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Virginia

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

FAIRFAX, Va., Oct. 19, 2021 /PRNewswire/ -- 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 30^th 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

The Company is well positioned for a stable or rising interest rate environment.

Year-to-date net interest income through September 30^th 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 4^th 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 Avenu^TM Banking as a Service (BaaS) solution for fintechs on October 25^th, Dick added. "We are designing Avenu^TM 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.

Contact: Jeff W. Dick, Chairman & CEO
(703) 481-4567

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	%		0.16	%
*Regulatory Capital Ratios (Bank only)⁽¹⁾*
Total risk-based capital ratio		16.55	%		13.39	%		16.55	%		13.39	%
Tier 1 risk-based capital ratio		15.68	%		12.27	%		15.68	%		12.27	%
Leverage ratio		12.23	%		10.19	%		12.23	%		10.19	%
Common equity tier 1 ratio		15.68	%		12.27	%		15.68	%		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

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SOURCE MainStreet Bancshares, Inc.