Main Street Financial Services Corp. Announces Earnings for Third Quarter of 2024

Business Highlights

• Financial results reflect a full quarter following the completed merger of Main Street Financial Services Corp. (Main Street) and Wayne Savings Bancshares, Inc. (Wayne) on May 31, 2024.
• Net income for the third quarter of 2024 totaled $3.4 million, or $0.44 per common share
• Annualized deposit growth of 7.8% for the quarter ended September 30, 2024
• Annualized loan growth of 4.6% for the quarter ended September 30, 2024
• Announced implementation of Dividend Reinvestment Plan for shareholders on October 3, 2024
• Declared cash dividend of $0.14 per share on October 11, 2024

The Company announced a merger of equals transaction with Wayne Savings Bancshares, Inc. ("Legacy Wayne”) on February 23, 2023. On May 31, 2024 (the "Merger Date”), the Company completed the transaction, forming a financial holding company with assets of $1.4 billion. On the Merger Date, Legacy Wayne merged with and into Main Street, with Main Street surviving the merger (the "Merger”). Immediately following the Merger, Main Street's wholly owned bank subsidiary, Main Street Bank Corp., merged with and into Wayne Savings Community Bank, with Wayne Savings Community Bank surviving the merger. Upon completion of the Merger, Wayne Savings Community Bank was renamed Main Street Bank Corp.

The Merger was accounted for as a reverse merger using the acquisition method of accounting, therefore, Legacy Wayne was deemed the acquirer for financial reporting purposes, even though Main Street was the legal acquirer. Accordingly, Legacy Wayne's historical financial statements are the historical financial statements of the combined company for all periods before the Merger Date. Our consolidated statements of income for the quarters ended June 30, 2024 and September 30, 2024, include the results from Main Street on and after May 31, 2024. Results for periods before May 31, 2024, reflect only those of Legacy Wayne and do not include the consolidated statements of income of Main Street. Accordingly, comparisons of our results for the quarter ended September 30, 2024, with those of prior periods may not be meaningful. The number of shares issued and outstanding, earnings per share, dividends paid and all references to share quantities of Main Street have been retrospectively adjusted to reflect the equivalent number of shares issued in the Merger.

The return on average equity and return on average assets for the third quarter of 2024 was 12.58% and 1.00%, compared to 14.41% and 0.91%, for the third quarter of 2023. Excluding merger-related expenses (non-GAAP), return on average equity and return on average assets for the quarter ended September 30, 2024, was 13.21% and 1.05%, respectively.

President and CEO James R. VanSickle commented "2024 has been the most transformational year in the 125-year history of our bank. The successful merger of Main Street and Wayne has provided long-term value for our shareholders and benefits for our customers, communities and employees. We are pleased with our growth in loans and deposits and our solid earnings during our first full quarter of operations ended on September 30, 2024. We remain optimistic about the increased capabilities, scale and profitability of our combined organization.”

Third Quarter 2024 Financial Results

Net interest income was $10.7 million for the quarter ended September 30, 2024, an increase of 97.6% from $5.4 million for the quarter ended September 30, 2023. The net interest margin of 3.28% for the third quarter of 2024 increased 40 basis points from 2.88% for the third quarter of 2023. Loan yields were 6.17% for the quarter ended September 30, 2024, an increase of 99 basis points when compared to 5.18% for the quarter ended September 30, 2023. Investment yields increased 111 basis points to 3.45% as of September 30, 2024 when compared to the quarter ended September 30, 2023. The cost of funds for the third quarter of 2024, was 2.64%, an increase of 102 basis points when compared to the third quarter of 2023. The cost of funds increase is largely due to utilizing higher-cost wholesale funding, such as FHLB advances, and shifting deposit composition to higher-yielding product offerings. The cost of total deposits was 2.29% for the quarter ended September 30, 2024, a 90 basis point increase when compared to 1.39% for the quarter ended September 30, 2023. The cost of borrowings for the quarter ended September 30, 2024 totaled 5.45%, an increase of 25 basis points when compared to the quarter ended September 30, 2023.

A provision for credit losses and unfunded commitments of $109,000 was recorded for the quarter ended September 30, 2024. During the quarter, the Company recognized 86,000 in charge-offs and $36,000 in recoveries, reflecting relatively stable asset quality.

Noninterest income totaled $1.6 million for the quarter ended September 30, 2024. The Company elected to sell approximately $15 million of the acquired securities portfolio during the quarter, recognizing a gain on sale of investments totaling $702,000.

Noninterest expense totaled $7.9 million for the quarter ended September 30, 2024, an increase of $4.1 million when compared to the quarter ended September 30, 2023. The increase reflects a full quarter of combined expenses after completion of the merger. Merger-related noninterest expenses (non-GAAP) totaled $0.2 million for the quarter, consisting of legal and professional services. Excluding merger-related expenses (non-GAAP), the Company's efficiency ratio was 62.9% for the quarter ended September 30, 2024, compared to 58.2% for the quarter ended September 30, 2023.

September 30, 2024 Financial Condition

At September 30, 2024, the Company had total assets of $1.39 billion with net loan balances totaling $1.11 billion. Net loans receivable increased by $12.6 million during the third quarter of 2024, or 4.6% annualized, primarily in the commercial loan portfolio. As part of the merger, the Company acquired $430.8 million in loans.

The allowance for credit losses was $11.8 million at September 30, 2024, compared to $7.3 million at December 31, 2023. The increase is a result of establishing an allowance for credit losses on the acquired non-PCD loan portfolio during the second quarter of 2024. The allowance for credit losses as a percent of total loans was 1.04%, compared to 1.09% as of December 31, 2023. The allowance for credit losses and the related provision for credit losses is based on management's judgment and evaluation of the loan portfolio. Management believes the current allowance for credit losses is adequate, however, changing economic and other conditions may require future adjustments to the allowance for credit losses.

Total nonperforming loans (NPLs) was $5.4 million at September 30, 2024, an increase from $0.4 million at December 31, 2023. The NPL to net loan receivable ratio was 0.48% as of September 30, 2024. Past due loan balances of 30 days and more increased from $2.8 million at December 31, 2023, to $13.2 million, or 1.18% of net loans outstanding, at September 30, 2024. The increase in nonperforming and past due loans is due to the impact of the acquired loan portfolio.

Improvement in Asset Quality Since Merger Announcement: The combined level of classified loans and loans past due 30 or more days was $24.4 million and $19.1 as of December 31, 2022. Since the merger announcement on February 23, 2023, the management teams of both Main Street and Wayne invested a great deal of time ensuring our combined organization utilizes strong underwriting standards and proactively monitors credit quality. Main Street sold approximately $15.2 million of loans in August 2023 and April 2024, of which approximately $12.7 million were classified loans. As of September 30, 2024, the resultant Company has $14.6 of classified loans and $13.2 of loans past due 30 or more days.

Total liabilities increased to $1.28 billion at September 30, 2024 with deposits totaling $1.10 billion and FHLB advances totaling $140.0 million. Deposits grew by $21.2 million, or 7.8% annualized, during the third quarter of 2024. As part of the merger, the Company acquired $487.4 million in deposits. As of September 30, 2024, the Company held no brokered deposits compared to $116.7 million at December 31, 2024. The Company leverages FHLB advances for short-term funding needs due to their accessibility and alignment with prevailing market rates. As of September 30, 2024, the Company held $140.0 million in FHLB advances.

Total stockholders' equity was $111.3 million at September 30, 2024, an increase of $58.4 million when compared to the December 31, 2023 balance. The increase was primarily driven by the merger between Main Street and Wayne. Total stockholders' equity increased during the third quarter of 2024 by $5.3 million, primarily from net income of $3.4 million and an increase in accumulated other comprehensive income benefit of $2.8 million, partially offset by dividends of $1.1 million.

Main Street Financial Services Corp. is a holding company headquartered in Wooster, Ohio. Its primary subsidiary, Main Street Bank Corp. was founded in 1899 and provides full-service banking, commercial lending, and mortgage services across its branch infrastructure. Today, Main Street Bank Corp. operates 19 branch locations in Wooster, Ohio, Wheeling, West Virginia and other surrounding communities in Ohio and West Virginia. Additional information about Main Street Bank Corp. is available at www.mymainstreetbank.bank.

Non-GAAP Disclosure

This press release includes disclosures of the Company's return on average equity, return on average assets, net income, and efficiency ratios which are excluding costs related to merger activities which are financial measures not prepared in accordance with generally accepted accounting principles in the United States (GAAP). A non-GAAP financial measure is a numerical measure of historical or future financial performance, financial position or cash flow that excludes or includes amounts that are required to be disclosed by GAAP. The Company believes that these non-GAAP financial measures provide both management and investors a more complete understanding of the underlying operational results and trends and the Company's marketplace performance. The presentation of this additional information is not meant to be considered in isolation or as a substitute for the numbers prepared in accordance with GAAP.

Forward-Looking-Statements

This release contains forward-looking statements that are not historical facts and that are intended to be "forward-looking statements” as that term is defined by the Private Securities Litigation Reform Act of 1995. These forward-looking statements may include, but are not limited to, statements about the Company's plans, objectives, expectations and intentions and other statements contained in this release that are not historical facts and pertain to the Company's future operating results. When used in this release, the words "expects,” "anticipates,” "intends,” "plans,” "believes,” "seeks,” "estimates” and similar expressions are generally intended to identify forward-looking statements. Actual results may differ materially from the results discussed in these forward-looking statements, because such statements are inherently subject to significant assumptions, risks and uncertainties, many of which are difficult to predict and are generally beyond the Company's control. These include but are not limited to: the possibility of adverse economic developments that may, among other things, increase default and delinquency risks in the Company's loan portfolios; shifts in interest rates; shifts in the rate of inflation; shifts in the demand for the Company's loan and other products; unforeseen increases in costs and expenses; lower-than-expected revenue or cost savings in connection with acquisitions; changes in accounting policies; changes in the monetary and fiscal policies of the federal government; and changes in laws, regulations and the competitive environment. Unless legally required, the Company disclaims any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

Contact Information:

Matthew Hartzler

Senior Vice President, Chief Financial Officer

(330) 264-5767