ex_488143.htm

EX-99.1 2 ex_488143.htm EXHIBIT 99.1 ex_488143.htm

Exhibit 99.1

PRESS RELEASE		Contact: Debra Cope
April 17, 2023, 8:00 AM ET		Director of Corporate Communications
		(703) 481-4599

MainStreet Bancshares, Inc., Reports Record Earnings for 1^st Quarter 2023

Steady Loan and Deposit Growth Fuel 8% Rise in Quarter-to-Quarter Net Income

FAIRFAX, Va., April 17, 2023 /PRNewswire/ -- MainStreet Bancshares, Inc. (Nasdaq: MNSB & MNSBP), the holding company for MainStreet Bank, reported record net income of $8.2 million for the quarter-ended March 31, 2023. This represents a 50% increase from the net income reported in the 1^st quarter of 2022. First-quarter results represent:

●

1.75% ROAA

●

4.69% NIM

●

$1.01 EPS

	●	$22.22 TBV
	●	$16.4% ROAE

(ROAA – Return on Average Assets; NIM – Net Interest Margin; EPS – Earnings Per Share common basic and diluted; TBV – Tangible Book Value per common share; ROAE – Return on Average Total Equity.)

“In light of the recent banking tensions, we’d be remiss if we didn’t address the important issues on the table,” said Jeff W. Dick, Chairman and CEO of MainStreet Bancshares, Inc. and MainStreet Bank. “We’ve taken the opportunity to re-evaluate our risk management processes along with our current balance sheet strategy. The result of that review is that we remain comfortable and confident with our risk profile - given the current and anticipated economic environment. Our deposit base is stable and growing. Currently nearly 70% of our outstanding deposits are insured by the FDIC and we offer all depositors access to additional FDIC insurance coverage through IntraFi. Our systems for managing liquidity risk, interest rate risk, and credit risk, along with all the other risks we manage daily, continue to give us an accurate assessment of the Bank and allow us to manage to our approved risk tolerance. Our primary objective is to ensure the ongoing safety and soundness of the Bank and the protection of depositor’s money. We have demonstrated the ability to do just that while pursuing good opportunities and rewarding investors with high quality performance.”

The Company has a solid risk management foundation. The leadership team built the Bank with good risk management systems and procedures in place from the start. Mr. Dick’s strong background in risk management started with his first career as a prudential banking supervisor in the U.S. and then in the U.K. While in the U.K., Mr. Dick was an adviser to the Bank of England on modernizing their approach to risk-based banking supervision.

Net interest income reached $21.1 million in the quarter ended March 31, 2023, up 38.8% from the year-earlier first quarter’s $15.2 million. MainStreet Bank benefited from having an asset-sensitive balance sheet during a 12-month period in which the Federal Reserve undertook nine interest rate increases, beginning in March 2022. This propelled the average net interest margin (NIM) higher by 76 basis points to 4.69% for the quarter ended March 31, 2023, versus 3.93% a year earlier.

“Implementing the Current Expected Credit Losses (CECL) accounting standard in the first quarter of 2023 resulted in a 15.6% increase in credit reserves. In all, we increased our credit reserves to $16.6 million, a 17.6% increase that also reflects loan growth,” said Thomas J. Chmelik, Chief Financial Officer of MainStreet Bancshares Inc. and MainStreet Bank. He noted that the level of Accumulated Other Comprehensive Income (AOCI) for the Company remains low, at -3.7% of total capital.

The loan portfolio grew 14.4% to $1.62 billion as of March 31, 2023, up from $1.41 billion in the year-earlier first quarter. Loan quality remained pristine, with zero nonperforming assets. Total deposits climbed 13.8% to $1.63 billion, up from $1.43 billion a year earlier. Non-interest-bearing deposits represent 29.9% of the total, and 63.9% of total deposits are core deposits. There was significant growth in time deposits, which rose to $730.1 million, up 58.4% from a year earlier. The bank’s total assets grew 16.6% to reach $2.06 billion as of March 31, 2023, versus $1.76 billion a year earlier.

“While all banks are experiencing some runoff in non-interest-bearing deposits, we were able to attract approximately $30 million in fresh deposits during a period of market upheaval in March, and loan demand and core deposit growth continue to be solid in our DC Metro market,” said Abdul Hersiburane, President of MainStreet Bank. “Pressure on deposit pricing is to be expected in a rising-rate environment, and we are responding with products that carry yields and terms calibrated to our assessment of the interest rate outlook, such as a 15-month CD.”

The Company's efficiency ratio stood at 53% for the quarter ended March 31, 2023, from 55% a year earlier. This improvement occurred even as the Company was making significant investments in Avenu™, with the hiring process accelerating as the division moves toward being fully operational in 2023.

Avenu™ Makes Major Strides, Onboards First Client

Avenu™ is tracking to an April 30 launch as our designers and engineers complete final sprints to harden our multitenancy and cyber architecture and to accelerate implementation of a debit card for funding. Avenu™ connects our fintech partners and their apps directly and seamlessly to MainStreet Bank’s banking core. Avenu™ is expected to accelerate MainStreet Bank’s deposit growth to support expanded lending.

“With three companies now signed up to proceed, we are inches away from going live with Avenu™, which will be a gateway to fast, simple secure payments for our end-users,” said Todd Youngren, president of Avenu™. “When you are developing a platform from the ground up, you have to address challenges as they arise, and that’s exactly what we’ve been doing as our team works full tilt toward our launch.”

Chairman and CEO Jeff W. Dick elaborated: “We are committed to a seamless launch for Avenu™, and in the current environment we feel strongly that time is on our side. We are unwilling to cut corners because reliability and compliance are critical features of Avenu™. We are very proud of creating an innovative system that allows partners to connect to the core system of a reliable bank with sharp instincts about risks and compliance.”

ABOUT AVENU™

Avenu™ — Banking Delivered

Avenu™ is the only embedded banking solution that connects our partners and their apps directly and seamlessly to a banking core — MainStreet Bank’s banking core. We are not a sponsor bank without our own technology, and we are not a middleware software company (aggregator) without our own bank. We are Avenu™, a leading financial technology company backed by an established community business bank in the heart of Washington, D.C.

Avenu™ — Serving a Community of Innovation

Our clients are fintechs, application developers, money movers, and entrepreneurs. They all have one thing in common: They are innovating how money moves to solve real-world issues and help communities thrive. We are focused on servicing our community and long-term business relationships.

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 not restricted by a conventional branching system, 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, D.C., 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)

	March 31, 2023			December 31, 2022			September 30, 2022			June 30, 2022			March 31, 2022
ASSETS
Cash and cash equivalents
Cash and due from banks	$	225,334		$	48,931		$	50,636		$	55,636		$	63,986
Federal funds sold		—			81,669			54,098			47,013			37,756
Total cash and cash equivalents		225,334			130,600			104,734			102,649			101,742
Investment securities available for sale, at fair value		63,209			62,631			162,319			143,240			123,802
Investment securities held to maturity, at amortized cost		17,616			17,642			17,670			17,698			18,769
Restricted equity securities, at amortized cost		22,436			24,325			16,436			16,485			17,209
Loans, net of allowance for credit losses of $15,435, $14,114, $12,994, $12,982, and $12,500, respectively		1,617,275			1,579,950			1,448,071			1,416,875			1,413,238
Premises and equipment, net		14,521			14,709			14,523			14,756			14,833
Accrued interest and other receivables		9,744			9,581			8,273			7,313			6,980
Computer software, net of amortization		10,559			9,149			7,258			4,956			3,906
Bank owned life insurance		37,503			37,249			36,996			36,742			36,492
Other assets		36,811			39,915			43,835			32,665			24,777
Total Assets	$	2,055,008		$	1,925,751		$	1,860,115		$	1,793,379		$	1,761,748
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Non-interest bearing deposits	$	487,875		$	550,690		$	566,016		$	535,591		$	514,160
Interest bearing demand deposits		100,522			80,099			93,695			99,223			76,286
Savings and NOW deposits		53,499			51,419			54,240			58,156			81,817
Money market deposits		260,316			222,540			254,190			231,207			301,842
Time deposits		730,076			608,141			585,783			575,950			460,839
Total deposits		1,632,288			1,512,889			1,553,924			1,500,127			1,434,944
Federal funds borrowed		60,696			—			—			—			—
Federal Home Loan Bank advances		45,000			100,000			—			—			40,000
Subordinated debt		72,344			72,245			72,146			72,047			71,955
Other liabilities		39,692			42,335			44,045			32,801			26,053
Total Liabilities		1,850,020			1,727,469			1,670,115			1,604,975			1,572,952
Stockholders’ Equity:
Preferred stock		27,263			27,263			27,263			27,263			27,263
Common stock		29,185			28,736			28,728			29,178			29,642
Capital surplus		64,213			63,999			63,231			64,822			66,798
Retained earnings		91,991			86,830			80,534			73,702			68,691
Accumulated other comprehensive loss		(7,664	)		(8,546	)		(9,756	)		(6,561	)		(3,598	)
Total Stockholders’ Equity		204,988			198,282			190,000			188,404			188,796
Total Liabilities and Stockholders’ Equity	$	2,055,008		$	1,925,751		$	1,860,115		$	1,793,379		$	1,761,748

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME INFORMATION

(In thousands, except share and per share data)

	Year-to-Date				Three Months Ended
	March 31, 2023		March 31, 2022		March 31, 2023		December 31, 2022		September 30, 2022			June 30, 2022		March 31, 2022
INTEREST INCOME:
Interest and fees on loans	$	26,731	$	16,685	$	26,731	$	23,972	$	20,261		$	17,954	$	16,685
Interest on investment securities
Taxable securities		518		357		518		467		378			401		357
Tax-exempt securities		264		272		264		262		261			263		272
Interest on federal funds sold		1,132		34		1,132		1,071		1,013			195		34
Total interest income		28,645		17,348		28,645		25,772		21,913			18,813		17,348
INTEREST EXPENSE:
Interest on interest bearing demand deposits		343		65		343		256		175			105		65
Interest on savings and NOW deposits		108		37		108		81		43			42		37
Interest on money market deposits		1,203		119		1,203		781		496			151		119
Interest on time deposits		4,144		1,431		4,144		2,966		2,275			1,530		1,431
Interest on federal funds borrowed		38		—		38		—		—			—		—
Interest on Federal Home Loan Bank advances		906		31		906		264		—			52		31
Interest on subordinated debt		812		468		812		828		828			812		468
Total interest expense		7,554		2,151		7,554		5,176		3,817			2,692		2,151
Net interest income		21,091		15,197		21,091		20,596		18,096			16,121		15,197
Provision for credit losses		283		800		283		1,118		—			480		800
Net interest income after provision for credit losses		20,808		14,397		20,808		19,478		18,096			15,641		14,397
NON-INTEREST INCOME:
Deposit account service charges		590		611		590		610		601			597		611
Bank owned life insurance income		255		251		255		253		254			250		251
Loan swap fee income		—		—		—		—		518			101		—
Net gain on held-to-maturity securities		—		—		—		—		—			4		—
Net gain (loss) on sale of loans		—		43		—		—		(211	)		—		43
Other non-interest income		158		257		158		196		186			312		257
Total other income		1,003		1,162		1,003		1,059		1,348			1,264		1,162
NON-INTEREST EXPENSES:
Salaries and employee benefits		7,621		5,548		7,621		6,775		5,874			5,604		5,548
Furniture and equipment expenses		498		657		498		710		760			659		657
Advertising and marketing		797		406		797		620		704			574		406
Occupancy expenses		486		341		486		378		400			352		341
Outside services		490		368		490		529		611			567		368
Administrative expenses		215		210		215		214		253			195		210
Other operating expenses		1,596		1,433		1,596		1,481		1,291			1,543		1,433
Total non-interest expenses		11,703		8,963		11,703		10,707		9,893			9,494		8,963
Income before income tax expense		10,108		6,596		10,108		9,830		9,551			7,411		6,596
Income tax expense		1,957		1,173		1,957		2,252		1,808			1,481		1,173
Net income		8,151		5,423		8,151		7,578		7,743			5,930		5,423
Preferred stock dividends		539		539		539		539		539			539		539
Net income available to common shareholders	$	7,612	$	4,884	$	7,612	$	7,039	$	7,204		$	5,391	$	4,884
Net income per common share, basic and diluted	$	1.01	$	0.64	$	1.01	$	0.95	$	0.97		$	0.71	$	0.64
Weighted average number of common shares, basic and diluted		7,517,213		7,647,519		7,517,213		7,433,607		7,463,719			7,575,484		7,647,519

UNAUDITED LOAN, DEPOSIT AND BORROWING DETAIL

(In thousands)

	March 31, 2023						December 31, 2022						March 31, 2022						Percentage Change
	$ Amount			% of Total			$ Amount			% of Total			$ Amount			% of Total			Last 3 Mos			Last 12 Mos
LOANS:
Construction and land development loans	$	415,078			25.3	%	$	393,783			24.6	%	$	344,605			24.0	%		5.4	%		20.5	%
Residential real estate loans		391,648			23.9	%		394,394			24.7	%		367,138			25.7	%		-0.7	%		6.7	%
Commercial real estate loans		737,019			45.0	%		700,728			43.8	%		588,005			41.1	%		5.2	%		25.3	%
Commercial and industrial loans		86,937			5.3	%		97,351			6.1	%		111,183			7.8	%		-10.7	%		-21.8	%
Consumer loans		7,534			0.5	%		13,336			0.8	%		19,711			1.4	%		-43.5	%		-61.8	%
Total Gross Loans	$	1,638,216			100.0	%	$	1,599,592			100.0	%	$	1,430,642			100.0	%		2.4	%		14.5	%
Less: Allowance for credit losses		(15,435	)					(14,114	)					(12,500	)
Net deferred loan fees		(5,506	)					(5,528	)					(4,904	)
Net Loans	$	1,617,275					$	1,579,950					$	1,413,238
DEPOSITS:
Non-interest bearing deposits	$	487,875			29.9	%	$	550,690			36.4	%	$	514,160			35.9	%		-11.4	%		-5.1	%
Interest-bearing demand deposits:
Demand deposits		100,522			6.2	%		80,099			5.3	%		76,286			5.3	%		25.5	%		31.8	%
Savings and NOW deposits		53,499			3.3	%		51,419			3.4	%		81,817			5.7	%		4.0	%		-34.6	%
Money market accounts		260,316			15.9	%		222,540			14.7	%		301,842			21.0	%		17.0	%		-13.8	%
Certificates of deposit $250,000 or more		458,683			28.1	%		370,005			24.5	%		292,978			20.4	%		24.0	%		56.6	%
Certificates of deposit less than $250,000		271,393			16.6	%		238,136			15.7	%		167,861			11.7	%		14.0	%		61.7	%
Total Deposits	$	1,632,288			100.0	%	$	1,512,889			100.0	%	$	1,434,944			100.0	%		7.9	%		13.8	%
BORROWINGS:
Federal funds borrowed		60,696			34.1	%		—			—			—			—			—			—
Federal Home Loan Bank advances		45,000			25.3	%		100,000			58.1	%		40,000			35.7	%		-55.0	%		12.5	%
Subordinated debt		72,344			40.6	%		72,245			41.9	%		71,955			64.3	%		0.1	%		0.5	%
Total Borrowings	$	178,040			100.0	%	$	172,245			100.0	%	$	111,955			100.0	%		3.4	%		59.0	%
Total Deposits and Borrowings	$	1,810,328					$	1,685,134					$	1,546,899						7.4	%		17.0	%

Core customer funding sources ⁽¹⁾	$	1,156,279			63.9	%	$	1,157,573			68.7	%	$	1,135,503			73.4	%		-0.1	%		1.8	%
Brokered and listing service sources ⁽²⁾		476,009			26.3	%		355,316			21.1	%		299,441			19.4	%		34.0	%		59.0	%
Federal funds borrowed		60,696			3.3	%		—			—			—			—			—			—
Federal Home Loan Bank advances		45,000			2.5	%		100,000			5.9	%		40,000			2.6	%		-55.0	%		12.5	%
Subordinated debt ⁽³⁾		72,344			4.0	%		72,245			4.3	%		71,955			4.6	%		0.1	%		0.5	%
Total Funding Sources	$	1,810,328			100.0	%	$	1,685,134			100.0	%	$	1,546,899			100.0	%		7.4	%		17.0	%

(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 March 31, 2023							For the three months ended March 31, 2022
	Average Balance		Interest Income/ Expense (3)(4)		Average Yields/ Rate (annualized) (3)(4)			Average Balance		Interest Income/ Expense (3)(4)		Average Yields/ Rate (annualized) (3)(4)
ASSETS:
Interest earning assets:
Loans ⁽¹⁾⁽²⁾	$	1,599,756	$	26,731		6.78	%	$	1,377,723	$	16,685		4.91	%
Securities:
Taxable		71,933		518		2.92	%		73,413		357		1.97	%
Tax-exempt		37,941		334		3.57	%		39,545		344		3.53	%
Federal funds and interest-bearing deposits		118,670		1,132		3.87	%		83,754		34		0.16	%
Total interest earning assets	$	1,828,300	$	28,715		6.37	%	$	1,574,435	$	17,420		4.49	%
Other assets		57,371							88,386
Total assets	$	1,885,671						$	1,662,821
Liabilities and Stockholders’ Equity:
Interest-bearing liabilities:
Interest-bearing demand deposits	$	83,388	$	343		1.67	%	$	70,403	$	65		0.37	%
Savings and NOW deposits		51,943		108		0.84	%		82,758		37		0.18	%
Money market deposit accounts		225,037		1,203		2.17	%		267,905		119		0.18	%
Time deposits		673,441		4,144		2.50	%		456,782		1,431		1.27	%
Total interest-bearing deposits	$	1,033,809	$	5,798		2.27	%	$	877,848	$	1,652		0.76	%
Federal funds purchased		2,965		38		5.20	%		1		—		—
Subordinated debt		72,306		812		4.55	%		43,995		468		4.31	%
FHLB borrowings		77,833		906		4.72	%		37,167		31		0.34	%
Total interest-bearing liabilities	$	1,186,913	$	7,554		2.58	%	$	959,011	$	2,151		0.91	%
Demand deposits and other liabilities		497,155							514,101
Total liabilities	$	1,684,068						$	1,473,112
Stockholders’ Equity		201,603							189,709
Total Liabilities and Stockholders’ Equity	$	1,885,671						$	1,662,821
Interest Rate Spread						3.79	%						3.58	%
Net Interest Income			$	21,161						$	15,269
Net Interest Margin						4.69	%						3.93	%

(1)	Includes loans classified as non-accrual
(2)	Total loan interest income includes amortization of deferred loan fees, net of deferred loan costs
(3)	Income and yields for all periods presented are reported on a tax-equivalent basis using the federal statutory rate of 21%
(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
	March 31,
	2023			2022
*Per share Data and Shares Outstanding*
Earnings per common share (basic and diluted)	$	1.01		$	0.64
Book value per common share	$	23.62		$	21.12
Tangible book value per common share(2)	$	22.22		$	20.61
Weighted average common shares (basic and diluted)		7,517,213			7,647,519
Common shares outstanding at end of period		7,524,277			7,648,973
*Performance Ratios*
Return on average assets (annualized)		1.75	%		1.32	%
Return on average equity (annualized)		16.40	%		11.59	%
Return on average common equity (annualized)		17.71	%		12.19	%
Yield on earning assets (FTE) (2) (annualized)		6.37	%		4.49	%
Cost of interest bearing liabilities (annualized)		2.58	%		0.91	%
Net interest spread (FTE)(2)		3.79	%		3.58	%
Net interest margin (FTE)(2) (annualized)		4.69	%		3.93	%
Noninterest income as a percentage of average assets (annualized)		0.22	%		0.28	%
Noninterest expense to average assets (annualized)		2.52	%		2.19	%
Efficiency ratio(3)		52.97	%		54.79	%
*Asset Quality*
Allowance for credit losses (ACL)
Beginning balance, ACL - loans	$	14,114		$	11,697
Add: recoveries		11			3
Less: charge-offs		—			—
Add: provision for credit losses		415			800
Add: current expected credit losses, nonrecurring adoption		895			—
Ending balance, ACL - loans	$	15,435		$	12,500

Beginning balance, reserve for unfunded commitment (RUC)	$	—		$	—
Add: current expected credit losses, nonrecurring adoption		1,310			—
Add: recovery of unfunded commitments		(132	)		—
Ending balance, RUC	$	1,178		$	—
Total allowance for credit losses	$	16,613		$	12,500

Allowance for loan losses to total gross loans		0.94	%		0.87	%
Allowance for credit losses to total gross loans		1.01	%		0.87	%
Allowance for loan losses to non-performing assets		N/A			N/A
Net charge-offs (recoveries) to average gross loans (annualized)		0.00	%		0.00	%
Concentration Ratios
Commercial real estate loans to total capital (4)		372.12	%		370.35	%
Construction loans to total capital (5)		140.78	%		136.19	%
Non-performing Assets
Loans 30-89 days past due to total gross loans		0.00	%		0.00	%
Loans 90 days past due to total gross loans		0.00	%		0.00	%
Non-accrual loans to total gross loans		0.00	%		0.00	%
Other real estate owned	$	—		$	—
Non-performing assets	$	—		$	—
Non-performing assets to total assets		0.00	%		0.00	%
*Regulatory Capital Ratios (Bank only) (1)*
Total risk-based capital ratio		16.35	%		16.44	%
Tier 1 risk-based capital ratio		15.49	%		15.63	%
Leverage ratio		14.69	%		14.47	%
Common equity tier 1 ratio		15.49	%		15.63	%
*Other information*
Closing stock price	$	23.49		$	24.31
Tangible equity / tangible assets (2)		9.51	%		10.52	%
Average tangible equity / average tangible assets (2)		10.22	%		11.25	%
Number of full time equivalent employees		170			141
Number of full service branch offices		6			6

(1)	Regulatory capital ratios as of March 31, 2023 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 only non-owner occupied and construction loans as a percentage of Bank capital
(5)	Construction loans as a percentage of Bank capital

Unaudited Reconciliation of Certain Non-GAAP Financial Measures

(Dollars In thousands)

	For the three months ended March 31,
	2023			2022
Net interest margin (FTE)
Net interest income (GAAP)	$	21,091		$	15,197
FTE adjustment on tax-exempt securities		70			72
Net interest income (FTE) (non-GAAP)		21,161			15,269

Average interest earning assets		1,828,300			1,574,435
Net interest margin (GAAP)		4.68	%		3.91	%
Net interest margin (FTE) (non-GAAP)		4.69	%		3.93	%

	As of March 31,
	2023			2022
Stockholders equity, adjusted
Total stockholders equity (GAAP)	$	204,988		$	188,796
Less: preferred stock		(27,263	)		(27,263	)
Total common stockholders equity (GAAP)		177,725			161,533
Less: intangible assets		10,559			3,906
Tangible common stockholders equity (non-GAAP)		167,166			157,627

Shares outstanding		7,524,277			7,648,973
Tangible book value per common share (non-GAAP)	$	22.22		$	20.61

	As of March 31,
	2023			2022
Stockholders equity, adjusted
Total stockholders equity (GAAP)	$	204,988		$	188,796
Less: intangible assets		(10,559	)		(3,906	)
Total tangible stockholders equity (non-GAAP)		194,429			184,890

	As of March 31,
	2023			2022
Total assets, adjusted
Total assets (GAAP)	$	2,055,008		$	1,761,748
Less: intangible assets		(10,559	)		(3,906	)
Total tangible assets (non-GAAP)		2,044,449			1,757,842

	As of March 31,
	2023			2022
Average stockholders equity, adjusted
Total average stockholders equity (GAAP)	$	201,603		$	189,709
Less: average intangible assets		(9,879	)		(2,972	)
Total average tangible stockholders equity (non-GAAP)		191,724			186,737

	For the three months ended March 31,
	2023			2022
Average assets, adjusted
Total average average assets (GAAP)	$	1,885,671		$	1,662,821
Less: average intangible assets		(9,879	)		(2,972	)
Total average tangible assets (non-GAAP)		1,875,792			1,659,849