Executive Summary

EPS of $0.53 and net interest margin of 3.75% marked a clean inflection, with management noting core NIM expansion and lower funding costs; non-GAAP EPS would have been $0.56 excluding $1.5M nonrecurring revenue and $1.8M nonrecurring expenses .
EPS beat consensus by $0.09 (0.53 vs 0.44), driven by NIM expansion, lower cost of funds, and resolution of a workout credit; revenue consensus was unavailable, but S&P reports Q2 revenue of ~$20.4M, indicating strength in core banking income .
Asset quality improved materially: non-accrual loans fell to 0.40% of gross loans and non-performing loans dropped to $7.2M, with management collecting 100% of principal, default-rate interest, and fees on a previously highlighted asset .
Guidance tone constructive: margin expected to “hold steady” with potential progress as ~~$152M of CDs reprice in 2H25; low single-digit loan growth guidance reaffirmed; buyback authorization remains active (~~$3.1M capacity) .
Balance sheet re-mix toward lower-cost funding continues (brokered/listing deposits down 19% q/q), but total deposits fell 5.8% q/q, a watch item even as loan-to-deposit ratio remained ~99% to maximize earnings power .

What Went Well and What Went Wrong

What Went Well

“Earnings per share increased to $0.53… and our net interest margin to 3.75%,” reflecting lower cost of funds (total funding cost down 20 bps to 3.29%) and core NIM expansion q/q .
Resolution of a previously discussed workout credit: “We’ve collected 100% of principal, interest at the default rate, and all fees,” supporting asset quality improvement and recoveries .
Funding mix improved: non-core deposits reliance reduced by ~19% q/q, while non-interest-bearing and low-cost deposits grew $6M; brokered/listing sources fell to $468.7M from $577.9M q/q .

What Went Wrong

Deposits declined 5.8% q/q to $1.799B, increasing sensitivity to deposit-gathering execution despite mix improvements; management is focused on synchronized loan/deposit growth to maximize earnings power .
CRE concentration elevated at 366% of capital (board limit 375%), constraining some growth optionality; management intends to balance pipeline with more non-CRE/owner-occupied CRE .
Past-due (30–89 days) accruals rose to 2.12% of gross loans (vs 0.81% prior year), even as non-accruals declined, warranting continued monitoring of borrower liquidity and asset pricing .

Financial Results

Metric	Q2 2024	Q1 2025	Q2 2025
EPS ($)	0.27	0.25	0.53
Net Income ($USD Millions)	2.62	2.45	4.59
Net Interest Income (GAAP) ($USD Millions)	15.34	16.51	18.79
Net Interest Margin (FTE) (%)	3.20	3.30	3.75
Efficiency Ratio (%)	77.90	82.03	74.26
ROA (Annualized, %)	0.50	0.46	0.86

Notes and clarifications: Press release narrative cites net interest income of $19.3M (+$2.8M q/q), while the detailed GAAP table shows $18.79M and FTE $18.86M; we highlight this disclosure discrepancy for transparency .

S&P Global consensus comparison:

Metric	Q2 2025 Actual	Q2 2025 Consensus	Surprise
EPS ($)	0.53	0.44*	+0.09
Revenue ($USD Millions)	20.40*	N/A*	N/A

Values marked * retrieved from S&P Global.

Key KPIs

KPI	Q2 2024	Q1 2025	Q2 2025
Loan-to-Deposit Ratio (%)	N/A	96	99
Total Deposits ($USD Millions)	1,755.36	1,908.33	1,798.55
Core Customer Funding Sources ($USD Millions)	1,376.99	1,330.39	1,329.80
Brokered/Listing Funding ($USD Millions)	378.37	577.94	468.74
Non-performing Loans ($USD Millions)	20.69	21.67	7.17
Non-accrual Loans / Gross Loans (%)	1.15	1.18	0.40
Net Charge-offs to Avg Loans (Annualized, %)	0.08	0.00	(0.03)
Total Funding Cost (%)	4.83 (interest-bearing liabilities)	3.49	3.29

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Net Interest Margin	2H 2025	Implied expansion trajectory	“Hold steady” with potential progress; core NIM expanding	Maintained to improving
Total Funding Cost	Q2 2025 vs Q1 2025	3.49% (Q1)	3.29% (Q2)	Lowered
CD Repricing	2H 2025	N/A	~$152M of CDs to reprice in 2H25, supportive of margin	New detail
Loan Growth	FY 2025	Low single-digit	Reaffirmed low single-digit; pipeline constructive	Maintained
Operating Expense Run-rate	2H 2025	N/A	Revised estimations to reflect major metro community bank costs; continued focus on reductions	Updated framework
Share Repurchases	Ongoing	Active plan	Active plan with ~$3.1M capacity; management will evaluate opportunities	Maintained
Dividends (Preferred)	Quarterly	Ongoing	Preferred dividends continued ($0.539M in Q2)	Maintained

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4 2024, Q1 2025)	Current Period (Q2 2025)	Trend
Net Interest Margin and Cost of Funds	NIM impacted by accrued interest reversal (Q3 2024); year-end NIM 3.13% with wholesale deposit restructuring (Q4 2024)	NIM 3.75%, core NIM expansion; total funding cost down to 3.29%	Improving
Deposit Mix and Core Funding	Structured non-core deposits to reprice/call as rates fall (Q3/Q4 2024)	Non-core reliance reduced 19% q/q; +$6M growth in non-interest/low-cost deposits	Mix improving
Asset Quality / Workouts	Nonperforming loans expected to improve; Avenu impairment weighed on FY24	Recovery of accrued interest; workout asset fully resolved at principal, default-rate interest, and fees; NPLs down to $7.2M	Improving
CRE Concentration	CRE concentration elevated but managed within policy (Q4 2024)	CRE concentration 366% of capital, below 375% board limit; pipeline balanced with owner-occupied / non-CRE	Monitored within limits
Government Contracting Portfolio	Strategic focus; risk monitoring emphasized	29 ABL lines, $13M outstanding; $79.2M commitments; 16% utilization; stabilization noted; borrowing base attestation strengthened	Stable; controls tightened
Avenu/BaaS Program	Platform launched in Q4; 2024 impairment recognized	Avenue costs largely incurred; maintenance mode; no significant future costs expected	De-emphasized; cost contained
Capital Actions / Buybacks	Strong capital; buyback framework discussed	Active plan; ~$3M–$3.1M capacity; no Q2 block repurchases	Optionality maintained

Management Commentary

“Earnings per share increased to $0.53… and our net interest margin to 3.75%… contributing factors included improvement to non-performing loans… lowering our cost of funds” — Alex Vari, Bank CFO .
“We’ve collected 100% of principal, interest at the default rate, and all fees. This is the outcome we anticipated” — Tom Floyd, Chief Lending Officer .
“We believe the margin will hold steady and could see progress as we have $152 million in certificates of deposit repricing in the second half of the year” — Alex Vari, Bank CFO .
“We like to keep the loan-to-deposit ratio high to maximize the earnings potential… business bankers and lenders are working in lockstep” — Management, Q&A .
“We have an active buyback plan in place with a capacity of just over $3 million to repurchase shares” — Alex Vari, Bank CFO .

Q&A Highlights

Loan growth: Low single-digit loan growth guidance reaffirmed; pipeline healthy across diversified industries; management previously constrained lending early-year due to macro/policy uncertainty .
Funding mix and margin: Opportunities to reprice CDs and grow core deposits expected to support margin; team focused on synchronized loan/deposit growth to maximize earnings power .
Asset quality: Trend improving; low office exposure; continued monitoring of residential market; criticized/classified moving positively .
Government contracting: Stabilizing environment; monthly attestation on contract structures added; advances only on billed receivables strengthen risk control .
Avenue costs: Major costs already incurred; now in maintenance mode; no significant future costs expected .

Estimates Context

EPS beat: Actual $0.53 vs consensus $0.44; surprise +$0.09, driven by NIM expansion and lower funding costs; excluding nonrecurring items (+$1.5M revenue, +$1.8M expenses), non-GAAP EPS would have been $0.56, implying underlying strength .
Revenue: S&P reports Q2 revenue of ~$20.4M; consensus unavailable, limiting revenue-specific surprise analysis; results suggest resilience in core banking income .

Values retrieved from S&P Global.

Key Takeaways for Investors

NIM momentum and cost-of-funds tailwinds are the primary catalysts near-term; ~$152M CD repricing in 2H25 provides a path to maintain or expand margin as deposit mix improves .
Asset-quality de-risking continues: NPLs fell to $7.2M and non-accruals to 0.40% of loans; workout resolution and recoveries drive credit cost normalization and support earnings durability .
Funding mix is trending better (brokered down 19% q/q), but total deposits declined 5.8% q/q; execution on core deposit gathering remains a key watch item for sustaining margin gains .
CRE concentration sits near internal limits (366% vs 375% cap), suggesting growth must be balanced with owner-occupied and non-CRE credits; monitor regulatory and macro sensitivities .
Non-GAAP items net to a small positive EPS impact this quarter; core trajectory is favorable, but investors should adjust for one-time revenue recovery and restructuring costs when modeling .
Buybacks provide capital allocation optionality (~$3.1M capacity), potentially accretive given valuation commentary (trading at ~78% of tangible book at quarter end per management) .
Medium-term thesis: Continued margin stabilization, disciplined credit, and improved funding mix can position ROA toward 1% and ROE back to double digits, contingent on deposit growth execution and macro rate path .

MainStreet Bancshares, Inc. (MNSB)·Q2 2025 Earnings Summary