MainStreet Bank Announces Mid-Year Results

HERNDON, Va., July 22 /PRNewswire-FirstCall/ -- MAINSTREET BANK
(OTC Bulletin Board: MNSB), a Virginia state-chartered bank that opened in May
2004, announced a return to quarterly profitability during the second quarter
of 2008. The Bank reported second quarter 2008 net income of $5 thousand, or
$0.00 per common share (basic and diluted), compared to a net loss of
$159 thousand, or ($0.07) per common share (basic and diluted) for the three
months ended June 30, 2007.
President & CEO Jeff W. Dick said, "We are extremely pleased with the
Bank's performance this quarter, which is in-line with the Board and
management's objectives for 2008. This return to quarterly profitability is
especially gratifying, given the condition of the economy as a whole, and the
significant difficulties being experienced in the banking industry, both
locally and nationally."
The second quarter profit partially offset the Bank's first quarter loss.
The net loss for the six months ended June 30, 2008 was $84 thousand, or
($0.03) per diluted common share, compared to a net loss of $292 thousand, or
($0.12) per diluted common share for the same period last year. Dick
indicated that, "Following a year of planned aggressive growth, the Board and
management continue to focus on our goal of achieving sustainable
profitability."
The Bank also continues to experience good balance sheet growth, with
total assets at June 30, 2008 of $175.4 million, which is an increase of 30%
over total assets at June 30, 2007. Gross loans at June 30, 2008 were
$131.6 million, an increase of 29% over June 30, 2007, and total deposits were
$131.3 million, an increase of 25%.
After four years of operations, asset quality remains strong. Total
non-performing loans as of June 30, 2008 were $230,011 or 0.17% of total
loans, and consist of a single loan with a 75% guarantee from the Small
Business Administration. Loans past due 30-89 days were $497,182 or 0.38% of
total loans. MainStreet Bank does not originate or hold subprime residential
mortgage loans in its loan portfolio or securities portfolio.
The Bank has offices located at 727 Elden Street in Herndon, Virginia and
4029 Chain Bridge Road in Fairfax, Virginia. But MainStreet Bank is not
limited by its physical branch network, offering business customers the
ability to Put Our Bank in Your Office(R) with robust yet simple-to-use
technology. The Bank's secure web-enabled technology is used to manage
accounts, pay bills, transfer funds, initiate wire transfers, sweep funds,
make loan payments and advance funds from lines of credit. The technology
interfaces with Intuit(R) and Microsoft(R) accounting software for greater
efficiency in accounting and finance operations. For accounts payable,
customers can also build in reminders, customize loan payments, and set up
regular funds transfers.
MainStreet Bank is the first community bank in the Washington, D.C.
Metropolitan area to offer this type of full online business banking solution.
Further information on the Bank can be obtained by visiting its website at
www.mstreetbank.com.
This release contains forward-looking statements, including our
expectations with respect to future events, that are subject to various risks
and uncertainties. Factors that could cause actual results to differ
materially from management's projections, forecasts, estimates and
expectations include: fluctuation in market rates of interest and loan and
deposit pricing, adverse changes in the overall national economy as well as
adverse economic conditions in our specific market areas, maintenance and
development of well-established and valued client relationships and referral
source relationships, and acquisition or loss of key production personnel.
Other risks that can affect the Bank are detailed from time to time in our
quarterly and annual reports filed with the Board of Governors of the Federal
Reserve System. We caution readers that the list of factors above is not
exclusive. The forward-looking statements are made as of the date of this
release, and we may not undertake steps to update the forward-looking
statements to reflect the impact of any circumstances or events that arise
after the date the forward-looking statements are made. In addition, our past
results of operations are not necessarily indicative of future performance.

MAINSTREET BANK
FINANCIAL HIGHLIGHTS (Unaudited)

Quarter Ended Year to-Date
(000's except share data) (000's except share data)
% %
Operations 6/30/08 6/30/07 Change 6/30/08 6/30/07 Change
Interest income $2,519 $2,356 6.9 $5,011 $4,402 13.8
Interest expense 1,153 1,064 8.4 2,363 1,929 22.5
Net interest
income 1,366 1,292 5.7 2,648 2,473 7.1
Provision for
loan losses 97 110 (11.8) 171 200 (14.5)
Net interest
income after
provision for
loan losses 1,269 1,182 7.4 2,477 2,273 9.0
Other income 62 48 29.2 132 82 61.0
Operating expenses 1,326 1,389 (4.5) 2,693 2,647 1.7
Income (loss)
before income
taxes 5 (159) nm (84) (292) 128.8
Income taxes - - - - - -
Net income (loss) $5 $ (159) nm $(84) $(292) 128.8

Per Share Data
Earnings (loss)
per share (basic
and diluted) $0.00 ($0.07) nm ($0.03) ($0.12) 125.0
Book value per
share $8.16 $8.78 (7.1) $8.16 $8.78 (7.1)
Closing stock
price $7.00 $10.55 (33.6) $7.00 $10.55 (33.6)

Weighted average
shares (basic
and diluted) 2,555,467 2,424,815 2,554,989 2,424,597

Selected Balance
Sheet Data
Investments $39,393 $23,529 67.4
Gross Loans $131,602 $101,668 29.4
Total Assets $175,414 $135,262 29.7
Deposits $131,269 $105,400 24.5
Federal Funds
and Repurchase
Agreements $2,228 $2,372 (6.1)
Borrowings $20,617 $5,667 263.8
Stockholders'
Equity $20,858 $21,290 (2.0)

Ratios
Return (loss) on
average assets 0.00% (0.13%) (0.05%) (0.25%)
Return (loss) on
average equity 0.02% (0.74%) (0.39%) (1.35%)
Gross loans to
deposits 100.25% 96.46%
Net interest
margin 3.33% 4.29% 3.38% 4.39%
Efficiency ratio 92.87% 98.98% 96.86% 103.60%
Allowance for
loan losses to
total loans 1.11% 1.14%
Past due loans
30-89 days to
total gross loans 0.38% 0.38%
Non-accrual loans
to total gross
loans 0.17% 0.00%

Regulatory Capital
Ratios
Tier 1 risk-based
capital ratio 15.38% 18.90%
Total risk-based
capital ratio 16.37% 19.87%
Leverage ratio 13.42% 18.22%

Balance Sheet
(averages)
Investments $29,528 $13,977 111.3 $23,995 $14,212 68.8
Gross Loans $125,401 $95,112 31.8 $120,953 $89,922 34.4
Total Assets $167,364 $123,467 35.6 $159,972 $115,617 38.4
Deposits $122,600 $93,637 30.9 $120,761 $86,453 39.7
Borrowings $20,624 $5,674 263.5 $14,779 $5,680 160.2
Stockholders'
Equity $21,274 $21,517 (1.1) $21,272 $21,593 (1.5)

Nm = not material

Contact: Jeff W. Dick
(703) 481-4567

SOURCE MainStreet Bank

Jeff W. Dick of MainStreet Bank, +1-703-481-4567