MainStreet Bank Q4 2025 Earnings Report

MainStreet Bank EPS Results

• Actual EPS: $0.46
• Consensus EPS: $0.49
• Beat/Miss: Missed by -$0.03
• One Year Ago EPS: N/A

MainStreet Bank Revenue Results

• Actual Revenue: $2.24 million
• Expected Revenue: $19.60 million
• Beat/Miss: Missed by -$17.36 million
• YoY Revenue Growth: N/A

MainStreet Bank Announcement Details

• Quarter: Q4 2025
• Date: 1/26/2026
• Time: Before Market Opens
• Conference Call Date: Monday, January 26, 2026
• Conference Call Time: 10:00AM ET

MainStreet Bank (NASDAQ:MNSB) Group, Inc. (NASDAQ: MNSB) is the bank holding company for MainStreet Bank, a community bank headquartered in Westborough, Massachusetts. Through its subsidiary, the company provides a full range of commercial and consumer banking services designed to meet the financial needs of individuals, small businesses, and non-profit organizations. Its core focus is on building long‐term relationships within the communities it serves.

MainStreet Bank’s product suite includes deposit accounts such as checking, savings, money market and certificate of deposit offerings, as well as a variety of lending solutions. The bank extends commercial real estate, business term and line-of-credit loans to support local enterprises, and offers residential mortgage, home equity and consumer installment loans for personal borrowing needs. Complementing these offerings are digital banking platforms, mobile deposit, online bill pay and treasury management services to streamline cash flow for both retail and commercial clients.

Established in 1981 and based in Westborough, Massachusetts, MainStreet Bank operates multiple branch offices throughout central Massachusetts. The bank’s community-oriented approach emphasizes local decision-making and personalized service. By focusing on regional markets, MainStreet Bank aims to deliver tailored financial solutions while maintaining strong ties with the businesses and households in its service area.

MainStreet Bank Q4 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Reported 2025 results with EPS $1.76, ROA 0.73%, ROTCE 7.24% and a net interest margin of 3.46%; net interest income grew 11% year‑over‑year and management expects further NIM improvement and funding cost relief in 2026.
• Positive Sentiment: Deposit strategy is working — cost of deposits fell by 71 basis points YoY, management is expanding branches (7th branch opening in Middleburg) and already sourced over $100 million of low‑cost deposits in the new market.
• Positive Sentiment: Share repurchase program is active: repurchased 209,000 shares in the quarter at a price 28% accretive to book and refreshed buyback capacity to $10 million, signaling focus on shareholder return.
• Positive Sentiment: Credit and capital profile remains solid — net charge‑offs were virtually zero, portfolio diversification reduced CRE concentration, classified assets 2.69% and nonaccruals 1.69%, with post‑stress CET1 of 11.8% well above regulatory thresholds.
• Negative Sentiment: The bank recorded $600,000 of non‑recurring interest reversals from two relationships moved to non‑accrual and its estimated worst‑case stress loss rose to $62.9 million, items that warrant monitoring for credit risk.

Presentation

[Jeff Dick, Chairman and CEO at MainStreet Bancshares, Inc.]

Welcome! My name is Jeff Dick. I'm the Chairman and CEO of MainStreet Bancshares, Inc., and MainStreet Bank. Thank you for joining our 2025 earnings webcast, which has been prerecorded due to inclement weather. If you have questions for us, please reach out to me or my Chief of Staff, Billy Freesmeier, at 703-481-4579 to schedule a meeting. We will also be attending the February 4th and 5th Janney conference in Scottsdale, Arizona, and would be happy to answer any questions at that time. With me today is our Chief Financial Officer, Alex Vari, and our Chief Lending Officer, Tom Floyd. I'd like to take a moment to point to our Safe Harbor page that describes the context of forward-looking statements that we may make today.

[Jeff Dick, Chairman and CEO at MainStreet Bancshares, Inc.]

Please also know that we may use certain non-GAAP measures which are identified as such within the presentation materials. We are fortunate to do business in an excellent market. The D.C. metropolitan area is much more than host to just the federal government. With our major universities, tourism, cutting-edge technologies, data centers, world-class medical facilities, and Fortune 500 companies, it's a great place for a community bank to call home. By the numbers, the median household income is $125,000. The average home listing price is $810,000, and the average time on market is 38 days. The D.C. market remains vibrant, and we continue to see plenty of good opportunities.

[Jeff Dick, Chairman and CEO at MainStreet Bancshares, Inc.]

The federal government is, and has historically been, a significant strength, and on the rare occasion, it isn't, we're on it and respond quickly to address any impact it may have on our business strategy. We've done a good job of strategically managing growth, always attempting to maximize our core profitability over a growth for growth's sake strategy. We are a Virginia-chartered bank, and we've been rooted in the Washington, D.C., metropolitan community for 22 years. We have a great reputation in our market with a good organic growth story. Our branch-light strategy is incredibly efficient, given the high cost of real estate. And while we always provide a full service to those who require it, we also rely upon the delivery of banking services using robust technology that allows us to put our bank in your office, and our customers love it.

[Jeff Dick, Chairman and CEO at MainStreet Bancshares, Inc.]

Our 7th branch, located in downtown Middleburg, Virginia, is opening in February. Devon Porter, son of the renowned banking duo, Rod Porter and Georgia Derrico, is leading our efforts in that market and has already accumulated over $100 million of low-cost deposits. Slide 7 shows that MNSB is a small-cap stock that trades on the Nasdaq Capital Market and is listed on the Russell 2000 Index. As of year-end, we traded at 80% of tangible book value. Last October, we filed a Form 8-K, indicating that the company refreshed its share repurchase plan to increase the capacity to $10 million. We will file a Rule 10b5-1 plan when we are outside of this trading blackout period. Since October, we were successful in repurchasing 209,000 shares at a price accretive to book value.

[Jeff Dick, Chairman and CEO at MainStreet Bancshares, Inc.]

Alex will tell you a little more about that later. During today's presentation, you'll see that we have successfully navigated the headwinds of our 2024 technology transition, emerging with a disciplined capital allocation strategy and a much improved financial performance. Our current performance reflects a company that is more focused and financially resilient than ever. We're proud of that quick recovery, and you will hear more about our favorable net interest margin, good expense control, good asset quality, and strong capital. At this point, I will turn the presentation over to our CFO, Alex Vari. Alex?

[Alex Vari, CFO at MainStreet Bank]

Thank you, Jeff. On slide 8, we summarize our financial performance over the last four quarters as well as for the year 2025. 2025 was a year that saw us shift our focus back to core banking, and we worked hard to position ourselves to springboard our performance in 2026. We closed the year with earnings per common share at $1.76. Our return on average assets was 0.73%. Our return on average tangible common equity was 7.24%, and our net interest margin was 3.46%. Despite working through a small handful of problem credits, we still grew net interest income by 11% over the year. Our net interest margin remains healthy, and we are poised to see even more funding cost relief throughout 2026.

[Alex Vari, CFO at MainStreet Bank]

We have focused diligently on becoming more efficient and have positioned ourselves to demonstrate that throughout 2026. Lastly, we saw a meaningful loan and deposit growth during the fourth quarter, and we expect that momentum to continue into the new year. Page 9 highlights our intentional management of our loan-to-deposit ratio to maximize our net interest income. Our liquidity position remains strong, with ample funding sources, particularly in our secured credit availability. As of the end of the year, we have expanded our liquidity facilities, covering over 30% of our entire deposit portfolio. Moving to slide 10, you will see our core net interest margin has remained steady over the last 9 months, confirming the fundamental health of our balance sheet.

[Alex Vari, CFO at MainStreet Bank]

In working through a couple challenged credits, the bank recorded non-recurring interest reversals of $600,000, specific to two relationships that were moved to non-accrual this quarter. You can refer to our presentation of non-GAAP ratios at the back of the slide deck for additional details. With the noise of 2025 behind us, the core portfolio remains strong. Given our current loan and deposit momentum, we expect to see not just net interest margin resilience, but improvement as we move through the coming year. Turning to slide 11, you'll see a deposit mix that is a direct reflection of our disciplined business customer-focused strategy. Over the last 5 quarters, we haven't just tried to grow the portfolio, we've optimized it.

[Alex Vari, CFO at MainStreet Bank]

By constantly recalibrating our mix, we successfully driven down our cost of deposits by 71 basis points year-over-year, almost in lockstep with the Federal Reserve rate reduction cycle. We are leaning into this optimism by expanding our branch footprint and targeting high-value niche industries to further scale our non-interest-bearing base. We aren't just looking for any deposit growth, we are looking for profitable, low cost, and scalable funding. Slide 12 lays out our estimated expense run rate for the first two quarters of the year. After demonstrating three quarters of normalized expenses, we expect the first two quarters of 2026 to be consistent with the fourth quarter of 2025. We also expect loan growth to be 3%-4% over the first six months.

[Alex Vari, CFO at MainStreet Bank]

Lastly, we quickly put our share buyback program into action by repurchasing 209,000 shares during the last quarter at a price that was 28% accretive to book value. We will continue to look for opportunities to repurchase shares and enhance shareholder value. At this point, I'll turn the presentation over to Tom Floyd, our Chief Lending Officer, to discuss our loan portfolio and loan performance.

[Tom Floyd, EVP and Chief Lending Officer at MainStreet Bank]

Thank you, Alex. As we recap the fourth quarter in 2025, I'm incredibly proud of our team's unwavering commitment to being a consistent and reliable financial partner. That dedication is reflected in our fourth quarter results, where we saw healthy growth across the loan portfolio, specifically in desirable categories. Perhaps most notably, we maintained our credit discipline, finishing the year with annual net charge-offs at virtually zero. Over the next few minutes, I'm excited to delve into the details of our portfolio composition and trends that drove these results. Slide 14 highlights our portfolio diversification. The headline here is that we delivered net portfolio growth while simultaneously reducing our CRE concentration.

[Tom Floyd, EVP and Chief Lending Officer at MainStreet Bank]

Pulling back in commercial real estate was intentionally done to manage risk and a result of being more selective on which opportunities to pursue, allowing us to focus our energy on the strategic growth of owner-occupied commercial real estate, where we see stronger, full relationship opportunities. As of the end of 2025, our portfolio composition consists of 30% non-owner-occupied commercial real estate, 24% owner-occupied commercial real estate, 16% construction, 12% multifamily, 12% residential real estate, and 6% commercial and industrial. Additionally, it's worth noting that nearly all of our construction portfolio has a suitable interest reserve held at the bank. Slide 15 is a lens into our government contracting portfolio. We've experienced good results in this portfolio and see opportunity for expansion here based on our view of the market share and our position in the market.

[Tom Floyd, EVP and Chief Lending Officer at MainStreet Bank]

Before I dive into the slide, I want to assure you that we're in constant contact with our borrowers in this highly dynamic space to ensure we are appropriately supporting our clients and effectively managing risk. Our portfolio has 27 asset-based lines of credit in place, where all advances are supported by a borrowing base of billed receivables. As you can see, these 29 lines have balances of $12.3 million outstanding, with total commitments of $67.3 million, which equates to an 18% utilization rate. Over the average line's lifetime, this is relatively consistent. Our entire government contracting book has only $1.4 million in outstanding term debt. These loans are amortizing rapidly, with an average remaining term of 24 months. The highlight here is the average deposit relationships attributable to this portfolio are $93.6 million over the quarter.

[Tom Floyd, EVP and Chief Lending Officer at MainStreet Bank]

The portfolio's strong deposit-to-credit relationship provides a significant funding advantage, with deposits averaging nearly seven times the outstanding credit. The next slide highlights that our loan portfolio was well positioned for stable or falling rates. 67% of our portfolio has rate resets beyond six months, with the remaining 33% with rate resets within six months. Of those loans with a faster reset, 60% have a weighted average floor rate of 5.84%. As we move into 2026, we anticipate this will help our net interest margin as rates are expected to remain stable or decrease. Slide 17 shows our trend in average new loan size moving downward over the last several years. This highlights that in the current environment, we're sticking to smaller-sized opportunities within our market.

[Tom Floyd, EVP and Chief Lending Officer at MainStreet Bank]

Moving to slide 18, you will see the trend in stress test estimates over the past five quarters. While the estimated worst-case stress loss has increased this quarter to $62.9 million, I want to draw your attention to the strength of our balance sheet. Even under these heightened hypothetical scenarios, our pre- and post-stress capital ratios remain very strong, with a post-stress Common Equity Tier 1 ratio of 11.8%, well above the 7% threshold of well-capitalized. It's important to contextualize this model against reality. While our stress testing remains conservative and rigorous, our actual net charge-offs have remained at virtually zero. This, coupled with our positive track record for navigating problem loans, gives us continued optimism about our future performance. To remind you of our rigorous stress test methodology, we utilize loan level testing for all construction and investor commercial real estate.

[Tom Floyd, EVP and Chief Lending Officer at MainStreet Bank]

For all other categories, we apply the worst ever historical loss rates to our current balances. And finally, we mark investments to market and bank-owned life insurance to the liquidation value. This comprehensive approach confirms that despite hypothetical pressures, our actual credit performance remains excellent, with low charge-offs, and our capital base remains solid, both pre and post-stress test. In slide 19, you will see our classified assets at 2.69%, nonaccruals at 1.69%, and other real estate owned at 0.09%. While we monitor these closely, the most important takeaway is our history of execution. Our low net charge-offs demonstrate that even when loans move to nonaccrual, our team is highly effective at protecting principal. We remain diligent in our workout efforts and are confident in our ability to drive favorable outcomes for these specific credits.

[Tom Floyd, EVP and Chief Lending Officer at MainStreet Bank]

In summary, we're pleased to deliver a quarter of consistent, disciplined performance, marked by a 2% growth in the loan portfolio quarter-over-quarter, and a strategic focus on smaller quality opportunities and on building full relationships. We have maintained a well-diversified loan book, actively managed across all categories. Crucially, our robust stress testing demonstrates we remain strongly capitalized, even in a worst-case scenario, and our classified and nonperforming assets are at manageable levels, supported by proven historical track record of timely, successful resolutions. We remain confident that our disciplined and relationship-focused approach positions us to deliver consistent performance and long-term value for our shareholders and the communities we serve. That wraps it up for our loan presentation. Back to you, Jeff.

[Jeff Dick, Chairman and CEO at MainStreet Bancshares, Inc.]

Thank you, Tom. That was very positive. While the snow kept us remote today, we want to make sure that all of your questions are addressed. Again, please feel free to reach out to me or my Chief of Staff, Billy Freesmeier, at 703-481-4579 to schedule a meeting. Additionally, we look forward to connecting in person at the Janney Conference in Scottsdale on February fourth and fifth, where we will be available for further discussion.

Participants

Executives

• Alex Vari, CFO
• Tom Floyd, EVP and Chief Lending Officer

Analysts

• Jeff Dick, Chairman and CEO at MainStreet Bancshares, Inc.