23,924 24,356 20,619

Loans, net of allowance for credit losses of $18,327, $17,098, $16,531, $16,506, and $15,626, respectively

1,775,558 1,778,840 1,727,110 1,705,137 1,681,444

Premises and equipment, net

13,571 13,787 14,081 13,944 14,275

Accrued interest and other receivables

11,077 11,916 10,727 12,390 11,184

Computer software, net of amortization

18,881 17,205 15,691 14,657 13,373

Bank owned life insurance

39,203 38,901 38,609 38,318 38,035

Other assets

32,945 41,200 39,182 34,914 47,087

Total Assets

$ 2,224,599 $ 2,093,746 $ 2,070,015 $ 2,035,432 $ 2,021,491

LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities:

Non-interest bearing deposits

$ 347,575 $ 314,636 $ 348,945 $ 364,606 $ 394,859

Interest bearing demand deposits

197,527 179,513 165,331 137,128 76,423

Savings and NOW deposits

61,893 60,867 46,036 45,878 46,550

Money market deposits

451,936 476,396 446,903 442,179 461,398

Time deposits

834,738 723,951 725,520 696,336 703,960

Total deposits

1,893,669 1,755,363 1,732,735 1,686,127 1,683,190

Federal funds purchased

- - - 15,000 -

Subordinated debt

72,940 72,841 72,741 72,642 72,543

Other liabilities

31,939 40,827 41,418 40,146 52,015

Total Liabilities

1,998,548 1,869,031 1,846,894 1,813,915 1,807,748

Stockholders' Equity:

Preferred stock

27,263 27,263 27,263 27,263 27,263

Common stock

29,463 29,452 29,514 29,198 29,188

Capital surplus

67,083 66,392 65,940 65,985 65,407

Retained earnings

108,616 109,651 108,334 106,549 102,694

Accumulated other comprehensive loss

(6,374 ) (8,043 ) (7,930 ) (7,478 ) (10,809 )

Total Stockholders' Equity

226,051 224,715 223,121 221,517 213,743

Total Liabilities and Stockholders' Equity

$ 2,224,599 $ 2,093,746 $ 2,070,015 $ 2,035,432 $ 2,021,491

*Derived from audited financial statements

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME INFORMATION

(In thousands, except share and per share data)

Year-to-Date

Three Months Ended

September 30, 2024

September 30, 2023

September 30, 2024

June 30, 2024

March 31, 2024

December 31, 2023

September 30, 2023

INTEREST INCOME:

Interest and fees on loans

$ 93,852 $ 85,530 $ 31,615 $ 31,655 $ 30,582 $ 30,951 $ 29,822

Interest on investment securities

Taxable securities

1,262 1,384 397 430 435 451 459

Tax-exempt securities

832 797 294 268 270 268 268

Interest on federal funds sold

3,550 3,528 1,285 1,083 1,182 1,510 1,217

Total interest income

99,496 91,239 33,591 33,436 32,469 33,180 31,766

INTEREST EXPENSE:

Interest on interest bearing demand deposits

6,049 761 2,117 2,118 1,814 1,027 216

Interest on savings and NOW deposits

553 400 206 190 157 146 145

Interest on money market deposits

15,911 8,091 5,277 5,542 5,092 5,538 4,068

Interest on time deposits

27,361 18,719 9,543 9,010 8,808 8,187 7,516

Interest on federal funds purchased

575 274 277 191 107 25 35

Interest on Federal Home Loan Bank advances

46 1,105 - - 46 118 186

Interest on subordinated debt

2,468 2,460 828 820 820 828 828

Total interest expense

52,963 31,810 18,248 17,871 16,844 15,869 12,994

Net interest income

46,533 59,429 15,343 15,565 15,625 17,311 18,772

Provision for (recovery of) credit losses

3,356 1,176 2,913 638 (195 ) 466 255

Net interest income after provision for (recovery of) credit losses

43,177 58,253 12,430 14,927 15,820 16,845 18,517

NON-INTEREST INCOME:

Deposit account service charges

1,516 1,639 557 490 469 510 514

Bank owned life insurance income

885 786 302 291 292 283 272

Net loss on securities called or matured

(48 ) - - (48 ) - - -

Other non-interest income (loss)

93 158 27 31 35 (34 ) 105

Total non-interest income

2,446 2,583 886 764 796 759 891

NON-INTEREST EXPENSES:

Salaries and employee benefits

22,222 21,139 7,250 7,484 7,488 7,129 6,924

Furniture and equipment expenses

2,806 1,983 931 940 935 804 713

Advertising and marketing

1,599 2,072 579 566 454 271 577

Occupancy expenses

1,257 1,287 407 415 435 397 375

Outside services

2,458 1,691 845 839 774 352 697

Administrative expenses

686 703 215 229 242 219 277

Other operating expenses

7,508 5,404 2,992 2,362 2,153 2,166 1,988

Total non-interest expenses

38,536 34,279 13,219 12,835 12,481 11,338 11,551

Income before income tax expense (benefit)

7,087 26,557 97 2,856 4,135 6,266 7,857

Income tax expense (benefit)

900 5,119 (168 ) 238 830 1,120 1,516

Net income

6,187 21,438 265 2,618 3,305 5,146 6,341

Preferred stock dividends

1,617 1,617 539 539 539 539 539

Net income (loss) available to common shareholders

$ 4,570 $ 19,821 $ (274 ) $ 2,079 $ 2,766 $ 4,607 $ 5,802

Earnings (loss) per common share, basic and diluted

$ 0.60 $ 2.64 $ (0.04 ) $ 0.27 $ 0.36 $ 0.61 $ 0.77

Weighted average number of common shares, basic and diluted

7,607,431 7,521,426 7,601,925 7,608,389 7,611,990 7,527,327 7,524,332

UNAUDITED LOAN, DEPOSIT AND BORROWING DETAIL

(In thousands)

September 30, 2024

June 30, 2024

September 30, 2023

Percentage Change

$ Amount

% of Total

$ Amount

% of Total

$ Amount

% of Total

Last 3 Mos

Last 12 Mos

LOANS:

Construction and land development loans

$ 373,486 20.8 % $ 410,698 22.8 % $ 426,698 25.1 % -9.1 % -12.5 %

Residential real estate loans

446,109 24.8 % 449,700 25.0 % 462,935 27.2 % -0.8 % -3.6 %

Commercial real estate loans

871,280 48.4 % 845,030 46.9 % 734,615 43.1 % 3.1 % 18.6 %

Commercial and industrial loans

106,249 5.9 % 93,559 5.2 % 73,855 4.3 % 13.6 % 43.9 %

Consumer loans

1,977 0.1 % 2,232 0.1 % 4,598 0.3 % -11.4 % -57.0 %

Total Gross Loans

$ 1,799,101 100.0 % $ 1,801,219 100.0 % $ 1,702,701 100.0 % -0.1 % 5.7 %

Less: Allowance for credit losses

(18,327 ) (17,098 ) (15,626 )

Net deferred loan fees

(5,216 ) (5,281 ) (5,631 )

Net Loans

$ 1,775,558 $ 1,778,840 $ 1,681,444

DEPOSITS:

Non-interest bearing deposits

$ 347,575 18.4 % $ 314,636 17.9 % $ 394,859 23.5 % 10.5 % -12.0 %

Interest-bearing deposits:

Demand deposits

197,527 10.4 % 179,513 10.2 % 76,423 4.5 % 10.0 % 158.5 %

Savings and NOW deposits

61,893 3.3 % 60,867 3.5 % 46,550 2.8 % 1.7 % 33.0 %

Money market deposits

451,936 23.9 % 476,396 27.1 % 461,398 27.4 % -5.1 % -2.1 %

Certificates of deposit $250,000 or more

532,201 28.0 % 473,827 27.0 % 432,440 25.7 % 12.3 % 23.1 %

Certificates of deposit less than $250,000

302,537 16.0 % 250,124 14.3 % 271,520 16.1 % 21.0 % 11.4 %

Total Deposits

$ 1,893,669 100.0 % $ 1,755,363 100.0 % $ 1,683,190 100.0 % 7.9 % 12.5 %

BORROWINGS:

Subordinated debt

72,940 100.0 % 72,841 100.0 % 72,543 100.0 % 0.1 % 0.5 %

Total Borrowings

$ 72,940 100.0 % $ 72,841 100.0 % $ 72,543 100.0 % 0.1 % 0.5 %

Total Deposits and Borrowings

$ 1,966,609 $ 1,828,204 $ 1,755,733 7.6 % 12.0 %

Core customer funding sources (1)

$ 1,471,350 74.8 % $ 1,376,991 75.3 % $ 1,144,513 65.2 % 6.9 % 28.6 %

Brokered and listing service sources (2)

422,319 21.5 % 378,372 20.7 % 538,677 30.7 % 11.6 % -21.6 %

Subordinated debt (3)

72,940 3.7 % 72,841 4.0 % 72,543 4.1 % 0.1 % 0.5 %

Total Funding Sources

$ 1,966,609 100.0 % $ 1,828,204 100.0 % $ 1,755,733 100.0 % 7.6 % 12.0 %

(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.

Excludes $278.6 million in core deposits placed in reciprocal networks for FDIC insurance coverage that will be classified as brokered deposits on the call report in pursuant to rule 12 CFR 337.6(e) as of September 30, 2024.

(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

(In thousands)

For the three months ended September 30, 2024

For the three months ended September 30, 2023

Average Balance

Interest Income/ Expense (3)(4)

Average Yields/ Rate (annualized) (3)(4)

Average Balance

Interest Income/ Expense (3)(4)

Average Yields/ Rate (annualized) (3)(4)

ASSETS:

Interest-earning assets:

Loans (1)(2)

$ 1,807,882 $ 31,615 6.94 % $ 1,665,474 $ 29,822 7.10 %

Securities:

Taxable

54,523 397 2.89 % 57,981 459 3.14 %

Tax-exempt

35,881 372 4.11 % 37,812 339 3.56 %

Federal funds and interest-bearing deposits

104,459 1,285 4.88 % 94,808 1,217 5.09 %

Total interest-earning assets

$ 2,002,745 $ 33,669 6.67 % $ 1,856,075 $ 31,837 6.81 %

Other assets

123,383 73,415

Total assets

$ 2,126,128 $ 1,929,490

Liabilities and Stockholders' Equity:

Interest-bearing liabilities:

Interest-bearing demand deposits

$ 173,996 $ 2,117 4.83 % $ 77,047 $ 216 1.11 %

Savings and NOW deposits

61,259 206 1.33 % 48,594 145 1.18 %

Money market deposits

445,730 5,277 4.70 % 413,710 4,068 3.90 %

Time deposits

759,247 9,543 4.99 % 700,405 7,516 4.26 %

Total interest-bearing deposits

$ 1,440,232 $ 17,143 4.72 % $ 1,239,756 $ 11,945 3.82 %

Federal funds purchased

19,001 277 5.78 % 2,501 35 5.55 %

FHLB advances

- - - 13,478 186 5.48 %

Subordinated debt

72,901 828 4.51 % 72,504 828 4.53 %

Total interest-bearing liabilities

$ 1,532,134 $ 18,248 4.73 % $ 1,328,239 $ 12,994 3.88 %

Demand deposits and other liabilities

368,349 388,004

Total liabilities

$ 1,900,483 $ 1,716,243

Stockholders' Equity

225,645 213,247

Total Liabilities and Stockholders' Equity

$ 2,126,128 $ 1,929,490

Interest Rate Spread

1.94 % 2.93 %

Net Interest Income

$ 15,421 $ 18,843

Net Interest Margin

3.05 % 4.01 %

(1)

Includes loans classified as non-accrual

(2)

Total loan interest income includes amortization of deferred loan fees, net of deferred loan costs

(3) Income and yields for all periods presented are reported on a tax-equivalent basis using the federal statutory rate of 21%

(4)

Refer to Appendix for reconciliation of non-GAAP measures

UNAUDITED AVERAGE BALANCE SHEETS, INTEREST AND RATES

(In thousands)

For the nine months ended September 30, 2024

For the nine months ended September 30, 2023

Average Balance

Interest Income/ Expense (3)(4)

Average Yields/ Rate (annualized) (3)(4)

Average Balance

Interest Income/ Expense (3)(4)

Average Yields/ Rate (annualized) (3)(4)

ASSETS:

Interest-earning assets:

Loans (1)(2)

$ 1,773,050 $ 93,852 7.08 % $ 1,640,460 $ 85,530 6.97 %

Securities:

Taxable

55,478 1,262 3.04 % 60,640 1,384 3.05 %

Tax-exempt

36,670 1,053 3.84 % 37,876 1,009 3.56 %

Federal funds and interest-bearing deposits

93,853 3,550 5.06 % 99,004 3,528 4.76 %

Total interest-earning assets

$ 1,959,051 $ 99,717 6.81 % $ 1,837,980 $ 91,451 6.65 %

Other assets

125,808 71,452

Total assets

$ 2,084,859 $ 1,909,432

Liabilities and Stockholders' Equity:

Interest-bearing liabilities:

Interest-bearing demand deposits

$ 164,192 $ 6,049 4.93 % $ 78,018 $ 761 1.30 %

Savings and NOW deposits

51,119 553 1.45 % 50,382 400 1.06 %

Money market deposit

447,668 15,911 4.75 % 328,037 8,091 3.30 %

Time deposits

728,459 27,361 5.02 % 699,377 18,719 3.58 %

Total interest-bearing deposits

$ 1,391,438 $ 49,874 4.79 % $ 1,155,814 $ 27,971 3.24 %

Federal funds purchased

13,279 575 5.79 % 6,878 274 5.33 %

FHLB advances

1,095 46 5.62 % 30,531 1,105 4.84 %

Subordinated debt

72,802 2,468 4.53 % 72,405 2,460 4.54 %

Total interest-bearing liabilities

$ 1,478,614 $ 52,963 4.79 % $ 1,265,628 $ 31,810 3.36 %

Demand deposits and other liabilities

382,591 436,157

Total liabilities

$ 1,861,205 $ 1,701,785

Stockholders' Equity

223,654 207,647

Total Liabilities and Stockholders' Equity

$ 2,084,859 $ 1,909,432

Interest Rate Spread

2.02 % 3.30 %

Net Interest Income

$ 46,754 $ 59,641

Net Interest Margin

3.19 % 4.34 %

(1)

Includes loans classified as non-accrual

(2)

Total loan interest income includes amortization of deferred loan fees, net of deferred loan costs

(3) Income and yields for all periods presented are reported on a tax-equivalent basis using the federal statutory rate of 21%

(4)

Refer to Appendix for reconciliation of non-GAAP measures

UNAUDITED SUMMARY FINANCIAL DATA

(Dollars in thousands except share and per share data)

At or For the Three Months Ended

At or For the Nine Months Ended

September 30,

September 30,

2024

2023

2024

2023

Per share Data and Shares Outstanding

Earnings (loss) per common share (basic and diluted)

$ (0.04 ) $ 0.77 $ 0.60 $ 2.64

Book value per common share

$ 26.15 $ 24.78 $ 26.15 $ 24.78

Tangible book value per common share(2)

$ 23.66 $ 23.00 $ 23.66 $ 23.00

Weighted average common shares (basic and diluted)

7,601,925 7,524,332 7,607,431 7,521,426

Common shares outstanding at end of period

7,602,783 7,524,887 7,602,783 7,524,887

Performance Ratios

Return on average assets (annualized)

0.05 % 1.30 % 0.40 % 1.50 %

Return on average equity (annualized)

0.47 % 11.80 % 3.70 % 13.80 %

Return on average common equity (annualized)

0.53 % 12.38 % 4.21 % 14.73 %

Yield on earning assets (FTE) (2) (annualized)

6.67 % 6.81 % 6.81 % 6.65 %

Cost of interest bearing liabilities (annualized)

4.73 % 3.88 % 4.79 % 3.36 %

Net interest spread (FTE)(2)

1.94 % 2.93 % 2.02 % 3.30 %

Net interest margin (FTE)(2) (annualized)

3.05 % 4.01 % 3.19 % 4.34 %

Non-interest income as a percentage of average assets (annualized)

0.17 % 0.18 % 0.16 % 0.18 %

Non-interest expense to average assets (annualized)

2.47 % 2.38 % 2.47 % 2.39 %

Efficiency ratio(3)

81.45 % 58.74 % 78.68 % 54.94 %

Asset Quality

Allowance for credit losses (ACL)

Beginning balance, ACL - loans

$ 17,098 $ 16,047 $ 16,506 $ 14,114

Add: recoveries

11 1 19 14

Less: charge-offs

(1,907 ) (324 ) (2,418 ) (331 )

Add: provision for (recovery of) credit losses - loans

3,125 (98 ) 4,220 934

Add: current expected credit losses, nonrecurring adoption

- - - 895

Ending balance, ACL - loans

$ 18,327 $ 15,626 $ 18,327 $ 15,626

Beginning balance, reserve for unfunded commitment (RUC)

$ 357 $ 1,199 $ 1,009 $ -

Add: current expected credit losses, nonrecurring adoption

- - - 1,310

Add: provision for (recovery of) unfunded commitments, net

(212 ) 353 (864 ) 242

Ending balance, RUC

$ 145 $ 1,552 $ 145 $ 1,552

Total allowance for credit losses

$ 18,472 $ 17,178 $ 18,472 $ 17,178

Allowance for credit losses on loans to total gross loans

1.02 % 0.92 % 1.02 % 0.92 %

Allowance for credit losses to total gross loans

1.03 % 1.01 % 1.03 % 1.01 %

Allowance for credit losses on loans to non-performing loans

64.84 % 48.08X 64.84 % 48.08X

Net charge-offs (recoveries) to average gross loans (annualized)

0.42 % 0.08 % 0.18 % 0.02 %

Concentration Ratios

Commercial real estate loans to total capital (4)

360.26 % 372.48 % 360.26 % 372.48 %

Construction loans to total capital (5)

118.15 % 138.79 % 118.15 % 138.79 %

Non-performing Assets

Loans 30-89 days past due and accruing to total gross loans

0.61 % 0.05 % 0.61 % 0.05 %

Loans 90 days past due and accruing to total gross loans

0.00 % 0.00 % 0.00 % 0.00 %

Non-accrual loans to total gross loans

1.57 % 0.02 % 1.57 % 0.02 %

Other real estate owned

$ - $ - $ - $ -

Non-performing loans

$ 28,264 $ 325 $ 28,264 $ 325

Non-performing assets to total assets

1.27 % 0.02 % 1.27 % 0.02 %

Regulatory Capital Ratios (Bank only) (1)

Total risk-based capital ratio

16.96 % 16.79 % 16.96 % 16.79 %

Tier 1 risk-based capital ratio

15.97 % 15.83 % 15.97 % 15.83 %

Leverage ratio

13.98 % 14.81 % 13.98 % 14.81 %

Common equity tier 1 ratio

15.97 % 15.83 % 15.97 % 15.83 %

Other information

Closing stock price

$ 18.45 $ 20.54 $ 18.45 $ 20.54

Tangible equity / tangible assets (2)

9.39 % 9.98 % 9.39 % 9.98 %

Average tangible equity / average tangible assets (2)

9.86 % 10.46 % 10.02 % 10.34 %

Number of full time equivalent employees

201 185 201 185

Number of full service branch offices

6 6 6 6

(1)

Regulatory capital ratios as of September 30, 2024 are preliminary

(2)

Refer to Appendix for reconciliation of non-GAAP measures

(3)

Efficiency ratio is calculated as non-interest expense as a percentage of net interest income and non-interest income

(4)

Commercial real estate includes only non-owner occupied, multifamily, and construction loans as a percentage of Bank capital

(5)

Construction loans as a percentage of Bank capital

Unaudited Reconciliation of Certain Non-GAAP Financial Measures

(Dollars In thousands)

For the three months ended September 30,

For the nine months ended September 30,

2024

2023

2024

2023

Net interest margin (FTE)

Net interest income (GAAP)

$ 15,343 $ 18,772 $ 46,533 $ 59,429

FTE adjustment on tax-exempt securities

78 71 221 212

Net interest income (FTE) (non-GAAP)

15,421 18,843 46,754 59,641

Average interest earning assets

2,002,745 1,856,075 1,959,051 1,837,980

Net interest margin (GAAP)

3.04 % 3.99 % 3.18 % 4.32 %

Net interest margin (FTE) (non-GAAP)

3.05 % 4.01 % 3.19 % 4.34 %

For the three months ended September 30,

For the nine months ended September 30,

2024

2023

2024

2023

Yield on earning assets (FTE)

Total interest income (GAAP)

$ 33,591 $ 31,766 $ 99,496 $ 91,239

FTE adjustment on tax-exempt securities

78 71 221 212

Total interest income (FTE) (non-GAAP)

33,669 31,837 99,717 91,451

Average interest earning assets

2,002,745 1,856,075 1,959,051 1,837,980

Yield on earning assets (GAAP)

6.65 % 6.79 % 6.79 % 6.64 %

Yield on earning assets (FTE) (non-GAAP)

6.67 % 6.81 % 6.81 % 6.65 %

For the three months ended September 30,

For the nine months ended September 30,

2024

2023

2024

2023

Net interest spread (FTE)

Yield on earning assets (GAAP)

6.65 % 6.79 %

6.79

%

6.64

%

Yield on earning assets (FTE) (non-GAAP)

6.67 % 6.81 %

6.81

%

6.65

%

Yield on interest-bearing liabilities (GAAP)

4.73 % 3.88 %

4.79

% 3.36 %

Net interest spread (GAAP)

1.92 % 2.91 %

2.00

%

3.29

%

Net interest spread (FTE) (non-GAAP)

1.94 % 2.93 % 2.02 %

3.30

%

As of September 30,

As of September 30,

2024

2023

2024

2023

Tangible common stockholders' equity

Total stockholders equity (GAAP)

$ 226,051 $ 213,743 $ 226,051 $ 213,743

Less: intangible assets

(18,881 ) (13,373 ) (18,881 ) (13,373 )

Tangible stockholders' equity (non-GAAP)

207,170 200,370 $ 207,170 200,370

Less: preferred stock

(27,263 ) (27,263 ) (27,263 ) (27,263 )

Tangible common stockholders' equity (non-GAAP)

179,907 173,107 179,907 173,107

Common shares outstanding

7,602,783 7,524,887 7,602,783 7,524,887

Tangible book value per common share (non-GAAP)

$ 23.66 $ 23.00 $ 23.66 $ 23.00

As of September 30,

As of September 30,

2024

2023

2024

2023

Stockholders equity, adjusted

Total stockholders equity (GAAP)

$ 226,051 $ 213,743 $ 226,051 $ 213,743

Less: intangible assets

(18,881 ) (13,373 ) (18,881 ) (13,373 )

Total tangible stockholders equity (non-GAAP)

207,170 200,370 207,170 200,370

As of September 30,

As of September 30,

2024

2023

2024

2023

Total tangible assets

Total assets (GAAP)

$ 2,224,599 $ 2,021,491 $ 2,224,599 $ 2,021,491

Less: intangible assets

(18,881 ) (13,373 ) (18,881 ) (13,373 )

Total tangible assets (non-GAAP)

2,205,718 2,008,118 2,205,718 2,008,118

For the three months ended September 30,

For the nine months ended September 30,

2024

2023

2024

2023

Average tangible stockholders' equity

Total average stockholders' equity (GAAP)

$ 225,645 $ 213,247 $ 223,654 $ 207,647

Less: average intangible assets

(17,738 ) (12,841 ) (16,405 ) (11,345 )

Total average tangible stockholders' equity (non-GAAP)

207,907 200,406 207,249 196,302

For the three months ended September 30,

For the nine months ended September 30,

2024

2023

2024

2023

Average tangible assets

Total average assets (GAAP)

$ 2,126,128 $ 1,929,490 $ 2,084,859 $ 1,909,432

Less: average intangible assets

(17,738 ) (12,841 ) (16,405 ) (11,345 )

Total average tangible assets (non-GAAP)

2,108,390 1,916,649 2,068,454 1,898,087