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: January 22, 2024
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 January 22, 2024, MainStreet Bancshares, Inc. (the “Company”) issued a press release setting forth the Company’s fourth quarter and year-to-date ended December 31, 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 January 22, 2024, the Company made available an investor presentation analyzing its fourth quarter and year-to-date ended December 31, 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.
Due to a temporary illness, MainStreet Bancshares, Inc will not be conducting its previously announced virtual webcast and quarterly earnings conference call on Monday, January 22, 2024. Investors that are interested in discussing the Company's press release or investor presentation are encouraged to contact Tom Chmelik by email at tchmelik@mstreetbank.com to arrange a meeting.
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 January 22, 2024, with respect to the Company’s unaudited financial results for the fourth quarter and year-ended December 31, 2023. |
| 99.2 | Investor Presentation dated January 22, 2024. |
| 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: January 22, 2024 | By: | /s/ Thomas J. Chmelik |
| Name: Thomas J. Chmelik | ||
| Title: Chief Financial Officer |
2
ex_597688.htm
Exhibit 99.1
| PRESS RELEASE | Contact: Debra Cope |
|---|---|
| January 22, 2024 8:00 AM ET | Director of Corporate Communications |
| Desk (703) 481-4599 | |
| Mobile (202) 468-3184 |
MainStreet Bancshares Inc. Delivered Consistent 2023 Earnings Despite Market Turmoil
Year-End and Fourth Quarter Results Underscore Steady Progress in Challenging Environment
FAIRFAX, Va., January 22, 2024 /PRNewswire/ -- MainStreet Bancshares, Inc. (Nasdaq: MNSB & MNSBP), the holding company for MainStreet Bank, reported net income of $26.6 million for the year ended December 31, 2023, consistent with expectations. Earnings per share for the year totaled $3.25.
Annualized returns for 2023 included:
| Return on Average Equity (ROAE): | 12.66% |
|---|---|
| Return on Average Assets (ROAA): | 1.38% |
| Net Interest Margin (NIM) (tax equivalent): | 4.08% |
| Efficiency Ratio: | 56.7% |
| Liquidity Coverage Ratio: | 133% |
| Core Deposit Ratio: | 74% |
| FDIC Insured Deposits / Total Deposits: | 77% |
| Allowance for Credit Losses (ACL): | 1.01% |
| Tangible Book Value per Common Share: | $23.86 |
“We’ve maintained a steady course, meeting customer credit needs and delivering healthy shareholder value at a time when community banks across our region and the nation face intense headwinds,” said Jeff W. Dick, Chairman and CEO of MainStreet Bancshares Inc. and MainStreet Bank.
“It’s worth reflecting on what an extraordinarily challenging year this was,” he continued. “In the first quarter of 2023, we witnessed the second, third, and fourth largest bank failures in U.S. history. The fallout increased the impact of historically steep interest rate hikes. Yet MainStreet Bancshares has not just persevered but prospered. We see a bright future for all facets of our business, and we continue to invest in innovation as our Avenu embedded banking solution comes to fruition.”
Strong Fundamentals
“Our core banking business is thriving,” added Abdul Hersiburane, MainStreet Bank’s President. “Core deposits rose to 74% in the fourth quarter, up from 68% in the third quarter, and in the same period our wholesale deposits declined from 31% to 24%. Net loans, meanwhile, were up 8% for the year.”
The Company’s loan book totaled $1.73 billion at the end of 2023, and concentrations are well managed, with commercial real estate standing at 373% of total capital, below the board-set limit of 375%. The quality of the loan portfolio remained pristine, with negligible net chargeoffs and past-due loans.
The cumulative net interest margin rested at 4.08% for the year, as funding costs began to stabilize. While this measure has trended down quarter over quarter, the Company’s levels have consistently remained higher than most of its peers due to strong balance sheet management.
Fortifying Avenu for Growth
Since it went live in the third quarter, Avenu has continued to make progress in attracting and onboarding customers. Its inaugural client, Safari Pay, has now entered the beta stage and is gradually adding customers and conducting transactions. As Avenu ramps up and begins compliance reviews and onboarding with additional customers, the team will continue to harden and test systems and fortify the operation to scale up.
“We set out to build from scratch a compliance-centric system that can connect our partners and their apps directly and seamlessly to MainStreet Bank’s banking core,” Dick noted. “This was never a modest task because we weren’t interested in jumping onboard the middleware bandwagon. We wanted to build our embedded banking solution with meticulous care, bringing our deep understanding of regulatory and business challenges to bear. We are confident that our embedded banking solution will prove innovative and enhance MainStreet Bank’s deposit growth and support expanded lending."
ABOUT AVENU
Avenu, MainStreet Bank’s fully integrated Software as a Service (SaaS) solution, identified its first client on October 18. SafariPay, via its global money transmittance service PaySii, expects its customers to maintain average balances of $4 million on the platform.
Avenu — Banking Delivered
Avenu is the only embedded banking solution that connects our partners and their apps directly and seamlessly to a banking core — MainStreet Bank’s banking core. We are not a sponsor bank without our own technology, and we are not a middleware software company (aggregator) without our own bank. We are Avenu, a leading financial technology company backed by an established community business bank in the heart of Washington, D.C.
Avenu — Serving a Community of Innovation
Our clients are fintechs, application developers, money movers, and entrepreneurs. They all have one thing in common: They are innovating how money moves to solve real-world issues and help communities thrive. We are focused on servicing our community and long-term business relationships.
ABOUT MAINSTREET BANK: MainStreet operates six branches in Herndon, Fairfax, McLean, Leesburg, Clarendon, and Washington, D.C. MainStreet Bank has 55,000 free ATMs and a fully integrated online and mobile banking solution. The Bank is not restricted by a conventional branching system, as it can offer business customers the ability to Put Our Bank in Your Office®. With robust and easy-to-use online business banking technology, MainStreet has "put our bank" in thousands of businesses in the metropolitan area.
MainStreet Bank has a robust line of business and professional lending products, including government contracting lines of credit, commercial lines and term loans, residential and commercial construction, and commercial real estate. MainStreet also works with the SBA to offer 7A and 504 lending solutions. From sophisticated cash management to enhanced mobile banking and instant-issue Debit Cards, MainStreet Bank is always looking for ways to improve our customer's experience.
MainStreet Bank was the first community bank in the Washington, D.C., metropolitan area to offer a full online business banking solution. MainStreet Bank was also the first bank headquartered in the Commonwealth of Virginia to offer 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)
| September 30, 2023 | June 30, 2023 | March 31, 2023 | December 31, 2022* | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| ASSETS | **** | **** | **** | **** | **** | |||||||||
| Cash and cash equivalents | ||||||||||||||
| Cash and due from banks | 53,581 | $ | 44,912 | $ | 67,700 | $ | 225,334 | $ | 48,931 | |||||
| Federal funds sold | 60,932 | 76,271 | 30,341 | — | 81,669 | |||||||||
| Total cash and cash equivalents | 114,513 | 121,183 | 98,041 | 225,334 | 130,600 | |||||||||
| Investment securities available for sale, at fair value | 59,928 | 56,726 | 60,579 | 63,209 | 62,631 | |||||||||
| Investment securities held to maturity, at amortized cost, net of allowance for credit losses of 0 for all periods | 17,275 | 17,565 | 17,590 | 17,616 | 17,642 | |||||||||
| Restricted equity securities, at amortized cost | 24,356 | 20,619 | 20,304 | 22,436 | 24,325 | |||||||||
| Loans, net of allowance for credit losses of 16,506, 15,626, 16,047, 15,435, and 14,114, respectively | 1,705,137 | 1,681,444 | 1,637,484 | 1,617,275 | 1,579,950 | |||||||||
| Premises and equipment, net | 13,944 | 14,275 | 14,427 | 14,521 | 14,709 | |||||||||
| Accrued interest and other receivables | 12,390 | 11,184 | 10,256 | 9,744 | 9,581 | |||||||||
| Computer software, net of amortization | 14,657 | 13,373 | 12,266 | 10,559 | 9,149 | |||||||||
| Bank owned life insurance | 38,318 | 38,035 | 37,763 | 37,503 | 37,249 | |||||||||
| Other assets | 34,914 | 47,087 | 40,641 | 36,811 | 39,915 | |||||||||
| Total Assets | 2,035,432 | $ | 2,021,491 | $ | 1,949,351 | $ | 2,055,008 | $ | 1,925,751 | |||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | **** | **** | **** | **** | **** | |||||||||
| Liabilities: | **** | **** | **** | **** | **** | |||||||||
| Non-interest bearing deposits | 364,606 | $ | 394,859 | $ | 388,992 | $ | 487,875 | $ | 550,690 | |||||
| Interest bearing demand deposits | 137,128 | 76,423 | 71,308 | 100,522 | 80,099 | |||||||||
| Savings and NOW deposits | 45,878 | 46,550 | 51,294 | 53,499 | 51,419 | |||||||||
| Money market deposits | 442,179 | 461,398 | 380,500 | 260,316 | 222,540 | |||||||||
| Time deposits | 696,336 | 703,960 | 701,289 | 730,076 | 608,141 | |||||||||
| Total deposits | 1,686,127 | 1,683,190 | 1,593,383 | 1,632,288 | 1,512,889 | |||||||||
| Federal funds borrowed | 15,000 | — | 30,000 | 60,696 | — | |||||||||
| Federal Home Loan Bank advances | — | — | — | 45,000 | 100,000 | |||||||||
| Subordinated debt | 72,642 | 72,543 | 72,444 | 72,344 | 72,245 | |||||||||
| Other liabilities | 40,146 | 52,015 | 43,016 | 39,692 | 42,335 | |||||||||
| Total Liabilities | 1,813,915 | 1,807,748 | 1,738,843 | 1,850,020 | 1,727,469 | |||||||||
| Stockholders’ Equity: | **** | **** | **** | **** | **** | |||||||||
| Preferred stock | 27,263 | 27,263 | 27,263 | 27,263 | 27,263 | |||||||||
| Common stock | 29,198 | 29,188 | 29,177 | 29,185 | 28,736 | |||||||||
| Capital surplus | 65,985 | 65,407 | 64,768 | 64,213 | 63,999 | |||||||||
| Retained earnings | 106,549 | 102,694 | 97,646 | 91,991 | 86,830 | |||||||||
| Accumulated other comprehensive loss | (7,478 | ) | (10,809 | ) | (8,346 | ) | (7,664 | ) | (8,546 | ) | ||||
| Total Stockholders’ Equity | 221,517 | 213,743 | 210,508 | 204,988 | 198,282 | |||||||||
| Total Liabilities and Stockholders’ Equity | 2,035,432 | $ | 2,021,491 | $ | 1,949,351 | $ | 2,055,008 | $ | 1,925,751 |
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 | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| December 31, 2023 | December 31, 2022 | December 31, 2023 | September 30, 2023 | June 30, 2023 | March 31, 2023 | December 31, 2022 | |||||||||
| INTEREST INCOME: | **** | ||||||||||||||
| Interest and fees on loans | $ | 116,184 | $ | 78,872 | $ | 30,849 | $ | 29,750 | $ | 28,855 | $ | 26,731 | $ | 23,972 | |
| Interest on investment securities | |||||||||||||||
| Taxable securities | 1,836 | 1,603 | 451 | 459 | 407 | 518 | 467 | ||||||||
| Tax-exempt securities | 1,065 | 1,058 | 268 | 268 | 265 | 264 | 262 | ||||||||
| Interest on federal funds sold | 5,038 | 2,312 | 1,510 | 1,217 | 1,179 | 1,132 | 1,071 | ||||||||
| Total interest income | 124,123 | 83,845 | 33,078 | 31,694 | 30,706 | 28,645 | 25,772 | ||||||||
| INTEREST EXPENSE: | **** | ||||||||||||||
| Interest on interest bearing demand deposits | 1,892 | 601 | 1,058 | 240 | 251 | 343 | 256 | ||||||||
| Interest on savings and NOW deposits | 546 | 203 | 146 | 145 | 147 | 108 | 81 | ||||||||
| Interest on money market deposits | 13,924 | 1,547 | 5,639 | 4,156 | 2,926 | 1,203 | 781 | ||||||||
| Interest on time deposits | 27,003 | 8,202 | 8,257 | 7,526 | 7,077 | 4,144 | 2,966 | ||||||||
| Interest on federal funds borrowed | 299 | — | 25 | 35 | 201 | 38 | — | ||||||||
| Interest on Federal Home Loan Bank advances | 1,224 | 347 | 118 | 186 | 13 | 906 | 264 | ||||||||
| Interest on subordinated debt | 3,288 | 2,936 | 828 | 828 | 820 | 812 | 828 | ||||||||
| Total interest expense | 48,176 | 13,836 | 16,071 | 13,116 | 11,435 | 7,554 | 5,176 | ||||||||
| Net interest income | 75,947 | 70,009 | 17,007 | 18,578 | 19,271 | 21,091 | 20,596 | ||||||||
| Provision for credit losses | 1,642 | 2,398 | 466 | 255 | 638 | 283 | 1,118 | ||||||||
| Net interest income after provision for credit losses | 74,305 | 67,611 | 16,541 | 18,323 | 18,633 | 20,808 | 19,478 | ||||||||
| NON-INTEREST INCOME: | **** | ||||||||||||||
| Deposit account service charges | 2,149 | 2,420 | 510 | 514 | 535 | 590 | 610 | ||||||||
| Bank owned life insurance income | 1,069 | 1,008 | 283 | 272 | 259 | 255 | 253 | ||||||||
| Loan swap fee income | — | 619 | — | — | — | — | — | ||||||||
| Net gain on held-to-maturity securities | — | 4 | — | — | — | — | — | ||||||||
| Net loss on sale of loans | — | (168 | ) | — | — | — | — | — | |||||||
| Other non-interest income | 420 | 951 | 68 | 177 | 16 | 158 | 196 | ||||||||
| Total other income | 3,638 | 4,834 | 861 | 963 | 810 | 1,003 | 1,059 | ||||||||
| NON-INTEREST EXPENSES: | **** | ||||||||||||||
| Salaries and employee benefits | 28,267 | 23,801 | 7,129 | 6,924 | 6,595 | 7,621 | 6,775 | ||||||||
| Furniture and equipment expenses | 2,787 | 2,786 | 804 | 713 | 772 | 498 | 710 | ||||||||
| Advertising and marketing | 2,343 | 2,304 | 271 | 577 | 698 | 797 | 620 | ||||||||
| Occupancy expenses | 1,684 | 1,471 | 397 | 375 | 426 | 486 | 378 | ||||||||
| Outside services | 2,044 | 2,075 | 352 | 697 | 504 | 490 | 529 | ||||||||
| Administrative expenses | 922 | 872 | 219 | 277 | 211 | 215 | 214 | ||||||||
| Other operating expenses | 7,072 | 5,748 | 1,964 | 1,866 | 1,646 | 1,596 | 1,481 | ||||||||
| Total non-interest expenses | 45,119 | 39,057 | 11,136 | 11,429 | 10,852 | 11,703 | 10,707 | ||||||||
| Income before income tax expense | 32,824 | 33,388 | 6,266 | 7,857 | 8,591 | 10,108 | 9,830 | ||||||||
| Income tax expense | 6,239 | 6,714 | 1,120 | 1,516 | 1,645 | 1,957 | 2,252 | ||||||||
| Net income | 26,585 | 26,674 | 5,146 | 6,341 | 6,946 | 8,151 | 7,578 | ||||||||
| Preferred stock dividends | 2,156 | 2,156 | 539 | 539 | 539 | 539 | 539 | ||||||||
| Net income available to common shareholders | $ | 24,429 | $ | 24,518 | $ | 4,607 | $ | 5,802 | $ | 6,407 | $ | 7,612 | $ | 7,039 | |
| Net income per common share, basic and diluted | $ | 3.25 | $ | 3.26 | $ | 0.61 | $ | 0.77 | $ | 0.85 | $ | 1.01 | $ | 0.95 | |
| Weighted average number of common shares, basic and diluted | 7,522,913 | 7,529,382 | 7,527,327 | 7,524,332 | 7,522,764 | 7,517,213 | 7,433,607 |
UNAUDITED LOAN, DEPOSIT AND BORROWING DETAIL
(In thousands)
| September 30, 2023 | December 31, 2022 | Percentage Change | ||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| % of Total | Amount | % of Total | Amount | % of Total | Last 3 Mos | Last 12 Mos | ||||||||||||||
| LOANS: | **** | **** | **** | **** | **** | **** | **** | **** | ||||||||||||
| Construction and land development loans | 24.9 | % | 25.1 | % | 24.6 | % | 0.7 | % | 9.1 | % | ||||||||||
| Residential real estate loans | 27.5 | % | 27.2 | % | 24.7 | % | 2.5 | % | 20.3 | % | ||||||||||
| Commercial real estate loans | 43.1 | % | 43.1 | % | 43.8 | % | 1.3 | % | 6.2 | % | ||||||||||
| Commercial and industrial loans | 4.4 | % | 4.3 | % | 6.1 | % | 2.1 | % | -22.5 | % | ||||||||||
| Consumer loans | 0.1 | % | 0.3 | % | 0.8 | % | -21.5 | % | -72.9 | % | ||||||||||
| Total Gross Loans | 100.0 | % | 100.0 | % | 100.0 | % | 1.4 | % | 8.0 | % | ||||||||||
| Less: Allowance for credit losses | ) | ) | ) | |||||||||||||||||
| Net deferred loan fees | ) | ) | ) | |||||||||||||||||
| Net Loans | ||||||||||||||||||||
| DEPOSITS: | **** | **** | **** | **** | **** | **** | **** | **** | ||||||||||||
| Non-interest bearing deposits | 21.6 | % | 23.5 | % | 36.4 | % | -7.7 | % | -33.8 | % | ||||||||||
| Interest-bearing deposits: | ||||||||||||||||||||
| Demand deposits | 8.1 | % | 4.5 | % | 5.3 | % | 79.4 | % | 71.2 | % | ||||||||||
| Savings and NOW deposits | 2.7 | % | 2.8 | % | 3.4 | % | -1.4 | % | -10.8 | % | ||||||||||
| Money market accounts | 26.2 | % | 27.4 | % | 14.7 | % | -4.2 | % | 98.7 | % | ||||||||||
| Certificates of deposit 250,000 or more | 26.3 | % | 25.7 | % | 24.5 | % | 2.4 | % | 19.6 | % | ||||||||||
| Certificates of deposit less than 250,000 | 15.1 | % | 16.1 | % | 15.7 | % | -6.6 | % | 6.5 | % | ||||||||||
| Total Deposits | 100.0 | % | 100.0 | % | 100.0 | % | 0.2 | % | 11.5 | % | ||||||||||
| BORROWINGS: | **** | **** | **** | **** | **** | **** | **** | **** | ||||||||||||
| Federal funds borrowed | 17.1 | % | 0.0 | % | 0.0 | % | 100.0 | % | 100.0 | % | ||||||||||
| Federal Home Loan Bank advances | 0.0 | % | 0.0 | % | 58.1 | % | -100.0 | % | -100.0 | % | ||||||||||
| Subordinated debt | 82.9 | % | 100.0 | % | 41.9 | % | 0.1 | % | 0.5 | % | ||||||||||
| Total Borrowings | 100.0 | % | 100.0 | % | 100.0 | % | 20.8 | % | -49.1 | % | ||||||||||
| Total Deposits and Borrowings | 1.0 | % | 5.3 | % | ||||||||||||||||
| Core customer funding sources (1) | 70.7 | % | 65.2 | % | 68.7 | % | 9.4 | % | 8.2 | % | ||||||||||
| Brokered and listing service sources (2) | 24.4 | % | 30.7 | % | 21.1 | % | -19.5 | % | 22.0 | % | ||||||||||
| Federal funds borrowed | 0.8 | % | 0.0 | % | 0.0 | % | 100.0 | % | 100.0 | % | ||||||||||
| Federal Home Loan Bank advances | 0.0 | % | 0.0 | % | 5.9 | % | 0.0 | % | -100.0 | % | ||||||||||
| Subordinated debt (3) | 4.1 | % | 4.1 | % | 4.3 | % | 0.1 | % | 0.5 | % | ||||||||||
| Total Funding Sources | 100.0 | % | 100.0 | % | 100.0 | % | 1.0 | % | 5.3 | % |
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. |
| Excludes $187.2 million in core deposits placed in reciprocal networks for FDIC insurance coverage that will be classified as brokered deposits on the call report in pursuent to rule 12 CFR 337.6(e) as of December 31, 2023. | |
| (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 December 31, 2023 | For the three months ended December 31, 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)^ | $ | 1,720,790 | $ | 30,849 | 7.11 | % | $ | 1,510,087 | $ | 23,972 | 6.30 | % | ||
| Securities: | ||||||||||||||
| Taxable | 67,494 | 451 | 2.65 | % | 70,776 | 467 | 2.62 | % | ||||||
| Tax-exempt | 37,614 | 339 | 3.58 | % | 38,007 | 332 | 3.46 | % | ||||||
| Federal funds and interest-bearing deposits | 114,421 | 1,510 | 5.24 | % | 124,865 | 1,071 | 3.40 | % | ||||||
| Total interest-earning assets | $ | 1,940,319 | $ | 33,149 | 6.78 | % | $ | 1,743,735 | $ | 25,842 | 5.88 | % | ||
| Other assets | 57,877 | 55,559 | ||||||||||||
| Total assets | $ | 1,998,196 | $ | 1,799,294 | ||||||||||
| Liabilities and Stockholders’ Equity: | **** | **** | ||||||||||||
| Interest-bearing liabilities: | ||||||||||||||
| Interest-bearing demand deposits | $ | 98,021 | $ | 1,058 | 4.28 | % | $ | 81,724 | $ | 256 | 1.24 | % | ||
| Savings and NOW deposits | 47,142 | 146 | 1.23 | % | 53,570 | 81 | 0.60 | % | ||||||
| Money market deposit accounts | 477,916 | 5,639 | 4.68 | % | 213,530 | 781 | 1.45 | % | ||||||
| Time deposits | 710,026 | 8,257 | 4.61 | % | 613,262 | 2,966 | 1.92 | % | ||||||
| Total interest-bearing deposits | $ | 1,333,105 | $ | 15,100 | 4.49 | % | $ | 962,086 | $ | 4,084 | 1.68 | % | ||
| Federal funds borrowed | 1,740 | 25 | 5.70 | % | 2 | — | — | |||||||
| FHLB advances | 8,424 | 118 | 5.56 | % | 23,913 | 264 | 4.38 | % | ||||||
| Subordinated debt | 72,603 | 828 | 4.52 | % | 72,206 | 828 | 4.55 | % | ||||||
| Total interest-bearing liabilities | $ | 1,415,872 | $ | 16,071 | 4.50 | % | $ | 1,058,207 | $ | 5,176 | 1.94 | % | ||
| Demand deposits and other liabilities | 365,655 | 546,827 | ||||||||||||
| Total liabilities | $ | 1,781,527 | $ | 1,605,034 | ||||||||||
| Stockholders’ Equity | 216,669 | 194,260 | ||||||||||||
| Total Liabilities and Stockholders’ Equity | $ | 1,998,196 | $ | 1,799,294 | ||||||||||
| Interest Rate Spread | 2.28 | % | 3.94 | % | ||||||||||
| Net Interest Income | $ | 17,078 | $ | 20,666 | ||||||||||
| Net Interest Margin | 3.49 | % | 4.70 | % | ||||||||||
| (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 year ended December 31, 2023 | For the year ended December 31, 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)^ | $ | 1,659,179 | $ | 116,184 | 7.00 | % | $ | 1,442,716 | $ | 78,872 | 5.47 | % | ||
| Securities: | ||||||||||||||
| Taxable | 68,815 | 1,836 | 2.67 | % | 72,809 | 1,603 | 2.20 | % | ||||||
| Tax-exempt | 37,810 | 1,348 | 3.57 | % | 38,528 | 1,339 | 3.48 | % | ||||||
| Federal funds and interest-bearing deposits | 103,840 | 5,038 | 4.85 | % | 122,596 | 2,312 | 1.89 | % | ||||||
| Total interest-earning assets | $ | 1,869,644 | $ | 124,406 | 6.65 | % | $ | 1,676,649 | $ | 84,126 | 5.02 | % | ||
| Other assets | 62,161 | 67,380 | ||||||||||||
| Total assets | $ | 1,931,805 | $ | 1,744,029 | ||||||||||
| Liabilities and Stockholders’ Equity: | **** | **** | ||||||||||||
| Interest-bearing liabilities: | ||||||||||||||
| Interest-bearing demand deposits | $ | 83,087 | $ | 1,892 | 2.28 | % | $ | 85,566 | $ | 601 | 0.70 | % | ||
| Savings and NOW deposits | 49,565 | 546 | 1.10 | % | 63,401 | 203 | 0.32 | % | ||||||
| Money market deposit accounts | 365,815 | 13,924 | 3.81 | % | 137,066 | 1,547 | 1.13 | % | ||||||
| Time deposits | 702,034 | 27,003 | 3.85 | % | 642,918 | 8,202 | 1.28 | % | ||||||
| Total interest-bearing deposits | $ | 1,200,501 | $ | 43,365 | 3.61 | % | $ | 928,951 | $ | 10,553 | 1.14 | % | ||
| Federal funds borrowed | 5,583 | 299 | 5.36 | % | 2 | — | — | |||||||
| FHLB advances | 24,959 | 1,224 | 4.90 | % | 23,986 | 347 | 1.45 | % | ||||||
| Subordinated debt | 72,455 | 3,288 | 4.54 | % | 65,176 | 2,936 | 4.50 | % | ||||||
| Total interest-bearing liabilities | $ | 1,303,498 | $ | 48,176 | 3.70 | % | $ | 1,018,115 | $ | 13,836 | 1.36 | % | ||
| Demand deposits and other liabilities | 418,386 | 535,075 | ||||||||||||
| Total liabilities | $ | 1,721,884 | $ | 1,553,190 | ||||||||||
| Stockholders’ Equity | 209,921 | 190,839 | ||||||||||||
| Total Liabilities and Stockholders’ Equity | $ | 1,931,805 | $ | 1,744,029 | ||||||||||
| Interest Rate Spread | 2.95 | % | 3.66 | % | ||||||||||
| Net Interest Income | $ | 76,230 | $ | 70,290 | ||||||||||
| Net Interest Margin | 4.08 | % | 4.19 | % | ||||||||||
| (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 Year Ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| December 31, | December 31, | |||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||
| Per share Data and Shares Outstanding | ****** | ****** | ****** | ****** | ||||||||
| Earnings per common share (basic and diluted) | $ | 0.61 | $ | 0.95 | $ | 3.25 | $ | 3.26 | ||||
| Book value per common share | $ | 25.81 | $ | 22.98 | $ | 25.81 | $ | 22.98 | ||||
| Tangible book value per common share(2) | $ | 23.86 | $ | 21.75 | $ | 23.86 | $ | 21.75 | ||||
| Weighted average common shares (basic and diluted) | 7,527,327 | 7,433,607 | 7,522,913 | 7,529,382 | ||||||||
| Common shares outstanding at end of period | 7,527,415 | 7,442,743 | 7,527,415 | 7,442,743 | ||||||||
| Performance Ratios | ****** | ****** | ****** | ****** | ||||||||
| Return on average assets (annualized) | 1.02 | % | 1.67 | % | 1.38 | % | 1.53 | % | ||||
| Return on average equity (annualized) | 9.42 | % | 15.48 | % | 12.66 | % | 13.98 | % | ||||
| Return on average common equity (annualized) | 9.65 | % | 16.72 | % | 13.37 | % | 14.99 | % | ||||
| Yield on earning assets (FTE) (2) (annualized) | 6.78 | % | 5.88 | % | 6.65 | % | 5.02 | % | ||||
| Cost of interest bearing liabilities (annualized) | 4.50 | % | 1.94 | % | 3.70 | % | 1.36 | % | ||||
| Net interest spread (FTE)(2) | 2.28 | % | 3.94 | % | 2.95 | % | 3.66 | % | ||||
| Net interest margin (FTE)(2) (annualized) | 3.49 | % | 4.70 | % | 4.08 | % | 4.19 | % | ||||
| Noninterest income as a percentage of average assets (annualized) | 0.17 | % | 0.23 | % | 0.19 | % | 0.28 | % | ||||
| Noninterest expense to average assets (annualized) | 2.21 | % | 2.36 | % | 2.34 | % | 2.24 | % | ||||
| Efficiency ratio(3) | 62.33 | % | 49.45 | % | 56.69 | % | 52.19 | % | ||||
| Asset Quality | ****** | ****** | ****** | ****** | ||||||||
| Allowance for credit losses (ACL) | ||||||||||||
| Beginning balance, ACL - loans | $ | 15,626 | $ | 12,994 | $ | 14,114 | $ | 11,697 | ||||
| Add: current expected credit losses, nonrecurring adoption | — | — | 895 | — | ||||||||
| Add: recoveries | 9 | 2 | 22 | 19 | ||||||||
| Less: charge-offs | (137 | ) | — | (468 | ) | — | ||||||
| Add: provision for (recovery of) credit losses - loans | 1,008 | 1,118 | 1,943 | 2,398 | ||||||||
| Ending balance, ACL - loans | $ | 16,506 | $ | 14,114 | $ | 16,506 | $ | 14,114 | ||||
| Beginning balance, reserve for unfunded commitment (RUC) | $ | 1,552 | $ | — | $ | — | $ | — | ||||
| Add: current expected credit losses, nonrecurring adoption | — | — | 1,310 | — | ||||||||
| Add: provision for (reversal of) unfunded commitments, net | (543 | ) | — | (301 | ) | — | ||||||
| Ending balance, RUC | $ | 1,009 | $ | — | $ | 1,009 | $ | — | ||||
| Total allowance for credit losses | $ | 17,515 | $ | 14,114 | $ | 17,515 | $ | 14,114 | ||||
| Allowance for credit losses on loans to total gross loans | 0.96 | % | 0.88 | % | 0.96 | % | 0.88 | % | ||||
| Allowance for credit losses to total gross loans | 1.01 | % | 0.89 | % | 1.01 | % | 0.89 | % | ||||
| Allowance for credit losses on loans to non-performing loans | 16.44 | N/A | 16.44 | N/A | ||||||||
| Net charge-offs (recoveries) to average gross loans (annualized) | 0.03 | % | 0.00 | % | 0.03 | % | 0.00 | % | ||||
| Concentration Ratios | ****** | ****** | ****** | ****** | ||||||||
| Commercial real estate loans to total capital (4) | 372.50 | % | 377.54 | % | 372.50 | % | 377.54 | % | ||||
| Construction loans to total capital (5) | 137.67 | % | 137.41 | % | 137.67 | % | 137.41 | % | ||||
| Non-performing Assets | ****** | ****** | ****** | ****** | ||||||||
| Loans 30-89 days past due to total gross loans | 0.04 | % | 0.00 | % | 0.04 | % | 0.00 | % | ||||
| Loans 90 days past due to total gross loans | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | ||||
| Non-accrual loans to total gross loans | 0.06 | % | 0.00 | % | 0.06 | % | 0.00 | % | ||||
| Non-performing assets | $ | 1,004 | $ | — | $ | 1,004 | $ | — | ||||
| Non-performing assets to total assets | 0.05 | % | 0.00 | % | 0.05 | % | 0.00 | % | ||||
| Regulatory Capital Ratios (Bank only) (1) | ****** | ****** | ****** | ****** | ||||||||
| Total risk-based capital ratio | 17.18 | % | 16.27 | % | 17.18 | % | 16.27 | % | ||||
| Tier 1 risk-based capital ratio | 16.22 | % | 15.47 | % | 16.22 | % | 15.47 | % | ||||
| Leverage ratio | 14.66 | % | 15.05 | % | 14.66 | % | 15.05 | % | ||||
| Common equity tier 1 ratio | 16.22 | % | 15.47 | % | 16.22 | % | 15.47 | % | ||||
| Other information | ****** | ****** | ****** | ****** | ||||||||
| Closing stock price | $ | 24.81 | $ | 27.49 | $ | 24.81 | $ | 27.49 | ||||
| Tangible equity / tangible assets (2) | 10.24 | % | 9.87 | % | 10.24 | % | 9.87 | % | ||||
| Average tangible equity / average tangible assets (2) | 10.22 | % | 10.39 | % | 10.31 | % | 10.66 | % | ||||
| Number of full time equivalent employees | 186 | 168 | 186 | 168 | ||||||||
| Number of full service branch offices | 6 | 6 | 6 | 6 | ||||||||
| (1) | Regulatory capital ratios as of December 31, 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 December 31, | For the year ended December 31, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2023 | 2022 | 2023 | 2022 | |||||||||
| Net interest margin (FTE) | **** | **** | **** | **** | ||||||||
| Net interest income (GAAP) | $ | 17,007 | $ | 20,596 | $ | 75,947 | $ | 70,009 | ||||
| FTE adjustment on tax-exempt securities | 71 | 70 | 283 | 281 | ||||||||
| Net interest income (FTE) (non-GAAP) | 17,078 | 20,666 | 76,230 | 70,290 | ||||||||
| Average interest earning assets | 1,940,319 | 1,743,735 | 1,869,644 | 1,676,649 | ||||||||
| Net interest margin (GAAP) | 3.48 | % | 4.69 | % | 4.06 | % | 4.18 | % | ||||
| Net interest margin (FTE) (non-GAAP) | 3.49 | % | 4.70 | % | 4.08 | % | 4.19 | % | ||||
| For the three months ended December 31, | For the year ended December 31, | |||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 2023 | 2022 | 2023 | 2022 | |||||||||
| Yield on earning assets (FTE) | **** | **** | **** | **** | ||||||||
| Total interest income | $ | 33,078 | $ | 25,772 | $ | 124,123 | $ | 83,845 | ||||
| FTE adjustment on tax-exempt securities | 71 | 70 | 283 | 281 | ||||||||
| Total interest income (FTE) (non-GAAP) | 33,149 | 25,842 | 124,406 | 84,126 | ||||||||
| Average interest earning assets | 1,940,319 | 1,743,735 | 1,869,644 | 1,676,649 | ||||||||
| Yield on earning assets (GAAP) | 6.76 | % | 5.86 | % | 6.64 | % | 5.00 | % | ||||
| Yield on earning assets (FTE) (non-GAAP) | 6.78 | % | 5.88 | % | 6.65 | % | 5.02 | % | ||||
| For the three months ended December 31, | For the year ended December 31, | |||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 2023 | 2022 | 2023 | 2022 | |||||||||
| Net interest spread (FTE) | **** | **** | **** | **** | ||||||||
| Yield on earning assets (GAAP) | 6.76 | % | 5.86 | % | 6.64 | % | 5.00 | % | ||||
| Yield on earning assets (FTE) (non-GAAP) | 6.78 | % | 5.88 | % | 6.65 | % | 5.02 | % | ||||
| Yield on interest-bearing liabilities | 4.50 | % | 1.94 | % | 3.70 | % | 1.36 | % | ||||
| Net interest spread (GAAP) | 2.26 | % | 3.92 | % | 2.94 | % | 3.64 | % | ||||
| Net interest spread (FTE) (non-GAAP) | 2.28 | % | 3.94 | % | 2.95 | % | 3.66 | % | ||||
| As of December 31, | As of December 31, | |||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||
| 2023 | 2022 | 2023 | 2022 | |||||||||
| Stockholders equity, adjusted | ||||||||||||
| Total stockholders equity (GAAP) | $ | 221,517 | $ | 198,282 | $ | 221,517 | $ | 198,282 | ||||
| Less: intangible assets | 14,657 | 9,149 | 14,657 | 9,149 | ||||||||
| Tangible stockholders equity (non-GAAP) | 206,860 | 189,133 | $ | 206,860 | $ | 189,133 | ||||||
| Less: preferred stock | 27,263 | 27,263 | 27,263 | 27,263 | ||||||||
| Tangible common stockholders equity (non-GAAP) | 179,597 | 161,870 | 179,597 | 161,870 | ||||||||
| Common shares outstanding | 7,527,415 | 7,442,743 | 7,527,415 | 7,442,743 | ||||||||
| Tangible book value per common share (non-GAAP) | $ | 23.86 | $ | 21.75 | $ | 23.86 | $ | 21.75 | ||||
| As of December 31, | As of December 31, | |||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 2023 | 2022 | 2023 | 2022 | |||||||||
| Total assets, adjusted | **** | **** | **** | **** | ||||||||
| Total assets (GAAP) | $ | 2,035,432 | $ | 1,925,751 | $ | 2,035,432 | $ | 1,925,751 | ||||
| Less: intangible assets | (14,657 | ) | (9,149 | ) | (14,657 | ) | (9,149 | ) | ||||
| Total tangible assets (non-GAAP) | 2,020,775 | 1,916,602 | 2,020,775 | 1,916,602 | ||||||||
| For the three months ended December 31, | For the year ended December 31, | |||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 2023 | 2022 | 2023 | 2022 | |||||||||
| Average stockholders equity, adjusted | **** | **** | **** | **** | ||||||||
| Total average stockholders equity (GAAP) | $ | 216,669 | $ | 194,225 | $ | 209,921 | $ | 190,839 | ||||
| Less: average intangible assets | (13,929 | ) | (8,143 | ) | (11,996 | ) | (5,471 | ) | ||||
| Total average tangible stockholders equity (non-GAAP) | 202,740 | 186,082 | 197,925 | 185,368 | ||||||||
| For the three months ended December 31, | For the year ended December 31, | |||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 2023 | 2022 | 2023 | 2022 | |||||||||
| Average assets, adjusted | **** | **** | **** | **** | ||||||||
| Total average average assets (GAAP) | $ | 1,998,196 | $ | 1,799,259 | $ | 1,931,805 | $ | 1,744,029 | ||||
| Less: average intangible assets | (13,929 | ) | (8,143 | ) | (11,996 | ) | (5,471 | ) | ||||
| Total average tangible assets (non-GAAP) | 1,984,267 | 1,791,116 | 1,919,809 | 1,738,558 |
Image Exhibit
Exhibit 99.2
