Terms

Series

Series A Fixed-Rate Non-Cumulative Perpetual Preferred Stock

Liquidation Preference

$25.00

Rate Type

Fixed

Payment Frequency

Quarterly

Cumulative

No

Perpetual

Yes

Convertible

No

Callable

Yes

First Call Date

September 30, 2025

First Call Price

$25.00

Capital Stack Ranking

Junior To: All Existing And Future Indebtedness And Other Liabilities, Subordinated Notes Due December 31 2026, Any Future Senior Preferred Stock, All Liabilities Of Mainstreet Bank (Structural Subordination); Pari Passu With: Any Future Parity Preferred Stock; Senior To: Common Stock, Any Junior Preferred Stock

Regulatory (Basel III) Call

Yes

Tax Classification

Qualified Dividend

Qualifies for QDI

Yes

Qualifies for DRD

Yes

Depositary Share Fraction

0.025

Prospectus Summary

MainStreet Bancshares, Inc. is offering depositary shares, each representing a 1/40th interest in a share of its Series A Fixed-Rate Non-Cumulative Perpetual Preferred Stock, with a liquidation preference equivalent to $25 per depositary share. The coupon rate was not yet set at the time of this preliminary prospectus (filed September 10, 2020). Dividends are payable quarterly in arrears on March 30, June 30, September 30, and December 30, commencing December 30, 2020, with a first optional call date of September 30, 2025 at $25 per depositary share. The preferred stock is non-cumulative, meaning that if the board does not declare a dividend for any period, that dividend is permanently lost — holders have no right to recover it in future periods. The Series A Preferred Stock sits above common stock and junior preferred stock in the capital stack but is junior to all existing and future debt obligations of MainStreet Bancshares, including its subordinated notes due December 31, 2026 and approximately $1.4 billion of total liabilities. Because this is a holding company issuance, the preferred is also structurally subordinated to all liabilities of MainStreet Bank — including depositor claims — since the holding company's cash flows depend on upstream dividends from the Bank. A regulatory capital call provision allows the issuer to redeem all (but not part) of the preferred within 90 days if, due to a post-issuance change in law or regulation, the stock ceases to qualify as additional Tier 1 capital under Federal Reserve rules; this redemption requires prior Federal Reserve approval and could occur at any time, potentially forcing reinvestment at less favorable rates. The effective yield will be determined at pricing (rate was blank in this preliminary filing) applied to the $25 per depositary share liquidation preference. Dividends, when declared, are expected to qualify for the preferential qualified dividend income (QDI) rate for individual holders and the dividends-received deduction (DRD) for corporate holders, subject to the issuer having sufficient current or accumulated earnings and profits. The record date falls on the 15th calendar day before each quarterly payment date. Dividend stopper provisions prevent the company from paying dividends on common or junior stock if full preferred dividends for the prior period have not been paid; additionally, if the holding company defaults on or misses interest on its subordinated notes, all preferred dividends are also blocked until cured.

Summarized from the SEC prospectus filing.

Distribution History

Ranking vs. Other Preferreds

Dividend Stopper Provisions

Dividend Stopper Description

If the issuer fails to pay full dividends on the Preferred Stock for the most recently completed dividend period, it cannot declare or pay dividends on common stock or other junior stock, and cannot repurchase or redeem junior or parity stock, during the next succeeding dividend period.

Div Score Breakdown

Reinvesty's multi-factor safety analysis for this preferred, composite score: 61 (Strong)