POTOMAC BANCSHARES, INC. REPORTS 2024 SECOND QUARTER RESULTS

In This Article:

CHARLES TOWN, W.Va., July 31, 2024 /PRNewswire/ -- Potomac Bancshares, Inc. (the "Company") (OTC: PTBS), the one bank holding company for Bank of Charles Town (BCT), for the quarter ended June 30, 2024, earned $1.421 million or $0.34 per share compared to $1.783 million or $0.43 per share for the quarter ended June 30, 2023, and $1.675 million in the first quarter of 2024 or $0.40 per share.

Visit PTBS Investor Relations site at https://ir.mybct.bank/ (PRNewsfoto/Potomac Bancshares, Inc.)
Visit PTBS Investor Relations site at https://ir.mybct.bank/ (PRNewsfoto/Potomac Bancshares, Inc.)

The quarter ended June 30, 2024, included investment security sales resulting in an after-tax loss of $300 thousand to continue our efforts to take advantage of higher interest rates by restructuring the bond portfolio. Excluding this loss, the earnings for the quarter ended June 30, 2024, would have been $1.721 million or $0.42 per share.

Net income was $3.096 million for the six months ended June 30, 2024, or $0.75 per share compared to $3.825 million or $0.92 per share for the six months ended June 30, 2023. Excluding the Q2 2024 investment security after-tax loss of $300 thousand, net income for the six months ended June 30, 2024, would have been $3.396 million, $0.82 per share.

Alice P. Frazier, CEO and President commented, "Each quarter we build upon the prior quarter, remaining cautiously optimistic given the actions and strategic initiatives in process. Strategically, we had an opportunity to expand our BCT Wealth and Trust division into Virginia with an experienced hire. Early results are positive and impactful. In addition, our Government Contract Lending unit pipeline of quality businesses grew with expected impact in the third quarter. With a mindset of cost savings, we completed our contract negotiations with our core service provider which will benefit the company going forward."

Frazier continued, "We are seeing momentum build in our loan pipeline and bookings as businesses are moving forward. As anticipated, our deposits decreased from a client account that was holding temporary funds with a specific payout schedule. The cost of deposits is moderating while loan yields continue to rise. We will continually take advantage of the market with strategic losses within the investment portfolio that significantly improve yield without excessive duration. Overall, we are pleased with the position of the balance sheet in this market and will continue our focus on cost structure."

Selected Linked Quarter Q2 2024 Compared to Q1 2024 Highlights

  • Assets decreased in the quarter $22.9 million or 2.7% declining to $832.5 million due to the aforementioned deposit decrease.

  • Loan growth was $8.4 million or 1.3% for the quarter. As of June 30, 2024, the unfunded commitments for construction loans approximated $18.9 million.

  • Net unrealized losses in the AFS portfolio in Q2 2024 decreased $829 thousand moving to $8.4 million from $9.2 million in Q1 2024.

  • Deposits decreased $22.8 million during the quarter or 3.0% from Q1 2024.

    • Decreases are in both noninterest-bearing deposits of $1.7 million or 1.0%, and interest-bearing deposits of $21.1 million or 3.6%. Part of the decrease in Q2 2024 was expected from a client account that was holding temporary funds for distribution based on a specific payout schedule.

  • The Tier 1 leverage capital ratio for BCT was 9.99% as of Q2 2024 and 9.98% as of Q1 2024. For the Company, the tangible equity / tangible assets ratio was 8.33% as of Q2 2024 compared to 7.92% as of Q1 2024.

  • Net interest margin for the quarter improved 5 basis points (bps) to 3.21% from 3.16% in Q1 2024. See Table 4 for additional details.

    • The yield on loans increased 7 bps to 5.14%.

    • The yield on the securities portfolio increased 27 bps to 3.13%.

    • The cost of interest-bearing deposits increased 10 bps to 2.29%.

  • The allowance for credit losses was 1.04% of total loans outstanding as of both Q2 2024 and Q1 2024.

  • Non-performing assets as a percentage of total assets was 0.36% for Q2 2024 and 0.32% in Q1 2024. The minor increase in non-performing assets will be resolved in the third quarter of 2024.

  • Non-interest income improved by $123 thousand, attributable to increases in secondary market loan fees, Wealth advisory fees, and interchange fees. See Table 3 for additional details.

  • Non-interest expense excluding the loss from investment security sales during the quarter was $6.0 million for Q2 2024, an increase of $302 thousand or 5.3% from Q1 2024. The increase is primarily in salary and employee benefits, other professional services, and advertising and public relations, partly offset by a decrease in other operating expenses. See Table 3 for additional details.

    • Salary and employee benefits were up due to increased salaries, incentive related expenses, mortgage commissions, and group insurance.

    • Advertising and public relations increased to support strategic initiatives and other public relations and shareholder events.

    • Other professional services are up due to increases in legal fees, Trust outsourcing expenses as additional functions are now outsourced, and staff recruitment.

    • Other operating expenses are attributable to a number of categories, including expenses associated with various annual shareholder-related expenses incurred in Q1 2024.