Core Viewpoint - MainStreet Bank (MNSB) has been upgraded to a Zacks Rank 2 (Buy), indicating a positive trend in earnings estimates which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Performance - The Zacks rating system is based on changes in earnings estimates, which are closely correlated with stock price movements, making it a valuable tool for investors [2][4]. - The recent upgrade reflects an optimistic earnings outlook for MainStreet Bank, likely leading to increased buying pressure and a rise in stock price [3][5]. Earnings Estimate Revisions - MainStreet Bank is projected to earn $1.10 per share for the fiscal year ending December 2025, representing a year-over-year increase of 103.7% [8]. - Over the past three months, the Zacks Consensus Estimate for MainStreet Bank has risen by 25%, indicating a positive trend in earnings estimates [8]. Zacks Rank System - The Zacks Rank system categorizes stocks into five groups based on earnings estimates, with a strong historical performance, particularly for Zacks Rank 1 stocks which have averaged a +25% annual return since 1988 [7]. - MainStreet Bank's upgrade to Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, suggesting potential for market-beating returns in the near term [10].

Group 1 - MainStreet Bank reported a quarterly loss of $0.12 per share, missing the Zacks Consensus Estimate of $0.23, and down from earnings of $0.61 per share a year ago, representing an earnings surprise of -152.17% [1] - The company posted revenues of $16.85 million for the quarter ended December 2024, missing the Zacks Consensus Estimate by 0.84%, and down from $17.87 million year-over-year [2] - MainStreet Bank shares have declined approximately 3.3% since the beginning of the year, while the S&P 500 has gained 3.7% [3] Group 2 - The earnings outlook for MainStreet Bank is mixed, with the current consensus EPS estimate for the coming quarter at $0.20 on revenues of $17.03 million, and $1.02 on revenues of $71.35 million for the current fiscal year [7] - The Zacks Industry Rank for Banks - Northeast is currently in the top 11% of over 250 Zacks industries, indicating a favorable outlook for the industry [8] - The estimate revisions trend for MainStreet Bank is currently a Zacks Rank 3 (Hold), suggesting the stock is expected to perform in line with the market in the near future [6]

Core Insights - MainStreet Bancshares, Inc. reported a loss of $9.98 million for 2024 due to nonrecurring impairment of capitalized intangible software and resolution of nonperforming assets, but remains strongly capitalized with good liquidity [1][2][3] - The company ended 2024 with a net interest margin of 3.13% and total deposits grew by 13% year-over-year to $1.9 billion, with core deposits making up 75% of total deposits [2][3][4] Financial Performance - The total interest income for the year was $134.615 million, an increase from $124.421 million in 2023, while total interest expense rose to $72.041 million from $47.679 million, resulting in a net interest income of $62.574 million [11][12] - The company resolved 62% of its nonperforming loans and grew its loan portfolio by 6%, with total gross loans reaching $1.835 billion [2][13] Business Strategy - The Avenu Banking-as-a-Service (BaaS) solution launched in October 2024 aims to diversify revenue streams and reach new customer segments, aligning with the company's branch-lite strategy [6][7] - MainStreet Bank focuses on providing innovative embedded banking services and has established fintech partnerships to enhance low-cost deposits and fee income [2][6] Market Position - MainStreet Bank operates in the DC Metropolitan area, which is described as a vibrant market, benefiting from a normalizing interest rate environment with the FOMC cutting rates by a total of 1.0% [3][4] - The bank has a robust line of business and professional lending products, including government contracting lines of credit and commercial real estate loans, and is an SBA Preferred Lender [4][5]

Financial Performance - MainStreet Bancshares reported a loss of $9.98 million for 2024 due to nonrecurring impairment of capitalized intangible software and resolution of nonperforming assets[1]. - The company reported a net loss of $9,980 thousand, contrasting with a net income of $26,585 thousand in the previous year[17]. - Earnings per common share were reported at $(1.60), down from $3.25, indicating a substantial decline[17]. - The company's return on average assets (annualized) for the three months ended December 31, 2024, was (2.80)%, compared to 1.02% for the same period in 2023[27]. - Net income (loss), as reported, for Q4 2024 was $(16,167) million, compared to a profit of $5,146 million in Q4 2023[30]. - Adjusted net income (loss) for Q4 2024 was $(353) million, while adjusted net income for Q4 2023 was $5,146 million[30]. - The annualized return on average assets (ROAA), as reported, for 2024 was (0.47)%, compared to 1.38% in 2023[30]. Revenue and Income - Total interest income for the year-to-date increased to $134,615 thousand, up from $124,421 thousand in the previous year, representing an increase of 0.96%[17]. - Total non-interest income totaled $3,252 thousand, slightly down from $3,340 thousand, reflecting a decrease of 2.63%[17]. - Net interest income after provision for credit losses decreased to $55,811 thousand from $75,100 thousand, a decline of 25.7%[17]. - Net interest income for the year ended December 31, 2024, was $62,865 thousand, a decrease from $77,025 thousand in 2023, reflecting a decline of 18.4%[25]. - Net interest income (GAAP) for Q4 2024 was $16,041 million, down from $17,311 million in Q4 2023, representing a decrease of 7.3%[30]. - Total interest income (GAAP) for the year 2024 was $134,615 million, an increase of 8.5% compared to $124,421 million in 2023[30]. Assets and Liabilities - Total assets as of December 31, 2024, were $2.23 billion, reflecting a stable financial position[15]. - The allowance for credit losses on loans increased to $19,450 thousand as of December 31, 2024, up from $16,506 thousand in 2023, indicating a rise of 11.7%[27]. - Total gross loans increased to $1,834,988 million, reflecting a 2.0% increase from the previous quarter and a 6.2% increase year-over-year[19]. - Net loans amounted to $1,810,556 million, showing a quarter-over-quarter increase of 2.0%[19]. - The total funding sources increased to $1,980,833 million, reflecting a 0.7% increase from the previous quarter and an 11.7% increase year-over-year[19]. Deposits and Funding - Total deposits grew by 13% year-over-year to $1.9 billion, with core deposits increasing by $187 million[2]. - Total deposits reached $1,907,794 million, a slight increase of 0.7% from the previous quarter and a significant 13.1% increase year-over-year[19]. - Non-interest bearing deposits decreased by 6.7% quarter-over-quarter and 11.1% year-over-year, totaling $324,307 million[19]. - Interest-bearing deposits saw a notable increase in money market deposits, which rose by 23.9% quarter-over-quarter and 26.7% year-over-year, reaching $560,082 million[19]. Operational Efficiency - The efficiency ratio for the year ended December 31, 2024, was 110.85%, significantly higher than 56.96% in 2023, indicating increased operational costs relative to income[27]. - The efficiency ratio, as reported, for Q4 2024 was 204.36%, significantly higher than 61.29% in Q4 2023[31]. Capital and Equity - Total stockholders' equity decreased to $207.99 million by year-end 2024, down from $226.05 million in the previous quarter[15]. - The total risk-based capital ratio as of December 31, 2024, was 15.69%, down from 17.18% in 2023, reflecting a decrease in capital adequacy[27]. - Tangible common stockholders' equity as of December 31, 2024, was $180,728 million, slightly up from $179,597 million in 2023[31]. - The tangible equity to tangible assets ratio decreased to 9.33% in 2024 from 10.24% in 2023, indicating a decline in financial stability[28]. Market and Stock Performance - The closing stock price on December 31, 2024, was $18.10, a decline from $24.81 at the end of 2023, representing a drop of 27.1%[27]. Employee Metrics - The number of full-time equivalent employees increased to 204 in 2024, up from 186 in 2023, indicating a growth in workforce[28]. Interest Rates and Economic Environment - The interest rate environment has normalized with the FOMC cutting rates by a total of 1.0% in 2024, benefiting borrowers[3]. - The interest rate spread decreased to 1.99%, down from 2.39% year-over-year[23]. - The yield on earning assets (GAAP) for Q4 2024 was 6.45%, down from 6.83% in Q4 2023[31].

Financial Performance - Net income for the three months ended September 30, 2024, was $265 thousand, a significant decrease of 95.8% from $6,341 thousand in the same period of 2023[9]. - Net income for the nine months ended September 30, 2024, was $6,187,000, a decrease of 71% compared to $21,438,000 in 2023[20]. - Comprehensive income for the three months ended September 30, 2024, was $1,934 thousand, compared to $3,878 thousand for the same period in 2023[11]. - The company reported a basic loss per common share of $0.04 for the three months ended September 30, 2024, compared to earnings of $0.77 per share in the same period of 2023[9]. - Net income available to common shareholders for the three months ended September 30, 2024, was a loss of $274,000 compared to a profit of $5,802,000 for the same period in 2023[112]. Asset and Deposit Growth - Total assets increased to $2,224,599 thousand as of September 30, 2024, up from $2,035,432 thousand at December 31, 2023, representing a growth of approximately 9.3%[6]. - Total deposits increased to $1,893,669 thousand as of September 30, 2024, up from $1,686,127 thousand at December 31, 2023, reflecting a growth of approximately 12.3%[6]. - As of September 30, 2024, total stockholders' equity increased to $226,051 thousand, up from $224,715 thousand as of June 30, 2024, reflecting a growth of approximately 0.6%[15]. - Cash and cash equivalents at the end of the period reached $232,114,000, up from $121,183,000, marking an increase of 92%[20]. Interest Income and Expense - Net interest income for the three months ended September 30, 2024, was $15,343 thousand, a decrease of 18.3% compared to $18,772 thousand for the same period in 2023[9]. - The total interest income for the three months ended September 30, 2024, was $33,591 thousand, an increase of 5.8% from $31,766 thousand in the same period of 2023[9]. - Total interest expense increased by $5.3 million to $18.2 million for the three months ended September 30, 2024, from $13.0 million for the same period in 2023[150]. - The average yield on interest-earning assets decreased by 14 basis points to 6.67% for the three months ended September 30, 2024, compared to 6.81% for the same period in 2023[145]. Credit Losses and Provisions - Provision for credit losses on loans was $3,125 thousand for the three months ended September 30, 2024, compared to a recovery of $98 thousand in the same period of 2023[9]. - The allowance for credit losses on loans was $18.3 million as of September 30, 2024, compared to $16.5 million at the end of 2023, indicating an increase of approximately 10.9%[55]. - The total allowance for credit losses was $18,327,000, an increase from $17,098,000 at the end of the previous quarter[59]. - The company reported charge-offs of $1,907,000 for the three months ended September 30, 2024, compared to $324,000 in the same period last year[59]. Non-Interest Income and Expense - Non-interest income for the Core Banking segment was $667 million, while total non-interest expense was $12,153 million for the same period[120]. - Non-interest income decreased by $5,000, or 0.6%, to $886,000 for Q3 2024, primarily due to non-recurring prepayment penalties recognized in 2023[165]. - Non-interest expense increased by $1.7 million, or 14.4%, to $13.2 million for Q3 2024, driven by increases in salaries and employee benefits as the company added fifteen employees[166]. Loan Performance - Loan originations decreased from approximately $92.0 million in the three months ended September 30, 2023, to $60.0 million in the same period of 2024, a decline of $32.0 million[160]. - Non-performing loans increased to a balance of $28.3 million as of September 30, 2024, with 42% attributable to one relationship[160]. - Special mention loans increased by $29.9 million and substandard loans increased by $44.2 million, totaling $45.8 million and $77.6 million respectively as of September 30, 2024[162]. Strategic Initiatives and Future Outlook - The company is focusing on market expansion and new product development to enhance revenue streams in the upcoming quarters[81]. - Future guidance indicates a positive outlook for revenue growth driven by strategic initiatives and market demand[81]. - The company is actively exploring acquisition opportunities to strengthen its market position and diversify its offerings[81]. Regulatory and Accounting Changes - The company adopted ASU 2023-02, which allows for a new method of accounting for tax equity investments, effective January 1, 2024, with a cumulative change of approximately $217,000[33]. - The Company expects the adoption of ASU 2023-07 to have no material impact on its consolidated financial statements, effective for fiscal years beginning after December 15, 2023[36].

Financial Data and Key Metrics Changes - The company reported an earnings per common share loss of $0.04 in Q3 2024, primarily due to actions taken on problem loans, impacting several financial ratios including net interest margin and efficiency ratio [11][12] - The annualized net interest margin for Q3 was 3.05%, with a year-to-date margin of 3.19%. Without interest reversals, the margins would have been 3.25% for the quarter and 3.32% year-to-date, indicating stability and improvement in the core earning engine [13] - Noninterest expenses decreased slightly quarter-over-quarter, with a projected run rate of 50 basis points per month for Q4 [17] Business Line Data and Key Metrics Changes - Core deposits constituted 78% of total deposits, with $95 million in new core deposits during the quarter, 35% of which were noninterest-bearing [14] - Gross loans remained flat at $1.8 billion, with new loan fundings of $82 million, indicating continued interest income growth [16][38] - The concentration in construction loans decreased from 130% of capital to 118%, attributed to lower origination volumes and project completions [27] Market Data and Key Metrics Changes - The company operates in a strong market characterized by low unemployment and high median household incomes, benefiting from its location in the Washington D.C. Metropolitan area [5] - Traditional deposit growth remains a challenge across many markets, prompting the company to pursue a banking-as-a-service solution to acquire low-cost deposits [8] Company Strategy and Development Direction - The company is focused on expanding its net interest margin by lowering deposit costs and enhancing its digital strategy through the Avenu banking-as-a-service solution [6][46] - Avenu version 1 is now in service, aimed at reaching new customer deposit segments and diversifying revenue streams [9][46] - The company engaged an independent consulting group, FS Vector, to assess the Avenu solution and its fit within the current regulatory environment [51][53] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future performance, expecting improved metrics in loan classifications and a reduction in problem loans [12][43] - The company is well-capitalized and committed to serving its community, with a focus on healthy growth despite challenges in the market [44] Other Important Information - The company has a robust liquidity management plan and is actively monitoring the stickiness of deposits from fintech partners [87] - The projected breakeven point for the Avenu solution has been pushed to 2026, reflecting a more conservative outlook based on the delayed launch and market conditions [76][79] Q&A Session Summary Question: What industries were involved in the loans sold at par? - The loans sold at par were primarily in investor commercial real estate, including a for-sale condo project and a multifamily project [65] Question: Can you provide an update on the cost of funds? - The cost of funds has declined slightly from June to September, and the beta on funding as Fed funds declines is expected to be higher than during the increase [66][68] Question: What are the expectations for Avenu's growth? - The current deposits stand at $30 million, with a breakeven point projected for 2026, reflecting a conservative estimate based on the delayed launch [76][79] Question: Are FDIC costs changing? - FDIC costs are expected to remain consistent, with slight increases due to higher deposits [72] Question: What is the estimated loss from nonperforming loans? - The estimated loss from current nonperforming loans is around 1.25%, equating to approximately $250,000 to $300,000 [89]

Group 1: Financial Performance - MainStreet Bank reported a quarterly loss of $0.04 per share, aligning with the Zacks Consensus Estimate, compared to earnings of $0.77 per share a year ago [1] - The bank's revenues for the quarter ended September 2024 were $16.23 million, surpassing the Zacks Consensus Estimate by 1.24%, but down from $19.54 million year-over-year [2] - Over the last four quarters, MainStreet Bank has not exceeded consensus EPS estimates and has topped consensus revenue estimates only once [2][3] Group 2: Stock Performance and Outlook - MainStreet Bank shares have declined approximately 27.5% since the beginning of the year, contrasting with the S&P 500's gain of 21.8% [3] - The current consensus EPS estimate for the upcoming quarter is $0.24 on revenues of $16.65 million, and for the current fiscal year, it is $0.95 on revenues of $65.1 million [7] - The estimate revisions trend for MainStreet Bank is currently unfavorable, resulting in a Zacks Rank 5 (Strong Sell), indicating expected underperformance in the near future [6] Group 3: Industry Context - The Banks - Northeast industry, to which MainStreet Bank belongs, is currently ranked in the top 14% of over 250 Zacks industries, suggesting a favorable industry outlook [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Financial Performance - MainStreet Bancshares reported a loss of -$0.04 per common share for Q3 2024, with year-to-date earnings per common share at $0.60[1]. - Net income for the year-to-date September 30, 2024, was $6,187,000, a significant decrease from $21,438,000 in 2023, representing a decline of 71.1%[11]. - Earnings per common share decreased to $0.60 for the year-to-date September 30, 2024, down from $2.64 in 2023, a decline of 77.3%[11]. - Earnings per common share (basic and diluted) decreased to $(0.04), compared to $0.77 in the same period last year[17]. - Return on average assets (annualized) dropped to 0.05%, down from 1.30% year-over-year[17]. Interest Income and Margin - The annualized net interest margin for Q3 2024 was 3.05%, impacted by $984,000 in reversed accrued interest income[2]. - Total interest income increased to $99,496,000 for the year-to-date September 30, 2024, compared to $91,239,000 for the same period in 2023, representing an increase of 9.2%[11]. - Net interest income after provision for credit losses decreased to $43,177,000 for the year-to-date September 30, 2024, down from $58,253,000 in 2023, a decline of 26.0%[11]. - Net interest income for the nine months ended September 30, 2024, was $46,754, compared to $59,641 for the same period in 2023, reflecting a decrease in net interest margin from 4.34% to 3.19%[15]. - Net interest income (GAAP) for the three months ended September 30, 2024, was $15,343 thousand, down from $18,772 thousand in the same period of 2023, representing a decline of approximately 18.4%[20]. - Net interest margin (GAAP) decreased to 3.04% for the three months ended September 30, 2024, compared to 3.99% for the same period in 2023, a drop of about 23.8%[20]. Loan and Credit Quality - The company charged off $1.9 million in nonperforming loans during the quarter, with a provision expense allocation of $1 million[2]. - The total principal losses incurred year-to-date 2024 approximated just 0.1% of total loans, indicating strong credit quality[3]. - Non-performing loans amounted to $28,264 thousand, significantly higher than $325 thousand in the same period last year[17]. - The allowance for credit losses increased to $18,327 as of September 30, 2024, compared to $17,098 in June 30, 2024, and $15,626 in September 30, 2023[12]. - Total allowance for credit losses reached $18,472 thousand, compared to $17,178 thousand in the previous year[17]. Deposits and Funding - Total deposits increased to $1.9 billion, with core deposits reaching $1.47 billion, accounting for 78% of total deposits[3]. - Total deposits reached $1,893,669 as of September 30, 2024, reflecting a 7.9% increase from $1,755,363 in June 30, 2024, and a 12.5% increase from $1,683,190 in September 30, 2023[12]. - Non-interest bearing core deposits grew by $33 million during the quarter[4]. - Core customer funding sources increased to $1,471,350, representing 74.8% of total funding sources, up from 75.3% in June 30, 2024, and significantly higher than 65.2% in September 30, 2023[12]. Expenses and Efficiency - Total non-interest income was $2,446,000 for the year-to-date September 30, 2024, compared to $2,583,000 in 2023, reflecting a decrease of 5.3%[11]. - Total non-interest expenses rose to $38,536,000 for the year-to-date September 30, 2024, up from $34,279,000 in 2023, an increase of 12.9%[11]. - The efficiency ratio increased to 81.45%, compared to 58.74% in the previous year[17]. Assets and Equity - Total assets as of September 30, 2024, were $2.22 billion, up from $2.09 billion as of June 30, 2024[10]. - Stockholders' equity increased to $226.05 million as of September 30, 2024, compared to $224.72 million at the end of Q2 2024[10]. - Total stockholders' equity (GAAP) increased to $226,051 thousand as of September 30, 2024, compared to $213,743 thousand as of September 30, 2023, reflecting a growth of approximately 5.8%[19]. - Tangible common stockholders' equity (non-GAAP) rose to $179,907 thousand as of September 30, 2024, up from $173,107 thousand as of September 30, 2023, indicating an increase of about 4.6%[19]. Market and Stock Performance - Closing stock price was $18.45, down from $20.54 in the previous year[17]. - The weighted average number of common shares increased to 7,607,431 for the year-to-date September 30, 2024, compared to 7,521,426 in 2023, an increase of 1.1%[11]. New Initiatives - The Avenu Banking-as-a-Service (BaaS) solution launched just before the end of Q3 2024, aimed at diversifying revenue streams[4]. - Avenu's first fintech client is expected to go live in early November, with plans for four additional fintechs to follow[5].

Company Overview - MainStreet Bank (MNSB) is expected to report a year-over-year decline in earnings due to lower revenues for the quarter ended September 2024, with a consensus estimate of a loss of $0.04 per share, reflecting a -105.2% change from the previous year [2][8] - Revenues are anticipated to be $16.03 million, which is an 18% decrease compared to the same quarter last year [2] Earnings Estimates and Revisions - The consensus EPS estimate has been revised down by 33.33% over the last 30 days, indicating a reassessment by analysts [3] - The Most Accurate Estimate for MainStreet Bank aligns with the Zacks Consensus Estimate, resulting in an Earnings ESP of 0% [6][7] Earnings Surprise Prediction - The Zacks Earnings ESP model suggests that the lack of recent analyst revisions makes it challenging to predict an earnings beat for MainStreet Bank [7] - Historical performance shows that MainStreet Bank has not surpassed consensus EPS estimates in the last four quarters, with a previous surprise of -15.63% when it reported earnings of $0.27 per share against an expectation of $0.32 [8] Comparative Industry Analysis - In comparison, CB Financial Services (CBFV) is expected to post earnings of $0.51 per share for the same quarter, indicating a -1.9% year-over-year change, with revenues projected at $12.6 million, down 4% from the previous year [10] - CB Financial Services has an Earnings ESP of -1.96% and a Zacks Rank of 4 (Sell), making it difficult to predict an earnings beat [10]

Financial Performance - Net income for the three months ended June 30, 2024, was $2,618 thousand, down 62.3% from $6,946 thousand in the same period of 2023[9]. - Net income for the six months ended June 30, 2024, was $5,923,000, compared to $15,098,000 for the same period in 2023, representing a decrease of 60.8%[20]. - Comprehensive income for the three months ended June 30, 2024, was $2,505 thousand, down from $6,264 thousand in the same period of 2023, indicating a decline of 60%[11]. - Basic earnings per share for the three months ended June 30, 2024, was $0.27, a decrease of 68.2% from $0.85 in the same period of 2023[9]. - Net income decreased by $4.3 million to $2.6 million for the three months ended June 30, 2024, down from $6.9 million for the same period in 2023[121]. Asset and Deposit Growth - Total assets increased to $2,093,746 thousand as of June 30, 2024, up from $2,035,432 thousand at December 31, 2023, representing a growth of approximately 2.8%[6]. - Total deposits rose to $1,755,363 thousand as of June 30, 2024, compared to $1,686,127 thousand at December 31, 2023, reflecting an increase of approximately 4.1%[6]. - Cash and cash equivalents at the end of the period were $91,459,000, down from $98,041,000 at the end of June 30, 2023, a decrease of 6.0%[20]. - The company experienced a net decrease in non-interest deposits of $49,970,000 for the six months ended June 30, 2024, compared to a net decrease of $161,697,000 in the same period of 2023[20]. - Core deposits grew by $124.5 million, or 9.9%, to $1.38 billion at June 30, 2024, compared to $1.25 billion at December 31, 2023[194]. Credit Losses and Loan Performance - Provision for credit losses on loans increased to $931 thousand for the three months ended June 30, 2024, compared to $617 thousand for the same period in 2023, indicating a rise of 50.9%[9]. - The allowance for credit losses on loans was $17,098,000 as of June 30, 2024, up from $16,506,000 at the end of 2023, reflecting a rise of approximately 3.6%[53]. - Non-performing loans increased to a balance of $20.7 million as of June 30, 2024, largely attributed to two relationships facing liquidity constraints[136]. - The total amount of classified loans in the Commercial and Industrial segment was $93.6 million, indicating potential areas for improvement[66]. - The total allowance for credit losses on loans to non-performing loans ratio was 82.63% as of June 30, 2024[192]. Interest Income and Expense - Net interest income for the three months ended June 30, 2024, was $15,289 thousand, a decrease of 20.3% compared to $19,271 thousand for the same period in 2023[9]. - Total interest income increased by $2.6 million, or 8.5%, to $33.3 million for the three months ended June 30, 2024, from $30.8 million for the same period in 2023[122]. - Interest expense increased by $6.6 million to $18.0 million for the three months ended June 30, 2024, from $11.4 million for the same period in 2023[127]. - The net interest margin compressed by 109 basis points from 4.24% for the three months ended June 30, 2023, to 3.15% for the same period in 2024[129]. - The average cost of deposits rose to 488 basis points for the three months ended June 30, 2024, compared to 350 basis points for the same period in 2023[128]. Non-Interest Income and Expenses - Total non-interest income for the three months ended June 30, 2024, was $873 thousand, a slight increase from $810 thousand in the same period of 2023[9]. - Non-interest expense increased to $12,668 thousand for the three months ended June 30, 2024, up from $10,852 thousand in the same period of 2023, marking a rise of 16.7%[9]. - Income tax expense decreased by $1.4 million, or 85.5%, to $238,000 for the three months ended June 30, 2024, driven by a decrease in income before income taxes of $5.7 million[143]. - Non-interest income decreased by $49,000, or 2.7%, to $1.8 million for the six months ended June 30, 2024, mainly due to lower deposit account service charges[164]. - Non-interest expense increased by $2.4 million, or 10.8%, to $25.0 million for the six months ended June 30, 2024, primarily due to increases in furniture and equipment expenses and salaries[165]. Regulatory and Compliance - The company is regulated under the Bank Holding Company Act of 1956 and is subject to supervision by the Federal Reserve[22]. - The total Risk-Based Capital ratio is 16.78%, significantly above the minimum target of 10.00%[184]. - The Common Equity Tier 1 Risk-Based Capital ratio stands at 15.85% as of June 30, 2024, exceeding the minimum target of 6.50%[184]. - The Tier 1 Risk-Based Capital ratio is 15.85% as of June 30, 2024, well above the minimum target of 8.00%[184]. - The company anticipates sufficient funds to meet current funding commitments despite potential outflows from deposits[205]. Strategic Initiatives and Future Outlook - The Company introduced Avenu, a Banking as a Service (BaaS) solution, which is expected to be deployed in 2024[27]. - The company created MainStreet Community Capital, LLC to apply for New Markets Tax Credit allocations to promote development in economically distressed areas[116]. - The company is focusing on market expansion and new product development to enhance future growth prospects[66]. - The company has capitalized $17.2 million in developing its SaaS solution for Banking as a Service (BaaS), which is expected to be deployed in the second half of 2024[115]. - The company operates six bank branches in Northern Virginia and Washington D.C., emphasizing personalized services to compete with larger banks[109].