Bank Nets $22.2 Million and Improves Net Interest Margin
MainStreet Bancshares, Inc. , the holding company for MainStreet Bank, reported record net income of $22.2 million for 2021. Year-end results represent:
- 12.38% return on average equity
- 1.32% return on average assets
- $2.65 per share of common stock (basic and diluted)
- $20.94 per common share tangible book value
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Net interest income of $53.5 million is up over 16% from last year. Steady loan rates and reduced funding costs propelled the net interest margin higher by 40 basis points to 3.61% in December 2021, versus 3.21% a year earlier. The Company’s efficiency ratio remains solid at 55%.
“Going forward, the Company’s balance sheet is positioned to respond well in a rising interest rate environment,” said Tom Chmelik, CFO and Senior Executive VP of MainStreet Bancshares, Inc. and MainStreet Bank. “When the Federal Reserve initiates a rate increase, it should have a positive impact on the Company’s earnings.”
The portfolio of hotel loans continues to perform well, and asset quality remains pristine – as nonperforming assets represent a mere 0.05% of total assets.
The loan portfolio grew 4.1% in 2021. Excluding Paycheck Protection Program (PPP) loans, originations of $526 million were offset by paydowns and sales of $364 million. Paydowns in 2021 were significantly higher than normal, which was anticipated after the much lower than normal paydowns experienced in 2020. The balance of PPP loans at year-end was $58 million.
Non-interest-bearing deposits represent 38% of the $1.4 billion in total deposits, and 77% of total deposits are core deposits.
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“The team committed significant time and energy to helping our customers navigate the PPP debt forgiveness process,” said Abdul Hersiburane, President of MainStreet Bank. “While this is core to relationship banking, it was counter-productive to balance sheet growth in the short-run. We are very pleased to see the return of robust demand for traditional loans as businesses regain their footing and turn to us to support their growth.”
The Company is also mapping out strategic initiatives in other areas. On October 25, 2021, the Company unveiled Avenu™ – its Banking as a Service (BaaS) platform for fintechs. Avenu™ is a proprietary solution purpose built for its fintech partners. With Avenu™, fintech’s can be up-and-running as quickly as 60 days. The Company is planning to go live with Avenu™ in the third quarter of 2022. If you are a fintech looking to add payments and deposits to your solution, go to Avenu.bank and join the queue today.
“The solution that the Avenu™ team is developing will be transformational for the Company and the fintech community,” said Jeff W. Dick, Chairman & CEO of MainStreet Bancshares, Inc. and MainStreet Bank. “We’re demystifying the banking process by offering fintechs modern API connectivity to our robust fintech core. We’re also providing a purpose-built training program on banking and compliance that will bring the fintech’s team up-to-speed on all they need to know to operate in this space. The net result for the Company should be a significant increase in low-cost deposits and a new source for fee income.”
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