MainStreet Bancshares(US:MNSB)2024-08-13 17:02Financial 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].