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What changed in MainStreet Bancshares, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of MainStreet Bancshares, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+438 added−377 removedSource: 10-K (2025-03-14) vs 10-K (2024-03-20)

Top changes in MainStreet Bancshares, Inc.'s 2024 10-K

438 paragraphs added · 377 removed · 247 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

71 edited+150 added−102 removed112 unchanged
Biggest changeThe Federal Reserve has issued guidance indicating that bank holding companies should generally pay dividends only if the company’s net income available to common shareholders over the past year has been sufficient to fully fund the dividends, and the prospective rate of earnings retention appears consistent with the company’s capital needs, asset quality and overall financial condition.
Biggest changeThe Federal Reserve has issued a supervisory letter on the payment of cash dividends by bank holding companies, which expresses the Federal Reserve’s view that a bank holding company should pay cash dividends only to the extent that: (1) the holding company’s net income for the past four quarters, net of any dividends previously paid during that period, is sufficient to fully fund the dividends; (2) the prospective rate of earnings retention is consistent with the bank holding company’s capital needs, asset quality, and overall financial condition; and (3) the bank holding company will continue to meet, and is not in danger of failing to meet, minimum regulatory capital adequacy ratios.
Item 1. Business As used herein, the “Company,” “we,” “our,” and “us” refer to MainStreet Bancshares, Inc., and the “Bank” refers to MainStreet Bank. Overview MainStreet Bancshares, Inc. is a bank holding company that owns 100% of MainStreet Bank and MainStreet Community Capital, LLC.
Item 1. Business As used herein, the “Company,” “we,” “our,” and “us” refer to MainStreet Bancshares, Inc., and the “Bank” refers to MainStreet Bank. Overview MainStreet Bancshares, Inc. is a financial holding company that owns 100% of MainStreet Bank and MainStreet Community Capital, LLC.
As our business lenders, officers, and Bank directors are based in or reside in the communities we serve, we are able to maintain a high-level of involvement in local organizations and establish a strong understanding of the banking needs of the respective communities.
As our business lenders, officers, and directors are based in or reside in the communities we serve, we are able to maintain a high-level of involvement in local organizations and establish a strong understanding of the banking needs of the respective communities.
We believe that a diverse workforce enhances our ability to serve our customers and our communities by enabling us to better understand their financial needs and to provide necessary and appropriate financial services. Seventy-four percent of the Company’s employees self-identify as either female or ethnically diverse (defined as all Equal Employment Opportunity Commission classifications other than white).
We believe that a diverse workforce enhances our ability to serve our customers and our communities by enabling us to better understand their financial needs and to provide necessary and appropriate financial services. Seventy-three percent of the Company’s employees self-identify as either female or ethnically diverse (defined as all Equal Employment Opportunity Commission classifications other than white).
For example, MainStreet Bank contracts with an asset disposal company to ensure that electronic assets, including monitors, security cameras, and batteries, are disposed of and recycled in an appropriate and environmentally sensitive manner. We have long allowed and even encouraged our employees to telecommute. Approximately 13% of our employees work remotely full-time.
For example, MainStreet Bank contracts with an asset disposal company to ensure that electronic assets, including monitors, security cameras, and batteries, are disposed of and recycled in an appropriate and environmentally sensitive manner. We have long allowed and even encouraged our employees to telecommute. Approximately 12% of our employees work remotely full-time.
Avenu will provide an embedded Banking as a Service (BaaS) solution that connects our partners (fintechs, application developers, money movers, and entrepreneurs) directly and seamlessly to our Software as a Service (SaaS) solution. Our transformational subledger combined with our high-touch compliance training goes beyond the industry standards to ensure that our Fintech partners will prosper.
Avenu provides an embedded Banking as a Service (BaaS) solution that connects our partners (fintechs, application developers, money movers, and entrepreneurs) directly and seamlessly to our Software as a Service (SaaS) solution. Our transformational subledger combined with our high-touch compliance training goes beyond the industry standards to ensure that our Fintech partners will prosper.
MainStreet Bancshares Inc. is a bank holding company incorporated under the laws of the Commonwealth of Virginia whose principal activity is the ownership and management of MainStreet Bank and MainStreet Community Capital, LLC. The Company is authorized to issue 10,000,000 shares of common stock, par value $4.00 per share.
MainStreet Bancshares Inc. is a bank holding company incorporated under the laws of the Commonwealth of Virginia whose principal activity is the ownership and management of MainStreet Bank and MainStreet Community Capital, LLC. The Company is authorized to issue 15,000,000 shares of common stock, par value $4.00 per share.
The information contained on our website is not part of this Annual Report on Form 10-K, nor incorporated by reference into this or any other SEC filing. Our SEC filings are also available at no cost through the SEC’s website at www.sec.gov . 18
The information contained on our website is not part of this Annual Report on Form 10-K, nor incorporated by reference into this or any other SEC filing. Our SEC filings are also available at no cost through the SEC’s website at www.sec.gov . 19
The Company is proud to have three veterans on its team as well. 11 Governance As indicated in the discussion of Board Leadership and Oversight, the Company believes effective oversight by the Board of Directors is an essential element of a financially sound and well-managed bank.
The Company is proud to have four veterans on its team as well. 11 Governance As indicated in the discussion of Board Leadership and Oversight, the Company believes effective oversight by the Board of Directors is an essential element of a financially sound and well-managed bank.
Credit Policies and Administration . The Bank has adopted a comprehensive lending policy, which includes a well-defined risk tolerance and stringent underwriting standards for all types of loans. Management believes that it employs experienced lending officers, secures appropriate collateral and carefully monitors the financial conditions of its borrowers.
The Bank has adopted a comprehensive lending policy, which includes a well-defined risk tolerance and stringent underwriting standards for all types of loans. Management believes that it employs experienced lending officers, secures appropriate collateral and carefully monitors the financial conditions of its borrowers.
We designed and implemented comprehensive legal, strategic, procedural and policy documents to guide business opportunities. 9 We are designing Avenu to be a comprehensive solution that provides FinTechs with an array of embedded banking services they may offer to their customers in a scalable cloud-based platform.
We designed and implemented comprehensive legal, strategic, procedural and policy documents to guide business opportunities. 9 We have designed Avenu to be a comprehensive solution that provides FinTechs with an array of embedded banking services they may offer to their customers in a scalable cloud-based platform.
The statutes, regulations and policies that govern our operations are under continuous review and are subject to amendment from time to time by Congress, the Virginia legislature and federal and state regulatory agencies. Any such future statutory or regulatory changes could adversely affect our operations and financial condition. Regulation of the Bank .
The statutes, regulations and policies that govern our operations are under continuous review and are subject to amendment from time to time by Congress, the Virginia legislature and federal and state regulatory agencies. Any such future statutory or regulatory changes could adversely affect our operations and financial condition. Bank Holding Company Regulation .
MainStreet Community Capital has applied to the CDFI Fund for an allocation of the New Markets Tax Credits , and plans to continue to do so annually. Turning to our staff, as of December 31, 2023, the Company employed 186 full-time employees. None of our employees are represented by a collective bargaining agreement.
MainStreet Community Capital has applied to the CDFI Fund for an allocation of the New Markets Tax Credits , and plans to continue to do so annually. Turning to our staff, as of December 31, 2024, the Company employed 204 full-time employees. None of our employees are represented by a collective bargaining agreement.
The earnings of the Company’s subsidiaries, and therefore the earnings of the Company, are affected by general economic conditions, management policies, changes in state and federal legislation and actions of various regulatory authorities, including those referred to above.
The earnings of the Bank, the Company’s subsidiary, and therefore the earnings of the Company, are affected by general economic conditions, management policies, changes in state and federal legislation and actions of various regulatory authorities, including those referred to above.
Bureau of Labor Statistics, Data as of November 2023 Note: Data is not seasonally adjusted As the home of the federal government, the broader Washington, D.C. region benefits from consistent population growth and remains well positioned to capitalize on any increase in government spending and infrastructure.
Bureau of Labor Statistics, Data as of October 2024 Note: Data is not seasonally adjusted As the home of the federal government, the broader Washington, D.C. region benefits from consistent population growth and remains well positioned to capitalize on any increase in government spending and infrastructure.
In addition, we were the first bank headquartered in the Commonwealth of Virginia to offer CDARS, the Certificate of Deposit Account Registry Service, an innovative deposit insurance solution that provides Federal Deposit Insurance Corporation (“FDIC”) insurance on deposits up to $50 million.
In addition, we were the first bank headquartered in the Commonwealth of Virginia to offer the Certificate of Deposit Account Registry Service ("CDARS"), an innovative deposit insurance solution from the IntraFi Network, LLC ("IntraFi") that provides Federal Deposit Insurance Corporation (“FDIC”) insurance on deposits up to $50 million.
Bureau of Labor Statistics, S&P Global Market Intelligence The Washington, D.C. MSA is a desirable market for a broad range of companies in a variety of industries, including twenty-seven companies from the 2023 Fortune 500 list, and six of the United States’ largest 100 private companies, according to the 2023 Forbes list of largest private companies by revenue.
Bureau of Labor Statistics, S&P Global Market Intelligence The Washington, D.C. MSA is a desirable market for a broad range of companies in a variety of industries, including thirty companies from the 2024 Fortune 500 list, and seven of the United States’ largest 100 private companies, according to the 2024 Forbes list of largest private companies by revenue.
We seek highly qualified directors with skills needed for a forward-looking Board. The Company had a technology expert on the Board in 2011, well before it became a recommended practice for community banks. At the Board level, the Company has seven independent directors, out of a total of ten.
We seek highly qualified directors with skills needed for a forward-looking Board. The Company has a technology expert on the Board since 2011, well before it became a recommended practice for community banks. At the Board level, the Company has seven independent directors, out of a total of nine.
Support 42.0% 17.0% 18.0% 23.0% All Employees 32.0% 19.0% 23.0% 26.0% The Company is focused on equal pay for equal work, and on developing all employees to reach their full potential. The Company realizes that hiring a diverse workforce that is representative of the diversity of the local population also allows us to better serve our marketplace.
Support 43.0% 15.0% 19.0% 23.0% All Employees 32.0% 18.0% 23.0% 27.0% The Company is focused on equal pay for equal work, and on developing all employees to reach their full potential. The Company realizes that hiring a diverse workforce that is representative of the diversity of the local population also allows us to better serve our marketplace.
Results of the credit review are used to validate our internal loan ratings and to review independent commentary on specific loans and loan administration activities. Lending Limit . As of December 31, 2023, our legal lending limit for loans to one borrower was approximately $46.8 million.
Results of the credit review are used to validate our internal loan ratings and to review independent commentary on specific loans and loan administration activities. Lending Limit . As of December 31, 2024, our legal lending limit for loans to one borrower was approxima tely $46.8 million .
Board Size: Total Number of Directors 10 Gender: Male Female Non-Binary Gender Undisclosed Number of directors based on gender identity 8 2 — — Number of directors who identify in any of the categories below: African American or Black 1 — — — Alaskan Native or American Indian — — — — Asian — — — — Hispanic or Latinx 1 — — — Native Hawaiian or Pacific Islander — — — — White 6 2 — — Two or More Races or Ethnicities — — — — LQBTQ+ — Undisclosed — 12 Title Ethnically Diverse Female Ethnically Diverse Male White Female White Male Independent Directors 0.0% 25.0% 25.0% 50.0% Executives 0.0% 33.0% 0.0% 67.0% Exec.
Board Size: Total Number of Directors 9 Gender: Male Female Non-Binary Gender Undisclosed Number of directors based on gender identity 8 1 — — Number of directors who identify in any of the categories below: African American or Black 1 — — — Alaskan Native or American Indian — — — — Asian — — — — Hispanic or Latinx 1 — — — Native Hawaiian or Pacific Islander — — — — White 6 1 — — Two or More Races or Ethnicities — — — — LQBTQ+ — Undisclosed — 12 Title Ethnically Diverse Female Ethnically Diverse Male White Female White Male Independent Directors 0.0% 29.0% 14.0% 57.0% Executives 0.0% 33.0% 0.0% 67.0% Exec.
Additionally, the Company is authorized to issue 2,000,000 shares of preferred stock, par value $1.00 per share. There were 7,527,415, shares of common stock outstanding and 28,750 shares of 7.50% Series A Fixed-Rate Non-Cumulative Perpetual Preferred Stock outstanding at December 31, 2023.
Additionally, the Company is authorized to issue 2,000,000 shares of preferred stock, par value $1.00 per share. There were 7,603,765, shares of common stock outstanding and 28,750 shares of 7.50% Series A Fixed-Rate Non-Cumulative Perpetual Preferred Stock outstanding at December 31, 2024.
Median household income growth projections range from 5% to over 10% through 2029. Overall, the Washington D.C. MSA ranks ninth out of the largest 25 MSAs ranked by population estimates as of 2023 according to the Census Bureau. We expect our strategies to benefit from the continued growth in population and high income of our market area’s residents.
Median household income growth projections range from 7% to over 10% through 2030. Overall, the Washington D.C. MSA ra nks ninth out of the largest 25 MSAs ranked by population estimates as of 2023 according to the Census Bureau. We expect our strategies to benefit from the continued growth in population and high income of our market area’s residents.
This division of MainStreet Bank will serve money service businesses, payment processers, and other clients who have a need to embed deposit gathering and payment processing in their mobile Apps. This division provides the Bank with valuable low-cost deposits and additional streams of fee income. Our SaaS software program will be deployed in the second quarter of 2024.
This division of MainStreet Bank serves money service businesses, payment processers, and other clients who have a need to embed deposit gathering and payment processing in their mobile Apps. This division provides the Bank with valuable low-cost deposits and additional streams of fee income. Our SaaS software program was deployed in October 2024.
We believe that our core lending and deposit business segments continue to perform well. For each of the fiscal years ended December 31, 2023 and December 31, 2022, our net charge-offs to average loans were 0.03% and 0.00%, respectively. As of December 31, 2023, we had $1.0 million in non-performing loans and non-performing assets to total assets was 0.05%.
We believe that our core lending and deposit business segments continue to perform well. For each of the fiscal years ended December 31, 2024 and December 31, 2023, our net charge-offs to average loans were 0.25% and 0.03%, respectively. As of December 31, 2024, we had $21.7 million in non-performing loans and non-performing assets to total assets was 0.97%.
MSA Employment by Sector Employment Sector by Percent Mining, Lodging, and Construction 4.9% Manufacturing 1.7% Trade, Transportation, and Utilities 11.7% Information 2.4% Financial Activities 4.5% Professional and Business Services 23.9% Education and Health Services 13.6% Leisure and Hospitality 9.5% Other Services 5.9% Government 21.6% Source: U.S.
MSA Employment by Sector Employment Sector by Percent Mining, Lodging, and Construction 4.9% Manufacturing 1.7% Trade, Transportation, and Utilities 12.0% Information 2.3% Financial Activities 4.4% Professional and Business Services 24.0% Education and Health Services 13.8% Leisure and Hospitality 9.4% Other Services 5.8% Government 21.7% Source: U.S.
The total of ten includes one director who stepped down from management in March 2022 and thus will become an independent director in March 2025. Two of the independent directors self-identify as female, one self-identifies as an African-American male and one self-identifies as a Hispanic male. Three of the independent directors self-identify as white males.
The total of nine includes one director who stepped down from manage ment in March 2022 and thus will become an independent director in March 2025. One of the independent directors self-identify as female, one self-identifies as an African-American male, and one self-identifies as a Hispanic male. Four of the independent directors self-identify as white males.
In January 2022, the Community Development Financial Institutions Fund (“CDFI”) of the United States Department of the Treasury certified MainStreet Community Capital, LLC as a registered CDE. In December 2023, MainStreet Community Capital submitted an application to apply for the 2023 NMTC program allocation. Allocation awards are expected to be announced during the fourth quarter of 2024.
In January 2022, the Community Development Financial Institutions Fund (“CDFI”) of the United States Department of the Treasury certified MainStreet Community Capital, LLC as a registered CDE. In December 2024, MainStreet Community Capital submitted an application to apply for the 2024 NMTC program allocation.
For the years ended December 31, 2023 and 2022, our return on average assets was 1.38% and 1.53%, respectively, and our return on average equity was 12.66% and 13.98%, respectively. We are focused on growing business relationships and building core deposits, loans and non-interest income.
For the years ended December 31, 2024 and 2023, our return on average assets was (0.47)% and 1.38%, respectively, and our return on average equity was (4.44)% and 12.66%, respectively. We are focused on growing business relationships and building core deposits, loans and non-interest income.
We can also arrange for FDIC insurance for deposits up to $50 million through CDARS, the Certificate of Deposit Account Registry Service, which provides a convenient method for a depositor to enjoy full FDIC insurance on deposits up to $50 million through a single banking relationship. For additional information on deposits, see Note 9 of Notes to Consolidated Financial Statements.
We can also arrange for FDIC insurance for deposits up to $50 million through CDARS, the Certificate of Deposit Account Registry Service, which provides a convenient method for a depositor to enjoy full FDIC insurance on deposits up to $50 million through a single banking relationship.
Additional information can be found in our investor presentations filed quarterly. MainStreet Community Capital, LLC In September 2021, the Company created a community development entity (“CDE”) subsidiary, MainStreet Community Capital, LLC, a Virginia limited liability company, to apply for New Market Tax Credit (“NMTC”) allocations from the U.S. Department of Treasury’s Community Development Financial Institutions Fund.
MainStreet Community Capital, LLC In September 2021, the Company created a community development entity (“CDE”) subsidiary, MainStreet Community Capital, LLC, a Virginia limited liability company, to apply for New Market Tax Credit (“NMTC”) allocations from the U.S. Department of Treasury’s Community Development Financial Institutions Fund.
At December 31, 2023, approximately 16.3% of our loan portfolio related to owner occupied commercial real estate loans, and approximately 26.7% of our loan portfolio related to investment commercial real estate. Real Estate Construction Lending . This segment of our portfolio is predominately residential in nature and is composed of loans with short durations.
At December 31, 2024, approximately 19.5% of our loan portfolio related to owner occupied commercial real estate loans, and approximately 30.5% of our loan portfolio related to investment commercial real estate. Real Estate Construction Lending . This segment of our portfolio is predominately residential in nature and is composed of loans with short durations.
Commercial loans are written for a variety of business purposes, including government contract receivables, plant and equipment, general working capital, contract administration and acquisition lending. Our client base is diverse, and we do not have a concentration of commercial business loans in any specific industry segment. Commercial Real Estate Lending . We finance owner-occupied and investment commercial real estate.
Commercial loans are written for a variety of business purposes, including government contract receivables, plant and equipment, general working capital, contract administration and acquisition lending. We are also a Preferred Lender for the Small Business Administration (SBA). Our client base is diverse, and we do not have a concentration of commercial business loans in any specific industry segment.
These promotions were distributed as follows: 2023 Promotions Diversity Ethnically Diverse White Female 11 15 Male 13 9 The Company celebrates diversity throughout the year and fosters opportunities to learn about different cultures, religious practices, traits and differences.
These promotions were distributed as follows: 2024 Promotions Diversity Ethnically Diverse White Female 5 6 Male 4 10 The Company celebrates diversity throughout the year and fosters opportunities to learn about different cultures, religious practices, traits and differences.
Employee Age Diversity Age Group 20 – 29 30 – 39 40 – 49 50 – 59 60 + Number of Employees 11 40 53 52 30 Percentage of Total 6% 22% 28% 28% 16% The age distribution of our employee base is also appropriately diversified. 13 The age distribution of our employees as denoted by generational categories.
Employee Age Diversity Age Group 20 – 29 30 – 39 40 – 49 50 – 59 60 + Number of Employees 20 47 53 59 25 Percentage of Total 10% 23% 26% 29% 12% The age distribution of our employee base is also appropriately diversified. 13 The age distribution of our employees as denoted by generational categories.
For further details, see stress test methodology in the Management's Discussion and Analysis. Residential Real Estate Lending . The Bank offers a variety of consumer-oriented residential real estate loans both for purchase and refinancing, most of which are brokered to the secondary market. Consumer Installment Lending . We offer consumer loans including term loans and overdraft protection.
For further details, see stress test methodology in the Management's Discussion and Analysis. Residential Real Estate Lending . The Bank offers a variety of consumer-oriented residential real estate loans both for purchase and refinancing. Consumer Installment Lending . We offer consumer loans including term loans, home equity lines of credit, and overdraft protection. Credit Policies and Administration .
In April of 2021, the Company completed an issuance and sale of $30 million in fixed-to-floating subordinated notes at an annual fixed interest rate of 3.75% until April 15, 2026. The net proceeds were used to fully call subordinated notes issued in 2016 and to support additional growth for other general business purposes.
The net proceeds were used to fully call subordinated notes issued in 2016 and to support additional growth for other general business purposes. The notes have a maturity date of April 15, 2031 and an annual fixed interest rate of 3.75% until April 15, 2026.
Our Business As of December 31, 2023, MainStreet Bancshares, Inc. had total consolidated assets of $2.0 billion, total net loans of $1.7 billion, total deposits of $1.7 billion and total stockholders’ equity of $221.5 million, and total tangible equity to total tangible assets was 10.24%.
Our Business As of December 31, 2024, MainStreet Bancshares, Inc. had total consolidated assets of $2.23 billion, total net loans of $1.8 billion, total deposits of $1.9 billion and total stockholders’ equity of $208.0 million, and total tangible equity to total tangible assets was 9.33%.
We attempt to mitigate those risks by carefully underwriting loans of this type and by following appropriate loan-to-value standards. Commercial real estate loans represent the largest segment of the Bank’s loan portfolio.
Risks inherent in managing a commercial real estate portfolio relate to sudden or gradual drops in property values as well as changes in the economic climate. We attempt to mitigate those risks by carefully underwriting loans of this type and by following appropriate loan-to-value standards. Commercial real estate loans represent the largest segment of the Bank’s loan portfolio.
Incentive Compensation. Federal banking agencies have issued guidance on incentive compensation policies intended to ensure that the incentive compensation policies of banking organizations do not undermine the safety and soundness of such organizations by encouraging excessive risk-taking.
In 2016, the federal banking agencies issued comprehensive guidance on incentive compensation policies intended to ensure that such policies of banking organizations do not undermine the safety and soundness of those organizations by encouraging excessive risk-taking. The incentive compensation guidance sets expectations for banking organizations concerning their incentive compensation arrangements and related risk-management, control, and governance processes.
The Company finds that doing so brings out the best in the team as we grow together to exceed customer expectations and create shareholder value. Supervision, Regulation and Other Factors General . The Company is a bank holding company that has elected status as a financial holding company.
The Company finds that doing so brings out the best in the team as we grow together to exceed customer expectations and create shareholder value. Supervision, Regulation and Other Factors General . The U.S. banking industry is highly regulated under federal and state law.
A bank holding company that qualifies and elects to be treated as a “financial holding company” may engage in a broad range of additional activities that are (i) financial in nature or incidental to such financial activities or (ii) complementary to a financial activity and do not pose a substantial risk to the safety and soundness of depository institutions or the financial system generally.
As such, it may engage in activities that are financial in nature or incidental to such financial activity, or complementary to a financial activity and which do not pose a substantial risk to the safety and soundness of the Bank or to the financial system generally.
As such, the Company is subject to extensive regulation under the Bank Holding Company Act of 1956 and to the examination and reporting requirements of the Federal Reserve. The Company is also subject to the rules and regulations of the SEC under the federal securities laws.
The Company is a bank holding company that has elected status as a financial holding company. As such, the Company is subject to extensive regulation under the Bank Holding Company Act of 1956, as amended (“BHCA”), and to the examination and reporting requirements of the Federal Reserve.
Employees by Generation Pre Baby Booms 0.5 % Baby Boomers 15.6 % Generation X 43.5 % Millennials 34.4 % Generation Z 6.0 % The gender distribution of our employee base is diversified. Employees by Gender Female 54.8 % Male 45.2 % For the fiscal year ended December 31, 2023, we had 48 promotions.
Employees by Generation Pre Baby Boomers 0.5 % Baby Boomers 14.7 % Generation X 44.1 % Millennials 37.3 % Generation Z 3.4 % The gender distribution of our employee base is diversified. Employees by Gender Female 53.9 % Male 46.1 % For the fiscal year ended December 31, 2024, we had 25 promotions.
Additionally, the investment portfolio is used to balance the Bank’s asset and liability position. The Bank invests in fixed rate or floating rate instruments as necessary to reduce interest rate risk exposure. At December 31, 2023, the held-to-maturity portfolio, which is primarily composed of municipal securities and is carried at amortized cost, totaled $17.3 million.
Additionally, the investment portfolio is used to balance the Bank’s asset and liability position. The Bank invests in fixed rate or floating rate instruments as necessary to reduce interest rate risk exposure.
The findings of the supervisory initiatives will be included in reports of examination. Deficiencies are incorporated into the organization’s supervisory ratings, which can affect the organization’s ability to make acquisitions and take other actions.
Any deficiencies in compensation practices that are identified may be incorporated into the organization’s supervisory ratings, which can affect its ability to make acquisitions or take other actions.
As a Virginia-chartered bank that is a member of the Federal Reserve System, the Bank is subject to regulation, supervision and examination by the Bureau and the Federal Reserve. State and federal laws also govern the activities in which the Bank engages, the investments that it makes and the aggregate amount of loans that may be granted to one borrower.
State and federal laws also govern the activities in which the Bank engages, the investments that it makes and the aggregate amount of loans that may be granted to one borrower. The Bureau and the Federal Reserve also regulate the branching authority of the Bank. In addition, various consumer and compliance laws and regulations affect the Bank’s operations.
Consistent with our culture, we worked over the past seven years with a small group of clients in order to understand the risks associated with this business line. We developed an infrastructure to identify, measure, monitor and control the risks associated with FinTechs, providing BaaS, and payment systems in general.
We developed an infrastructure to identify, measure, monitor, and control the risks associated with FinTechs, providing BaaS, and payment systems in general.
In general, the Bank Holding Company Act limits the activities of a bank holding company to those of banking, managing or controlling banks, or any other activity that the Federal Reserve has determined to be so closely related to banking or to managing or controlling banks that an exception is allowed for those activities.
In general, the BHCA limits the activities permissible for bank holding companies to the business of banking, managing, or controlling banks, and such other activities as the Federal Reserve has determined to be so closely related to banking as to be properly incidental thereto.
As a state-chartered bank that is a member of the Federal Reserve System, the Bank is subject to periodic examinations by the Bureau and by the Federal Reserve Bank of Richmond.
The Company is also subject to the rules and regulations of the SEC and state securities administrators under federal and state securities laws. As a Virginia-chartered commercial bank that is a member of the Federal Reserve System, the Bank is subject to regulation, supervision and examination by the Bureau and the Federal Reserve.
A bank that has experienced rapid growth in commercial real estate lending, has notable exposure to a specific type of commercial real estate loan, or is approaching or exceeding the following supervisory criteria may be identified for further supervisory analysis with respect to real estate concentration risk: • Total reported loans for construction, land development and other land represent 100% or more of the bank’s total regulatory capital; or • Total commercial real estate loans (as defined in the guidance) represent 300% or more of the bank’s total regulatory capital and the outstanding balance of the bank’s commercial real estate loan portfolio has increased 50% or more during the prior 36 months.
The guidance provides that a bank may have a concentration in CRE lending if total reported loans for construction, land development, and other land represent 100% or more of total risk-based capital, or total non-owner occupied CRE loans, excluding owner occupied properties, represent 300% or more of the bank’s total risk-based capital and the outstanding balance of the bank’s CRE loan portfolio has increased 50% or more during the prior 36 months.
Banking-as-a-Service (BaaS). Beginning in 2016, the Board and management identified an opportunity for alternative sources of low-cost deposits and fee income. We determined that Financial Technology (“FinTech”) companies were making significant inroads into banking, and we expanded our strategic plan to include banking customers that require BaaS and other payment service solutions.
We determined that Financial Technology (“FinTech”) companies were making significant inroads into banking, and we expanded our strategic plan to include banking customers that require BaaS and other payment service solutions. Consistent with our culture, we worked with a small group of clients in order to understand the risks associated with this business line.
Our underwriting policies and processes focus on the client’s ability to repay the loan as well as an assessment of the underlying real estate. Risks inherent in managing a commercial real estate portfolio relate to sudden or gradual drops in property values as well as changes in the economic climate.
Commercial Real Estate Lending . We finance owner-occupied and investment commercial real estate. Our underwriting policies and processes focus on the client’s ability to repay the loan as well as an assessment of the underlying real estate.
At that date, the available-for-sale portfolio, which is composed of U.S. Treasury securities, collateralized mortgage-backed securities, subordinated debt of other financial institutions and U.S. Government agency securities and is carried at fair value, totaled $59.9 million. For additional information, see Note 3 of Notes to Consolidated Financial Statements. Subordinated Notes .
At December 31, 2024, the held-to-maturity portfolio, which is primarily composed of municipal securities and subordinated debt of other financial institutions, and is carried at amortized cost, totaled $16.1 million. At that date, the available-for-sale portfolio, which is composed of collateralized mortgage-backed securities, subordinated debt of other financial institutions, preferred stock, municipal securities, and U.S.
The Basel III Capital Rules require the maintenance of “Common Equity Tier 1” (“CET1”) capital, Tier 1 capital and Total capital to risk-weighted assets of at least 4.5%, 6% and 8%, respectively. The capital rules also establish a minimum leverage ratio of at least 4% Tier 1 capital to average consolidated assets.
Under the current Basel III regulatory framework, the Bank is required to maintain the following minimum regulatory capital ratios: ● A ratio of common equity Tier 1 capital to total risk-weighted assets of at least 4.5%; ● A ratio of Tier 1 capital to total risk-weighted assets of at least 6%; ● A ratio of Tier 1 capital plus Tier 2 capital to total risk-weighted assets of at least 8%; and ● A leverage ratio (Tier 1 capital to adjusted total assets) of at least 4%.
Under the Bank Holding Company Act, we are required to obtain the prior approval of the Federal Reserve to acquire ownership or control of more than 5% of the voting shares or substantially all of the assets of any bank holding company or bank or merge or consolidate with another bank holding company.
Acquisitions by Bank Holding Companies . We must obtain the prior approval of the Federal Reserve before acquiring more than 5% of the voting stock of any bank or other bank holding company, acquiring all or substantially all of the assets of any bank or bank holding company, or merging or consolidating with any other bank holding company.
The guidance, which covers all employees that have the ability to materially affect the risk profile of an organization, is based upon the key principles that a banking organization’s incentive compensation arrangements should (i) provide incentives that do not encourage risk-taking beyond the organization’s ability to effectively identify and manage risks, (ii) be compatible with effective internal controls and risk management, and (iii) be supported by strong corporate governance, including active and effective oversight by the organization’s board of directors.
The incentive compensation guidance, which covers all employees that have the ability to materially affect the risk profile of an organization, either individually or as part of a group, is based upon three primary principles: balanced risk-taking incentives, compatibility with effective controls and risk management, and strong corporate governance.
A capital injection may be required at times when the holding company does not have the resources to provide it. In addition, any loans by a holding company to a subsidiary bank are subordinate in right of payment to deposits and to certain other indebtedness of such subsidiary bank.
In addition, any capital loans that we make to the Bank are subordinate in right of payment to deposits and to certain other indebtedness of the Bank.
In the event of a bank holding company’s bankruptcy, the bankruptcy trustee will assume any commitment by the holding company to a federal bank regulatory agency to maintain the capital of a subsidiary bank.
In the event of our bankruptcy, any commitment by us to a federal bank regulatory agency to maintain the capital of the Bank under a capital restoration plan would be assumed by the bankruptcy trustee and entitled to a priority of payment. 16 Scope of Permissible Activities .
At December 31, 2023, the Bank had a tier 1 leverage capital ratio of 14.66%, a common equity tier 1 risk-based capital ratio of 16.22%, a tier 1 risk-based capital ratio of 16.22%, and a total risk-based capital ratio of 17.18%.
The Bank exceeds the regulatory guidelines to be classified as “well capitalized.” Our capital position remains strong. At December 31, 2024, the Bank had a tier 1 leverage capital ratio of 12.08%, a common equity tier 1 risk-based capital ratio of 14.64%, a tier 1 risk-based capital ratio of 14.64%, and a total risk-based capital ratio of 15.69%.
All insured depository institutions have a responsibility under the Community Reinvestment Act of 1977 (the “CRA”) and federal regulations thereunder to help meet the credit needs of their communities, including low- and moderate-income neighborhoods.
The Community Reinvestment Act of 1977, as amended (“CRA”), and the related regulations are intended to encourage banks to help meet the credit needs of their entire assessment area, including low and moderate income neighborhoods, consistent with the safe and sound operations of such banks.
The Bank received an “ Outstanding ” CRA rating in its most recent assessment received on August 22, 2022 by the Federal Reserve. In October 2023, the Federal Reserve, the Office of the Comptroller of the Currency, and the FDIC issued a final rule to strengthen and modernize the CRA regulations.
An unsatisfactory CRA record could substantially delay approval or result in denial of an application. The Bank received an “Outstanding” rating in its most recent CRA examination in 2022. On October 24, 2023, the federal banking agencies adopted a final rule to modernize the CRA regulations.
These activities include securities underwriting and dealing, insurance agency and underwriting, and making merchant banking investments. On October 12, 2021, the Company filed an election to be treated as a financial holding company.
These activities include securities dealing, underwriting and market making, insurance underwriting and agency activities, merchant banking, and insurance company portfolio investments. Expanded financial activities of financial holding companies generally are regulated according to the type of such financial activity: banking activities by banking regulators, securities activities by securities regulators, and insurance activities by insurance regulators.
Under the implementing regulations, in order to be considered well-capitalized, a bank must have a ratio of CET1 capital to risk-weighted assets of 6.5%, a ratio of Tier 1 capital to risk-weighted assets of 8%, a ratio of total capital to risk-weighted assets of 10%, and a leverage ratio of 5%.
To be well-capitalized, a bank must have a total risk-based capital ratio of at least 10%, a Tier I risk-based capital ratio of at least 8%, a common equity Tier I risk-based capital ratio of at least 6.5%, and a leverage ratio of at least 5%, and must not be subject to any written agreement, order, or directive requiring it to maintain a specific capital level for any capital measure.
Area Total Population as of 2024 (Actual) Population Change 2010-2024 Projected Population Change 2024-2029 Median Household Income 2024 Median Household Income Projected Change 2024-2029 Unemployment Rate as of November 2023 Unemployment Rate as of November 2022 District of Columbia 679,947 -1.39 % 1.92 % $98,916 7.28 % 4.8 % 4.5 % Arlington County 239,054 0.17 % 1.77 % 134,727 6.37 % 2.2 % 2.1 % Fairfax County 1,141,875 -0.73 % 0.86 % 142,822 5.55 % 2.5 % 2.5 % Loudoun County 442,613 5.14 % 6.31 % 143,652 5.68 % 2.6 % 2.5 % Prince William County 496,046 2.87 % 4.36 % 122,657 5.46 % 2.8 % 2.8 % United States 336,157,119 1.42 % 2.40 % 75,874 10.12 % 3.5 % 3.3 % Source: U.S.
Area Total Population as of 2025 (Actual) Population Change 2010-2025 Projected Population Change 2025-2030 Median Household Income 2025 Median Household Income Projected Change 2025-2030 Unemployment Rate as of October 2024 Unemployment Rate as of October 2023 District of Columbia 685,183 -0.63 % 1.90 % $106,049 8.29 % 5.3 % 5.0 % Arlington County 240,077 0.60 % 4.80 % 136,716 7.09 % 2.2 % 2.2 % Fairfax County 1,141,206 -0.79 % 0.59 % 150,142 9.19 % 2.6 % 2.6 % Loudoun County 441,547 4.89 % 4.64 % 178,282 9.17 % 2.6 % 2.6 % Prince William County 496,564 2.98 % 4.24 % 126,144 7.88 % 2.8 % 2.9 % United States 337,643,652 1.87 % 2.40 % 78,770 8.29 % 3.9 % 3.6 % Source: U.S.
We have elected not to take advantage of this extended transition period, which means that the financial statements included in this Form 10-K, as well as any financial statements that we file in the future, will be subject to all new or revised accounting standards generally applicable to public companies. 4 Nasdaq Listing We were approved to list shares of our common stock on the Nasdaq Capital Market under our current symbol “MNSB” as of April 22, 2019.
Allocation awards are expected to be announced during the fourth quarter of 2025. 4 Nasdaq Listing We were approved to list shares of our common stock on the Nasdaq Capital Market under our current symbol “MNSB” as of April 22, 2019.
Vice Pres. 0.0% 11.0% 33.0% 56.0% Senior Vice Pres. 21.0% 18.0% 14.0% 46.0% Vice Pres. 26.0% 30.0% 22.0% 22.0% Asst. Vice Pres. 17.0% 26.0% 48.0% 9.0% Branch 53.0% 11.0% 26.0% 11.0% Admin.
Vice Pres. 0.0% 10.0% 40.0% 50.0% Senior Vice Pres. 21.0% 22.0% 14.0% 43.0% Vice Pres. 29.0% 18.0% 28.0% 25.0% Asst. Vice Pres. 14.0% 29.0% 43.0% 14.0% Branch 60.0% 10.0% 20.0% 10.0% Admin.
A bank with a ratio of tangible equity to total assets of 2.0% or less is subject to the appointment of the FDIC as receiver if its capital level does not improve within 90 days. As of December 31, 2023, the Bank was in compliance with all regulatory capital standards and qualified as “well-capitalized,” under the prompt correction action regulations.
As of December 31, 2024, the Bank was in compliance with all regulatory capital standards and qualified as “well-capitalized” under the prompt corrective action regulations. See Note 16 of Notes to Consolidated Financial Statements.
As such, we are subject to regulation, supervision, and examination by the Federal Reserve. We are required to file quarterly reports with the Federal Reserve and provide such additional information as the Federal Reserve may require.
The Company is subject to regulation under the BHCA and to supervision, examination, and enforcement by the Federal Reserve as well as the Bureau.
The capital conservation buffer requirement effectively increases the minimum required risk-based capital ratios to 7% for CET1, 8.5% for Tier 1 capital and 10.5% for Total capital.
Thus, when including the 2.5% CCB, a bank’s minimum ratio of common equity Tier 1 capital to total risk-weighted assets increases to 7%, its minimum ratio of Tier 1 capital to total risk-weighted assets increases to 8.5%, and its minimum ratio of total capital to total risk-weighted assets increases to 10.5%. These capital requirements are minimum requirements.
Such extensions of credit must be made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with third parties and must not involve more than the normal risk of repayment or present other unfavorable features. Community Reinvestment Act and Fair Lending Laws .
Among other things, extensions of credit to insiders are required to be made on terms that are substantially the same as, and follow credit underwriting procedures that are not less stringent than, those prevailing for comparable transactions with unaffiliated persons.
Removed
Emerging Growth Company Status We qualify as an “emerging growth company” under the JOBS Act and as defined in Section 2(a) of the Securities Act of 1933. For as long as we are an emerging growth company, we may choose to take advantage of exemptions from various reporting requirements applicable to other public companies but not to emerging growth companies.
Added
The Bank also participates in the IntraFi Insured Cash Sweep ("ICS") program, which also functions to provide greater FDIC insurance coverage for participating customers.
Removed
See “Risk Factors—We are an emerging growth company, and any decision on our part to comply only with certain reduced reporting and disclosure requirements applicable to emerging growth companies could make our common stock less attractive to investors.” As an emerging growth company: • we may present as few as two years of audited financial statements and two years of related management discussion and analysis of financial condition and results of operations, in contrast to other reporting companies which must provide audited financial statements for three fiscal years; • we are exempt from the requirement to obtain an attestation and report from our auditors on management’s assessment of our internal control over financial reporting under the Sarbanes-Oxley Act of 2002; • we are permitted to provide less extensive disclosure about our executive compensation arrangements, including recently adopted pay versus performance disclosures; and • we are permitted to include less extensive narrative disclosures than required of other reporting companies, particularly with respect to executive compensation.
Added
The Avenu division is classified within our Financial Technology reportable segment outlined in Note 26. Additional information can be found in our investor presentations filed quarterly.
Removed
In this Form 10-K we have elected to take advantage of the reduced disclosure requirements relating to executive compensation, and in the future we may take advantage of any or all of these exemptions for so long as we remain an emerging growth company.
Added
Government agency securities and is carried at fair value, totaled $55.7 million. For additional information, see Note 3 of the Notes to Consolidated Financial Statements. Subordinated Notes . In April of 2021, the Company completed an issuance and sale of $30 million in fixed-to-floating subordinated notes.
Removed
We will remain an emerging growth company until the earliest of (i) the end of the first fiscal year during which we have total annual gross revenues of $1.07 billion or more, (ii) the end of the fiscal year following the fifth anniversary of the completion of our initial registered public offering of common equity securities, which will be in December 31, 2024, (iii) the date on which we have, during the previous three-year period, issued more than $1.0 billion in non-convertible debt and (iv) the date on which we are deemed to be a “large accelerated filer” as defined in Rule 12b-2 under the Securities Exchange Act of 1934 (the “Exchange Act”).
Added
The Bank also participates in the IntraFi Insured Cash Sweep ("ICS") program, which also functions to provide greater FDIC insurance coverage for participating customers. For additional information on deposits, see Note 9 of Notes to Consolidated Financial Statements. Banking-as-a-Service (BaaS). Beginning in 2016, the Board and management identified an opportunity for alternative sources of low-cost deposits and fee income.
Removed
In addition to the relief described above, the JOBS Act permits us an extended transition period for complying with new or revised accounting standards affecting public companies.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

36 edited+14 added−14 removed194 unchanged
Biggest changeAny significant environmental liabilities could cause an adverse effect on our business, financial condition and results of operations. The implementation of the Current Expected Credit Loss accounting standard could require us to increase our allowance and future provisions for credit losses and may have a material adverse effect on our financial condition and results of operations .
Biggest changeThe Company cannot predict the effect that any such legislation and/or implementing regulations, if adopted, may have on the Company. A change in statutes, regulations and/or regulatory policies applicable to us, if material, could have an adverse effect on our business, financial condition, results of operations and prospects.
There are many factors that may impact the market price and trading volume of our common stock, including, without limitation: • actual or anticipated fluctuations in our operating results, financial condition or asset quality; • operating results that vary from the expectations of management, securities analysts and investors; • changes in expectations as to our future financial performance; • operating and stock price performance of companies that investors deem comparable to us; • future issuances of our common stock or other securities; • changes in general economic or business conditions; • changes in the credit, mortgage and housing markets, the markets for securities relating to mortgages or housing, and developments with respect to financial institutions generally; • proposed or adopted changes in laws, regulations or policies affecting us; • significant acquisitions or business combinations, strategic partnerships, joint ventures or capital commitments by or involving our competitors or us; and • other economic, competitive, governmental, regulatory and technological factors affecting our operations, pricing, products and services. 29 The Company depends on the Bank for dividends, distributions and other payments.
There are many factors that may impact the market price and trading volume of our common stock, including, without limitation: • actual or anticipated fluctuations in our operating results, financial condition or asset quality; • operating results that vary from the expectations of management, securities analysts and investors; • changes in expectations as to our future financial performance; • operating and stock price performance of companies that investors deem comparable to us; • future issuances of our common stock or other securities; • changes in general economic or business conditions; • changes in the credit, mortgage and housing markets, the markets for securities relating to mortgages or housing, and developments with respect to financial institutions generally; • proposed or adopted changes in laws, regulations or policies affecting us; • significant acquisitions or business combinations, strategic partnerships, joint ventures or capital commitments by or involving our competitors or us; and • other economic, competitive, governmental, regulatory and technological factors affecting our operations, pricing, products and services. 30 The Company depends on the Bank for dividends, distributions and other payments.
Deep fakes could have a material impact on the Company in a number of ways, including: ● Loss of reputation - deep fakes could be used to damage a company's reputation by creating false or misleading content that is attributed to the company, ● Financial losses - deep fakes could be used to manipulate the stock market by creating false or misleading information about a company's financial performance, and ● Legal liability - deep fakes could expose companies to legal liability for defamation, copyright infringement, or other claims. 24 Our ability to provide our products and services, many of which are internet-based, and communicate with our customers, depends upon the management and safeguarding of information systems and infrastructure, networks, software, data, technology, methodologies and business secrets, including those of our service providers.
Deep fakes could have a material impact on the Company in a number of ways, including: ● Loss of reputation - deep fakes could be used to damage a company's reputation by creating false or misleading content that is attributed to the company, ● Financial losses - deep fakes could be used to manipulate the stock market by creating false or misleading information about a company's financial performance, and ● Legal liability - deep fakes could expose companies to legal liability for defamation, copyright infringement, or other claims. 25 Our ability to provide our products and services, many of which are internet-based, and communicate with our customers, depends upon the management and safeguarding of information systems and infrastructure, networks, software, data, technology, methodologies and business secrets, including those of our service providers.
Changes in economic conditions affecting borrowers, new information regarding existing loans, identification of additional problem loans and other factors, both within and outside of our control, may require us to increase our allowance for credit losses. Increases in nonperforming loans have a significant impact on our allowance for loan losses.
Changes in economic conditions affecting borrowers, new information regarding existing loans, identification of additional problem loans and other factors, both within and outside of our control, may require us to increase our allowance for credit losses. Increases in nonperforming loans have a significant impact on our allowance for credit losses.
If we cannot raise additional capital when needed, it may have a material adverse effect on our financial condition, results of operations and prospects. Compliance and Regulatory Risks We operate in a highly regulated environment, and we may be adversely affected by changes in laws and regulations.
If we cannot raise additional capital when needed, it may have a material adverse effect on our financial condition, results of operations and prospects. Compliance, Legislative, and Regulatory Risks We operate in a highly regulated environment, and we may be adversely affected by changes in laws and regulations.
Credit losses could have a material adverse effect on our business, financial condition, and results of operations. We have significant exposure to risks associated with commercial and residential real estate. A substantial portion of our loan portfolio consists of commercial and residential real estate-related loans, including construction and residential and commercial mortgage loans.
Credit losses could have a material adverse effect on our business, financial condition, and results of operations. We have exposure to risks associated with commercial and residential real estate. A substantial portion of our loan portfolio consists of commercial and residential real estate-related loans, including construction and residential and commercial mortgage loans.
These matters also could result in adverse judgments, settlements, fines, penalties, injunctions or other relief. 30 In addition, in recent years, a number of judicial decisions have upheld the right of borrowers to sue lending institutions on the basis of various evolving legal theories, collectively termed “lender liability.” Generally, lender liability is founded on the premise that a lender has either violated a duty, whether implied or contractual, of good faith and fair dealing owed to the borrower or has assumed a degree of control over the borrower resulting in the creation of a fiduciary duty owed to the borrower or its other creditors or shareholders.
These matters also could result in adverse judgments, settlements, fines, penalties, injunctions or other relief. 31 In addition, in recent years, a number of judicial decisions have upheld the right of borrowers to sue lending institutions on the basis of various evolving legal theories, collectively termed “lender liability.” Generally, lender liability is founded on the premise that a lender has either violated a duty, whether implied or contractual, of good faith and fair dealing owed to the borrower or has assumed a degree of control over the borrower resulting in the creation of a fiduciary duty owed to the borrower or its other creditors or shareholders.
The amount that we, as a mortgagee, may realize after a default is dependent upon factors outside of our control, including: • general or local economic conditions; • environmental clean-up liabilities; • neighborhood values; • interest rates; 19 • real estate tax rates; • operating expenses of the foreclosed properties; • supply of and demand for rental units or properties; • ability to obtain and maintain adequate occupancy of the properties; • zoning laws; • governmental rules, regulations and fiscal policies; and • extreme weather conditions or other natural or man-made disasters.
The amount that we, as a mortgagee, may realize after a default is dependent upon factors outside of our control, including: • general or local economic conditions; • environmental clean-up liabilities; • neighborhood values; • interest rates; 20 • real estate tax rates; • operating expenses of the foreclosed properties; • supply of and demand for rental units or properties; • ability to obtain and maintain adequate occupancy of the properties; • zoning laws; • governmental rules, regulations and fiscal policies; and • extreme weather conditions or other natural or man-made disasters.
We have insurance against some cyber risks and attacks; nonetheless, our insurance coverage may not be sufficient to offset the impact of a material loss event (including if our insurer denies coverage as to any particular claim in the future), and such insurance may increase in cost or cease to be available on commercially reasonable terms, or at all, in the future. 25 We rely on third party service providers to provide key components of our business infrastructure, and a failure of these parties to perform for any reason could disrupt our operations.
We have insurance against some cyber risks and attacks; nonetheless, our insurance coverage may not be sufficient to offset the impact of a material loss event (including if our insurer denies coverage as to any particular claim in the future), and such insurance may increase in cost or cease to be available on commercially reasonable terms, or at all, in the future. 26 We rely on third party service providers to provide key components of our business infrastructure, and a failure of these parties to perform for any reason could disrupt our operations.
Like all financial institutions, we are exposed to the risk that our borrowers may not repay their loans according to their terms, and the collateral securing the payment of these loans may be insufficient to fully compensate us for the outstanding balance of the loan plus the costs to dispose of the collateral. 20 We maintain an allowance for credit losses ("ACL"), which includes the allowance for credit losses on loans, at a level we believe is adequate to absorb expected losses in our loan portfolio as of the corresponding balance sheet date.
Like all financial institutions, we are exposed to the risk that our borrowers may not repay their loans according to their terms, and the collateral securing the payment of these loans may be insufficient to fully compensate us for the outstanding balance of the loan plus the costs to dispose of the collateral. 21 We maintain an allowance for credit losses ("ACL"), which includes the allowance for credit losses on loans, at a level we believe is adequate to absorb expected losses in our loan portfolio as of the corresponding balance sheet date.
Accordingly, we may lose customers seeking new technology-driven products and services to the extent we are unable to compete effectively. 23 A failure or a breach of our operational systems or infrastructure, or those of third party service providers, could disrupt our business, result in the unauthorized disclosure of confidential or proprietary information, damage our reputation and cause financial losses.
Accordingly, we may lose customers seeking new technology-driven products and services to the extent we are unable to compete effectively. 24 A failure or a breach of our operational systems or infrastructure, or those of third party service providers, could disrupt our business, result in the unauthorized disclosure of confidential or proprietary information, damage our reputation, and cause financial losses.
In order to keep deposits required for funding purposes, it may be necessary to raise deposit rates without commensurate increases in asset pricing in the short term. Prior to 2022, it has been the policy of the Federal Reserve to maintain interest rates at historically low levels through its targeted federal funds rate and the purchase of mortgage-backed securities.
In order to keep deposits required for funding purposes, it may be necessary to raise deposit rates without commensurate increases in asset pricing in the short term. Prior to 2022, it had been the policy of the Federal Reserve to maintain interest rates at historically low levels through its targeted federal funds rate and the purchase of mortgage-backed securities.
While these procedures are designed to provide us with the information needed to implement policy adjustments where necessary, and to take proactive corrective actions, there can be no assurance that such measures will be effective in avoiding undue credit risk. 21 We are subject to environmental liability risk associated with our lending activities.
While these procedures are designed to provide us with the information needed to implement policy adjustments where necessary, and to take proactive corrective actions, there can be no assurance that such measures will be effective in avoiding undue credit risk. 22 We are subject to environmental liability risk associated with our lending activities.
This contagion risk can also occur when a perceived lack of trust in the banking system spreads throughout the industry based upon the results of a few poorly managed larger financial institutions. Our stock price may be negatively impacted by unrelated bank failures and negative customer confidence in financial institutions.
This contagion risk can also occur when a perceived lack of trust in the banking system spreads throughout the industry based upon the results of a few poorly managed larger financial institutions. Our stock price and our required liquidity may be negatively impacted by unrelated bank failures and negative customer confidence in financial institutions.
As discussed above, rates are fluctuating, and due to a number of factors including changes in monetary policies of the Federal Reserve, will likely continue to fluctuate. 27 External and Market-Related Risks Changes in general business, economic and political conditions, especially in our market area, could adversely affect our growth and earnings.
As discussed above, rates are fluctuating, and due to a number of factors including changes in monetary policies of the Federal Reserve, will likely continue to fluctuate. 28 External and Market-Related Risks Changes in general business, economic and political conditions, especially in our market area, could adversely affect our growth and earnings.
As described below these competitors include banks, other financial institution and non-banks offering services and products previously only provided by banks. 26 The decreased soundness of other financial institutions could adversely affect us. Our ability to engage in routine funding transactions could be adversely affected by the actions and commercial soundness of other financial institutions.
As described below these competitors include banks, other financial institution and non-banks offering services and products previously only provided by banks. 27 The decreased soundness of other financial institutions could adversely affect us. Our ability to engage in routine funding transactions could be adversely affected by the actions and commercial soundness of other financial institutions.
Such regulation and supervision govern the activities in which we may engage, and are intended primarily for the protection of the insurance fund and the depositors and borrowers of the Bank rather than for holders of our common stock. Various consumers and compliance laws also affect our operations.
Such regulation and supervision govern the activities in which we may engage, and are intended primarily for the protection of the insurance fund and the depositors and borrowers of the Bank rather than for holders of our capital stock. Various consumers and compliance laws also affect our operations.
Operations Risk. Our business is dependent on our ability to process, store and transmit, on a daily basis, a number of transactions. These transactions, as well as the information technology services we provide to clients, often must adhere to client-specific guidelines, as well as legal and regulatory standards.
Operations Risk. Our business is dependent on our ability to process, store and transmit, on a daily basis, numerous transactions. These transactions, as well as the information technology services we provide to clients, often must adhere to client-specific guidelines, as well as legal and regulatory standards.
Liquidity is essential to our business. An inability to raise funds through deposits, borrowings, the sale of loans and other sources could have a substantial negative effect on our liquidity.
An inability to raise funds through deposits, borrowings, the sale of loans and other sources could have a substantial negative effect on our liquidity.
As a result, market rates on the loans we have originated and the yields on securities we have purchased have been at historically low levels.
As a result, market rates on the loans we originated and the yields on securities we purchased during that period have been at historically low levels.
These events have led to a greater focus by institutions, investors and regulators on the on-balance sheet liquidity of and funding sources for financial institutions, the composition of their deposits, including the amount of uninsured deposits, the amount of accumulated other comprehensive loss, capital levels and interest rate risk management. Additional required capital may not be available.
These events have led to a greater focus by institutions, investors and regulators on the on-balance sheet liquidity of and funding sources for financial institutions, the composition of their deposits, including the amount of uninsured deposits, the amount of accumulated other comprehensive loss, capital levels and interest rate risk management.
We face risks related to our operational, technological and organizational infrastructure. Our ability to grow and compete is dependent on the Company’s ability to build or acquire the necessary operational and technological infrastructure and to manage the cost of that infrastructure as we expand.
Our ability to grow and compete is dependent on the Company’s ability to build or acquire the necessary operational and technological infrastructure and to manage the cost of that infrastructure as we expand.
These increased costs could require us to divert a significant amount of money that we could otherwise use to expand our business and achieve our strategic objectives. Item 1B. Unresolved Staff Comments None.
These increased costs could require us to divert a significant amount of money that we could otherwise use to expand our business and achieve our strategic objectives.
We can give no assurance that our allowance for credit losses is or will be sufficient to absorb actual loan losses. We maintain an allowance for credit losses on loans, which is a reserve established through a provision for credit losses charged to expense, that represents management’s estimable and observable losses within the existing portfolio of loans.
We maintain an allowance for credit losses on loans, which is a reserve established through a provision for credit losses charged to expense, that represents management’s estimable and observable losses within the existing portfolio of loans.
As of December 31, 2023, we had $359.4 million in unfunded credit commitments to our customers.
As of December 31, 2024, we had $232.6 million in unfunded credit commitments to our customers.
As of that same date, we had approximately $429.6 million of construction real estate loans and $474.6 million of residential real estate loans, which represented 24.9% and 27.5% respectively.
As of that same date, we had approximately $393.4 million of construction real estate loans and $439.5 million of residential real estate loans, which represented 21.4% and 23.9% respectively.
We are required by federal regulatory authorities to maintain adequate levels of capital to support our operations. In addition, we may elect to raise additional capital to support our business or to finance acquisitions, if any, or we may otherwise elect or be required to raise additional capital.
In addition, we may elect to raise additional capital to support our business or to finance acquisitions, if any, or we may otherwise elect or be required to raise additional capital.
Any change in such regulation and oversight, whether in the form of regulatory policy, regulations, legislation or supervisory action, may have a material impact on our operations.
Any change in such regulation and oversight, whether in the form of regulatory policy, regulations, legislation or supervisory action, may have a material impact on our operations. The earnings of the Bank, and therefore the earnings of the Company, are affected by changes in federal and state legislation and actions of various regulatory authorities.
As of December 31, 2023, we had approximately $282.1 million of owner-occupied and $461.8 million of investment commercial real estate loans outstanding, which represented approximately 16.3% and 26.7%, respectively, of our loan portfolio as of December 31, 2023.
As of December 31, 2024, we had approximately $357.7 million of owner-occupied and $560.1 million of investment commercial real estate loans outstanding, which represented approximately 19.5% and 30.5%, respectively, of our loan portfolio as of December 31, 2024.
Higher interest payment obligations could also adversely affect certain borrowers, particularly our floating-rate borrowers. Substantial and prolonged increases in market interest rates could have a material adverse effect on our financial condition and results of operation. 22 Liquidity Risk Liquidity risk could impair our ability to fund operations, meet our obligations as they become due, and jeopardize our financial condition.
Higher interest payment obligations could also adversely affect certain borrowers, particularly our floating-rate borrowers. Substantial and prolonged increases in market interest rates could have a material adverse effect on our financial condition, results of operation, and liquidity. We have implemented strategies to lessen the potential effects of interest rate changes on our financial condition and results of operations.
Continuing deterioration in economic conditions, including inflation, a possible recession, higher interest rates, unresolved or new adverse effects of the COVID-19 pandemic, and unanticipated problem loans, may necessitate an increase in our allowance for credit losses. In addition, bank regulatory authorities may require an increase or future charge-offs based on their judgments which may differ from ours.
Continuing deterioration in economic conditions, including inflation, a possible recession, higher interest rates, unresolved or new adverse effects of a pandemic, and unanticipated problem loans, may necessitate an increase in our allowance for credit losses.
Although none of these types of attacks have had a material impact on our business to date, we anticipate that the efforts to attack our systems, and those of our customers and vendors, will grow in complexity and volume. As such, we have developed an incident response plan to coordinate the efforts following the identification of an attack.
Computers connected to the internet are vulnerable to many types of threats by cyber criminals. Although none of these types of attacks have had a material impact on our business to date, we anticipate that the efforts to attack our systems, and those of our customers and vendors, will grow in complexity and volume.
A breach or failure of a chosen vendor could have a material adverse impact on our operating environment. Replacing a chosen vendor could also result in a significant delay and expense. Internet Risk. Our services and technology solutions rely on internet communications. Computers connected to the internet are vulnerable to many types of threats by cyber criminals.
A breach or failure of a chosen vendor could have a material adverse impact on our operating environment and may expose the Company’s or our customers’ data which could result in operational, compliance and/or reputational risks. Replacing a chosen vendor could also result in a significant delay and expense. Internet Risk. Our services and technology solutions rely on internet communications.
In 2021, the Company began development of a proprietary BaaS software solution, Avenu, which provides an embedded banking solution that connects our partners (fintechs, application developers, money movers, and entrepreneurs) directly and seamlessly to our Software as a Service (SaaS) solution. Developing and deploying a software program may add additional risk, including cybersecurity, compliance, financial, and reputational concerns.
In 2021, the Company began development of a proprietary BAAS solution, Avenu, to provide an embedded banking solution that connects our partners (fintech, application developers, money movers, and entrepreneurs) directly and seamlessly to our Software as a Service (SAAS). At the end of 2024, management reviewed the Avenu platform’s performance.
We may be required to increase our provisions for credit losses and to charge off loans in the future, which increases and charges could materially adversely affect us. There is no precise method of predicting the timing of loan losses.
In addition, bank regulatory authorities may require an increase to the allowance for credit losses to cover future charge-offs, based on their judgments which may differ from ours. We may be required to increase our provisions for credit losses and to charge off loans in the future, which increases in provision and charges could materially adversely affect us.
In an attempt to help the overall economy and in response to inflationary pressures, throughout 2022 and 2023 the Federal Reserve increased its targeted Fed Funds rate. The Federal Reserve also announced its intention to take other actions to mitigate growing signs of inflation. As the Federal Reserve continues its mission, overall interest rates have been impacted.
In an attempt to help the overall economy and in response to inflationary pressures, throughout 2022 and 2023 the Federal Reserve increased its targeted Fed Funds rate. More recently, the Federal Reserve began decreasing the federal funds rate. At this time there is considerable uncertainty regarding future interest rate levels.
Removed
Effective January 1, 2023, we were required to adopt the Financial Accounting Standards Board (the “FASB”) Accounting Standards Update 2016-13, Financial Instruments-Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments , commonly referred to as “CECL.” Under CECL the allowance for credit losses methodology has been changed from an incurred loss concept to an expected loss concept, which is more dependent on future economic forecasts, assumptions and models than previous accounting standards and could result in increases in, and add volatility to, our allowance for credit losses and future provisions for credit losses.
Added
There is no precise method of predicting the timing of loan losses. We can give no assurance that our allowance for credit losses is or will be sufficient to absorb actual loan losses.
Removed
These forecasts, assumptions, and models are inherently uncertain and are based upon management’s reasonable judgments in light of currently available information. As a result, our allowance for credit losses may not be adequate to absorb actual credit losses, and, if not adequate, could materially and adversely affect our financial condition and results of operations.
Added
However, such strategies may only mitigate these effects and not always be successful. 23 Liquidity Risk Liquidity risk could impair our ability to fund operations, meet our obligations as they become due, and jeopardize our financial condition. Liquidity is essential to our business.
Removed
We are subject to environmental liability risk associated with our lending activities. In the course of our business, we may foreclose on and take title to real estate. Although we exercise prudent due diligence when making loans, we could be subject to environmental liabilities with respect to these properties.
Added
Developing and deploying a software program has added, and may contain to add, additional risk, including financial, cybersecurity, compliance and reputational concerns.
Removed
We may be held liable to a governmental entity or to third parties for property damage, personal injury, investigation and clean-up costs incurred by these parties in connection with environmental contamination or may be required to investigate or clean up hazardous or toxic substances or chemical releases at a property.
Added
Delays in bringing Avenu to market and subsequent changes in revenue generation potential necessitated a review for impairment and a resulting charge to earnings of the full value of its capitalized intangible software. For additional information, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” We face risks related to our operational, technological, and organizational infrastructure.
Removed
The costs associated with investigation or remediation activities could be substantial. In addition, if we are the owner or former owner of a contaminated site, we may be subject to common law claims by third parties based on damages and costs resulting from environmental contamination emanating from the property.
Added
As such, we have developed an incident response plan to coordinate the efforts following the identification of an attack.
Removed
The earnings of the Bank, and therefore the earnings of the Company, are affected by changes in federal and state legislation and actions of various regulatory authorities. 28 Risks Associated with Our Common Stock The market price for the Company ’ s common stock price may be volatile.
Added
If we are unable to adequately manage our liquidity, we may experience an adverse effect on our financial condition and results of operations. Additional required capital may not be available. We are required by federal regulatory authorities to maintain adequate levels of capital to support our operations.
Removed
We are an emerging growth company, and any decision on our part to comply only with certain reduced reporting and disclosure requirements applicable to emerging growth companies could make our common stock less attractive to investors.
Added
We may be affected by possible regulatory reform and legislation. Legislative and regulatory initiatives introduced in Congress and state legislatures, as well as by regulatory agencies, may include proposals to expand or contract the powers of financial institutions, or proposals to substantially change the overall financial institution regulatory system.
Removed
We are an emerging growth company, and, for as long as we continue to be an emerging growth company, we may choose to take advantage of exemptions from various reporting requirements applicable to other public companies but not to emerging growth companies, including, but not limited to, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
Added
Such legislation could change banking statutes and the operating environment of the Company in substantial and unpredictable ways. If enacted, such legislation could increase or decrease our cost of doing business, limit or expand permissible activities, or affect the balance among competing financial institutions.
Removed
As an emerging growth company, we also are not subject to Section 404(b) of the Sarbanes Oxley Act of 2002, which would require that our independent auditors review and attest as to the effectiveness of our internal control over financial reporting.
Added
We may be adversely affected by changes in federal and state tax laws and regulations. We are subject to federal and applicable state tax laws and regulations. Such tax requirements are often complex and require interpretation. Material changes in these laws and regulations could negatively impact our business, financial condition, results of operations and prospects.
Removed
In this Form 10-K, we have elected to take advantage of the reduced disclosure requirements relating to executive compensation, and in the future we may take advantage of any or all of these exemptions for so long as we remain an emerging growth company.
Added
In the normal course of business, we are routinely subject to examinations and challenges from federal and applicable state tax authorities regarding our tax obligations. Federal and state taxation authorities may challenge tax positions of financial institutions, including us.
Removed
In addition to the relief described above, the JOBS Act permits us an extended transition period for complying with new or revised accounting standards affecting public companies.
Added
These positions may relate to tax compliance, sales and use, franchise, gross receipts, payroll, property and income taxation issues, including tax base, apportionment and available tax credits. The challenges made by tax authorities may adjust the timing or amount of taxable income or deductions or the allocation of income.
Removed
We have elected not to take advantage of this extended transition period, which means that the financial statements included in this Form 10-K, as well as any financial statements that we file in the future, will be subject to all new or revised accounting standards generally applicable to public companies.
Added
Any such challenges not resolved in our favor could have a material adverse effect. Our participation in the New Markets Tax Credit ( “ NMTC ” ) Program entails certain risks.
Removed
We will cease to be an emerging growth company upon the earliest of: (i)the first fiscal year after our annual gross revenues are $1.07 billion or more; (ii)the date on which we have, during the previous three-year period, issued more than $1.0 billion in non-convertible debt securities; or (iii)the end of any fiscal year in which the market value of our common stock held by non-affiliates exceeded $700 million as of the end of the second quarter of that fiscal year, or five years after completing our initial public offering.
Added
Our Bank is a participant as an investor and lender in the NMTC Program which provides a tax incentive for private investment into projects and businesses located in low-income communities. NMTCs are allocated by the Community Development Financial Institutions Fund to qualified community development interests. Refer to Note 3 for additional information regarding the current investments in the NMTC Program.
Removed
Investors may find our common stock less attractive because we choose to rely on these exemptions. If some investors find our common stock less attractive as a result of our choices to reduce disclosure, there may be a less active trading market for our common stock and the price of our common stock may be more volatile.
Added
NMTCs are subject to recapture for seven years after an equity investment is made in a CDE if: • The CDE ceases to be certified; or • “Substantially all” of the equity investment proceeds are no longer used for qualified businesses; or • The CDE redeems the investment. 29 Risks Associated with Our Common Stock The market price for the Company ’ s common stock price may be volatile.

Item 2. Properties

Properties — owned and leased real estate

4 edited+0 added−1 removed0 unchanged
Biggest changeFairfax, VA 22030 Owned 2010 $7,260 Other Properties: Herndon Branch 727 Elden Street Leased 2004 — Herndon, VA 20170 Operations Center 22980 Shaw Road Leased 2021 — Sterling, VA, 20166 McLean Branch 1354 Old Chain Bridge Road Owned 2014 1,320 McLean, VA 22101 Clarendon Branch 1000 N. Highland Street Owned 2009 513 Arlington, VA 22201 Leesburg Branch 307 E.
Biggest changePendleton Street Leased 2024 — Building A, Suite 100 Middleburg, VA 20118 McLean Branch 1354 Old Chain Bridge Road Owned 2014 1,271 McLean, VA 22101 Clarendon Branch 1000 N. Highland Street Owned 2009 464 Arlington, VA 22201 Leesburg Branch 307 E. Market Street Owned 2017 2,189 Leesburg, VA 20176 Washington D.C. Branch 1130 Connecticut Avenue, N.W.
Item 2. Properties As of December 31, 2023, the net book value of our office properties was $11.4 million, and the net book value of our furniture, fixtures and equipment was $2.2 million. The following table sets forth information regarding our offices.
Item 2. Properties As of December 31, 2024, the net book value of our office properties was $11.0 million, and the net book value of our furniture, fixtures and equipment was $1.5 million. The following table sets forth information regarding our offices.
Market Street Owned 2017 2,273 Leesburg, VA 20176 Washington D.C. Branch 1130 Connecticut Avenue, N.W. Leased 2019 — Washington , D.C. 20036 We believe that current facilities are adequate to meet our present and foreseeable needs, subject to possible future expansion.
Leased 2019 — Washington , D.C. 20036 We believe that current facilities are adequate to meet our present and foreseeable needs, subject to possible future expansion. See Note 7 of Notes to the December 31, 2024, Consolidated Financial Statements, for additional disclosures related to the Company’s properties.
Net Book Value Leased or Year Acquired of Real Location Owned or Leased Property (In thousands) Headquarters: 10089 Fairfax Blvd.
Net Book Value Leased or Year Acquired of Real Location Owned or Leased Property (In thousands) Headquarters: 10089 Fairfax Blvd. Fairfax, VA 22030 Owned 2010 $7,063 Other Properties: Herndon Branch 727 Elden Street Leased 2004 — Herndon, VA 20170 Operations Center 22980 Shaw Road Leased 2021 — Sterling, VA, 20166 Middleburg Office 10 N.
Removed
See Note 7 of Notes to the December 31, 2023, Consolidated Financial Statements, for additional disclosures related to the Company’s properties.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

11 edited+2 added−0 removed8 unchanged
Biggest changeAll awards that were then outstanding under the 2016 Plan remained outstanding in accordance with their terms.
Biggest changeAll awards that were then outstanding under the 2016 Plan remained outstanding in accordance with their terms. At the Annual Meeting of shareholders held on May 15, 2024, the Company's common shareholders approved a proposal to increase the number of shares of authorized common stock from 650,000 to 1,150,000 shares.
Unregistered Sales and Issuer Repurchases of Common Stock Unregistered Sales of Common Stock Set forth below is information concerning sales of common stock by the Company during the past 3 years that were not registered under the Securities Act. 33 In 2019, the Board of Directors of the Bank and the Bank’s shareholders approved the MainStreet Bank 2019 Equity Incentive Plan (the “2019 Plan”), to provide officers, other selected employees and directors with additional incentives to promote growth and performance.
Unregistered Sales and Issuer Repurchases of Common Stock Unregistered Sales of Common Stock Set forth below is information concerning sales of common stock by the Company during the past 3 years that were not registered under the Securities Act. 34 In 2019, the Board of Directors of the Bank and the Bank’s shareholders approved the MainStreet Bank 2019 Equity Incentive Plan (the “2019 Plan”), to provide officers, other selected employees and directors with additional incentives to promote growth and performance.
A discussion of applicable regulatory restrictions on dividends by the Company and the Bank is provided in Item 1 (“Business”) under “Dividends, Capital Distributions, and Other Payments.” Securities Authorized For Issuance Under Equity Compensation Plans The following table provides information concerning securities authorized for issuance under equity compensation plans, the weighted average price of such securities and the number of securities remaining available for future issuance, as of December 31, 2023.
A discussion of applicable regulatory restrictions on dividends by the Company and the Bank is provided in Item 1 (“Business”) under “Dividends, Capital Distributions, and Other Payments.” Securities Authorized For Issuance Under Equity Compensation Plans The following table provides information concerning securities authorized for issuance under equity compensation plans, the weighted average price of such securities and the number of securities remaining available for future issuance, as of December 31, 2024.
During the fiscal year ended December 31, 2023, the Company declared and paid four cash dividends. Holders of the common stock are subject to priority dividend rights of any holders of preferred stock then outstanding. There were 28,750 shares of preferred stock outstanding at December 31, 2023.
During the fiscal year ended December 31, 2024, the Company declared and paid four cash dividends. Holders of the common stock are subject to priority dividend rights of any holders of preferred stock then outstanding. There were 28,750 shares of preferred stock outstanding at December 31, 2024.
(Dollars in thousands, except for per share amounts) Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number (or Approximate Dollar Value) of Shares that May Yet be Purchased Under the Plans or Programs October 1, 2023 - October 31, 2023 — $ — — $ 4,506 November 1, 2023 - November 30, 2023 — $ — — $ 4,506 December 1, 2023 - December 31, 2023 — $ — — $ 4,506 Total — — $ 4,506 Preferred Stock and Depositary Shares On September 15, 2020, the Company closed its underwritten public offering of 1,000,000 depositary shares, each representing 1/40th of a share of 7.50% Series A Fixed-Rate Non-Cumulative Perpetual Preferred Stock, par value $1.00 per share (the “Series A Preferred Stock”).
(Dollars in thousands, except for per share amounts) Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number (or Approximate Dollar Value) of Shares that May Yet be Purchased Under the Plans or Programs October 1, 2024 - October 31, 2024 — $ — — $ 3,538 November 1, 2024 - November 30, 2024 — $ — — $ 3,538 December 1, 2024 - December 31, 2024 — $ — — $ 3,538 Total — — $ 3,538 Preferred Stock and Depositary Shares On September 15, 2020, the Company closed its underwritten public offering of 1,000,000 depositary shares, each representing 1/40th of a share of 7.50% Series A Fixed-Rate Non-Cumulative Perpetual Preferred Stock, par value $1.00 per share (the “Series A Preferred Stock”).
Item 5. Market for Registrant ’ s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Common Stock Our common stock is traded on the Nasdaq Capital Market under the symbol “MNSB.” At December 31, 2023, the Company had approximately 227 shareholders of record.
Item 5. Market for Registrant ’ s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Common Stock Our common stock is traded on the Nasdaq Capital Market under the symbol “MNSB.” At December 31, 2024, the Company had approximately 228 shareholders of record.
The new stock repurchase program replaces the Company’s previous program. During the year ended December 31, 2023, the Company repurchased 8,000 shares under this plan. The Company did not repurchase common stock during the fourth quarter of 2023.
The new stock repurchase program replaces the Company’s previous program. During the year ended December 31, 2024, the Company repurchased 166,000 shares under this plan. The Company did not repurchase common stock during the fourth quarter of 2024.
Equity Compensation Plan Category Number of securities to be issued upon exercise of outstanding options, warrants and rights Weighted- average exercise price of outstanding options, warrants and rights (1) Number of securities remaining and available for future issuance (2) Plans approved by shareholders 228,300 $ — 188,397 Plans not approved by shareholders — — — Total 228,300 $ — 188,397 (1) Restricted stock shares were not included when calculating the weighted-average exercise price.
Equity Compensation Plan Category Number of securities to be issued upon exercise of outstanding options, warrants and rights Weighted- average exercise price of outstanding options, warrants and rights (1) Number of securities remaining and available for future issuance (2) Plans approved by shareholders 237,717 $ — 570,462 Plans not approved by shareholders — — — Total 237,717 $ — 570,462 (1) Restricted stock shares were not included when calculating the weighted-average exercise price.
(2) Remaining shares available for issuance include 188,397 shares under the 2019 Equity Incentive Plan (“2019 Plan”). Shares remaining to be issued subsequent to December 31, 2023 under the 2019 Plan can be issued either as a restricted stock grant or upon exercise of stock options.
(2) Remaining shares available for issuance include 570,462 shares under the 2019 Equity Incentive Plan (“2019 Plan”). Shares remaining to be issued subsequent to December 31, 2024 under the 2019 Plan can be issued either as a restricted stock grant or upon grant and exercise of stock options.
During 2023, (117,408) shares of restricted common stock vested from shares issued under both the 2019 Plan and the Bank's 2016 Equity Incentive Plan ("2016 Plan"). See Note 18 of Notes to Consolidated Financial Statements.
During 2024, (108,518) shares of restricted common stock vested from shares issued under both the 2019 Plan and the Bank's 2016 Equity Incentive Plan ("2016 Plan"). See Note 18 of Notes to Consolidated Financial Statements.
The terms and conditions of the 2019 Plan were subsequently converted into and deemed to be the terms and conditions of a substantially identical Company incentive compensation plan. To date, a total of 461,603 shares of restricted common stock have been awarded under the 2019 Plan.
The terms and conditions of the 2019 Plan were subsequently converted into and deemed to be the terms and conditions of a substantially identical Company incentive compensation plan.
Added
To date, a total of 605,553 shares of restricted common stock have been awarded under the 2019 Plan and 26,015 shares have been forfeited, for a net of 579,538 shares of restricted common stock issued and outstanding under the 2019 Plan.
Added
As of December 31, 2023, a total of 485,872 shares of restricted common stock had been awarded under the 2019 Plan and 24,269 shares had been forfeited, for a net of 461,603 shares of restricted common stock issued and outstanding under the 2019 Plan.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

118 edited+25 added−13 removed110 unchanged
Biggest changeThe Company believes that tangible common stockholders' equity, excluding intangible assets, is a meaningful supplement to GAAP financial measures and useful to investors because it provides an additional measure to calculate the book value of our common shares by removing the value of a subjective portion of our balance sheet. 57 The following table reconciles these non-GAAP measures from their respective GAAP basis measures for the years ended December 31, For the year ended December 31, (Dollars in thousands) 2023 2022 Net interest margin (FTE) Net interest income (GAAP) $ 75,947 $ 70,009 FTE adjustment on tax-exempt securities 283 281 Net interest income (FTE) (non-GAAP) 76,230 70,290 Average interest earning assets $ 1,869,644 1,676,649 Net interest margin (GAAP) 4.06 % 4.18 % Net interest margin (FTE) (non-GAAP) 4.08 % 4.19 % Stockholders' equity, adjusted Total stockholders' equity (GAAP) $ 221,517 $ 198,282 Less: preferred stock (27,263 ) (27,263 ) Total common stockholders' equity (GAAP) 194,254 171,019 Less: intangible assets 14,657 9,149 Tangible common stockholders' equity (non-GAAP) 179,597 161,870 Shares outstanding 7,527,415 7,442,743 Tangible book value per common share (non-GAAP) $ 23.86 $ 21.75 Yield on earning assets (FTE) Total interest income 124,123 83,845 FTE adjustment on tax-exempt securities 283 281 Total interest income (FTE) (non-GAAP) 124,406 84,126 Average interest earning assets 1,869,644 1,676,649 Yield on earning assets (GAAP) 6.64 % 5.00 % Yield on earning assets (FTE) (non-GAAP) 6.65 % 5.02 % Net interest spread (FTE) Yield on earning assets (GAAP) 6.64 % 5.00 % Yield on earning assets (FTE) (non-GAAP) 6.65 % 5.02 % Yield on interest-bearing liabilities 3.70 % 1.36 % Net interest spread (GAAP) 2.94 % 3.64 % Net interest spread (FTE) (non-GAAP) 2.95 % 3.66 % 58
Biggest changeThe Company believes that tangible common stockholders' equity, excluding intangible assets, is a meaningful supplement to GAAP financial measures and useful to investors because it provides an additional measure to calculate the book value of our common shares by removing the value of a subjective portion of our balance sheet. 59 The following table reconciles these non-GAAP measures from their respective GAAP basis measures for the years ended December 31, For the year ended December 31, (Dollars in thousands) 2024 2023 2022 Net interest margin (FTE) Net interest income (GAAP) $ 62,574 $ 76,742 $ 70,649 FTE adjustment on tax-exempt securities 291 283 281 Net interest income (FTE) (non-GAAP) 62,865 77,025 70,930 Average interest earning assets 2,010,448 1,858,215 1,676,649 Net interest margin (GAAP) 3.11 % 4.13 % 4.21 % Net interest margin (FTE) (non-GAAP) 3.13 % 4.15 % 4.23 % Yield on earning assets (FTE) Total interest income (GAAP) $ 134,615 $ 124,421 $ 84,018 FTE adjustment on tax-exempt securities 291 283 281 Total interest income (FTE) (non-GAAP) 134,906 124,704 84,299 Average interest earning assets 2,010,448 1,858,215 1,676,649 Yield on earning assets (GAAP) 6.70 % 6.70 % 5.01 % Yield on earning assets (FTE) (non-GAAP) 6.71 % 6.71 % 5.03 % Net interest spread (FTE) Yield on earning assets (GAAP) 6.70 % 6.70 % 5.01 % Yield on earning assets (FTE) (non-GAAP) 6.71 % 6.71 % 5.03 % Yield on interest-bearing liabilities 4.70 % 3.66 % 1.31 % Net interest spread (GAAP) 1.99 % 3.04 % 3.70 % Net interest spread (FTE) (non-GAAP) 2.01 % 3.05 % 3.71 % Net Income and earnings per share, adjusted Net Income (loss), as reported $ (9,980 ) $ 26,585 $ 26,674 Less: nonrecurring intangible impairment (19,721 ) — — Less: nonrecurring restructuring expenses (430 ) — — Less: nonrecurring other expenses (890 ) — — Related income tax benefit 4,763 — — Net income (loss), adjusted 6,298 26,585 26,674 Preferred stock dividends 2,156 2,156 2,156 Net income (loss) available to common shareholders, adjusted 4,142 24,429 24,518 Weighted average shares - basic and diluted 7,606,391 7,522,913 7,529,382 Earnings (loss) per common share, basic and diluted, adjusted Earnings (loss) per common share, basic and diluted, as reported $ (1.60 ) $ 3.25 $ 3.26 Nonrecurring expenses per share, net of taxes 2.14 — — Earnings (loss) per common share, basic and diluted, adjusted $ 0.54 $ 3.25 $ 3.26 Adjusted Return (loss) on Average Assets (ROAA) Average assets, as reported $ 2,136,586 $ 1,955,187 $ 1,758,862 Annualized ROAA, as reported (0.47 )% 1.38 % 1.53 % Annualized ROAA, as adjusted 0.29 % 1.38 % 1.53 % Adjusted Return (loss) on Average Equity (ROAE) Average equity, as reported $ 224,631 $ 209,921 $ 190,839 Annualized ROAE, as reported (4.44 )% 12.66 % 13.98 % Annualized ROAE, as adjusted 2.80 % 12.66 % 13.98 % Efficiency Ratio, adjusted Noninterest expenses, as reported $ 72,967 $ 45,616 $ 39,524 Less: nonrecurring intangible impairment (19,721 ) — — Less: nonrecurring restructuring expenses (430 ) — — Less: nonrecurring other expenses (890 ) — — Noninterest expenses, adjusted for nonrecurring expenses 51,926 45,616 39,524 Efficiency ratio, as reported 110.85 % 56.69 % 52.19 % Efficiency ratio, as adjusted 78.88 % 56.69 % 52.19 % Tangible common stockholders' equity Total stockholders' equity (GAAP) $ 207,991 $ 221,517 $ 198,282 Less: intangible assets — (14,657 ) (9,149 ) Tangible stockholders' equity (non-GAAP) 207,991 206,860 189,133 Less: preferred stock (27,263 ) (27,263 ) (27,263 ) Tangible common stockholders' equity (non-GAAP) 180,728 179,597 161,870 Common shares outstanding 7,603,765 7,527,415 7,442,743 Tangible book value per common share (non-GAAP) $ 23.77 $ 23.86 $ 21.75 Stockholders equity, adjusted Total stockholders equity (GAAP) $ 207,991 $ 221,517 $ 198,282 Less: intangible assets — (14,657 ) (9,149 ) Total tangible stockholders equity (non-GAAP) 207,991 206,860 189,133 Total tangible assets Total assets (GAAP) $ 2,228,098 $ 2,035,432 $ 1,925,751 Less: intangible assets — (14,657 ) (9,149 ) Total tangible assets (non-GAAP) 2,228,098 2,020,775 1,916,602 Average tangible stockholders' equity Total average stockholders' equity (GAAP) $ 224,631 $ 209,921 $ 190,839 Less: average intangible assets (16,989 ) (11,996 ) (5,471 ) Total average tangible stockholders' equity (non-GAAP) 207,642 197,925 185,368 Average tangible assets Total average assets (GAAP) $ 2,136,586 $ 1,955,187 $ 1,758,862 Less: average intangible assets (16,989 ) (11,996 ) (5,471 ) Total average tangible assets (non-GAAP) 2,119,597 1,943,191 1,753,391 60
The discussion of the critical accounting policies and analysis set forth below is intended to supplement and highlight information contained in the accompanying Consolidated Financial Statements and the selected financial data presented elsewhere in this Form 10-K.
Critical Accounting Policies The discussion of the critical accounting policies and analysis set forth below is intended to supplement and highlight information contained in the accompanying Consolidated Financial Statements and the selected financial data presented elsewhere in this Form 10-K.
(2) Interest rate spread represents the difference between the average yield on average interest–earning assets and the average cost of average interest-bearing liabilities. (3) Net interest earning assets represent total average interest–earning assets less total interest–bearing liabilities. (4) Net interest margin represents net interest income divided by total average interest-earning assets.
(2) Interest rate spread represents the difference between the average yield on average interest–earning assets and the average cost of average interest-bearing liabilities. (3) Net interest earning assets represent total average interest–earning assets less total average interest–bearing liabilities. (4) Net interest margin represents net interest income divided by total average interest-earning assets.
For The following table shows the Company's earning assets and the results of the stress test performed for the periods indicated.
The following table shows the Company's earning assets and the results of the stress test performed for the periods indicated.
Critical Accounting Policies The accounting and financial reporting policies of the Company conform to accounting principles generally accepted in the United States of America and to general practices within the banking industry. Accordingly, the financial statements require certain estimates, judgments, and assumptions, which are believed to be reasonable, based upon the information available.
The accounting and financial reporting policies of the Company conform to accounting principles generally accepted in the United States of America and to general practices within the banking industry. Accordingly, the financial statements require certain estimates, judgments, and assumptions, which are believed to be reasonable, based upon the information available.
This information should be read together with the accompanying consolidated financial statements included in this Form 10-K. The historical information indicated as of and for the years ended December 31, 2023,and 2022 has been derived from the Company's audited consolidated financial statements for the years ended December 31, 2023, and 2022.
This information should be read together with the accompanying consolidated financial statements included in this Form 10-K. The historical information indicated as of December 31, 2024 and 2023 and for the years ended December 31, 2024, 2023, and 2022, has been derived from the Company's audited consolidated financial statements for the years ended December 31, 2024, 2023, and 2022.
This discussion and analysis should be read in conjunction with the accompanying consolidated financial statements. 34 Forward-Looking Statements This Annual Report on Form 10-K contains certain forward-looking statements and information relating to the Company within the meaning of the Private Securities Litigation Reform Act of 1995 that are based on the beliefs of management as well as assumptions made by and information currently available to management.
This discussion and analysis should be read in conjunction with the accompanying consolidated financial statements. 35 Forward-Looking Statements This Annual Report on Form 10-K contains certain forward-looking statements and information relating to the Company within the meaning of the Private Securities Litigation Reform Act of 1995 that are based on the beliefs of management as well as assumptions made by and information currently available to management.
While management believes the Company’s valuation methodologies are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date. 36 See Note 20, Fair Value Presentation, in Notes to Consolidated Financial Statements for a detailed discussion of determining fair value, including pricing validation processes.
While management believes the Company’s valuation methodologies are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date. 37 See Note 20, Fair Value Presentation, in Notes to Consolidated Financial Statements for a detailed discussion of determining fair value, including pricing validation processes.
Typically, one type of concession, such as a term extension, is granted initially. If the borrower continues to experience financial difficulty, another concession, such as principal forgiveness, may be granted. The Company further describes loans that were modified during the year ended December 31, 2023 in Note 5 of Notes to Consolidated Financial Statements.
Typically, one type of concession, such as a term extension, is granted initially. If the borrower continues to experience financial difficulty, another concession, such as principal forgiveness, may be granted. The Company further describes loans that were modified during the year ended December 31, 2024 in Note 5 of Notes to Consolidated Financial Statements.
For commercial loans, residential real estate loans, owner-occupied commercial real estate loans and consumer installment loans, we multiply the total outstanding amount for each loan category by our highest quarter historical loss for that category as a surrogate in order to calculate a stressed loss. 46 For our non-owner occupied commercial real estate loans, we use three separate methodologies in our stress test.
For commercial loans, residential real estate loans, owner-occupied commercial real estate loans and consumer installment loans, we multiply the total outstanding amount for each loan category by our highest quarter historical loss for that category as a surrogate in order to calculate a stressed loss. 47 For our non-owner occupied commercial real estate loans, we use three separate methodologies in our stress test.
Fair Value of Financial Instruments : A portion of the Company’s assets and liabilities is carried at fair value, with changes in fair value recorded either in earnings or accumulated other comprehensive income (loss). These include investment securities available for sale and interest rate loan swaps on qualifying commercial loans.
Fair Value of Financial Instruments : A portion of the Company’s assets and liabilities are carried at fair value, with changes in fair value recorded either in earnings or accumulated other comprehensive income (loss). These include investment securities available-for-sale and interest rate loan swaps on qualifying commercial loans.
The Board determined that loans made inside a 15-mile radius of Washington, D.C. carry less geographic risk than those made outside of that radius. 49 The graphic below is a geopoint map that depicts all construction loans, non-owner occupied CRE loans, and owner-occupied CRE loans, with a majority of all loan types concentrated within a 15-mile radius of Washington, D.C.
The Board determined that loans made inside a 15-mile radius of Washington, D.C. carry less geographic risk than those made outside of that radius. 51 The graphic below is a geopoint map that depicts all construction loans, non-owner occupied CRE loans, and owner-occupied CRE loans, with a majority of all loan types concentrated within a 15-mile radius of Washington, D.C.
See Note 1, Organization, Basis of Presentation, and Impact of Recently Issued Accounting Pronouncements and Note 5, Allowance for Credit Losses, in Notes to Consolidated Financial Statements for further information on the Company’s adoption of ASC 326. 51 The following table sets forth activity in our allowance for credit losses on loans for the periods indicated.
See Note 1, Organization, Basis of Presentation, and Impact of Recently Issued Accounting Pronouncements and Note 5, Allowance for Credit Losses, in Notes to Consolidated Financial Statements for further information on the Company’s adoption of ASC 326. 53 The following table sets forth activity in our allowance for credit losses on loans for the periods indicated.
Non-GAAP; refer to Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section “Non-GAAP Measures” of this Form 10-K. 40 Rate/ Volume Analysis The following table presents the effects of changing rates and volumes on net interest income for the periods indicated.
Non-GAAP; refer to Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section “Non-GAAP Measures” of this Form 10-K. 41 Rate/ Volume Analysis The following table presents the effects of changing rates and volumes on net interest income for the periods indicated.
The capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings and other factors. 56 The federal regulatory capital rules apply to all depository institutions as well as to bank holding companies with consolidated assets of $3 billion or more.
The capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings and other factors. 58 The federal regulatory capital rules apply to all depository institutions as well as to bank holding companies with consolidated assets of $3 billion or more.
The entire FTE adjustment is attributable to the interest tax effect on tax-exempt securities, using the statutory federal income tax rate of 21%.
The entire FTE adjustment is attributable to the income tax effect on tax-exempt securities, using the statutory federal income tax rate of 21%.
The Bank’s interest rate swaps with loan customers and dealer counterparties are described more fully in Note 19 in the December 31, 2023, Consolidated Financial Statements. Selected Financial Data The following table sets forth summarized historical consolidated financial information for each of the periods indicated.
The Bank’s interest rate swaps with loan customers and dealer counterparties are described more fully in Note 19 in the December 31, 2024, Consolidated Financial Statements. Selected Financial Data The following table sets forth summarized historical consolidated financial information for each of the periods indicated.
Management believes, as of December 31, 2023, the Bank meets all capital adequacy requirements to which it is subject. As of December 31, 2023 and 2022, the most recent notification from the Federal Reserve Bank of Richmond categorized the Bank as well capitalized under the regulatory framework for prompt corrective action.
Management believes, as of December 31, 2024, the Bank meets all capital adequacy requirements to which it is subject. As of December 31, 2024 and 2023, the most recent notification from the Federal Reserve Bank of Richmond categorized the Bank as well capitalized under the regulatory framework for prompt corrective action.
The composition and maturities of the investment securities portfolio at December 31, 2023, are summarized in the following table. Maturities are based on the final contractual payment date, and do not reflect the effect of scheduled principal repayments, prepayments, or early redemptions that may occur.
The composition and maturities of the investment securities portfolio at December 31, 2024, are summarized in the following table. Maturities are based on the final contractual payment date, and do not reflect the effect of scheduled principal repayments, prepayments, or early redemptions that may occur.
Adjustable-rate mortgage-backed securities are included in the period in which interest rates are next scheduled to adjust. The Company does invest in both taxable and non-taxable municipal securities. No material changes occurred in the non-taxable security portfolio for the year ended December 31, 2023.
Adjustable-rate mortgage-backed securities are included in the period in which interest rates are next scheduled to adjust. The Company does invest in both taxable and non-taxable municipal securities. No material changes occurred in the non-taxable security portfolio for the year ended December 31, 2024.
Other short-term investments such as federal funds sold and maturing interest-bearing deposits with other banks, are additional sources of liquidity. 55 The liability portion of the balance sheet provides liquidity through various customers’ interest-bearing and noninterest-bearing deposit accounts and through FHLB and other borrowings.
Other short-term investments such as federal funds sold and maturing interest-bearing deposits with other banks, are additional sources of liquidity. 57 The liability portion of the balance sheet provides liquidity through various customers’ interest-bearing and noninterest-bearing deposit accounts and through FHLB and other borrowings.
Item 6. [Reserved] Item 7. Management ’ s Discussion and Analysis of Financial Condition and Results of Operations The purpose of this discussion is to focus on significant changes in the financial condition and results of operations of the Company during the years ended December 31, 2023 and 2022.
Item 6. [Reserved] Item 7. Management ’ s Discussion and Analysis of Financial Condition and Results of Operations The purpose of this discussion is to focus on significant changes in the financial condition and results of operations of the Company during the years ended December 31, 2024 and 2023.
Our lending activities are principally directed to our market area consisting of the Washington, D.C. and Northern Virginia metropolitan areas. Loan Portfolio Maturities and Yields . The following table summarizes the scheduled repayments of our loan portfolio at December 31, 2023.
Our lending activities are principally directed to our market area consisting of the Washington, D.C. and Northern Virginia metropolitan areas. Loan Portfolio Maturities and Yields . The following table summarizes the scheduled repayments of our loan portfolio at December 31, 2024.
There were no sales of available-for-sale debt securities in 2023 or 2022. Net cash provided by financing activities was $83.0 million and $232.6 million for the twelve months ended December 31, 2023 and 2022, respectively, which consisted primarily of increases in interest bearing deposits and federal funds purchased for the twelve months ended December 31, 2023.
There were no sales of available-for-sale debt securities in 2024, 2023, or 2022. Net cash provided by financing activities was $200.7 million, $83.0 million, and $232.6 million, for the twelve months ended December 31, 2024, 2023, and 2022, respectively, which consisted primarily of increases in interest bearing deposits and federal funds purchased for the twelve months ended December 31, 2024.
The Company did not sell any securities within the investment portfolio for the year ended December 31, 2023 or 2022. For available-for-sale securities, management evaluates all investments in an unrealized loss position on a quarterly basis, and more frequently when economic or market conditions warrant such evaluation.
The Company did not sell any securities within the investment portfolio during the year ended December 31, 2024 or 2023. For available-for-sale securities, management evaluates all investments in an unrealized loss position on a quarterly basis, and more frequently when economic or market conditions warrant such evaluation.
Financial assets measured at amortized cost will be presented at the net amount expected to be collected by using an allowance for credit losses. See Note 1. Organization, Basis of Presentation, Summary of Significant Accounting Policies, and Impact of Recently Issued Accounting Pronouncements for a more detailed description of methodology and impact of adoption.
Financial assets measured at amortized cost will be presented at the net amount expected to be collected by using an allowance for credit losses. See Note 1. Organization, Basis of Presentation, and Impact of Recently Issued Accounting Pronouncements for a more detailed description of methodology and impact of adoption.
Given the interest rate environment and strategic initiatives, the Company replaced maturing lower yielding wholesale CDs with higher market rate CDs. The replacement CDs include call options at our discretion if economic conditions changed. The Company also utilized additional wholesale demand deposits to provide liquidity and more effectively balance our interest rate sensitivity.
Given the interest rate environment and strategic initiatives, the Company replaced maturing lower yielding wholesale CDs with higher market rate CDs. Many replacement CDs include call options at our discretion if economic conditions change. The Company also utilized additional wholesale demand deposits to provide liquidity and more effectively balance our interest rate sensitivity.
Net cash used in investing activities, which consists primarily of disbursements for loan originations and the purchase of securities, offset by principal collections on loans and proceeds from maturing securities, was $130.7 million and $228.7 million for the twelve months ended December 31, 2023, and December 31, 2022, respectively.
Net cash used in investing activities, which consists primarily of disbursements for loan originations and the purchase of securities, offset by principal collections on loans and proceeds from maturing securities, was $122.3 million, $130.7 million, and $228.7 million for the twelve months ended December 31, 2024, December 31, 2023, and December 31, 2022, respectively.
The following table sets forth the major components of net interest income and the related yields and rates for the year ended December 31, 2023, compared to the year ended December 31, 2022.
The following table sets forth the major components of net interest income and the related yields and rates for the year ended December 31, 2024, compared to the years ended December 31, 2023 and December 31, 2022.
All amounts set forth are included in the Results of Operations for the Year Ended December 31, 2023 and 2022 for MainStreet Bancshares, Inc. unless indicated otherwise.
All amounts set forth are included in the Results of Operations for the Year Ended December 31, 2024 and 2023 for MainStreet Bancshares, Inc. unless indicated otherwise.
The Agencies specifically excluded owner-occupied commercial real estate from their concentration guidance, as the primary source of repayment is the cash flow from the ongoing operations and activities conducted by the party, or affiliate of the party, who owns the property. 48 The following two tables depict a well-diversified portfolio of owner-occupied commercial real estate as of December 31, 2023 and December 31, 2022.
The Agencies specifically excluded owner-occupied commercial real estate from their concentration guidance, as the primary source of repayment is the cash flow from the ongoing operations and activities conducted by the party, or affiliate of the party, who owns the property. 50 The following two tables depict a well-diversified portfolio of owner-occupied commercial real estate as of December 31, 2024 and December 31, 2023.
Our cash flows are comprised of three primary classifications: cash flows from operating activities, investing activities, and financing activities. Net cash provided by operating activities was $31.6 million and $33.5 million for the twelve months ended December 31, 2023, and December 31, 2022, respectively.
Our cash flows are comprised of three primary classifications: cash flows from operating activities, investing activities, and financing activities. Net cash provided by operating activities was $14.7 million, $31.6 million, and $33.5 million for the twelve months ended December 31, 2024, December 31, 2023, and December 31, 2022, respectively.
Certificates of deposit due within one year of December 31, 2023, totaled $463.7 million of total deposits. If these deposits do not remain with us, we will be required to seek other sources of funds in the normal course of business, including other deposits and Federal Home Loan Bank advances.
Certificates of deposit due within one year of December 31, 2024, totaled $615.7 million of total deposits. If these deposits do not remain with us, we will be required to seek other sources of funds in the normal course of business, including other deposits and Federal Home Loan Bank advances.
We believe that we have enough sources of liquidity to satisfy our short and long-term liquidity needs as of December 31, 2023.
We believe that we have enough sources of liquidity to satisfy our short and long-term liquidity needs as of December 31, 2024.
The capital conservation buffer was phased in from 0.0% for 2015 to 2.50% by 2019. The capital conservation buffer for 2023 and 2022 is 2.50%.
The capital conservation buffer was phased in from 0.0% for 2015 to 2.50% by 2019. The capital conservation buffer for 2024 and 2023 is 2.50%.
The external review did not identify any material underwriting or ongoing portfolio management concerns. 47 The following two tables break down the December 31, 2023 and December 31, 2022 non-owner occupied CRE portfolio balances by showing the current balance in each sub-category and location.
The external review did not identify any material underwriting or ongoing portfolio management concerns. 48 The following two tables break down the December 31, 2024 and December 31, 2023 non-owner occupied CRE portfolio balances by showing the current balance in each sub-category and location.
The Bank’s actual regulatory capital amounts and ratios as of December 31, 2023 and 2022 are presented in the table below.
The Bank’s actual regulatory capital amounts and ratios as of December 31, 2024 and 2023 are presented in the table below.
(2) Efficiency ratio is calculated as non-interest expense as a percentage of net interest income and non-interest income. 38 Analysis of Results of Operations for the Years Ended December 31, 2023 and 2022 Net Income The following table sets forth the principal components of net income for the periods indicated.
(2) Efficiency ratio is calculated as non-interest expense as a percentage of net interest income and non-interest income. 39 Analysis of Results of Operations for the Years Ended December 31, 2024, 2023 , and 2022 Net Income The following table sets forth the principal components of net income (loss) for the periods indicated.
Important factors that could cause actual results to differ materially from those in the forward–looking statements included herein include, but are not limited to: • general economic conditions, either nationally or in our market area, that are worse than expected; • competition among depository and other financial institutions, particularly intensified competition for deposits; • inflation and an interest rate environment that may reduce our margins or reduce the fair value of financial instruments; • adverse changes in the securities markets; • changes in laws or government regulations or policies affecting financial institutions, including changes in regulatory structure and in regulatory fees and capital requirements; • our ability to enter new markets successfully and capitalize on growth opportunities; • our ability to successfully integrate acquired entities; • changes in consumer spending, borrowing and savings habits; • changes in accounting policies and practices; • changes in our organization, compensation and benefit plans; • our ability to attract and retain key employees; • changes in our financial condition or results of operations that reduce capital; • changes in the financial condition or future prospects of issuers of securities that we own; • the concentration of our business in the Northern Virginia as well as the greater Washington, DC metropolitan area and the effect of changes in the economic, political and environmental conditions on this market; • adequacy of our allowance for credit losses; • deterioration of our asset quality; • cyber threats, attacks or events • reliance on third parties for key services • future performance of our loan portfolio with respect to recently originated loans; • additional risks related to new lines of business, products, product enhancements or services; • results of examination of us by our regulators, including the possibility that our regulators may require us to increase our allowance for credit losses or to write-down assets or take other supervisory action; • the effectiveness of our internal controls over financial reporting and our ability to remediate any future material weakness in our internal controls over financial reporting; • liquidity, interest rate and operational risks associated with our business; • implications of our status as a smaller reporting company and as an emerging growth company; and • a work stoppage, forced quarantine, or other interruption or the unavailability of key employees. 35 Should one or more of these risks or uncertainties materialize or should underlying assumptions prove incorrect, actual results may vary materially from those described herein.
Important factors that could cause actual results to differ materially from those in the forward–looking statements included herein include, but are not limited to: • general economic conditions, either nationally or in our market area, that are worse than expected; • competition among depository and other financial institutions, particularly intensified competition for deposits; • inflation and an interest rate environment that may reduce our margins or reduce the fair value of financial instruments; • adverse changes in the securities markets; • changes in laws or government regulations or policies affecting financial institutions, including changes in regulatory structure and in regulatory fees and capital requirements; • our ability to enter new markets successfully and capitalize on growth opportunities; • our ability to successfully integrate acquired entities; • changes in consumer spending, borrowing and savings habits; • changes in accounting policies and practices; • changes in our organization, compensation and benefit plans; • our ability to attract and retain key employees; • changes in our financial condition or results of operations that reduce capital; • changes in the financial condition or future prospects of issuers of securities that we own; • the concentration of our business in the Northern Virginia as well as the greater Washington, DC metropolitan area and the effect of changes in the economic, political and environmental conditions on this market; • adequacy of our allowance for credit losses; • deterioration of our asset quality; • cyber threats, attacks or events; • reliance on third parties for key services; • future performance of our loan portfolio with respect to recently originated loans; • additional risks related to new lines of business, products, product enhancements or services; • results of examination of us by our regulators, including the possibility that our regulators may require us to increase our allowance for credit losses or to write-down assets or take other supervisory action; • the effectiveness of our internal controls over financial reporting and our ability to remediate any future material weakness in our internal controls over financial reporting; • liquidity, interest rate and operational risks associated with our business; • a work stoppage, forced quarantine, or other interruption or the unavailability of key employees; • volatility in the financial institution industry, including failures and/or rumors of possible failures of other financial institutions and actions by regulatory authorities in response thereto; • litigation or governmental actions; • impairment of a material asset; and • other factors beyond our knowledge or control. 36 Should one or more of these risks or uncertainties materialize or should underlying assumptions prove incorrect, actual results may vary materially from those described herein.
FHLB advances, other secured borrowings, federal funds purchased, and other short-term borrowed funds, as well as longer-term debt issued through the capital markets, all provide supplemental liquidity sources. The Company’s funding activities are monitored and governed through the Company’s asset/liability management process Deposits Total deposits increased by $173.2 million from December 31, 2022 to December 31, 2023.
FHLB advances, other secured borrowings, federal funds purchased, and other short-term borrowed funds, as well as longer-term debt issued through the capital markets, all provide supplemental liquidity sources. The Company’s funding activities are monitored and governed through the Company’s asset/liability management process Deposits Total deposits increased by $221.7 million from December 31, 2023 to December 31, 2024.
Even if the borrower is not presently in default, management will consider the likelihood that cash flow shortages, adverse economic conditions and negative trends may result in a payment default in the near future. 50 As a percentage of total assets, nonperforming assets were 0.05% at December 31, 2023, compared with 0.00% at December 31, 2022.
Even if the borrower is not presently in default, management will consider the likelihood that cash flow shortages, adverse economic conditions and negative trends may result in a payment default in the near future. 52 As a percentage of total assets, nonperforming assets were 0.97% at December 31, 2024, compared with 0.05% at December 31, 2023.
The Company also recognized $251,000 in planned operating losses in other fee income related to two New Market Tax Credit investments during the year ended December 31, 2023. Bank owned life insurance income increased $61,000 for the year ended December 31, 2023, compared to the year ended December 31, 2022, due to the rising rate environment throughout 2023.
The Company also recognized $251,000 in planned operating losses in other fee income related to two New Market Tax Credit investments during the year ended December 31, 2023. Bank owned life insurance income increased $120,000 for the year ended December 31, 2024, compared to the year ended December 31, 2023, due to the high rate environment throughout 2024.
During the year ended December 31, 2023 , total wholesale deposit funding accounted for approximately 33% of our in terest expense. The following table presents the Company's total wholesale deposit composition, concentrations, current rate and remaining duration, if applicable as of December 31, 2023.
During the year ended December 31, 2024 , total wholesale deposit funding accounted for approximately 28% of our interest expense. The following table presents the Company's total wholesale deposit composition, concentrations, current rate and remaining duration, if applicable as of December 31, 2024 and December 31, 2023.
During the year ended December 31, 2023, the independent external loan review firm reviewed approximately 55% of the entire portfolio by outstanding dollar balance.
During the year ended December 31, 2024, the independent external loan review firm reviewed approximately 70% of the entire portfolio by outstanding dollar balance.
Salaries and employee benefits expense increased by $4.5 million to $28.3 million for the year ended December 31, 2023 from $23.8 million for the year ended December 31, 2022 primarily as a result of increasing our personnel team members by 18 employees.
Salaries and employee benefits expense increased by $2.2 million to $30.5 million for the year ended December 31, 2024 from $28.3 million for the year ended December 31, 2023 primarily as a result of increasing our personnel team members by 18 employees.
Asset Quality The Company’s asset quality remained strong during the year ended December 31, 2023. Nonperforming assets, which includes nonaccrual loans, accruing loans 90 days past due, and other real estate owned totaled $1,004,000 at December 31, 2023, and $21,000 at December 31, 2022.
Asset Quality The Company’s asset quality remained strong during the year ended December 31, 2024. Nonperforming assets, which includes nonaccrual loans, accruing loans 90 days past due, and other real estate owned totaled $21.7 million at December 31, 2024, and $1.0 million at December 31, 2023.
December 31, 2023 Bank Capital Adequacy Ratios Pre- and Post-Stress (Tax-Effective) Well Capitalized with Buffer Bank Minimum Target As of December 31, 2023 Post Stress, Low Estimate Post Stress, High Estimate Community Bank Leverage Ratio 8.00 % 8.50 % 14.66 % 13.74 % 13.59 % Leverage Ratio 5.00 % 8.00 % 14.66 % 13.74 % 13.59 % Total Risk-Based Capital 10.00 % 11.50 % 17.18 % 16.17 % 16.00 % Tier 1 Risk-Based Capital 8.00 % 9.50 % 16.22 % 15.20 % 15.04 % Common Equity Tier 1 Risk-Based Capital 6.50 % 8.00 % 16.22 % 14.79 % 14.62 % December 31, 2022 Bank Capital Adequacy Ratios Pre- and Post-Stress (Tax-Effective) Well Capitalized with Buffer Bank Minimum Target As of December 31, 2022 Post Stress, Low Estimate Post Stress, High Estimate Community Bank Leverage Ratio 8.00 % 8.50 % 15.05 % 13.63 % 13.44 % Leverage Ratio 7.50 % 8.00 % 15.05 % 13.63 % 13.44 % Total Risk-Based Capital 10.50 % 11.50 % 16.27 % 14.82 % 14.63 % Tier 1 Risk-Based Capital 8.50 % 9.50 % 15.47 % 14.01 % 13.82 % Common Equity Tier 1 Risk-Based Capital 7.00 % 8.00 % 15.47 % 14.01 % 13.82 % The Company employs an external loan review firm to conduct ongoing reviews of the loan portfolio.
December 31, 2024 Bank Capital Adequacy Ratios Pre- and Post-Stress (Tax-Effective) Well Capitalized with Buffer Bank Minimum Target As of December 31, 2024 Post Stress, Low Estimate Post Stress, High Estimate Leverage Ratio 5.00 % 7.50 % 12.08 % 10.62 % 10.44 % Total Risk-Based Capital 10.00 % 11.50 % 15.69 % 13.92 % 13.71 % Tier 1 Risk-Based Capital 8.00 % 9.50 % 14.64 % 12.87 % 12.66 % Common Equity Tier 1 Risk-Based Capital 6.50 % 8.00 % 14.64 % 12.47 % 12.26 % December 31, 2023 Bank Capital Adequacy Ratios Pre- and Post-Stress (Tax-Effective) Well Capitalized with Buffer Bank Minimum Target As of December 31, 2023 Post Stress, Low Estimate Post Stress, High Estimate Leverage Ratio 5.00 % 7.50 % 14.66 % 13.74 % 13.59 % Total Risk-Based Capital 10.00 % 11.50 % 17.18 % 16.17 % 16.00 % Tier 1 Risk-Based Capital 8.00 % 9.50 % 16.22 % 15.20 % 15.04 % Common Equity Tier 1 Risk-Based Capital 6.50 % 8.00 % 16.22 % 14.79 % 14.62 % The Company employs an external loan review firm to conduct ongoing reviews of the loan portfolio.
At December 31, 2023 and 2022, we were permitted to borrow up to an aggregate total of $504.8 million and $465.0 million, respectively, from the Federal Home Loan Bank of Richmond. There were Federal Home Loan Bank borrowings outstanding of $0 and $100.0 million at December 31, 2023, and December 31, 2022, respectively.
At December 31, 2024 and 2023, we were permitted to borrow up to an aggregate total of $544.8 million and $504.8 million, re spectively, from the Federal Home Loan Bank of Richmond. There were Federal Home Loan Bank borrowings outstanding of $0 at December 31, 2024, and December 31, 2023, respectively.
The levels of these assets are dependent on our operating, financing, lending and investing activities during any given period. At December 31, 2023, cash and cash equivalents totaled $114.5 million. Securities classified as available-for-sale, which provide additional sources of liquidity, totaled $59.9 million at December 31, 2023.
The levels of these assets are dependent on our operating, financing, lending and investing activities during any given period. At December 31, 2024, cash and cash equivalents totaled $207.7 million. Securities classified as available-for-sale, which provide additional sources of liquidity, totaled $55.7 million at December 31, 2024.
The recovery of credit losses for off-balance sheet exposure was driven by fluctuations in our revolving credit line utilization rates as of December 31, 2023. Loan originations decreased $152.3 million, which totaled $599.9 million for the year ended December 31, 2022 compared to loan originations of $447.6 million for the year ended December 31, 2023.
The recovery of credit losses for off-balance sheet exposure was driven by fluctuations in our revolving credit line utilization rates as of December 31, 2024. Loan originations decreased $73.6 million, which totaled $447.6 million for the year ended December 31, 2023 compared to loan originations of $374.0 million for the year ended December 31, 2024.
As of December 31, 2023, all of the Company's reciprocal deposits were core deposits from customers who placed their deposits in the reciprocal network for additional FDIC insurance coverage. 53 At December 31, 2023, the Company had $387.8 million in total deposits in excess of the FDIC insurance limit of $250,000.
As of December 31, 2024, all of the Company's reciprocal deposits were core deposits from customers who placed their deposits in the reciprocal network for additional FDIC insurance coverage. 55 At December 31, 2024, the Company had $779.6 million in total deposits in excess of the FDIC insurance limit of $250,000.
Certificates of deposit in amounts in excess of the FDIC insurance limit of $250,000 totaled approximately $99.9 million. The following table sets forth the maturity of these certificates as of December 31, 2023.
Certificates of deposit in amounts in excess of the FDIC insurance limit of $250,000 totaled approximately $457.4 million. The following table sets forth the maturity of these certificates as of December 31, 2024.
There were repayments of $100.0 million to the Federal Home Loan Bank for year ended 2023. We are committed to maintaining a strong liquidity position. We monitor our liquidity position on a daily basis. We anticipate that we will have sufficient funds to meet our current funding commitments.
There were repayments of $15.0 million in federal funds purchased for year ended 2024 and repayments of $100.0 million in FHLB advances for the year ended 2023. We are committed to maintaining a strong liquidity position. We monitor our liquidity position on a daily basis. We anticipate that we will have sufficient funds to meet our current funding commitments.
Wholesale deposits provide a diversified and stable source of funding during times of market volatility. As of December 31, 2023, the Company had $433.0 million of total wholesale deposit funding sources, an increase of $77.5 million compared to December 31, 2022, which totaled $355.6 million.
Wholesale deposits provide a diversified and stable source of funding during times of market volatility. As of December 31, 2024, the Company had $468.1 million of total wholesale deposit funding sources, an increase of $35.1 million compared to December 31, 2023, which totaled $433.0 million.
This increase was a result of higher rates paid on all outstanding deposits in conjunction with the increasing rate environment throughout the year. 39 The rate paid on FHLB borrowings and federal funds purchased for the year ended December 31, 2023 was 4.90% and 5.36%, respectively, compared to the prior year of 1.45% for FHLB borrowings and no interest paid on federal funds purchased.
This increase was a result of higher rates paid on all outstanding deposits in conjunction with the higher rate environment throughout the year. 40 The rate paid on FHLB borrowings and federal funds purchased for the year ended December 31, 2024 was 5.61% and 5.78%, respectively, compared to the prior year of 4.90% for FHLB borrowings and 5.36% for federal funds purchased.
Establishing a trading portfolio would require specific authorization by the Board of Directors. The total investment securities portfolio, including both investment securities available for sale and investment securities held to maturity, was $77.2 million at December 31, 2023, a decrease of $3.1 million compared with December 31, 2022.
Establishing a trading portfolio would require specific authorization by the Board of Directors. The total investment securities portfolio, including both investment securities available-for-sale and investment securities held-to-maturity, was $71.8 million at December 31, 2024, a decrease of $5.4 million compared with December 31, 2023.
The largest component of non-interest expense is salaries and employee benefits. Non-interest expense also includes operational expenses, such as occupancy and equipment expenses, professional fees, advertising expenses and other general and administrative expenses, including FDIC assessments, communications, travel, meals, training, supplies and postage.
Non-interest expense also includes operational expenses, such as occupancy and equipment expenses, professional fees, advertising expenses and other general and administrative expenses, including FDIC assessments, communications, travel, meals, training, supplies and postage.
While our basic market area is the Washington, D.C. metropolitan area, the Bank has made loans outside that market area where the applicant is an existing customer, and the nature and quality of such loans was consistent with the Company's lending policies.
While our basic market area is the Washington, D.C. metropolitan area, the Bank has made loans outside that market area where the applicant is an existing customer, and the nature and quality of such loans was consistent with the Company's lending policies. The Company has a limited amount of credit exposure to government contractors in the Washington, D.C. metropolitan area.
At December 31, 2023 2022 (Dollars in thousands) Allowance for Credit Losses - Loans Percent of Allowance in Each Category to Total Allocated Allowance Percent of Loans in Each Category to Total Loans Allowance for Loan Losses Percent of Allowance in Each Category to Total Allocated Allowance Percent of Loans in Each Category to Total Loans Residential Real Estate: Single family $ 1,510 9.1 % 11.8 % $ 1,240 8.8 % 11.2 % Multifamily 1,084 6.6 % 15.7 % 906 6.4 % 13.5 % Commercial Real Estate: Owner occupied 3,393 20.6 % 16.3 % 2,102 14.9 % 14.3 % Non-owner occupied 5,495 33.3 % 26.7 % 5,057 35.8 % 29.5 % Construction and Land Development 3,575 21.7 % 24.9 % 3,347 23.7 % 24.6 % Commercial – Non Real Estate: Commercial and industrial 1,435 8.7 % 4.4 % 1,418 10.0 % 6.1 % Consumer – Non Real Estate: Secured 14 0.1 % 0.2 % 44 0.4 % 0.8 % Total $ 16,506 100.0 % 100.0 % $ 14,114 100.0 % 100.0 % Funding Activities Deposits are the primary source of funds for lending and investing activities and their cost is the largest category of interest expense.
At December 31, 2024 2023 (Dollars in thousands) Allowance for Credit Losses - Loans Percent of Allowance in Each Category to Total Allocated Allowance Percent of Loans in Each Category to Total Loans Allowance for Credit Losses - Loans Percent of Allowance in Each Category to Total Allocated Allowance Percent of Loans in Each Category to Total Loans Residential Real Estate: Single family $ 1,433 7.4 % 11.1 % $ 1,510 9.1 % 11.8 % Multifamily 1,045 5.4 % 12.8 % 1,084 6.6 % 15.7 % Commercial Real Estate: Owner occupied 4,154 21.3 % 19.5 % 3,393 20.5 % 16.3 % Non-owner occupied 7,167 36.8 % 30.5 % 5,495 33.3 % 26.7 % Construction and Land Development 4,648 23.9 % 21.4 % 3,575 21.7 % 24.9 % Commercial – Non Real Estate: Commercial and industrial 993 5.1 % 4.5 % 1,435 8.7 % 4.4 % Consumer – Non Real Estate: Secured 10 0.1 % 0.1 % 14 0.1 % 0.2 % Total $ 19,450 100.0 % 100.0 % $ 16,506 100.0 % 100.0 % Funding Activities Deposits are the primary source of funds for lending and investing activities and their cost is the largest category of interest expense.
Wholesale deposits, which are included in the table below, totaled $433.0 million and $355.6 million at December 31, 2023, and December 31, 2022, respectively.
Wholesale deposits, which are included in the table below, totaled $468.1 million and $433.0 million at December 31, 2024, and December 31, 2023, respectively.
At December 31, 2023 2022 (Dollars in thousands) Charge-offs Recoveries Net charge-offs Net charge-offs to average loans Charge-offs Recoveries Net charge-offs Net charge-offs to average loans Real Estate: Residential $ — $ 7 $ 7 0.0 % $ — $ — $ — 0.0 % Commercial (462 ) — (462 ) (0.5 )% — — — 0.0 % Consumer (6 ) 15 9 0.1 % (19 ) — (19 ) (0.1 )% Total $ (468 ) $ 22 $ (446 ) (0.0 )% $ (19 ) $ — $ (19 ) (0.0 )% At December 31, 2023, our allowance for credit losses on loans represented 0.96% of total loans and we had only $1.0 million in non-performing loans.
At December 31, 2024 2023 2022 (Dollars in thousands) Charge-offs Recoveries Net charge-offs Net charge-offs to average loans Charge-offs Recoveries Net charge-offs Net charge-offs to average loans Charge-offs Recoveries Net charge-offs Net charge-offs to average loans Real Estate: Residential $ (132 ) $ — $ (132 ) 0.0 % $ — $ 7 $ 7 0.0 % $ — $ — $ — 0.0 % Commercial (740 ) — (740 ) (0.1 )% — — — 0.0 % — — — 0.0 % Construction (3,684 ) — (3,684 ) (0.9 )% — — — 0.0 % — — — 0.0 % Commercial and industrial (4 ) 19 15 0.0 % (462 ) — (462 ) (0.5 )% — — — 0.0 % Consumer (9 ) 9 — 0.0 % (6 ) 15 9 0.1 % (19 ) — (19 ) (0.1 )% Total $ (4,569 ) $ 28 $ (4,541 ) (0.3 )% $ (468 ) $ 22 $ (446 ) (0.0 )% $ (19 ) $ — $ (19 ) (0.0 )% At December 31, 2024, our allowance for credit losses on loans represented 1.06% of total loans and we had $21.7 million in non-performing loans.
For the year ended December 31, 2023, the yield on the taxable investment securities portfolio was 2.67% compared to 2.20% for the year ended December 31, 2022. For the year ended December 31, 2023, the yield on the tax-exempt investment securities portfolio was 3.57% compared to 3.48% for the year ended December 31, 2022.
For the year ended December 31, 2024, the yield on the taxable investment securities portfolio was 3.08% compared to 3.20% for the year ended December 31, 2023. For the year ended December 31, 2024, the yield on the tax-exempt investment securities portfolio was 3.80% compared to 3.57% for the year ended December 31, 2023.
As of December 31, 2023, the Company additionally reported $176.3 million in reciprocal deposits considered wholesale for call report purposes only, bringing regulatory defined wholesale deposits to $574.8 million as of December 31, 2023.
As of December 31, 2024, the Company additionally reported $259.9 million in reciprocal deposits considered wholesale for call report purposes only, bringing regulatory defined wholesale deposits to $702.8 million as of December 31, 2024.
Fluctuations in interest rates as well as changes in the volume and mix of earning assets and interest-bearing liabilities can impact net interest income and net interest margin. Net interest income before provision for or recovery of credit losses totaled $75.9 million for the year ended December 31, 2023, compared to $70.0 million for the year ended December 31, 2022.
Fluctuations in interest rates as well as changes in the volume and mix of earning assets and interest-bearing liabilities can impact net interest income and net interest margin. Net interest income before provision for credit losses totaled $62.6 million for the year ended December 31, 2024, compared to $76.7 million for the year ended December 31, 2023.
There were $446,000 in net loan charge-offs and $19,000 in net loan recoveries during the years ended December 31, 2023 and December 31, 2022, respectively. 52 Allocation of Allowance for Credit Losses on Loans .
There were $4.5 million in net loan charge-offs and $446,000 in net loan charge-offs during the years ended December 31, 2024 and December 31, 2023, respectively. 54 Allocation of Allowance for Credit Losses on Loans .
At December 31, 2023, the investment securities portfolio includes $59.9 million of investment securities available for sale and $17.3 million of investment securities held to maturity compared to $62.6 million of investment securities available for sale and $17.6 million of investment securities held to maturity at December 31, 2022.
At December 31, 2024, the investment securities portfolio includes $55.7 million of investment securities available-for-sale and $16.1 million of investment securities held-to-maturity compared to $59.9 million of investment securities available-for-sale and $17.3 million of investment securities held-to-maturity at December 31, 2023.
As of December 31, 2023, the Company had $1.0 million in loans on nonaccrual status. See Note 1, Organization, Basis of Presentation, and Impact of Recently Issued Accounting Pronouncements and Note 5, Allowance for Credit Losses, in Notes to Consolidated Financial Statements for further information on the Company’s credit grade categories, which are derived from standard regulatory rating definitions.
See Note 1, Organization, Basis of Presentation, and Impact of Recently Issued Accounting Pronouncements and Note 5, Allowance for Credit Losses, in Notes to Consolidated Financial Statements for further information on the Company’s credit grade categories, which are derived from standard regulatory rating definitions. The following table summarizes asset quality information at December 31, 2024, and December 31, 2023.
The decrease in provision for credit losses on loans was primarily driven by loan growth as well as increasing qualitative factors within our model assumptions for increased levels of past dues and potential weaknesses in underlying collateral for certain asset classes.
The increase in provision for credit losses on loans was primarily driven by loan growth and charge offs taken in 2024 as well as increasing qualitative factors within our model assumptions for increased levels of past dues, higher levels of nonperforming loans as of December 31, 2024 compared to December 31, 2023, and potential weaknesses in underlying collateral for certain asset classes.
For the Year Ended December 31, For the Year Ended December 31, 2023 2022 (Dollars in thousands) Balance at beginning of year $ 14,114 $ 11,697 Current expected credit losses, nonrecurring adoption 895 — Charge-offs: Commercial and industrial (462 ) — Consumer (6 ) — Total charge-offs (468 ) — Recoveries: Residential real estate 7 — Consumer 15 19 Total recoveries 22 19 Net (charge-offs) recoveries (446 ) 19 Provision for credit losses - loans 1,943 2,398 Balance at end of period $ 16,506 $ 14,114 Ratios: Net charge offs to average loans outstanding 0.03 % 0.00 % Allowance for credit losses on loans to non-performing loans at end of period 16.44 N/A Allowance for credit losses on loans to gross loans at end of period 0.96 % 0.88 % The following table summarizes our net charge-off activity by loan segment for the periods indicated.
For the Year Ended December 31, For the Year Ended December 31, 2024 2023 (Dollars in thousands) Balance at beginning of year $ 16,506 $ 14,114 Current expected credit losses, nonrecurring adoption — 895 Charge-offs: Residential real estate (132 ) — Commercial real estate (740 ) — Construction (3,684 ) — Commercial and industrial (4 ) (462 ) Consumer (9 ) (6 ) Total charge-offs (4,569 ) (468 ) Recoveries: Residential real estate — 7 Commercial and industrial 19 — Consumer 9 15 Total recoveries 28 22 Net charge-offs (4,541 ) (446 ) Provision for credit losses - loans 7,485 1,943 Balance at end of period $ 19,450 $ 16,506 Ratios: Net charge offs to average loans outstanding 0.25 % 0.03 % Allowance for credit losses on loans to non-performing loans at end of period 89.84 % 16.44X Allowance for credit losses on loans to gross loans at end of period 1.06 % 0.96 % The following table summarizes our net charge-off activity by loan segment for the periods indicated.
During the prior 36 months, the Company has experienced an increase in its commercial real estate portfolio by 55%. The management team has extensive experience in underwriting commercial real estate loans and has implemented and continues to maintain heightened risk management procedures and strong underwriting criteria with respect to its commercial real estate portfolio.
The management team has extensive experience in underwriting commercial real estate loans and has implemented and continues to maintain heightened risk management procedures and strong underwriting criteria with respect to its commercial real estate portfolio.
We caution readers not to place undue reliance on forward-looking statements. The Company disclaims any obligation to revise or update any forward-looking statements contained in this Form 10-K to reflect future events or developments.
We caution readers not to place undue reliance on forward-looking statements. The Company disclaims any obligation to revise or update any forward-looking statements contained in this Form 10-K to reflect future events or developments. Additional information on risk factors that may affect forward-looking statements is included under “Risk Factors” in this Form 10-K.
Additionally, we had credit availability of $114.0 million with correspondent banks for short-term liquidity needs, if necessary. Borrowings were $15.0 million and $0 outstanding at December 31, 2023 and 2022, respectively, under this facility.
Additionally, as of December 31, 2024 and 2023 we had credit availabilit y of $144.0 mill ion and $114.0 million with correspondent banks for short-term liquidity needs, if necessary. Borrowings were $0 million and $15.0 out standing at December 31, 2024 and 2023, respectively, under this facility.
The provision for credit losses on loans decreased to a loan loss provision of $1.9 million for the year ended December 31, 2023, compared to the prior year which ended at loan loss provision of $2.4 million.
The provision for credit losses on loans increased to a credit loss provision of $7.5 million for the year ended December 31, 2024, compared to the prior year which ended at credit loss provision of $1.9 million.
December 31, December 31, 2023 2022 (Dollars in thousands) Non-accrual loans: Residential real estate Single family $ 851 $ — Commercial and industrial 149 — Total non-accrual loans 1,000 — Loans accruing past 90 days: Commercial and industrial — 15 Consumer non real estate - secured 4 6 Total non-performing loans 1,004 21 Total non-performing assets $ 1,004 $ 21 Ratios: Total non-performing loans to gross loans receivable 0.06 % 0.00 % Total non-performing loans to total assets 0.05 % 0.00 % Total non-accrual loans to gross loans receivable 0.05 % 0.00 % Interest income that would have been recorded for the years ended December 31, 2023 and 2022 had non-accruing loans been current according to their original terms was $133,092 and $0, respectively.
December 31, December 31, 2024 2023 (Dollars in thousands) Non-accrual loans: Residential real estate Single family $ 1,162 $ 851 Commercial real estate Non-owner occupied 11,160 — Construction & Land Development 4,235 — Commercial non-real estate Commercial and industrial 5,093 149 Total non-accrual loans 21,650 1,000 Loans greater than 90 days past due and still accruing: Consumer non real estate - secured — 4 Total non-performing loans 21,650 1,004 Total non-performing assets $ 21,650 $ 1,004 Ratios: Total non-performing loans to gross loans receivable 1.18 % 0.06 % Total non-performing loans to total assets 0.97 % 0.05 % Total non-accrual loans to gross loans receivable 1.18 % 0.05 % Interest income that would have been recorded for the years ended December 31, 2024 and 2023 had non-accruing loans been current according to their original terms was $1.9 million and $133,092, respectively.
Historical results set forth below and elsewhere in this Form 10-K are not necessarily indicative of future performance At December 31, 2023 2022 (In thousands) Selected Financial Condition Data: Total assets $ 2,035,432 $ 1,925,751 Total cash and cash equivalents 114,513 130,600 Total investment securities 77,203 80,273 Loans receivable, net 1,705,137 1,579,950 Bank-owned life insurance 38,318 37,249 Premises and equipment, net 13,944 14,709 Computer software, net of amortization 14,657 9,149 Total deposits 1,686,127 1,512,889 FHLB advances — 100,000 Federal funds purchased 15,000 — Subordinated debt 72,642 72,245 Allowance for credit losses on off-balance sheet credit exposure 1,009 — Total stockholders’ equity 221,517 198,282 37 For the year ended December 31, 2023 2022 (In thousands) Selected Operating Data: Interest income $ 124,123 $ 83,845 Interest expense 48,176 13,836 Net interest income 75,947 70,009 Provision for credit losses 1,642 2,398 Net interest income after provision for credit losses 74,305 67,611 Total non-interest income 3,638 4,834 Total non-interest expenses 45,119 39,057 Income before income taxes 32,824 33,388 Income tax expense 6,239 6,714 Net income 26,585 26,674 Less: Preferred stock dividends 2,156 2,156 Net income available to common shareholders $ 24,429 $ 24,518 Basic and diluted earnings per common share $ 3.25 $ 3.26 At or For the Years Ended December 31, 2023 2022 Performance Ratios: Return on average assets 1.38 % 1.53 % Return on average equity 12.66 % 13.98 % Interest rate spread 2.95 % 3.66 % Net interest margin (1) 4.08 % 4.19 % Efficiency ratio (2) 56.69 % 52.19 % Non-interest expense to average assets 2.34 % 2.24 % Average interest-earning assets to average interest-bearing liabilities 143.43 % 164.68 % Per share Data and Shares Outstanding Earnings per common share (basic and diluted) $ 3.25 $ 3.26 Book value per common share $ 25.81 $ 22.98 Dividends per common share $ 0.40 $ 0.25 Tangible book value per common share $ 23.86 $ 21.75 Market value per common share $ 24.81 $ 27.49 Weighted average common shares (basic and diluted) 7,522,913 7,529,382 Common shares outstanding at end of period 7,527,415 7,442,743 Capital Ratios (Bank) Common equity tier 1(CET1) capital to risk-weighted assets 16.22 % 15.47 % Total risk-based capital to risk-weighted assets 17.18 % 16.27 % Tier 1 capital to risk-weighted assets 16.22 % 15.47 % Tier 1 capital to average assets 14.66 % 15.05 % Asset Quality Ratios Allowance for credit losses on loans as a percentage of total loans 0.96 % 0.88 % Allowance for credit losses on loans as a percentage of non-performing loans 16.44 N/A Net charge-offs to average outstanding loans during the period 0.03 % 0.00 % Non-performing loans as a percentage of total loans 0.06 % 0.00 % Non-performing assets as a percentage of total assets 0.05 % 0.00 % Other Data: Common equity / total assets 9.54 % 8.88 % Tangible equity / tangible assets 10.24 % 9.87 % Average tangible equity to average tangible assets 10.31 % 10.66 % Number of offices 6 6 Number of full-time equivalent employees 186 168 (1) Non-GAAP; refer to Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section “Non-GAAP Measures” of this Form 10-K.
At December 31, 2024 2023 (In thousands) Selected Financial Condition Data: Total assets $ 2,228,098 $ 2,035,432 Total cash and cash equivalents 207,708 114,513 Total investment securities 71,825 77,203 Loans receivable, net 1,810,556 1,705,137 Bank-owned life insurance 39,507 38,318 Premises and equipment, net 13,287 13,944 Computer software, net of amortization — 14,657 Total deposits 1,907,794 1,686,127 Federal funds purchased — 15,000 Subordinated debt 73,039 72,642 Allowance for credit losses on off-balance sheet credit exposure 287 1,009 Total stockholders’ equity 207,991 221,517 38 For the year ended December 31, 2024 2023 2022 (In thousands) Selected Operating Data: Interest income $ 134,615 $ 124,421 $ 84,018 Interest expense 72,041 47,679 13,369 Net interest income 62,574 76,742 70,649 Provision for credit losses 6,763 1,642 2,398 Net interest income after provision for credit losses 55,811 75,100 68,251 Total non-interest income 3,252 3,340 4,661 Total non-interest expenses 72,967 45,616 39,524 Income (loss) before income taxes (13,904 ) 32,824 33,388 Income tax expense (benefit) (3,924 ) 6,239 6,714 Net income (loss) (9,980 ) 26,585 26,674 Less: Preferred stock dividends 2,156 2,156 2,156 Net income (loss) available to common shareholders $ (12,136 ) $ 24,429 $ 24,518 Basic and diluted earnings (loss) per common share $ (1.60 ) $ 3.25 $ 3.26 At or For the Years Ended December 31, 2024 2023 2022 Performance Ratios: Return on average assets (0.47 )% 1.38 % 1.53 % Return on average equity (4.44 )% 12.66 % 13.98 % Interest rate spread (1) 2.01 % 3.05 % 3.71 % Net interest margin (1) 3.13 % 4.15 % 4.23 % Efficiency ratio (2) 110.85 % 56.69 % 52.19 % Non-interest expense to average assets 3.42 % 2.34 % 2.24 % Average interest-earning assets to average interest-bearing liabilities 131.19 % 143.43 % 164.68 % Per share Data and Shares Outstanding: Earnings (loss) per common share (basic and diluted) $ (1.60 ) $ 3.25 $ 3.26 Book value per common share $ 23.77 $ 25.81 $ 22.98 Dividends per common share $ 0.40 $ 0.40 $ 0.25 Tangible book value per common share (1) $ 23.77 $ 23.86 $ 21.75 Market value per common share $ 18.10 $ 24.81 $ 27.49 Weighted average common shares (basic and diluted) 7,606,391 7,522,913 7,529,382 Common shares outstanding at end of period 7,603,765 7,527,415 7,442,743 Capital Ratios (Bank): Common equity tier 1(CET1) capital to risk-weighted assets 14.64 % 16.22 % 15.47 % Total risk-based capital to risk-weighted assets 15.69 % 17.18 % 16.27 % Tier 1 capital to risk-weighted assets 14.64 % 16.22 % 15.47 % Tier 1 capital to average assets 12.08 % 14.66 % 15.05 % Asset Quality Ratios: Allowance for credit losses on loans as a percentage of total loans 1.06 % 0.96 % 0.88 % Allowance for credit losses on loans as a percentage of non-performing loans 89.84 % 16.44X N/A Net charge-offs to average outstanding loans during the period 0.25 % 0.03 % 0.00 % Non-performing loans as a percentage of total loans 1.18 % 0.06 % 0.00 % Non-performing assets as a percentage of total assets 0.97 % 0.05 % 0.00 % Other Data: Common equity / total assets 8.11 % 9.54 % 8.88 % Tangible equity / tangible assets (1) 9.33 % 10.24 % 9.87 % Average tangible equity to average tangible assets 9.80 % 10.31 % 10.66 % Number of offices 6 6 6 Number of full-time equivalent employees 204 186 168 (1) Non-GAAP; refer to Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section “Non-GAAP Measures” of this Form 10-K.
The allowance for credit losses on loans is assessed on a monthly basis and provisions are made for credit losses on loans as required in order to maintain the allowance. The allowance for off-balance sheet credit is assessed quarterly and provisions are made to maintain the allowance.
The allowance for credit losses on loans is assessed on a monthly basis and provisions are made for credit losses on loans as required in order to maintain the allowance at the required level determined by our analysis.
The Avenu team will deploy the platform in 2024. Comparison of Statements of Financial Condition at December 31, 2023 and at December 31, 2022 Total Assets Total assets increased $109.7 million, or 5.7%, to $2.0 billion at December 31, 2023 from $1.9 billion at December 31, 2022.
Comparison of Statements of Financial Condition at December 31, 2024 and at December 31, 2023 Total Assets Total assets increased $192.7 million, or 9.5%, to $2.2 billion at December 31, 2024 from $2.0 billion at December 31, 2023.
The total estimated stress test loss is deducted from capital and we recalculate the capital ratios. As shown in the tables below, as of December 31, 2023, and 2022 the post-stress capital ratios well exceed our Board target ratios as well as Agency minimums (with buffer).
As shown in the tables below, as of December 31, 2024, and 2023 the post-stress capital ratios well exceed our Board target ratios as well as Agency minimums (with buffer).
The federal banking Agencies issued guidance in 2006 which addresses institutions’ with increased concentrations of commercial real estate (CRE) loans. The guidance does not establish specific CRE lending limits; rather, it promotes sound risk management practices and appropriate levels of capital that will enable institutions to continue to pursue CRE lending in a safe and sound manner.
The guidance does not establish specific CRE lending limits; rather, it promotes sound risk management practices and appropriate levels of capital that will enable institutions to continue to pursue CRE lending in a safe and sound manner.
The increase in both categories was primarily due to rates on variable securities increasing with the current rate environment and lower yields on investment securities maturing during the period. The rate paid on interest bearing deposits increased to 3.61% during the year ended December 31, 2023, from 1.14% during the year ended December 31, 2022.
The increase in yield on the tax-exempt investment securities was primarily due to rates on variable securities remaining high with the current rate environment and lower yields on investment securities maturing during the period. The rate paid on interest bearing deposits increased to 4.70% during the year ended December 31, 2024, from 3.57% during the year ended December 31, 2023.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

7 edited+0 added−0 removed14 unchanged
Biggest changeEstimated Increase EVE as a Percentage of Fair (Decrease) EVE Value of Assets(3) Basis Point Increase Change in Estimated EVE (Decrease) Interest Rates(1) EVE(2) Amount Percent Ratio(4) Basis Points (Dollars in thousands) +400 $ 294,780 $ (27,244 ) (8.46 )% (1.56 )% (25 ) +300 $ 310,606 $ (11,418 ) (3.55 )% 1.54 % 25 +200 $ 320,330 $ (1,693 ) (0.53 )% 2.75 % 44 +100 $ 324,404 $ 2,381 0.74 % 2.29 % 36 Level $ 322,023 $ — — — — -100 $ 310,856 $ (11,168 ) (3.47 )% (4.72 )% (75 ) -200 $ 298,600 $ (23,424 ) (7.27 )% (9.72 )% (155 ) -300 $ 285,318 $ (36,705 ) (11.40 )% (15.01 )% (239 ) -400 $ 270,550 $ (51,473 ) (15.98 )% (20.67 )% (329 ) (1) Assumes an immediate uniform change in interest rates at all maturities.
Biggest changeEstimated Increase EVE as a Percentage of Fair (Decrease) EVE Value of Assets(3) Basis Point Increase Change in Estimated EVE (Decrease) Interest Rates(1) EVE(2) Amount Percent Ratio(4) Basis Points (Dollars in thousands) +400 $ 258,851 $ (56,812 ) (18.00 )% (11.54 )% (165 ) +300 $ 280,280 $ (35,383 ) (11.21 )% (6.25 )% (89 ) +200 $ 295,186 $ (20,477 ) (6.49 )% (3.09 )% (44 ) +100 $ 309,798 $ (5,865 ) (1.86 )% (0.26 )% (4 ) Level $ 315,663 $ — — — — -100 $ 316,834 $ 1,171 0.37 % (1.18 )% (17 ) -200 $ 315,422 $ (241 ) (0.08 )% (3.10 )% (44 ) -300 $ 311,777 $ (3,886 ) (1.23 )% (5.67 )% (81 ) -400 $ 308,597 $ (7,066 ) (2.24 )% (8.21 )% (117 ) (1) Assumes an immediate uniform change in interest rates at all maturities.
(4) EVE Ratio represents EVE divided by the fair value of assets. 59 Market Interest Rate Shift The financial statements and related data presented herein have been prepared in accordance with generally accepted accounting principles in the United States of America which require the measurement of financial position and operating results in terms of historical dollars without considering changes in relative purchasing power of money over time due to inflation.
(4) EVE Ratio represents EVE divided by the fair value of assets. 61 Market Interest Rate Shift The financial statements and related data presented herein have been prepared in accordance with generally accepted accounting principles in the United States of America which require the measurement of financial position and operating results in terms of historical dollars without considering changes in relative purchasing power of money over time due to inflation.
However, this goal can be difficult to completely achieve in times of rapidly changing interest rates and is one of many factors considered in determining the Company’s interest rate positioning. The Company is asset sensitive as of December 31, 2023. Refer to the Net Interest Income Sensitivity table for additional details on the Company’s interest rate sensitivity.
However, this goal can be difficult to completely achieve in times of rapidly changing interest rates and is one of many factors considered in determining the Company’s interest rate positioning. The Company is asset sensitive as of December 31, 2024. Refer to the Net Interest Income Sensitivity table for additional details on the Company’s interest rate sensitivity.
These back-to-back loan swaps qualify as financial derivatives with fair values reported in “Other assets” and “Other liabilities” in the Consolidated Statement of Financial Condition. We believe that our current interest rate exposure is manageable and does not indicate any significant exposure to interest rate changes. 60
These back-to-back loan swaps qualify as financial derivatives with fair values reported in “Other assets” and “Other liabilities” in the Consolidated Statement of Financial Condition. We believe that our current interest rate exposure is manageable and does not indicate any significant exposure to interest rate changes. 62
The table below sets forth, as of December 31, 2023, the calculation of the estimated changes in our net interest income that would result from changes in market interest rates over one year if we take no action from our current plan.
The table below sets forth, as of December 31, 2024, the calculation of the estimated changes in our net interest income that would result from changes in market interest rates over one year if we take no action from our current plan.
The table below represents an analysis of our interest rate risk as measured by the estimated changes in our economic value of equity, resulting from an instantaneous and sustained parallel shift in the yield curve at December 31, 2023.
The table below represents an analysis of our interest rate risk as measured by the estimated changes in our economic value of equity, resulting from an instantaneous and sustained parallel shift in the yield curve at December 31, 2024.
Basis Point Change in Net Interest Income Year 1 Change Interest Rates Year 1 Forecast From Level (Dollars in thousands) +400 $92,535 13.39 % +300 $90,605 11.03 % +200 $87,899 7.71 % +100 $85,257 4.47 % Level $81,606 — -100 $79,000 -3.19 % -200 $77,003 -5.64 % -300 $77,484 -5.05 % -400 $77,651 -4.85 % Economic Value of Equity ( “ EVE ” ).
Basis Point Change in Net Interest Income Year 1 Change Interest Rates Year 1 Forecast From Level (Dollars in thousands) +400 $ 75,167 7.57 % +300 $ 74,639 6.82 % +200 $ 73,384 5.02 % +100 $ 71,964 2.99 % Level $ 69,874 — -100 $ 67,836 -2.92 % -200 $ 68,956 -1.31 % -300 $ 72,353 3.55 % -400 $ 75,746 8.40 % Economic Value of Equity ( “ EVE ” ).

Other MNSBP 10-K year-over-year comparisons