MainStreet Bancshares in Fairfax, Va., is encouraging investors to reject a shareholder proposal that the board sell the Fairfax, Va., company.
The $2.2 billion-asset company also announced that it pulled the plug on its long-planned Avenu Banking-as-a-Service platform.
Shareholder Philip Timyan proposed that the company and its assets be sold “at the earliest opportunity for the highest price available” due to what he views as subpar returns. Timyan owns about 88,000 shares of MainStreet stock.
The company’s board, in urging shareholders to vote against the proposal, called it “vague and indefinite” while emphasizing a commitment to maximizing shareholder value through strategic decision-making.
“The company’s 2024 performance was not where we wanted it to be.,” the board said in a regulatory filing.
“The board and management team took aggressive steps to resolve the minor credit quality issues,” including restructuring wholesale deposit priorities to lower funding costs and expense management to streamline operations and improve profitability.
MainStreet disclosed in its first-quarter earnings release that it no longer plans to proceed with Avenu. The company had invested roughly $22 million building the BaaS platform.
“This quarter saw a change in direction for the Avenu technology initiative, which will not be moving forward,” Chairman and CEO Jeff Dick, said in the release. “The timeline for the expected return on invested capital extended beyond the company’s plan, and we decided to devote our energy on the core bank.”
Avenu had just $41 million in deposits at the end of last year, well short of MainStreet’s $200 million target. The platform lost $3.6 million last year; it wrote down the value of the software it developed to run the business by nearly $20 million during the fourth quarter.
MainStreet earned $2.5 million in the first quarter.