Results

MainStreet Bancshares Inc.

10/19/2021 | Press release | Distributed by Public on 10/19/2021 06:14

MainStreet Bancshares, Inc. Reports Record Strong and Steady Third Quarter 2021 Earnings - Form 8-K

MainStreet Bancshares, Inc. Reports Record Strong and Steady Third Quarter 2021 Earnings

Fairfax, Virginia - October 19, 2021 - MainStreet Bancshares, Inc. (Nasdaq: MNSB & MNSBP), the holding company for MainStreet Bank, reported net income of $4.8 million for the third quarter of 2021. Year-to-date net income through September 30th is $17.4 million, and year-to-date results represent:

13.14% return on average equity

1.37% return on average assets

$2.09 earnings per share of common stock (basic and diluted)

$20.64 per common share book value

Year-to-date net interest income through September 30th of $39.7 million is up 20.5% over the same period last year.

The Company's cost of funds for the quarter-ended September 30, 2021, is 1.03%, down 32% from the same period a year earlier. The Company is on-track to continue reducing funding costs. The Company's efficiency ratio is 54.7% for the nine-months ended September 30, 2021.

Total assets remain steady through the year at $1.7 billion. Net loans of $1.2 billion include approximately $264 million of new commercial loans and advances and $86 million of new Paycheck Protection Program (PPP) loans. The table below provides a reconcilement of gross loans, inclusive and net of Paycheck Protection Program (PPP) loans. Asset quality continues to be strong with non-performing assets representing a negligible seven hundredths of a percent of total assets on September 30, 2021.

Reconcilement of Gross Loans through September 30, 2021

Gross Loans

(millions)

Gross Loans

Net of PPP

(millions)

% Gross Loans

% Gross Loans

Gross loans 12/31/2020

$1,300

$1,164

+ New loans & advances

$351

27%

$264

23%

- Repayments

$364

-28%

$229

-20%

- Sold loans*

$30

$30

Gross loans 9/30/2021

$1,257

$1,169

- ALLL 9/30/2021

$11

$11

+ PPP loans

**

$88

Net loans 9/30/2021

$1,246

$1,246

*Sold loans represent the amount of loans sold for concentration risk management purposes. The loans that were sold yielded a net premium on sale.

** Already included in Gross Loans.

Non-interest-bearing deposits represent 34% of the $1.4 billion in total deposits. Seventy-six percent of total deposits are core deposits.

"The Company is extremely well positioned for a stable or rising interest rate environment," said Jeff W. Dick, Chairman & CEO of MainStreet Bancshares, Inc. and MainStreet Bank. "Inflation and market indicators are certainly pointing toward an interest rate adjustment, and we are well prepared for it."

As of September 30th, the Company has $88 million remaining in PPP loans. The origination fees yet to be realized on the remaining balance approximate $3.8 million. Total PPP activity is recapped in the table below.

Round 1

2020

Round 2

2021

(millions)

Originated

$192

$86

Paydowns during 2020

$41

-

Paydowns during 2021

$132

$17

Remaining balance 9/30/2021

$19

$69

All loans that were provided with deferrals of interest or principal during the pandemic have returned to their original payment structure prior to September 30, 2021.

"The federal government's implementation of PPP was vital to our customer's financial health during the pandemic, and we are proud to have distributed $279 million of that program to many of our existing and new customers. I'm excited to report that 68% of PPP proceeds has already been forgiven," said Abdul Hersiburane, President of MainStreet Bank. "With the high volume of PPP activity, it has been a challenge to achieve our normal level of growth during 2021, but we are optimistic for a strong 4th quarter."

The Company's hotel portfolio is performing well, reporting average August occupancy at 67.8% and average revenue per available room at $74.60. The Company continues to retain a special 40 basis point COVID 19 Allowance for Loan and Lease Losses (ALLL) provision against the remaining balance of its hotel loan portfolio.

The Company will be announcing its AvenuÔ Banking as a Service (BaaS) solution for fintechs on October 25th, Dick added. "We are designing AvenuÔ to be a transformational solution for fintechs. We look forward to sharing details about how we are serving a market segment that needs robust and fully compliant BaaS solutions."

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, 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, DC 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, except share data)

September 30, 2021

June 30, 2021

March 31, 2021

December 31, 2020

September 30,

2020

ASSETS

Cash and cash equivalents

Cash and due from banks

$

67,992

$

120,121

$

118,399

$

75,935

$

102,480

Federal funds sold

65,725

56,164

51,598

31,593

25,074

Total cash and cash equivalents

133,717

176,285

169,997

107,528

127,554

Investment securities available for sale, at fair value

171,603

165,791

180,028

147,414

118,844

Investment securities held to maturity, at carrying value

26,081

26,136

26,427

22,520

23,114

Restricted equity securities, at cost

5,039

5,039

4,664

4,616

4,616

Loans held for sale

-

-

-

57,006

-

Loans, net of allowance for loan losses of $11,428, $11,133, $13,215,

$12,877, and $14,346, respectively

1,246,331

1,256,436

1,299,169

1,230,379

1,279,899

Premises and equipment, net

14,795

13,929

13,975

14,289

14,474

Other real estate owned, net

1,158

1,158

1,180

1,180

1,580

Accrued interest and other receivables

4,718

8,752

9,349

9,604

8,579

Computer software, net of amortization

1,165

-

-

-

-

Bank owned life insurance

35,987

35,736

25,518

25,341

25,157

Other assets

16,605

18,433

12,722

23,288

26,371

Total Assets

$

1,657,199

$

1,707,695

$

1,743,029

$

1,643,165

$

1,630,188

LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities:

Non-interest bearing deposits

$

475,157

$

486,001

$

492,463

$

370,497

$

416,648

Interest bearing DDA deposits

63,622

68,028

69,180

70,307

72,807

Savings and NOW deposits

79,556

72,353

72,259

74,099

69,015

Money market deposits

310,776

310,303

342,468

426,600

348,146

Time deposits

485,255

528,247

561,772

496,743

510,429

Total deposits

1,414,366

1,464,932

1,538,142

1,438,246

1,417,045

Subordinated debt

40,635

40,576

14,841

14,834

14,827

Other liabilities

18,169

22,559

17,868

22,420

25,055

Total Liabilities

1,473,170

1,528,067

1,570,851

1,475,500

1,456,927

Stockholders' Equity:

Preferred stock

27,263

27,263

27,263

27,263

27,527

Common stock

29,462

29,446

29,437

29,130

32,460

Capital surplus

67,152

66,667

66,233

66,116

75,217

Retained earnings

59,920

55,676

49,090

44,179

37,105

Accumulated other comprehensive income

232

576

155

977

952

Total Stockholders' Equity

184,029

179,628

172,178

167,665

173,261

Total Liabilities and Stockholders' Equity

$

1,657,199

$

1,707,695

$

1,743,029

$

1,643,165

$

1,630,188

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME INFORMATION

(In thousands, except share and per share data)

Year-to-Date

Three Months Ended

September 30, 2021

September 30, 2020

September 30, 2021

June 30, 2021

March 31, 2021

December 31, 2020

September 30, 2020

INTEREST INCOME:

Interest and fees on loans

$

46,211

$

43,702

$

15,162

$

15,257

$

15,792

$

15,933

$

15,083

Interest on investment securities

1,712

1,488

585

597

530

519

491

Interest on federal funds sold

73

416

38

20

15

15

12

Total interest income

47,996

45,606

15,785

15,874

16,337

16,467

15,586

INTEREST EXPENSE:

Interest on interest bearing DDA deposits

170

209

60

55

55

108

56

Interest on savings and NOW deposits

127

169

38

47

42

52

55

Interest on money market deposits

645

1,742

148

220

277

418

490

Interest on time deposits

6,039

9,740

1,795

1,994

2,250

2,583

2,841

Interest on Federal Home Loan Bank

advances and other borrowings

-

107

-

-

-

-

13

Interest on subordinated debt

1,346

727

541

567

238

240

245

Total interest expense

8,327

12,694

2,582

2,883

2,862

3,401

3,700

Net interest income

39,669

32,912

13,203

12,991

13,475

13,066

11,886

Provision for (recovery of) loan losses

(1,470

)

6,560

290

(2,080

)

320

(2,950

)

635

Net interest income after provision

for (recovery of) loan losses

41,139

26,352

12,913

15,071

13,155

16,016

11,251

NON-INTEREST INCOME:

Deposit account service charges

1,802

1,407

642

621

539

509

487

Bank owned life insurance income

647

595

252

218

177

183

199

Loan swap fee income

-

2,677

-

-

-

833

1,851

Net gain on held-to-maturity securities

3

-

-

-

3

-

-

Net gain (loss) on sale of loans

434

33

(40

)

130

344

-

33

Other fee income

1,601

878

632

586

383

378

288

Total other income

4,487

5,590

1,486

1,555

1,446

1,903

2,858

NON-INTEREST EXPENSES:

Salaries and employee benefits

14,276

13,191

4,847

4,663

4,767

4,746

4,495

Furniture and equipment expenses

1,743

1,528

716

500

526

601

574

Advertising and marketing

1,115

713

438

402

275

290

266

Occupancy expenses

1,092

910

399

387

306

360

332

Outside services

908

696

292

280

336

263

215

Administrative expenses

493

508

202

141

150

166

167

Other operating expenses

4,517

4,595

1,567

1,500

1,449

1,732

1,589

Total other expenses

24,144

22,141

8,461

7,873

7,809

8,158

7,638

Income before income tax expense

21,482

9,801

5,938

8,753

6,792

9,761

6,471

Income tax expense

4,124

1,793

1,155

1,627

1,342

2,051

1,299

Net Income

17,358

8,008

4,783

7,126

5,450

7,710

5,172

Preferred stock dividends

1,617

-

539

539

539

635

-

Net income available to common shareholders

$

15,741

$

8,008

$

4,244

$

6,587

$

4,911

$

7,075

$

5,172

Net income per common share,

basic and diluted

$

2.09

$

0.97

$

0.56

$

0.87

$

0.65

$

0.92

$

0.63

Weighted average number of common shares,

basic and diluted

7,547,254

8,274,419

7,571,214

7,546,452

7,523,547

7,700,470

8,272,570

UNAUDITED LOAN, DEPOSIT AND BORROWING DETAIL

(In thousands)

September 30, 2021

June 30, 2021

September 30, 2020

Percentage Change

$ Amount

% of

Total

$ Amount

% of

Total

$ Amount

% of

Total

Last

3 Mos

Last

12 Mos

LOANS:

Construction and land development loans

$

327,004

25.9

%

$

328,480

25.8

%

$

325,516

25.0

%

-0.4

%

0.5

%

Residential real estate loans

223,029

17.6

%

190,426

14.9

%

157,518

12.1

%

17.1

%

41.6

%

Commercial real estate loans

494,766

39.1

%

503,514

39.5

%

505,201

38.8

%

-1.7

%

-2.1

%

Commercial industrial loans - Other

102,747

8.1

%

93,837

7.4

%

88,884

6.8

%

9.5

%

15.6

%

Commercial industrial loans - PPP Loans

88,534

7.0

%

124,578

9.8

%

173,075

13.3

%

-28.9

%

-48.8

%

Consumer loans

27,740

2.3

%

33,643

2.6

%

51,505

4.0

%

-17.5

%

-46.1

%

Total Gross Loans

$

1,263,820

100.0

%

$

1,274,478

100.0

%

$

1,301,699

100.0

%

-0.8

%

-2.9

%

Less: Allowance for loan losses

(11,428

)

(11,133

)

(14,346

)

Net deferred loan fees

(6,061

)

(6,909

)

(7,454

)

Net Loans

$

1,246,331

$

1,256,436

$

1,279,899

DEPOSITS:

Non-interest bearing demand deposits

$

475,157

33.6

%

$

486,001

33.2

%

$

416,648

29.4

%

-2.2

%

14.0

%

Interest-bearing demand deposits:

Demand deposits

63,622

4.5

%

68,028

4.6

%

72,807

5.1

%

-6.5

%

-12.6

%

Savings and NOW deposits

79,556

5.6

%

72,353

4.9

%

69,015

4.9

%

10.0

%

15.3

%

Money market accounts

310,776

22.0

%

310,303

21.2

%

348,146

24.6

%

0.2

%

-10.7

%

Certificates of deposit $250,000 or more

295,454

20.9

%

303,769

20.7

%

211,800

14.9

%

-2.7

%

39.5

%

Certificates of deposit less than $250,000

189,801

13.4

%

224,478

15.4

%

298,629

21.1

%

-15.4

%

-36.4

%

Total Deposits

$

1,414,366

100.0

%

$

1,464,932

100.0

%

$

1,417,045

100.0

%

-3.5

%

-0.2

%

BORROWINGS:

Subordinated debt

40,635

100.0

%

40,576

100.0

%

14,827

100.0

%

0.1

%

174.1

%

Total Borrowings

$

40,635

100.0

%

$

40,576

100.0

%

$

14,827

100.0

%

0.1

%

174.1

%

Total Deposits and Borrowings

$

1,455,001

$

1,505,508

$

1,431,872

-3.4

%

1.6

%

Core customer funding sources (1)

$

1,097,948

75.5

%

$

1,118,795

74.3

%

$

1,066,236

74.5

%

-1.9

%

3.0

%

Brokered and listing service sources (2)

316,418

21.7

%

346,137

23.0

%

350,809

24.5

%

-8.6

%

-9.8

%

Subordinated debt (3)

40,635

2.8

%

40,576

2.7

%

14,827

1.0

%

0.1

%

174.1

%

Total Funding Sources

$

1,455,001

100.0

%

$

1,505,508

100.0

%

$

1,431,872

100.0

%

-3.4

%

1.6

%

(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 September 30, 2021

For the three months ended September 30, 2020

Average

Balance

Interest

Income/

Expense

Average

Yields/ Rate

(annualized)

Average

Balance

Interest

Income/

Expense

Average

Yields/ Rate

(annualized)

ASSETS:

Interest earning assets:

Loans (1)(2)(3)

$

1,258,485

$

15,162

4.78

%

$

1,292,566

$

15,083

4.63

%

Investment securities

102,893

585

2.26

%

73,486

491

2.65

%

Federal funds and interest-bearing deposits

234,363

38

0.06

%

108,666

12

0.04

%

Total interest earning assets

$

1,595,741

$

15,785

3.92

%

$

1,474,718

$

15,586

4.19

%

Other assets

88,521

65,665

Total assets

$

1,684,262

$

1,540,383

Liabilities and Stockholders' Equity:

Interest-bearing liabilities:

Interest-bearing demand deposits

$

64,966

$

60

0.37

%

$

26,469

$

56

0.84

%

Money market deposit accounts

302,848

148

0.19

%

332,750

490

0.58

%

Savings and NOW deposits

75,968

38

0.20

%

62,066

55

0.35

%

Time deposits

507,254

1,795

1.40

%

522,995

2,841

2.16

%

Total interest-bearing deposits

$

951,036

$

2,041

0.85

%

$

944,280

$

3,442

1.45

%

Federal funds and repos purchased

2

-

-

-

-

-

Subordinated debt

40,609

541

5.29

%

14,823

245

6.56

%

FHLB borrowings

-

-

-

4,511

13

1.14

%

Total interest-bearing liabilities

$

991,647

$

2,582

1.03

%

$

963,614

$

3,700

1.52

%

Demand deposits and other liabilities

510,008

428,726

Total liabilities

$

1,501,655

$

1,392,340

Stockholders' Equity

182,607

148,043

Total Liabilities and Stockholders' Equity

$

1,684,262

$

1,540,383

Interest Rate Spread

2.89

%

2.67

%

Net Interest Income

$

13,203

$

11,886

Net Interest Margin

3.28

%

3.20

%

Net Interest Margin, excluding PPP loans(4)

3.14

%

3.29

%

(1)

Includes loans classified as non-accrual

(2)

Includes average PPP balances of $105.2 million, related interest income of approximately $263,000, and $1.1 million in PPP fees recognized for the three months ended September 30, 2021

(3)

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

(4)

Refer to Appendix for reconciliation of non-GAAP measures

UNAUDITED AVERAGE BALANCE SHEETS, INTEREST AND RATES

(In thousands)

For the nine months ended September 30, 2021

For the nine months ended September 30, 2020

Average

Balance

Interest

Income/

Expense

Average

Yields/ Rate

(annualized)

Average

Balance

Interest

Income/

Expense

Average

Yields/ Rate

(annualized)

ASSETS:

Interest earning assets:

Loans (1)(2)(3)

$

1,293,359

$

46,211

4.78

%

$

1,188,565

$

43,702

4.92

%

Investment securities

94,575

1,712

2.42

%

73,504

1,488

2.71

%

Federal funds and interest-bearing deposits

224,521

73

0.04

%

123,217

416

0.45

%

Total interest earning assets

$

1,612,455

$

47,996

3.98

%

$

1,385,286

$

45,606

4.40

%

Other assets

76,758

65,368

Total assets

$

1,689,213

$

1,450,654

Liabilities and Stockholders' Equity:

Interest-bearing liabilities:

Interest-bearing demand deposits

$

67,345

$

170

0.34

%

$

25,847

$

209

1.08

%

Money market deposit accounts

345,662

645

0.25

%

288,836

1,742

0.81

%

Savings and NOW deposits

72,591

127

0.23

%

64,513

169

0.35

%

Time deposits

508,722

6,039

1.59

%

543,531

9,740

2.40

%

Total interest-bearing deposits

$

994,320

$

6,981

0.94

%

$

922,727

$

11,860

1.72

%

Federal funds and repos purchased

1

-

-

-

-

-

Subordinated debt

31,815

1,346

5.66

%

14,816

727

6.56

%

FHLB borrowings

-

-

-

8,266

107

1.73

%

Total interest-bearing liabilities

$

1,026,136

$

8,327

1.08

%

$

945,809

$

12,694

1.79

%

Demand deposits and other liabilities

486,510

361,771

Total liabilities

$

1,512,646

$

1,307,580

Stockholders' Equity

176,567

143,074

Total Liabilities and Stockholders' Equity

$

1,689,213

$

1,450,654

Interest Rate Spread

2.90

%

2.61

%

Net Interest Income

$

39,669

$

32,912

Net Interest Margin

3.29

%

3.18

%

Net Interest Margin, excluding PPP loans(4)

3.15

%

3.22

%

(1)

Includes loans classified as non-accrual and loans held for sale

(2)

Includes average PPP balances of $140.2 million, related interest income of approximately $1.1 million, and $4.0 million in PPP fees recognized for the nine months ended September, 2021

(3)

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

(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 Nine Months Ended

September 30,

September 30,

2021

2020

2021

2020

Per share Data and Shares Outstanding

Earnings per common share (basic and diluted)

$

0.56

$

0.63

$

2.09

$

0.97

Book value per common share

$

20.64

$

17.61

$

20.64

$

17.61

Tangible book value per common share(2)

$

20.49

$

17.61

$

20.49

$

17.61

Weighted average common shares (basic and diluted)

7,571,214

8,272,570

7,547,254

8,274,419

Common shares outstanding at end of period

7,593,749

8,277,837

7,593,749

8,277,837

Performance Ratios

Return on average assets (annualized)

1.13

%

1.33

%

1.37

%

0.74

%

Return on average assets, excluding impact of PPP loans (annualized)(2)

0.85

%

1.19

%

1.07

%

0.60

%

Return on average equity (annualized)

10.39

%

13.86

%

13.14

%

7.48

%

Return on average common equity (annualized)

10.84

%

14.29

%

14.09

%

7.56

%

Yield on earning assets (annualized)

3.92

%

4.19

%

3.98

%

4.40

%

Cost of interest bearing liabilities (annualized)

1.03

%

1.52

%

1.08

%

1.79

%

Net interest spread

2.89

%

2.67

%

2.90

%

2.61

%

Net interest margin (annualized)

3.28

%

3.20

%

3.29

%

3.18

%

Net interest margin, excluding PPP loans (annualized)(2)

3.14

%

3.29

%

3.15

%

3.22

%

Noninterest income as a percentage of average assets (annualized)

0.35

%

0.74

%

0.36

%

0.52

%

Noninterest expense to average assets (annualized)

1.99

%

1.97

%

1.91

%

2.04

%

Efficiency ratio(3)

57.60

%

51.80

%

54.68

%

57.50

%

Asset Quality

Commercial real estate loans to total capital (4)

341.44

%

416.76

%

341.44

%

416.76

%

Construction loans to total capital (5)

150.42

%

190.10

%

150.42

%

190.10

%

Loans 30-89 days past due to total gross loans

0.00

%

0.08

%

0.00

%

0.08

%

Loans 90 days past due to total gross loans

0.00

%

0.08

%

0.00

%

0.08

%

Non-accrual loans to total gross loans

0.00

%

0.10

%

0.00

%

0.10

%

Other real estate owned

$

1,158

$

1,580

$

1,158

$

1,580

Non-performing assets

$

1,158

$

2,822

$

1,158

$

2,822

Non-performing assets to total assets

0.07

%

0.17

%

0.07

%

0.17

%

Non-performing assets to total assets, excluding PPP loans(2)

0.07

%

0.19

%

0.07

%

0.19

%

Allowance for loan losses to total gross loans

0.90

%

1.10

%

0.90

%

1.10

%

Allowance for loan losses to total loans, excluding PPP loans(2)

0.97

%

1.27

%

0.97

%

1.27

%

Allowance for loan losses to non-performing assets

9.87

5.08

9.87

5.08

Net loan charge-offs (recoveries)

$

(5

)

$

20

$

(21

)

$

1,798

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

0.00

%

0.01

%

0.00

%

0.20

%

Net charge-offs (recoveries) to average gross loans, excluding PPP loans (annualized)(2)

0.00

%

0.01

%

0.00

%

0.17

%

Regulatory Capital Ratios (Bank only) (1)

Total risk-based capital ratio

16.48

%

13.39

%

16.48

%

13.39

%

Tier 1 risk-based capital ratio

15.61

%

12.27

%

15.61

%

12.27

%

Leverage ratio

12.23

%

10.19

%

12.23

%

10.19

%

Common equity tier 1 ratio

15.61

%

12.27

%

15.61

%

12.27

%

Other information

Closing stock price

$

23.99

$

12.24

$

23.99

$

12.24

Equity / assets

11.10

%

10.63

%

11.10

%

10.63

%

Equity / assets, excluding PPP loans(2)

11.73

%

11.89

%

11.73

%

11.89

%

Average equity / average assets

10.84

%

9.61

%

10.45

%

10.00

%

Average equity / average assets, less average PPP loans(2)

11.56

%

10.82

%

11.40

%

10.62

%

Number of full time equivalent employees

128

123

128

123

# Full service branch offices

6

7

6

7

(1)

Regulatory capital ratios as of September 30, 2021 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 non-owner occupied and construction loans as a percentage of Bank capital

(5)

Construction loans as a percentage of Bank capital

Reconciliation of Certain Non-GAAP Financial Measures

(Dollars In thousands)

For the three months ended September 30,

For the nine months ended September 30,

2021

2020

2021

2020

Paycheck Protection Program adjustment impact

Loans held for investment (GAAP)

$

1,263,820

$

1,301,699

$

1,263,820

$

1,301,699

Less: PPP loans

88,534

173,075

88,534

173,075

Loans held for investment, excluding PPP (non-GAAP)

$

1,175,286

$

1,128,624

$

1,175,286

$

1,128,624

Average loans held for investment (GAAP)

$

1,258,485

$

1,292,566

$

1,293,359

$

1,188,565

Less: Average PPP loans

105,153

172,659

140,210

102,891

Average loans held for investment, excluding PPP (non-GAAP)

$

1,153,332

$

1,119,907

$

1,153,149

1,085,674

For the three months ended September 30,

For the nine months ended September 30,

2021

2020

2021

2020

Net interest margin adjustment

Net interest income (GAAP)

$

13,203

$

11,886

$

39,669

$

32,912

Less: PPP fees recognized

1,136

644

3,958

1,235

Less: PPP interest income earned

263

432

1,052

772

Net interest income, excluding PPP income (non-GAAP)

11,804

10,810

34,659

30,905

Average interest earning assets (GAAP)

1,595,741

1,474,718

1,612,455

1,385,286

Less: average PPP loans

105,153

172,659

140,210

102,891

Average interest earning assets, excluding PPP (non-GAAP)

1,490,588

1,302,059

1,472,245

1,282,395

Net interest margin (GAAP)

3.28

%

3.20

%

3.29

%

3.18

%

Net interest margin, excluding PPP (non-GAAP)

3.14

%

3.29

%

3.15

%

3.22

%

For the three months ended September 30,

For the nine months ended September 30,

2021

2020

2021

2020

Total asset adjustment

Total assets (GAAP)

$

1,657,199

$

1,630,188

$

1,657,199

$

1,630,188

Less: PPP loans

88,534

173,075

88,534

173,075

Total assets, excluding PPP loans (non-GAAP)

1,568,665

1,457,113

1,568,665

1,457,113

Total equity (GAAP)

184,029

173,261

184,029

173,261

Equity / assets, excluding PPP loans (non-GAAP)

11.73

%

11.89

%

11.73

%

11.89

%

Average asset adjustment

Average assets (GAAP)

1,684,262

1,540,383

1,689,213

1,450,654

Less: average PPP loans

105,153

172,659

140,210

102,891

Total average assets, excluding average PPP loans

1,579,109

1,367,724

1,549,003

1,347,763

Total average equity (GAAP)

182,607

148,043

176,567

143,074

Average equity / average assets, excluding average PPP loans (non-GAAP)

11.56

%

10.82

%

11.40

%

10.62

%

For the three months ended September 30,

For the nine months ended September 30,

2021

2020

2021

2020

Return on Average Assets, adjusted

Net income (GAAP)

$

4,783

$

5,172

$

17,358

$

8,008

Less: PPP fees recognized

1,136

644

3,958

1,235

Less: PPP interest income earned

263

432

1,052

772

Net income, excluding PPP income (non-GAAP)

3,384

4,096

12,348

6,001

Average total assets

1,684,262

1,540,383

1,689,213

1,450,654

Less: average PPP loans

105,153

172,659

140,210

102,891

Average total assets, excluding PPP (non-GAAP)

1,579,109

1,367,724

1,549,003

1,347,763

Return on average assets, excluding PPP (non-GAAP)

0.85

%

1.19

%

1.07

%

0.60

%

For the three months ended September 30,

For the nine months ended September 30,

2021

2020

2021

2020

Nonperforming Assets to total assets, adjusted

Total nonperforming assets (GAAP)

$

1,158

$

2,822

$

1,158

$

2,822

Total assets (GAAP)

1,657,199

1,630,188

1,657,199

1,630,188

Less: PPP loans

88,534

173,075

88,534

173,075

Total assets, excluding PPP loans (non-GAAP)

1,568,665

1,457,113

1,568,665

1,457,113

Nonperforming assets to total assets, excluding PPP loans (non-GAAP)

0.07

%

0.19

%

0.07

%

0.19

%

For the three months ended September 30,

For the nine months ended September 30,

2021

2020

2021

2020

Allowance for loan losses, adjusted

Allowance for loan losses (GAAP)

$

11,428

$

14,346

$

11,428

$

14,346

Total gross loans (GAAP)

1,263,820

1,301,699

1,263,820

1,301,699

Less: PPP loans

88,534

173,075

88,534

173,075

Total gross loans, excluding PPP loans (non-GAAP)

1,175,286

1,128,624

1,175,286

1,128,624

Allowance for loan losses to total loans, excluding PPP (non-GAAP)

0.97

%

1.27

%

0.97

%

1.27

%

For the three months ended September 30,

For the nine months ended September 30,

2021

2020

2021

2020

Net charge-offs to average loans, adjusted

Total net charge-offs (recoveries) (GAAP)

$

(5

)

20

$

(21

)

$

1,778

Total average gross loans (GAAP)

1,258,485

1,292,566

1,293,359

1,188,565

Less: average PPP loans

105,153

172,659

140,210

102,891

Total average gross loans, excluding PPP loans (non-GAAP)

1,153,332

1,119,907

1,153,149

1,085,674

Net charge-offs (recoveries) to average gross loans, excluding PPP (annualized) (non-GAAP)

0.00

%

0.01

%

0.00

%

0.16

%

For the three months ended September 30,

For the nine months ended September 30,

2021

2020

2021

2020

Stockholders equity, adjusted

Total common stockholders equity

$

156,766

145,734

$

156,766

$

145,734

Less: intangible assets

1,165

-

1,165

-

Tangible common stockholders equity

155,601

145,734

155,601

145,734

Shares outstanding

7,593,749

8,277,837

7,593,749

8,277,837

Tangible book value per common share

$

20.49

$

17.61

$

20.49

$

17.61