8-K
MainStreet Bancshares, Inc. (MNSB)
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): Date: July 24, 2023
MainStreet Bancshares, Inc.
(Exact name of Registrant as Specified in Its Charter)
| Virginia | 001-38817 | 81-2871064 |
|---|---|---|
| (State or Other Jurisdiction<br><br> <br>of Incorporation) | (Commission File Number) | (IRS Employer<br><br> <br>Identification No.) |
| 10089 Fairfax Boulevard , Fairfax, VA | 22030 | |
| (Address of Principal Executive Offices) | (Zip Code) |
(703) 481-4567
(Registrant’s Telephone Number, Including Area Code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| --- | --- |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading<br><br> <br>Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock | MNSB | The Nasdaq Stock Market LLC |
| Depositary Shares (each representing a 1/40^th^ interest in a share of 7.50% Series A Fixed-Rate Non-Cumulative Perpetual Preferred Stock | MNSBP | The Nasdaq Stock Market LLC |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company ☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒
Item 2.02 Results of Operations and Financial Condition.
On July 24, 2023, MainStreet Bancshares, Inc. (the “Company”) issued a press release setting forth the Company’s second quarter and year-to-date ended June 30, 2023, unaudited financial results. A copy of the Company’s press release is attached hereto as Exhibit 99.1, is hereby incorporated by reference, and will be posted on the Company's website.
Item 7.01 Regulation FD Disclosure
On July 24, 2023, the Company made available an investor presentation analyzing its second quarter and year-to-date ended June 30, 2023, unaudited financial results. A copy of the Company’s investor presentation is attached hereto as Exhibit 99.2, is hereby incorporated by reference, and will be posted on the Company’s website.
The information furnished under Items 2.02, 7.01 and 9.01 of this Current Report on Form 8-K, including the exhibits, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section, and it shall not be deemed incorporated by reference in any filing under the Exchange Act, or the Securities Act of 1933, as amended, except as expressly set forth by specific reference in such filing to this Form 8-K.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit<br><br> <br>Number | Description |
|---|---|
| 99.1 | Press Release, dated July 24, 2023, with respect to the Company’s unaudited financial results for the second quarter and year-to-date ended June 30, 2023. |
| 99.2 | Investor Presentation dated July 24, 2023. |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
1
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| MAINSTREET BANCSHARES, INC | ||
|---|---|---|
| Date: July 24, 2023 | By: | /s/ Thomas J. Chmelik |
| Name: Thomas J. Chmelik | ||
| Title: Chief Financial Officer |
2
ex_526173.htm
Exhibit 99.1
| PRESS RELEASE | Contact: Debra Cope |
|---|---|
| July 24, 2023, 8:00 AM ET | Director of Corporate Communications |
| (703) 481-4599 |
MainStreet Bancshares, Inc., Reports Continued Strong Financial Performance for 2nd Quarter 2023
Net Interest Margin Continues to Outperform Most Peers
FAIRFAX, Va., July 24, 2023 /PRNewswire/ -- MainStreet Bancshares, Inc. (Nasdaq: MNSB & MNSBP), the holding company for MainStreet Bank, reported net income of $6.9 million for the quarter ended June 30, 2023, in line with expectations. This represents a 17.1% increase from the year-earlier second quarter.
Performance through the first half of 2023 remains very strong (returns are annualized):
| Return on average assets: | 1.60% |
|---|---|
| Return on average equity: | 14.87% |
| Net interest margin (tax equivalent): | 4.45% |
| Efficiency ratio: | 53.48% |
| Allowance for credit losses: | 1.04% |
| Liquidity coverage ratio: | 124% |
| Core deposit ratio: | 74% |
| FDIC insured deposits / total deposits: | 76% |
| Net charge-offs: | $0 |
| Earnings per common share: | $1.86 |
| Tangible book value per common share: | $22.73 |
“The MainStreet team has done an extraordinary job of maximizing the Company’s financial performance while staying true-to-form with proper risk management practices. We were well-prepared for a rising rate environment,” said Jeff W. Dick, Chairman and CEO of MainStreet Bancshares, Inc. and MainStreet Bank. “And the recent collapse of a few badly managed regional banks shook the industry but ultimately gave us the opportunity to tell our risk management story.”
“Spurred by the FOMC rate increases, the collapse of Silicon Valley Bank also prompted an immediate jump in deposit costs for the industry,” Dick explained. “It appears that the FOMC will increase rates an additional 25 basis points when it meets on July 26^th^, but the industry is sensing a slowdown in future rises thereafter.”
The Company’s loan book totaled $1.66 billion at the end of the second quarter, up 15.7% from $1.43 billion one year earlier and up 1.3% from the first quarter.
“We are working hard for our customers and sticking to our strong underwriting standards. Our asset quality remains pristine,” said Abdul Hersiburane, president of MainStreet Bank. “Our business bankers and lenders are redoubling their efforts to gain deposit share in our market, and we continue to benefit from a flight to quality as discerning depositors seek the security of federal insurance for their operating funds and other large deposits.”
ABOUT AVENU™ ****
Avenu™ onboarded its first client while designers and engineers completed final sprints to harden our multitenancy and cyber architecture and to accelerate implementation of a debit card for funding. Avenu™ connects 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.
Avenu™ — Banking Delivered
Avenu™ is the only embedded banking solution that connects fintechs and their apps directly and seamlessly to a bank — MainStreet Bank. 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 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 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.
UNAUDITED CONSOLIDATED BALANCE SHEET INFORMATION
(In thousands)
| March 31, 2023 | December 31, 2022* | September 30, 2022 | June 30, 2022 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| ASSETS | **** | **** | **** | **** | **** | |||||||||
| Cash and cash equivalents | ||||||||||||||
| Cash and due from banks | 67,700 | $ | 225,334 | $ | 48,931 | $ | 50,636 | $ | 55,636 | |||||
| Federal funds sold | 30,341 | — | 81,669 | 54,098 | 47,013 | |||||||||
| Total cash and cash equivalents | 98,041 | 225,334 | 130,600 | 104,734 | 102,649 | |||||||||
| Investment securities available for sale, at fair value | 60,579 | 63,209 | 62,631 | 162,319 | 143,240 | |||||||||
| Investment securities held to maturity, at amortized cost, net of allowance for credit losses of 0 for all periods | 17,590 | 17,616 | 17,642 | 17,670 | 17,698 | |||||||||
| Restricted equity securities, at amortized cost | 20,304 | 22,436 | 24,325 | 16,436 | 16,485 | |||||||||
| Loans, net of allowance for credit losses of 16,047, 15,435, 14,114, 12,994, and 12,982, respectively | 1,637,484 | 1,617,275 | 1,579,950 | 1,448,071 | 1,416,875 | |||||||||
| Premises and equipment, net | 14,427 | 14,521 | 14,709 | 14,523 | 14,756 | |||||||||
| Accrued interest and other receivables | 10,256 | 9,744 | 9,581 | 8,273 | 7,313 | |||||||||
| Computer software, net of amortization | 12,266 | 10,559 | 9,149 | 7,258 | 4,956 | |||||||||
| Bank owned life insurance | 37,763 | 37,503 | 37,249 | 36,996 | 36,742 | |||||||||
| Other assets | 40,641 | 36,811 | 39,915 | 43,835 | 32,665 | |||||||||
| Total Assets | 1,949,351 | $ | 2,055,008 | $ | 1,925,751 | $ | 1,860,115 | $ | 1,793,379 | |||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | **** | **** | **** | **** | **** | |||||||||
| Liabilities: | **** | **** | **** | **** | **** | |||||||||
| Non-interest bearing deposits | 388,992 | $ | 487,875 | $ | 550,690 | $ | 566,016 | $ | 535,591 | |||||
| Interest bearing demand deposits | 71,308 | 100,522 | 80,099 | 93,695 | 99,223 | |||||||||
| Savings and NOW deposits | 51,294 | 53,499 | 51,419 | 54,240 | 58,156 | |||||||||
| Money market deposits | 380,500 | 260,316 | 222,540 | 254,190 | 231,207 | |||||||||
| Time deposits | 701,289 | 730,076 | 608,141 | 585,783 | 575,950 | |||||||||
| Total deposits | 1,593,383 | 1,632,288 | 1,512,889 | 1,553,924 | 1,500,127 | |||||||||
| Federal funds borrowed | 30,000 | 60,696 | — | — | — | |||||||||
| Federal Home Loan Bank advances | — | 45,000 | 100,000 | — | — | |||||||||
| Subordinated debt | 72,444 | 72,344 | 72,245 | 72,146 | 72,047 | |||||||||
| Other liabilities | 43,016 | 39,692 | 42,335 | 44,045 | 32,801 | |||||||||
| Total Liabilities | 1,738,843 | 1,850,020 | 1,727,469 | 1,670,115 | 1,604,975 | |||||||||
| Stockholders’ Equity: | **** | **** | **** | **** | **** | |||||||||
| Preferred stock | 27,263 | 27,263 | 27,263 | 27,263 | 27,263 | |||||||||
| Common stock | 29,177 | 29,185 | 28,736 | 28,728 | 29,178 | |||||||||
| Capital surplus | 64,768 | 64,213 | 63,999 | 63,231 | 64,822 | |||||||||
| Retained earnings | 97,646 | 91,991 | 86,830 | 80,534 | 73,702 | |||||||||
| Accumulated other comprehensive loss | (8,346 | ) | (7,664 | ) | (8,546 | ) | (9,756 | ) | (6,561 | ) | ||||
| Total Stockholders’ Equity | 210,508 | 204,988 | 198,282 | 190,000 | 188,404 | |||||||||
| Total Liabilities and Stockholders’ Equity | 1,949,351 | $ | 2,055,008 | $ | 1,925,751 | $ | 1,860,115 | $ | 1,793,379 |
All values are in US Dollars.
*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 | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| June 30, 2023 | June 30, 2022 | June 30, 2023 | March 31, 2023 | December 31, 2022 | September 30, 2022 | June 30, 2022 | |||||||||
| INTEREST INCOME: | **** | ||||||||||||||
| Interest and fees on loans | $ | 55,586 | $ | 34,639 | $ | 28,855 | $ | 26,731 | $ | 23,972 | $ | 20,261 | $ | 17,954 | |
| Interest on investment securities | |||||||||||||||
| Taxable securities | 926 | 758 | 407 | 518 | 467 | 378 | 401 | ||||||||
| Tax-exempt securities | 529 | 535 | 265 | 264 | 262 | 261 | 263 | ||||||||
| Interest on federal funds sold | 2,311 | 229 | 1,179 | 1,132 | 1,071 | 1,013 | 195 | ||||||||
| Total interest income | 59,352 | 36,161 | 30,706 | 28,645 | 25,772 | 21,913 | 18,813 | ||||||||
| INTEREST EXPENSE: | **** | ||||||||||||||
| Interest on interest bearing demand deposits | 594 | 170 | 251 | 343 | 256 | 175 | 105 | ||||||||
| Interest on savings and NOW deposits | 255 | 79 | 147 | 108 | 81 | 43 | 42 | ||||||||
| Interest on money market deposits | 4,129 | 270 | 2,926 | 1,203 | 781 | 496 | 151 | ||||||||
| Interest on time deposits | 11,221 | 2,961 | 7,077 | 4,144 | 2,966 | 2,275 | 1,530 | ||||||||
| Interest on federal funds borrowed | 239 | — | 201 | 38 | — | — | — | ||||||||
| Interest on Federal Home Loan Bank advances | 919 | 83 | 13 | 906 | 264 | — | 52 | ||||||||
| Interest on subordinated debt | 1,632 | 1,280 | 820 | 812 | 828 | 828 | 812 | ||||||||
| Total interest expense | 18,989 | 4,843 | 11,435 | 7,554 | 5,176 | 3,817 | 2,692 | ||||||||
| Net interest income | 40,363 | 31,318 | 19,271 | 21,091 | 20,596 | 18,096 | 16,121 | ||||||||
| Provision for credit losses | 921 | 1,280 | 638 | 283 | 1,118 | - | 480 | ||||||||
| Net interest income after provision for credit losses | 39,442 | 30,038 | 18,633 | 20,808 | 19,478 | 18,096 | 15,641 | ||||||||
| NON-INTEREST INCOME: | **** | ||||||||||||||
| Deposit account service charges | 1,125 | 1,209 | 535 | 590 | 610 | 601 | 597 | ||||||||
| Bank owned life insurance income | 514 | 500 | 259 | 255 | 253 | 254 | 250 | ||||||||
| Loan swap fee income | — | 101 | — | — | — | 518 | 101 | ||||||||
| Net gain on held-to-maturity securities | — | 4 | — | — | — | — | 4 | ||||||||
| Net gain (loss) on sale of loans | — | 43 | — | — | — | (211 | ) | — | |||||||
| Other non-interest income | 174 | 568 | 16 | 158 | 196 | 186 | 312 | ||||||||
| Total other income | 1,813 | 2,425 | 810 | 1,003 | 1,059 | 1,348 | 1,264 | ||||||||
| NON-INTEREST EXPENSES: | **** | ||||||||||||||
| Salaries and employee benefits | 14,216 | 11,152 | 6,595 | 7,621 | 6,775 | 5,874 | 5,604 | ||||||||
| Furniture and equipment expenses | 1,270 | 1,316 | 772 | 498 | 710 | 760 | 659 | ||||||||
| Advertising and marketing | 1,495 | 980 | 698 | 797 | 620 | 704 | 574 | ||||||||
| Occupancy expenses | 912 | 693 | 426 | 486 | 378 | 400 | 352 | ||||||||
| Outside services | 994 | 935 | 504 | 490 | 529 | 611 | 567 | ||||||||
| Administrative expenses | 426 | 405 | 211 | 215 | 214 | 253 | 195 | ||||||||
| Other operating expenses | 3,242 | 2,976 | 1,646 | 1,596 | 1,481 | 1,291 | 1,543 | ||||||||
| Total non-interest expenses | 22,555 | 18,457 | 10,852 | 11,703 | 10,707 | 9,893 | 9,494 | ||||||||
| Income before income tax expense | 18,700 | 14,006 | 8,591 | 10,108 | 9,830 | 9,551 | 7,411 | ||||||||
| Income tax expense | 3,602 | 2,654 | 1,645 | 1,957 | 2,252 | 1,808 | 1,481 | ||||||||
| Net income | 15,098 | 11,352 | 6,946 | 8,151 | 7,578 | 7,743 | 5,930 | ||||||||
| Preferred stock dividends | 1,078 | 1,078 | 539 | 539 | 539 | 539 | 539 | ||||||||
| Net income available to common shareholders | $ | 14,020 | $ | 10,274 | $ | 6,407 | $ | 7,612 | $ | 7,039 | $ | 7,204 | $ | 5,391 | |
| Net income per common share, basic and diluted | $ | 1.86 | $ | 1.35 | $ | 0.85 | $ | 1.01 | $ | 0.95 | $ | 0.97 | $ | 0.71 | |
| Weighted average number of common shares, basic and diluted | 7,519,949 | 7,611,303 | 7,522,764 | 7,517,213 | 7,433,607 | 7,463,719 | 7,575,484 |
UNAUDITED LOAN, DEPOSIT AND BORROWING DETAIL
(In thousands)
| March 31, 2023 | June 30, 2022 | Percentage Change | ||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| % of Total | Amount | % of Total | Amount | % of Total | Last 3 Mos | Last 12 Mos | ||||||||||||||
| LOANS: | **** | **** | **** | **** | **** | **** | **** | **** | ||||||||||||
| Construction and land development loans | 25.4 | % | 25.3 | % | 25.0 | % | 1.5 | % | 17.7 | % | ||||||||||
| Residential real estate loans | 24.7 | % | 23.9 | % | 25.6 | % | 4.8 | % | 11.9 | % | ||||||||||
| Commercial real estate loans | 43.9 | % | 45.0 | % | 41.8 | % | -1.3 | % | 21.4 | % | ||||||||||
| Commercial and industrial loans | 5.6 | % | 5.3 | % | 6.5 | % | 7.7 | % | 1.0 | % | ||||||||||
| Consumer loans | 0.4 | % | 0.5 | % | 1.1 | % | -23.7 | % | -66.6 | % | ||||||||||
| Total Gross Loans | 100.0 | % | 100.0 | % | 100.0 | % | 1.3 | % | 15.7 | % | ||||||||||
| Less: Allowance for credit losses | ) | ) | ) | |||||||||||||||||
| Net deferred loan fees | ) | ) | ) | |||||||||||||||||
| Net Loans | ||||||||||||||||||||
| DEPOSITS: | **** | **** | **** | **** | **** | **** | **** | **** | ||||||||||||
| Non-interest bearing deposits | 24.4 | % | 29.9 | % | 35.7 | % | -20.3 | % | -27.4 | % | ||||||||||
| Interest-bearing deposits: | ||||||||||||||||||||
| Demand deposits | 4.5 | % | 6.2 | % | 6.6 | % | -29.1 | % | -28.1 | % | ||||||||||
| Savings and NOW deposits | 3.2 | % | 3.3 | % | 3.9 | % | -4.1 | % | -11.8 | % | ||||||||||
| Money market accounts | 23.9 | % | 15.9 | % | 15.4 | % | 46.2 | % | 64.6 | % | ||||||||||
| Certificates of deposit 250,000 or more | 25.5 | % | 28.1 | % | 25.6 | % | -11.4 | % | 6.1 | % | ||||||||||
| Certificates of deposit less than 250,000 | 18.5 | % | 16.6 | % | 12.8 | % | 8.6 | % | 53.0 | % | ||||||||||
| Total Deposits | 100.0 | % | 100.0 | % | 100.0 | % | -2.4 | % | 6.2 | % | ||||||||||
| BORROWINGS: | **** | **** | **** | **** | **** | **** | **** | **** | ||||||||||||
| Federal funds borrowed | 29.3 | % | 34.1 | % | 0.0 | % | -50.6 | % | 0.0 | % | ||||||||||
| Federal Home Loan Bank advances | 0.0 | % | 25.3 | % | 0.0 | % | -100.0 | % | 0.0 | % | ||||||||||
| Subordinated debt | 70.7 | % | 40.6 | % | 100.0 | % | 0.1 | % | 0.6 | % | ||||||||||
| Total Borrowings | 100.0 | % | 100.0 | % | 100.0 | % | -42.5 | % | 42.2 | % | ||||||||||
| Total Deposits and Borrowings | -6.3 | % | 7.9 | % | ||||||||||||||||
| Core customer funding sources (1) | 69.9 | % | 63.9 | % | 69.6 | % | 2.5 | % | 8.3 | % | ||||||||||
| Brokered and listing service sources (2) | 24.1 | % | 26.3 | % | 25.8 | % | -14.2 | % | 0.7 | % | ||||||||||
| Federal funds borrowed | 1.7 | % | 3.3 | % | 0.0 | % | -50.6 | % | 0.0 | % | ||||||||||
| Federal Home Loan Bank advances | 0.0 | % | 2.5 | % | 0.0 | % | -100.0 | % | 0.0 | % | ||||||||||
| Subordinated debt (3) | 4.3 | % | 4.0 | % | 4.6 | % | 0.1 | % | 0.6 | % | ||||||||||
| Total Funding Sources | 100.0 | % | 100.0 | % | 100.0 | % | -6.3 | % | 7.9 | % |
All values are in US Dollars.
| (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
(In thousands)
| For the three months ended June 30, 2023 | For the three months ended June 30, 2022 | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 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)^ | $ | 1,649,300 | $ | 28,855 | 7.02 | % | $ | 1,434,877 | $ | 17,954 | 5.02 | % | ||
| Securities: | ||||||||||||||
| Taxable | 68,381 | 407 | 2.39 | % | 73,153 | 401 | 2.20 | % | ||||||
| Tax-exempt | 37,876 | 335 | 3.55 | % | 38,507 | 333 | 3.47 | % | ||||||
| Federal funds and interest-bearing deposits | 87,608 | 1,179 | 5.40 | % | 98,326 | 195 | 0.80 | % | ||||||
| Total interest earning assets | $ | 1,843,165 | $ | 30,776 | 6.70 | % | $ | 1,644,863 | $ | 18,883 | 4.60 | % | ||
| Other assets | 69,488 | 65,225 | ||||||||||||
| Total assets | $ | 1,912,653 | $ | 1,710,088 | ||||||||||
| Liabilities and Stockholders’ Equity: | **** | **** | ||||||||||||
| Interest-bearing liabilities: | ||||||||||||||
| Interest-bearing demand deposits | $ | 73,800 | $ | 251 | 1.36 | % | $ | 96,352 | $ | 105 | 0.44 | % | ||
| Savings and NOW deposits | 50,644 | 147 | 1.16 | % | 62,588 | 42 | 0.27 | % | ||||||
| Money market deposit accounts | 344,118 | 2,926 | 3.41 | % | 234,097 | 151 | 0.26 | % | ||||||
| Time deposits | 723,056 | 7,077 | 3.93 | % | 499,734 | 1,530 | 1.23 | % | ||||||
| Total interest-bearing deposits | $ | 1,191,618 | $ | 10,401 | 3.50 | % | $ | 892,771 | $ | 1,828 | 0.82 | % | ||
| Federal funds purchased | 15,174 | 201 | 5.31 | % | 1 | — | — | |||||||
| FHLB borrowings | 989 | 13 | 5.27 | % | 35,275 | 52 | 0.59 | % | ||||||
| Subordinated debt | 72,405 | 820 | 4.54 | % | 72,009 | 812 | 4.52 | % | ||||||
| Total interest-bearing liabilities | $ | 1,280,186 | $ | 11,435 | 3.58 | % | $ | 1,000,056 | $ | 2,692 | 1.08 | % | ||
| Demand deposits and other liabilities | 424,505 | 521,130 | ||||||||||||
| Total liabilities | $ | 1,704,691 | $ | 1,521,186 | ||||||||||
| Stockholders’ Equity | 207,962 | 188,902 | ||||||||||||
| Total Liabilities and Stockholders’ Equity | $ | 1,912,653 | $ | 1,710,088 | ||||||||||
| Interest Rate Spread | 3.12 | % | 3.52 | % | ||||||||||
| Net Interest Income | $ | 19,341 | $ | 16,191 | ||||||||||
| Net Interest Margin | 4.21 | % | 3.95 | % | ||||||||||
| (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 six months ended June 30, 2023 | For the six months ended June 30, 2022 | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 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)^ | $ | 1,624,664 | $ | 55,586 | 6.90 | % | $ | 1,406,457 | $ | 34,639 | 4.97 | % | ||
| Securities: | ||||||||||||||
| Taxable | 70,147 | 926 | 2.66 | % | 73,283 | 758 | 2.09 | % | ||||||
| Tax-exempt | 37,908 | 670 | 3.56 | % | 39,023 | 677 | 3.50 | % | ||||||
| Federal funds and interest-bearing deposits | 103,053 | 2,311 | 4.52 | % | 91,081 | 229 | 0.51 | % | ||||||
| Total interest earning assets | $ | 1,835,772 | $ | 59,493 | 6.54 | % | $ | 1,609,844 | $ | 36,303 | 4.55 | % | ||
| Other assets | 63,465 | 76,387 | ||||||||||||
| Total assets | $ | 1,899,237 | $ | 1,686,231 | ||||||||||
| Liabilities and Stockholders’ Equity: | **** | **** | ||||||||||||
| Interest-bearing liabilities: | ||||||||||||||
| Interest-bearing demand deposits | $ | 78,568 | $ | 594 | 1.52 | % | $ | 83,450 | $ | 170 | 0.41 | % | ||
| Savings and NOW deposits | 51,290 | 255 | 1.00 | % | 72,617 | 79 | 0.22 | % | ||||||
| Money market deposit accounts | 284,906 | 4,129 | 2.92 | % | 250,908 | 270 | 0.22 | % | ||||||
| Time deposits | 698,384 | 11,221 | 3.24 | % | 478,376 | 2,961 | 1.25 | % | ||||||
| Total interest-bearing deposits | $ | 1,113,148 | $ | 16,199 | 2.93 | % | $ | 885,351 | $ | 3,480 | 0.79 | % | ||
| Federal funds purchased | 9,103 | 239 | 5.29 | % | 1 | — | — | |||||||
| FHLB borrowings | 39,199 | 919 | 4.73 | % | 36,215 | 83 | 0.46 | % | ||||||
| Subordinated debt | 72,355 | 1,632 | 4.55 | % | 58,079 | 1,280 | 4.44 | % | ||||||
| Total interest-bearing liabilities | $ | 1,233,805 | $ | 18,989 | 3.10 | % | $ | 979,646 | $ | 4,843 | 1.00 | % | ||
| Demand deposits and other liabilities | 460,632 | 517,281 | ||||||||||||
| Total liabilities | $ | 1,694,437 | $ | 1,496,927 | ||||||||||
| Stockholders’ Equity | 204,800 | 189,304 | ||||||||||||
| Total Liabilities and Stockholders’ Equity | $ | 1,899,237 | $ | 1,686,231 | ||||||||||
| Interest Rate Spread | 3.44 | % | 3.55 | % | ||||||||||
| Net Interest Income | $ | 40,504 | $ | 31,460 | ||||||||||
| Net Interest Margin | 4.45 | % | 3.94 | % | ||||||||||
| (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 per share data)
| At or For the Three Months Ended | At or For the Six Months Ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| June 30, | June 30, | |||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||
| Per share Data and Shares Outstanding | ****** | ****** | ****** | ****** | ||||||||
| Earnings per common share (basic and diluted) | $ | 0.85 | $ | 0.71 | $ | 1.86 | $ | 1.35 | ||||
| Book value per common share | $ | 24.36 | $ | 21.41 | $ | 24.36 | $ | 21.41 | ||||
| Tangible book value per common share(2) | $ | 22.73 | $ | 20.75 | $ | 22.73 | $ | 20.75 | ||||
| Weighted average common shares (basic and diluted) | 7,522,764 | 7,575,484 | 7,519,949 | 7,611,303 | ||||||||
| Common shares outstanding at end of period | 7,522,297 | 7,526,463 | 7,522,297 | 7,526,463 | ||||||||
| Performance Ratios | ****** | ****** | ****** | ****** | ||||||||
| Return on average assets (annualized) | 1.46 | % | 1.39 | % | 1.60 | % | 1.36 | % | ||||
| Return on average equity (annualized) | 13.40 | % | 12.59 | % | 14.87 | % | 12.09 | % | ||||
| Return on average common equity (annualized) | 14.22 | % | 13.38 | % | 15.92 | % | 12.79 | % | ||||
| Yield on earning assets (FTE) (2) (annualized) | 6.70 | % | 4.60 | % | 6.54 | % | 4.55 | % | ||||
| Cost of interest bearing liabilities (annualized) | 3.58 | % | 1.08 | % | 3.10 | % | 1.00 | % | ||||
| Net interest spread (FTE)(2) | 3.12 | % | 3.52 | % | 3.44 | % | 3.55 | % | ||||
| Net interest margin (FTE)(2) (annualized) | 4.21 | % | 3.95 | % | 4.45 | % | 3.94 | % | ||||
| Noninterest income as a percentage of average assets (annualized) | 0.17 | % | 0.30 | % | 0.19 | % | 0.29 | % | ||||
| Noninterest expense to average assets (annualized) | 2.28 | % | 2.23 | % | 2.39 | % | 2.21 | % | ||||
| Efficiency ratio(3) | 54.04 | % | 54.61 | % | 53.48 | % | 54.70 | % | ||||
| Asset Quality | ****** | ****** | ****** | ****** | ||||||||
| Allowance for credit losses (ACL) | ||||||||||||
| Beginning balance, ACL - loans | $ | 15,435 | $ | 12,500 | $ | 14,114 | $ | 11,697 | ||||
| Add: recoveries | 1 | 2 | 12 | 5 | ||||||||
| Less: charge-offs | (6 | ) | — | (6 | ) | — | ||||||
| Add: provision for credit losses | 617 | 480 | 1,032 | 1280 | ||||||||
| Add: current expected credit losses, nonrecurring adoption | — | — | 895 | — | ||||||||
| Ending balance, ACL - loans | $ | 16,047 | $ | 12,982 | $ | 16,047 | $ | 12,982 | ||||
| Beginning balance, reserve for unfunded commitment (RUC) | $ | 1,178 | $ | — | $ | — | $ | — | ||||
| Add: current expected credit losses, nonrecurring adoption | — | — | 1,310 | — | ||||||||
| Add: provision for unfunded commitments | 21 | — | 21 | — | ||||||||
| Less: recovery of unfunded commitments | — | — | (132 | ) | — | |||||||
| Ending balance, RUC | $ | 1,199 | $ | — | $ | 1,199 | $ | — | ||||
| Total allowance for credit losses | $ | 17,246 | $ | 12,982 | $ | 17,246 | $ | 12,982 | ||||
| Allowance for credit losses on loans to total gross loans | 0.97 | % | 0.91 | % | 0.97 | % | 0.91 | % | ||||
| Allowance for credit losses to total gross loans | 1.04 | % | 0.91 | % | 1.04 | % | 0.91 | % | ||||
| Allowance for credit losses on loans to non-performing assets | N/A | N/A | N/A | N/A | ||||||||
| Net charge-offs (recoveries) to average gross loans (annualized) | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | ||||
| Concentration Ratios | ****** | ****** | ****** | ****** | ||||||||
| Commercial real estate loans to total capital (4) | 363.43 | % | 366.10 | % | 363.43 | % | 366.10 | % | ||||
| Construction loans to total capital (5) | 139.59 | % | 138.16 | % | 139.59 | % | 138.16 | % | ||||
| Non-performing Assets | ****** | ****** | ****** | ****** | ||||||||
| Loans 30-89 days past due to total gross loans | 0.00 | % | 0.01 | % | 0.00 | % | 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 | % | 0.00 | % | 0.00 | % | 0.00 | % | ||||
| Other real estate owned | $ | — | $ | — | $ | — | $ | — | ||||
| Non-performing assets | $ | — | $ | — | $ | — | $ | — | ||||
| Non-performing assets to total assets | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | ||||
| Regulatory Capital Ratios (Bank only) (1) | ****** | ****** | ****** | ****** | ||||||||
| Total risk-based capital ratio | 16.79 | % | 16.23 | % | 16.79 | % | 16.23 | % | ||||
| Tier 1 risk-based capital ratio | 15.83 | % | 15.42 | % | 15.83 | % | 15.42 | % | ||||
| Leverage ratio | 14.81 | % | 14.34 | % | 14.81 | % | 14.34 | % | ||||
| Common equity tier 1 ratio | 15.83 | % | 15.42 | % | 15.83 | % | 15.42 | % | ||||
| Other information | ****** | ****** | ****** | ****** | ||||||||
| Closing stock price | $ | 22.66 | $ | 22.77 | $ | 22.66 | $ | 22.77 | ||||
| Tangible equity / tangible assets (2) | 10.24 | % | 10.26 | % | 10.24 | % | 10.26 | % | ||||
| Average tangible equity / average tangible assets (2) | 10.34 | % | 10.81 | % | 10.28 | % | 11.03 | % | ||||
| Number of full time equivalent employees | 179 | 146 | 179 | 146 | ||||||||
| Number of full service branch offices | 6 | 6 | 6 | 6 | ||||||||
| (1) | Regulatory capital ratios as of June 30, 2023 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 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 June 30, | For the six months ended June 30, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2023 | 2022 | 2023 | 2022 | |||||||||
| Net interest margin (FTE) | **** | **** | **** | **** | ||||||||
| Net interest income (GAAP) | $ | 19,271 | $ | 16,121 | $ | 40,363 | $ | 31,318 | ||||
| FTE adjustment on tax-exempt securities | 70 | 70 | 141 | 142 | ||||||||
| Net interest income (FTE) (non-GAAP) | 19,341 | 16,191 | 40,504 | 31,460 | ||||||||
| Average interest earning assets | 1,843,165 | 1,644,863 | 1,835,772 | 1,609,844 | ||||||||
| Net interest margin (GAAP) | 4.19 | % | 3.93 | % | 4.43 | % | 3.92 | % | ||||
| Net interest margin (FTE) (non-GAAP) | 4.21 | % | 3.95 | % | 4.45 | % | 3.94 | % | ||||
| As of June 30, | As of June 30, | |||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||
| 2023 | 2022 | 2023 | 2022 | |||||||||
| Stockholders equity, adjusted | ||||||||||||
| Total stockholders equity (GAAP) | $ | 210,508 | $ | 188,404 | $ | 210,508 | $ | 188,404 | ||||
| Less: intangible assets | 12,266 | 4,956 | 12,266 | 4,956 | ||||||||
| Tangible stockholders equity (non-GAAP) | 198,242 | 183,448 | $ | 198,242 | $ | 183,448 | ||||||
| Less: preferred stock | 27,263 | 27,263 | 27,263 | 27,263 | ||||||||
| Tangible common stockholders equity (non-GAAP) | 170,979 | 156,185 | 170,979 | 156,185 | ||||||||
| Shares outstanding | 7,522,297 | 7,526,463 | 7,522,297 | 7,526,463 | ||||||||
| Tangible book value per common share (non-GAAP) | $ | 22.73 | $ | 20.75 | $ | 22.73 | $ | 20.75 | ||||
| As of June 30, | As of June 30, | |||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 2023 | 2022 | 2023 | 2022 | |||||||||
| Total assets, adjusted | **** | **** | **** | **** | ||||||||
| Total assets (GAAP) | $ | 1,949,351 | $ | 1,793,379 | $ | 1,949,351 | $ | 1,793,379 | ||||
| Less: intangible assets | (12,266 | ) | (4,956 | ) | (12,266 | ) | (4,956 | ) | ||||
| Total tangible assets (non-GAAP) | 1,937,085 | 1,788,423 | 1,937,085 | 1,788,423 | ||||||||
| For the three months ended June 30, | For the six months ended June 30, | |||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 2023 | 2022 | 2023 | 2022 | |||||||||
| Average stockholders equity, adjusted | **** | **** | **** | **** | ||||||||
| Total average stockholders equity (GAAP) | $ | 207,962 | $ | 188,902 | $ | 204,800 | $ | 189,304 | ||||
| Less: average intangible assets | (11,284 | ) | (4,512 | ) | (10,585 | ) | (3,746 | ) | ||||
| Total average tangible stockholders equity (non-GAAP) | 196,678 | 184,390 | 194,215 | 185,558 | ||||||||
| For the three months ended June 30, | For the six months ended June 30, | |||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 2023 | 2022 | 2023 | 2022 | |||||||||
| Average assets, adjusted | **** | **** | **** | **** | ||||||||
| Total average average assets (GAAP) | $ | 1,912,653 | $ | 1,710,088 | $ | 1,899,237 | $ | 1,686,231 | ||||
| Less: average intangible assets | (11,284 | ) | (4,512 | ) | (10,585 | ) | (3,746 | ) | ||||
| Total average tangible assets (non-GAAP) | 1,901,369 | 1,705,576 | 1,888,652 | 1,682,485 |
Image Exhibit
Exhibit 99.2
