Well, good afternoon and thank you for joining our virtual earnings webcast. My name is Jeff Dick, I'm the chairman and CEO of MainStreet Bancshares, Inc. and Main Street Bank. I'm joined here today with our Chief Lending Officer, Tom Floyd; our Chief Accountant, Alex Vari, and of course our CFO, Tom Chmelik. If you'd like, you can submit written questions throughout the presentation using the viewing portal. We will address your questions at the end of this presentation. If you miss, if we miss your questions during the discussion, please reach out after the webcast. Chris Marinac will not be joining us on the call today. He did submit questions in advance, and we will address them after the session. Also Matt Breese of Stephens, Inc., no longer provides coverage for our company. We'd be remiss if we didn't point you to our Safe Harbor page that describes the content of the forward-looking statements. We use certain non-GAAP measures which are identified as such within the presentation materials. The DC market is still a great place to do business. We always talk about the strength of our market, because we are in a region that hosts the federal government or we do also have world-class universities, hospital systems, airports, tourism, data centers, and at least 16, 14 Fortune 500 companies. As such, we also have low unemployment and high median household income for our workforce. Slide four reminds you of our growth story over the past 20-years. I think there's an interesting correlation to be made from our early years to the present time. We started with a technology strategy of putting our bank in our customer's office. You may recall back in 2004 that the Check 21 Act became law shortly after we opened, which allows -- allowed…

Thank you, Jeff. On slide eight, we summarize our financial performance over the past four quarters, as well as for the fiscal year 2024. For the year, we are reporting a loss of [Technical Difficulty] $1.60, our return on average assets of negative [0.47%] (ph), a return on average equity of negative 4.44%, and a net interest margin of 3.13%. Our performance ratios were impacted by an impairment of our intangible assets recognized during the fourth quarter. As you will see later in the slide deck, we provide core performance ratios after the non-recurring adjustment. As we discussed in our quarterly calls earlier this year, our ratios were also directly impacted by taking action on a handful of problem loans. We have made significant progress finding solutions to non-performing loans, and we remain strongly capitalized and look forward to the opportunities we have in 2025. During 2024, we reversed $1.9 million of interest income, and we had net charge offs of $4.5 million, an additional $2.9 million of provision expense was added to ensure the allowance for credit losses remains directionally consistent for portfolio growth and our recent history. As you can see, the non-recurring credit issuances impact our earnings per common share by $0.67, our return on average assets [Technical Difficulty] by 24 basis points, our return on average equity by 224 basis points, and our net interest margin by 8 basis points. As we will discuss later in the presentation, our credit metrics will drive improvement in our key performance ratios and will be reflected in our overall allowance for credit losses as it returns to our historical average. During the fourth quarter, as the Board and Management balanced Venue's 2025 gross demand and expense run rate, we made tough decisions about carrying back development personnel and focusing…

That will be just one second. There's a message. Is there an issue with the audio? I mean, it could be just the one. If anybody else is having any issues, please let us know. I apologize. Okay, it’s just the audio. The audio was bad. You know, these. Okay, you're fading in and out a little bit, so I would just ask, we'll speak up a little bit more, try to get this resolved. All right, you want start, yes.

We'll start on slide 12. On slide 12, you will see our non-interest bearing deposits represent 23% of our core deposit base and 17% of all deposits. We have an additional $122 million in callable CDs that will be accretive to our net interest margin as they are called. We continue to grow core deposits in a meaningful way, adding $187 million during 2024. Our non-core deposit balances increase strategically to capitalize market conditions that will reduce funding costs and shorten the duration of our term deposits. As the FOMC reacts to market conditions, they have begun to lower expectations about continued rate cuts in 2025, making it even more important that banks and competitive markets find niche markets to accumulate low cost deposits. Now turning to 2025, our projected run rate to what we are expecting going into the year. Adjusting for the non-recurring transactions, non-interest expenses increased a nominal 6 basis points quarter-over-quarter. Management has taken action to reduce expenses and increase expense control and efficiency. At this point in 2025 we are projecting a run rate of 83 basis points per month through the first quarter. Of course, we will continue to update you as the year progresses. At this point, I'll turn the presentation over to Tom Floyd, our Chief Lending Officer, to discuss our loan portfolio and loan performance.

Thank you, Alex. 2024 was a challenging year, but a year that I'm very proud of and looking forward to reviewing with you. Over the next few minutes, I'm excited to share details about our loan portfolio composition, trends in credit quality, our annual growth, and a measure of our stability going forward. You will see that over the fourth quarter, we achieved positive movement in terms of total non-performing asset levels and positive trends in total past due levels. Coupled with our commitment to serving our vibrant client base, we remain optimistic about the future. Our loan portfolio is well positioned for stable or falling rates, 61% of our portfolio has rate resets beyond six months, with the remaining 39% with rate resets within six months. Of those, 55% have weighted average floor rate, 6.34%. As we move forward into 2025, we anticipate this will help our net interest margin as rates are expected to remain stable or decreased. Our legal lending limit remained at $47 million and our average new loan size was $1.9 million. As we mentioned last quarter, this highlights that as we've grown in our capacity, we continue to serve the smaller sized capital formation needs in our market. We're very comfortable in our niche. Slide 16 highlights that our loan portfolio is diversified with healthy metrics. The non-owner occupied loans comprise 30% of the portfolio and include hospitality, industrial, mixed use, retail, and a small amount of office. The weighted average yield is 6.47% and the weighted average loan to value is 60%. Construction loans comprise 21% of the total book and are comprised of mixed use, multifamily, residential, retail, and self-storage. Our weighted average yield is 7.8% and the weighted average loan to value is 61%. Owner-occupied accounts for 19% of the portfolio…

Thank you, Tom. Our banking as a service balance sheet for 2024 now reflects the 62,000 in other assets and $41 million in low or no cost deposits. The income statement reflects the net loss of $3.6 million for normal operations. Looking at the pipeline, there's five FinTech client contracts. The first is fully live, but proceeding slowly at this point. Then you will go into beta as soon as the due diligence is finished for the client number one and should go live quickly from that point. We're thinking beta will be about two weeks, maybe three weeks at the most. As an aside from that, the API integration team is actually accommodating a timeline for a [Technical Difficulty] move through the process in 60 to 90-days. The three clients that are in the queue behind Venue are currently moving at a slower pace at their choices. Venue is moving fast and has a lot of potential. In my mind, the client with the next most potential is one waiting for their California money transmitter license. Once that FinTech on boards with us, we should see some very good momentum. Venue, again, is our cannabis payments solution. We control the app, the network, the virtual terminal for checkout, and the merchant services solution. Each aspect of the solution is very simple and very elegant. The cannabis retail itself, the industry, I'm sorry, is large-scale driven, and we see a tremendous opportunity. Slide 30 shows data from a March 2024 forecast, estimating the U.S. legal cannabis retail market at $35.2 billion for 2025. Slide 31 tells us that there are 12,452 cannabis licenses in the United States. The slide also shows us the retail volume of sales in 21 of the 38 states where cannabis retail sales are illegal. The…

At this point, we're going to start questions that we received from Chris Marinac, who is the Director of Research at Janney Montgomery Scott. After that, we'll address questions that were submitted earlier in the day and through the portal. So I'm going to start by reading a few of Chris’s questions. First one is an Alex question or Tom Chmelik question. The asset impairment makes sense. Will the other measures that you also put in place meaningful as taking Avenue forward?

Yes, that's a great question and they are. You know, we took action to decrease our expenses and focus on revenue. You mentioned those actions were reducing some personnel costs. We renegotiated contracts very focused on reducing the expense, the efficiency and trying to be as lean as possible and really focused on revenue. And I think that's going to be a meaningful [Technical Difficulty] to the bottom line.

Tom, anything to add?

Yes, as you said, we're very thoughtful with the expenses that we went through to decrease for this year and we'll constantly continue to look for other expenses continue to work through as time goes on.

Good, thank you. And the next question is still on Avenue. Does the Avenue solution that we have in place today fully support our cannabis opportunity? What does that look like, and how long will that take to see meaningful saturation? And yes, the version one of Avenue that went into place in October 1, 2024, has everything that Avenue solution needs in order to be successful. The small remaining team focused on Avenue will continue to harden the software solution to make it so it's more efficient, works faster, and more scalable. But it's working and all of the alpha testing for Avenue, or Venue, I'm sorry, has been very successful. We are working ISO reseller relationships in place as quickly as we can and get everything moving so we can start to really focus on onboarding the cannabis retailers. This is a bit of a chicken and egg kind of situation. We onboard the cannabis retailers. We do in-store marketing. We do other types of marketing to get to consumers. They download the app from the app stores and we're sort of off to the races, but it really is getting as many cannabis retailers on board as quickly as we can that will drive, I think, the ultimate adaption. So we're excited and we're looking at working hard on that. The next question is the pre-ROA of 53 basis points achievable in 2025 and is there room to improve upon it? Alex or Tom?

Yes, yes, having just said that, the short answer is yes, absolutely. We have a number of things that are impacting that. So when we're looking at our 2024 performance, we had some credit issues and some non-recurring transactions. Those are behind us. And so we won't be having those going into 2025. Couple other things I'm thinking about, certainly a trend in the last quarter, our net interest income by dollars is increasing. We had an increase in net interest income by about 4.5% over 4%, which is a nice trend to see. And as I mentioned earlier, we -- in the first quarter, we exercised $60 million worth of callable CDs that were accretive to our net interest margin. We have another $120 million sort of in the chamber, if you will, right? That will be accretive to our funding as we continue to call those and just we are seeing continued deposit opportunities in our market, as well as new [Indiscernible], so we have a lot of opportunities to be excited about in 2025.

Yes, and the other thing is the decrease in the non-performing assets will halt the margin also and hopefully with some of the things that will work through on former NPAs or not as this recovery of interest. We believe we will see it come here.

Excellent. This is a Tom Floyd question. Do you think the loan growth opportunities exist in our market to support our planned loan growth?

I absolutely do. And as I mentioned, we love our market. It's a large market. We have less than 1% market share in our market. So for us to get low-single-digit loan growth, there's an abundance of opportunities for the type of lending we are trying to do, which is owner-occupied, owner-operated, end-user businesses. Those opportunities give us the opportunity to get full banking relationships. They're pretty much in the community, SBA lending, and other types of owner-occupied C&I. So we absolutely think they're within our market.

This is a follow-on question. You've answered some of this, but the types of specific lending that we're looking at trying to focus on for 2025, and maybe as you think about that, I think a natural follow-up would be what the types of loans if there's any that you intend to stay away from?

So absolutely owner-unoccupied I think is the thing that we're going to look to do a lot of this year. In terms of loans that we'll be approaching with caution would be that we're looking financing in the government contracting space, you know, where your payments are on billed receivables, things of that nature we're going to be very conscious with. We certainly have a good customer base of government contractors and we're going to continue to support their asset-based needs. We will be more cautious with acquisition financing going forward.

Tom Chmelik, you are a veteran of DC native. Does the new administration and Congress present any barriers with what we're trying to achieve?

I mean, one thing that we've always done is whatever the restriction is, whether it's Republican or Democrat, and you know, as they come in, it moves slowly. So there will be some changes, but albeit it all be slow. We still have the federal government here. It's not leaving anytime tomorrow. He’s not taking it out of town. But I think it's going to be interesting to see what does happen. I think, you know, it's just not here. It's all across the country. As I said, we still have a vibrant economy. Without the federal government, there's a lot of things that go on here, as Jeff alluded to at the beginning of the slide presentation.

Yes, and it's interesting, the mandate for federal workers returning back to work, I think, is going to be significant. When COVID hit in Washington, DC, like I'm sure many of the major cities, all of the very small, what we call mall and box shops, the shoe repair, the breakfast, coffee, Starbucks coffee shops. So just all of those little businesses dried up because there was no traffic, no foot traffic, you know, in the city for years and it's still not what it was. You know, so there's even opportunities as, you know, those spots are still empty, I think, for businesses to come back once the federal workers come back and, you know, need those services again. So those are wonderful SBA opportunities, because of the right size for that.

That's a great point and we've added to the talent of our team with some very experienced SBA staff, so we are excited with that as we go forward.

Good, again, an accounting question for the first quarter of 2025. You indicated a 3 basis points monthly increase in the run rates. Where does that number start from? Is that from the end of the just the Q4, that from 2024?

Right, yes. And so that's starting with the year-to-date, 2024, normalized net interest expenses. So when you take out the non-recurring non-interest expenses, it gets you to about $51.9 million. So we're using that as our [Technical Difficulty] point to say 83 basis points per month from there. And I'd like to just point out that, you know, with due to the cost cutting things and the focus on reducing expenses, that's actually about a 40% reduction in run rate from where we were in 2024. So we're really excited about things that we've done, what we're looking forward to in 2025.

Yes. I mean, that is a significant 40%. And that's one of the things that we're really focused on to try to improve the performance metrics for the coming year. We'll sort of bounce back and forth. Again a loan question, a loans for credit losses question more specifically. And the question is, have I added about 10 basis points for the losses projected for 2025? Would that be about right? I'll let you start, Tom.

Yes, I think if you wanted to be conservative, you know, that that can solve it candidly. We've seen a lot of improvements in our credit quality metrics over the last quarter, and so we're optimistic about our direction. And we believe that what we have into our [Technical Difficulty] should cover what we think we need to clean up. So, yes.

Yes, there's always the absolute unknown, but having said that, I know the lenders, the credit administration, the loan review, everything else has really scoured the portfolio and it's in very good shape at this point. So those were Chris's questions. There's a couple more here [Technical Difficulty] I've got some of on my mobile phone that I will try to read. There's one here that says, can you spend a little bit more time discussing just the net, the core results of the bank? And I think if you went back to the slide that shows, or thinking about that, let's focus it just a bit on those core results, sort of ex credit, ex impairment. How does that [Technical Difficulty]? How will that go into 2025? We've talked about it a little bit, but I think it's more relevant.

Yes, happy to touch on that. So if [Technical Difficulty] we really laid out what the key performance ratios kind of would have been, you know, for the core, had you taken out the capital impairment. And frankly, 2024 was a challenging year. We had deposit costs are challenging. And so those are things that the bank is continuing with. But I think the things that we're focused on are the things that I kind of mentioned before that we have a lot of levers that we can pull as far as reducing funding costs the things that we're doing with our deposits you know we have -- I know we're talking less about Avenue, but you know Avenue 1, Version 1 is behind us. Those expenses are being pared back and we're being very [Technical Difficulty]. The bank had a very good interest margin at 3.13% for the year. We're proud of that. We believe that we are primed to continue expanding that. And as I mentioned, we're adding new loans. Net interest income is growing. We still have, as I put earlier, sort of powdering the keg to continue lowering that funding cost, being some of the things that we did with the balance sheet, you know, in managing that.

Tom, [Technical Difficulty]

The loan yields, we are still getting loan yields that we've always gotten. I mean, we provide service, and that's what we've always said to everybody that's what we do and we get paid for what we do here, so that will continue to be that an issue going forward with the type of loans that we're doing.

And with improving credit metrics and we're going to continue to see increased profitability metrics, you know, on the bank of [Technical Difficulty] certainly you know just looking at the bank. I've had a couple of questions that have come in. It says, what does we've significantly pared down future work at this point mean? I'll own that, it was poorly written. It's in reference to, you know, the changes that we've made with the future software development. When we look at Avenue, Version 1 is in production. As I said previously, we need a core small team that will continue to work too hard and make it more -- make the solution more efficient to take care of any of the small things that go from day-to-day when other solutions update their systems and that type of a thing. And there are actually two services that were well underway to developments. One is the ability to add debit card functions to the solution, so that a FinTech could offer white label to their clients. That actually helped a lot in bringing in larger balances. So that's the reason that one was put in. The other one that's underway is we’re developing what we need to do for an RDFI, which is sorry, ACH terminology, but it allows the FinTech, it allows the customer of the FinTech to direct deposit some or all of their paycheck right into that account. So again, both of those are really focused on going after clients or FinTech’s that could use that feature functionality, which would then translate into higher balances being maintained for those accounts. Pretty much anything beyond that has been put on hold and the reductions that in force that those have been taken that was questioned by somebody when would…

Yes, I can take that. It's interesting, the accounting guidance there, it gives you a guide and tells you, you know, here are the criteria and here's how do you look at it. I think in our case, we used the income approach and with the new product that has yet to really generate cash flow, it's a little bit more difficult to tie down to a specific number. And so if you're using projections and looking at it from that perspective. So it is difficult to assess in terms of absolutes as the accounting guidance gives it. So we took the fact that we had in the best possible way and finished out our analysis.

Tom, anything to add?

No, I mean, that's spot on.

Someone asked that question. It’s not Avenue question. Were the delays in Avenues primarily driven by insufficient market demand, technological development challenges, or heightened competitive pressures? Well, I think we've been actually very clear on them. You know, we saw the 21 consent orders that the regulator put in place in 2023, 2024. We looked at those and we really draft the contents. And it was a matter of not wanting to have to do many things around, but to have all that technology properly integrated. Now, there were some technological issues, again, that we could have work around, but that we decided to just fix. Those were third parties. And so, it's 100%, [Technical Difficulty], But ultimately view it was impacted by your desire from a compliance regulatory and otherwise perspective in order to do it right, get it right the full time. We felt that was very important. So, you know, we didn't have that solution, but we're going to market until October 1. And when we brought it to market, we've been aggressive since then, working with fines to get into the space we're dealing with them their speed. We are again also out at the market looking at a lot of different opportunities to continue to grow with other FinTech providers that have more potential. Are there any questions from?

Yes, questions about Avenue. And I'll paraphrase some of these. How many customers does Avenue post currently?

And so the only [Technical Difficulty] only fully live is DC. We talked about that earlier and that's been slow to take up. They went live on December 31 and they're going at their pace. They've all downloaded from their customer. They have a customer pace and that's been and that, you know, one of the things that sort of influenced the apparent decision as well.

Can you provide additional details on the status of the causes expected in 2024 and 2025?

For 2025. Okay, I mean, it would be 2025 there. Yes, so that's really a function of the opportunities that we have. And we think some of that's going to come from the Venue opportunity. We didn't really focus much on the cannabis retailers operating cannabis. That's an opportunity that we're exploring. There's also, again, they're not under contract yet, but there's been some very good potentials out there and we're trying to bring in apologize I can't share names, I can shares [Technical Difficulty] options, but they're working very hard to bring these in and it's going to change. I think one of the key things to recognize is what happens if that materialize. And so that's really what drives the future of Avenue. Like, we'll get it from the positive standpoint, but it materializes. We do everything that is meant to do, move on and grow. We have to be realistic about alternative and the board and management discussed that too and will take action.

What is the expected expenses for 2025?

So they've been pared down. There's an opportunity, based on variable costs. I'm not going to put the variable as a function, as well the solution is. But…

I think it's [Technical Difficulty] focus on reducing expenses and being as lean as possible. We had [Technical Difficulty] the team that's able to operate the functionality that we have now. But we're very much keeping those operating expenses as lean as possible. If we are revisiting certain contracts that are in place to try to lower the cost on those contracts in this time.

But as I stated before, if we achieve the income that we have in the slide deck, that will be a positive result that will cover all the expenses with the cushion.

And then again, for Avenue, you mentioned 40% reduction for expenses. What was that 40% comprised of?

Yes, I'll just clarify that. So that's not Avenue specific. We were talking about a reduction in the run rate for the company. And it wasn't, I apologize, if I was not, it's not a 40% reduction in expense. When you're looking at the run rate that we had in 2024, compared to the run rate that we're projecting in 2025, it's a 40% reduction in the run rates. We're anticipating 83 basis points per month, which is a reduction of the rate that we had in 2024. And that was done through the cost-cutting productions and the expense things that we were discussing previously here. Sounds like that's the last question. That's okay. So I'm sorry, there's one more in the public here. Need to find it so I can read it properly. Again with regard to Avenue, please elaborate on what are the operational changes versus the revaluation? I'm not 100% sure what that means. I'm going to reach out to the author of that and address it off line. We have talked about the operational change. I think I just went through that, so perhaps I answered the question already. But the efficiencies that we've gained. But that is definitely more significant of the two. There was more savings built into paring things down, renegotiating the agreements that we've already been able to renegotiate and reset expectations. The board, I think, I guess, I didn't say this, but the board just met for 2.5 days here at our headquarters. We went through some very good strategic planning, very comprehensive market evaluations, the accounting team and all of the leadership of the bank really participated in what can we do from an efficiency standpoint to get things, you know, operate as lean as we can for this coming year. You know, none of us were happy with 2024 overall performance. Having said that, I think we as a group, we worked as hard as we ever have in order to get it there. But when I look at 2024, it's really a lot of work to get things into the right place, to get things very focused, so that now we're in a position to really take off and get some extremely strong positive momentum. So we're excited for that. We know that there's challenges before us that we'll be able to prove to the market. And we thank you for your continued investment in MainStreet Bank. And if you do have questions, by all means, please reach out. We will be at an investor conference starting Wednesday morning through Thursday. But we will try to get back to you if we can get together to talk through any questions that you have after this. Thank you again for taking the time to be with us today. We very much appreciate it. I hope you have a good rest of the day.