Q4 2023 Compared to Q4 2022 

• Both quarters were impacted by securities losses taken as investment portfolio restructuring for greater yield. The quarter ended December 31, 2023, was impacted by a $154 thousand pre-tax loss on sales of securities. Excluding this loss, the earnings for the fourth quarter of 2023 would have been $1.830 million or $0.44 per share. The quarter ended December 31, 2022, was also impacted by a $367 thousand pre-tax loss on sales of securities. Excluding this loss, the earnings for the fourth quarter of 2022 would have been $2.239 million or $0.54 per share.

• Loan growth of $28.8 million, or 4.6%, was driven primarily by commercial loan growth of $17.0 million and mortgage loan growth of $8.9 million.

  • Non-owner-occupied office property loans were $44.2 million or 6.8% of the total loan portfolio as of Q4 2023. Most of the office property loans are for main street, small offices.

• Securities portfolio duration as of Q4 2023 was 4.35 compared to 4.13 as of Q4 2022.

  • Net unrealized losses in the AFS portfolio were $8.7 million as of Q4 2023 and $10.0 million as of Q4 2022.

• Total deposits increased $74.2 million or 11.2%. Non-interest bearing deposits remained flat year over year, while interest bearing deposits grew $74.6 million or 14.8%.

• The Tier 1 leverage capital ratio for BCT was 9.77% as of Q4 2023 compared to 10.08% as of Q4 2022. The tangible equity / tangible assets ratio for the Company was 8.05% as of Q4 2023 and 8.00% as of Q4 2022.

• Net interest margin was 3.29% for Q4 2023 compared to 3.63% in Q4 2022.

  • The Q4 2023 loan yield increased 45 basis points (bps) to 5.0% and total earning assets yield increased 61 bps to 4.76% compared to Q4 2022.

  • The cost of interest bearing deposits increased 128 bps to 1.91% and total interest bearing liabilities costs increased by 125 bps to 1.99% compared to Q4 2022.

• The allowance for credit losses was 1.02% of total loans outstanding as of Q4 2023 and 1.00% as Q4 2022.

  • There was no provision for credit losses recorded in the current quarter, and a $165 thousand provision was recorded in Q4 2022. Management considers the current balance of the allowance for credit losses adequate.

• Non-performing assets as a percentage of total assets was 0.32% as of Q4 2023. There were none as of Q4 2022.

• Non-interest income for the quarter was $1.7 million, an increase of $243 thousand or 17.1% compared to Q4 2022. Increases are primarily in Wealth and Investments fee income and other operating income. See Table 3 for additional details.

• Non-interest expense excluding the loss on sales of AFS Securities was $6.1 million for Q4 2023, an increase of $926 thousand or 17.9% over Q4 2022. During Q4 2023, we had several one-time expenses totaling $315 thousand. Excluding these one-time items, expenses increased 11.8% for the quarter compared to expenses in Q4 2022 primarily due to strategic hires and investments in training and technology to support growth. See Table 3 for additional details.

  • One-time expenses include professional fees related to core processing contract negotiations, check fraud losses, and tuition reimbursements.

Linked Quarter Q4 2023 Compared to Q3 2023 

• Asset growth for the quarter was $20.9 million reaching $830.6 million or 2.6%.

• Loans were flat for the quarter as originations were offset by anticipated payoffs of completed project loans.

• Net unrealized losses in the AFS portfolio were $8.7 million as of Q4 2023 and $11.9 million as of Q3 2023.

• Deposits increased during the quarter $18.4 million from Q3 2023 or 2.6%.

  • Growth occurred in both interest bearing deposits and noninterest bearing deposits. Interest bearing deposits increased $16.7 million or 3%. Noninterest bearing deposits increased $1.7 million or 1.1%.

• The Tier 1 leverage capital ratio for BCT was 9.77% compared to 9.93% as of Q3 2023. For the Company, the tangible equity / tangible assets ratio was 8.05% compared to 7.75% as of Q3 2023.

• Net interest margin for the quarter increased 6 bps to 3.29% from 3.23% in Q3 2023. For most of Q4 2023, BCT benefitted from a large deposit earning a below market rate causing the increase in margin. The deposit was repriced on January 1, 2024 to market rates.

  • The yield on loans increased 7 bps to 5.0% and total earning assets yield increased 14 bps to 4.76%.

  • The yield on the securities portfolio increased 44 bps driven by the restructuring.

  • The cost of interest bearing deposits increased 8 bps to 1.91% while the cost of interest bearing liabilities also increased 8 bps to 1.99%.

• The allowance for credit losses was 1.02% of total loans outstanding as of Q4 2023 and 1.04% as of Q3 2023.

  • Given the strong credit quality and nominal growth, there was no provision for credit losses in either quarter.

• Non-performing assets as a percentage of total assets was 0.32% for Q4 2023 and 0.33% for Q3 2023.

• Non-interest income increased during the quarter by $29 thousand to $1.66 million, primarily attributable to increases in Wealth and Investment income and penalties from early loan payoffs partly offset by decreases in secondary market income and service charges on deposits. See Table 3 for additional details.

• Non-interest expense excluding the loss on sales of AFS Securities was $6.1 million for Q4 2023, an increase of $565 thousand or 10.2% over Q3 2023. As noted above, Q4 2023 included $315 thousand of one-time expenses previously explained. Excluding the one-time expenses, overall expenses for the quarter increased only 4.5%, primarily attributable to strategic hires, incentive accruals, and an increase in group health insurance. See Table 3 for additional details.

Dividend Announcement

At our January Board meeting, Potomac Bancshares, Inc. Board of Directors declared a quarterly dividend of $0.10 per share. The dividend is for all shareholders of record on February 2, 2024, and will be paid on February 9, 2024.

About the Company

Founded in 1871, BCT - Bank of Charles Town, also known as The Community's Bank, is a wholly owned subsidiary of Potomac Bancshares, Inc. (OTC:PTBS). The Company conducts operations through its main office, an additional eight branch offices, and two loan production offices. BCT's offices are in Jefferson and Berkeley Counties (WV), Washington County (MD), and Loudoun and Stafford Counties (VA). The Bank provides various banking products and services including free access to over 55,000 ATMs through the Allpoint? network plus online and mobile banking for individuals, businesses, and local governments. The Bank also offers commercial lines and term loans, residential and commercial construction loans, commercial real estate loans, agricultural loans, and government contractor loans. The Residential Lending division offers secondary market and portfolio mortgage loans, one-time close construction to perm loans, as well as home equity loans and lines of credit. For over 65 years, BCT Wealth Advisors has provided financial management, investment, trust, and estate services to its clients. In 2023, American Banker selected BCT as a "Top 200 Community Bank," an annual listing of the best performing banks in the United States with assets under $2 billion. BCT was voted a "Best of the Best" winner in the 2023 Journal-News Readers' Choice Awards in four categories:  Bank, Mortgage Company, Loan Services, and Financial Planning. In 2023, 2021, 2020, and 2019 the Bank was named a "Best Bank To Work For" by American Banker.

The Company's shares are quoted on the OTC Pink Sheet marketplace under the symbol "PTBS." For more information about Potomac Bancshares, Inc., and the Bank, please visit our website at www.mybct.bank.

Forward Looking Statements

Certain statements made in this press release may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that include projections, predictions, expectations, or beliefs about events or results or otherwise are not statements of historical facts, such as statements about the Company's growth strategy and deployment of capital. Although the Company believes that its expectations with respect to such forward-looking statements are based upon reasonable assumptions within the bounds of its existing knowledge of its business and operations, there can be no assurance that actual results, performance, or achievements of the Company will not differ materially from those expressed or implied by such forward-looking statements. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether because of new information, future events or otherwise, except as required by applicable law.

 

 

 

 

 

 

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SOURCE Potomac Bancshares, Inc.