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MainStreet Bancshares, Inc. (MNSB)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 EPS was $0.52 and net income $4.52M; management stated both exceeded “market expectations” of $0.51 EPS and $4.48M net income, a modest beat driven by healthy core NIM and expense control .
  • Net interest margin (FTE) compressed sequentially to 3.42% from 3.75% in Q2, but improved year over year vs 3.05% in Q3 2024 as funding costs fell and deposit mix improved .
  • Operating revenue (net interest income + non-interest income) was $18.17M, down vs Q2 ($19.73M) but up vs Q3 2024 ($16.23M); asset quality remained strong with non-performing loans (NPLs) to assets at 1.10% .
  • Board authorized a new $10.0M common stock repurchase program on Oct 16, replacing prior plan—an incremental capital return catalyst that may support EPS and book value accretion .

What Went Well and What Went Wrong

What Went Well

  • Core NIM (FTE) of 3.54% remained healthy; CFO highlighted a well-structured balance sheet to handle rate changes and focus on core revenue generation and expense control .
  • Asset quality commentary was positive; CLO cited lending opportunities across government contracting, CRE, construction, and owner-occupied segments, and continued strong asset quality .
  • Capital return increased via a new $10.0M repurchase authorization; company reiterated well-capitalized status .

What Went Wrong

  • Sequential margin pressure: NIM (FTE) fell to 3.42% in Q3 from 3.75% in Q2, reflecting funding mix normalization and lower interest income versus Q2 .
  • Rising reliance on brokered/listing service sources: brokered/listing deposits rose to 27.7% of funding vs 25.1% in Q2 and 21.5% in Q3 2024; $114.9M in reciprocal deposits will be classified as brokered under 12 CFR 337.6(e) as of 9/30/25 (reporting optics headwind) .
  • Efficiency remains an ongoing focus: quarterly efficiency ratio at 69.50% (improving vs 81.45% in Q3 2024) but still higher than best-in-class peers; management is working down OpEx and revising run-rate assumptions for a major metro market .

Financial Results

MetricQ3 2024Q1 2025Q2 2025Q3 2025
Operating Revenue ($USD Millions)$16.23 $17.45 $19.73 $18.17
Net Interest Income ($USD Millions)$15.34 $16.51 $18.79 $17.10
Non-Interest Income ($USD Millions)$0.89 $0.94 $0.94 $1.07
Diluted EPS ($USD)$(0.04) $0.25 $0.53 $0.52
Net Interest Margin (FTE) %3.05% 3.30% 3.75% 3.42%
  • Year over year (Q3 2025 vs Q3 2024): revenue +$1.94M, EPS to $0.52 from $(0.04), NIM +37 bps .
  • Sequential (Q3 vs Q2): revenue −$1.56M, EPS −$0.01, NIM −33 bps .
  • Versus estimates: EPS beat S&P Global consensus by $0.01 ($0.52 vs $0.51)*; revenue consensus unavailable from S&P for the quarter (company cited a market-expected net income/EPS beat) .
    *Values retrieved from S&P Global.

Segment breakdown (Loans)

Loan Category ($USD Thousands)Q3 2024 Amount / % of TotalQ2 2025 Amount / % of TotalQ3 2025 Amount / % of Total
Construction & Land Dev.$373,486 / 20.8% $328,351 / 18.3% $312,318 / 17.2%
Residential Real Estate$446,109 / 24.8% $452,458 / 25.3% $411,592 / 22.7%
Commercial Real Estate$871,280 / 48.4% $911,390 / 50.9% $981,091 / 54.2%
Commercial & Industrial$106,249 / 5.9% $97,699 / 5.5% $105,217 / 5.8%
Consumer$1,977 / 0.1% $1,075 / 0.1% $1,204 / 0.1%
Total Gross Loans$1,799,101 / 100% $1,790,973 / 100% $1,811,422 / 100%

Key performance indicators

KPIQ3 2024Q2 2025Q3 2025
ROA (annualized)0.05% 0.86% 0.85%
ROE (annualized)0.47% 8.72% 8.33%
Efficiency Ratio81.45% 74.26% 69.50%
NPLs to Total Assets1.27% 0.34% 1.10%
NPLs to Gross Loans1.57% 0.40% 1.29%
ACL to Loans1.02% 1.07% 1.04%
ACL to NPLs64.84% 2.01x 80.52%
Core NIM (FTE)3.25% 3.54% 3.54%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Interest Margin (FTE)2H 2025“Hold steady, could see progress” given $152M CDs repricing and robust pipeline Core NIM cited at 3.54% and “healthy”; balance sheet well-structured; continued focus on core revenue/OpEx control Maintained
Loan GrowthFY 2025Low single-digit loan growth reiterated in Q2 Q&A Management sees quality lending opportunities in GovCon, CRE, construction, owner-occupied Maintained
Operating Expense Run-Rate2H 2025Revised expense run-rate for metro market; committed to lowering OpEx Continued emphasis on expense control noted by CFO Maintained
Share Repurchase ProgramOngoing~ $3.1M capacity as of Q2 New authorization up to $10.0M (Oct 16, 2025) replacing prior plan Raised
Dividend (Preferred)OngoingPreferred dividends of $539K per quarter Preferred dividends continued at $539K in Q3 Maintained
Formal Revenue/EPS GuidanceFY/QtrNot provided Not provided; qualitative commentary only Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q3 2025)Trend
NIM trajectoryQ2: NIM 3.75%; core NIM expanding; funding cost reduced 20 bps; CDs repricing opportunity NIM (FTE) 3.42%; core NIM 3.54%; management sees healthy margin Stable-to-slightly lower sequential; still higher YoY
Deposit mix & fundingQ2: grew non-interest & low-cost deposits; reduced non-core by 19% Core funding share down; brokered/listing share up; reciprocal deposits reclassified as brokered for call report Mixed; optics on brokered share worsen
Loan pipeline & growthQ2: low single-digit loan growth guidance; robust pipeline Continued quality opportunities in GovCon, CRE, construction, owner-occupied Pipeline intact
Asset qualityQ2: improvement; resolved a workout, recovered interest/fees CLO: strong credit; worked with borrowers to improve relationships Positive
Capital returnQ2: buyback capacity >$3M New $10.0M buyback authorization Positive
Technology initiativesQ1: discontinued “Avenu” BaaS initiative to focus on core bank No new tech initiatives; emphasis on core banking Focused on core

Management Commentary

  • “Our core net interest margin is a healthy 3.54%…balance sheet is well-structured…focus on core revenue generation and expense control.” — Alex Vari, CFO .
  • “We continue to see quality opportunities to lend…we continue to show strong asset quality.” — Tom Floyd, Chief Lending Officer .
  • Q2 call: “Earnings per share increased to $0.53…NIM to 3.75%…recovering accrued interest, lowering cost of funds.” — Alex Vari .
  • Q2 call: “Low single-digit loan growth guidance…not just growth for growth’s sake; encouraged by pipeline.” — Tom Floyd .

Q&A Highlights

  • Loan growth sustainability: low single-digit guidance maintained; focus on quality opportunities and balance-sheet optimization (loan-to-deposit ratio ~100%) .
  • Funding mix: visibility to reprice CDs; business bankers growing core deposits despite competitive market .
  • Asset quality outlook: classifieds trending positive; limited office exposure; close monitoring of real estate valuations .
  • GovCon portfolio: stabilizing; advancing only on billed receivables; monthly attestation on contract structures .
  • Profitability goals: on track toward ~1% ROA over time; higher ROE with improved ROA .

Estimates Context

  • EPS: S&P Global consensus $0.51 vs actual reported $0.52 (beat +$0.01)*.
  • Target Price Consensus Mean: $23.25 for Q3 2025*.
  • Revenue consensus for the quarter was unavailable via S&P; company-reported operating revenue was $18.17M .
    *Values retrieved from S&P Global.

Key Takeaways for Investors

  • Modest EPS beat and healthy core NIM despite sequential margin compression; YoY margin expansion underscores improved earnings power .
  • Share repurchase authorization expanded to $10.0M—potential near-term support for EPS and book value per share .
  • Asset quality narrative constructive; NPLs/asset ratios remain manageable with continued workout success and disciplined GovCon underwriting .
  • Watch funding optics: brokered/listing deposit share rising and reciprocal deposits reclassified as brokered—could pressure valuation multiples despite core deposit efforts .
  • CRE concentration increased (356% of capital) but within board policy; pipeline tilting toward owner-occupied CRE mitigates regulatory ratio exposure .
  • Operating leverage improving (efficiency ratio 69.50%); continued OpEx focus central to reaching ~1% ROA longer term .
  • Near-term trading lens: buyback and EPS beat are positives; sequential NIM decline and funding mix could temper enthusiasm—monitor deposit trends and NIM trajectory into Q4 .

Additional Q3-Related Disclosures

  • Board appointment (Sept 30): Wendy Adeler Hall adds retail growth/community engagement expertise to Board—signals ongoing governance depth .
  • CFO promotion (July 7): Alex Vari promoted to Bank CFO; SOX framework implementation indicates strengthening internal controls .