POTOMAC BANCSHARES, INC. REPORTS 2024 SECOND QUARTER RESULTS
The quarter ended
Net income was
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."
- 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 ofJune 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.
- Decreases are in both noninterest-bearing deposits of
- 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.
Selected Q2 2024 Compared to Q2 2023 Highlights
- Commercial loan growth of
$9.8 million , mortgage loan growth of$5.5 million , and home equity growth of$3.6 million , drove an overall increase in loans outstanding of$18.9 million or 2.9%.- Non-owner-occupied office property loans were
$44.5 million or 6.7% of the total loan portfolio as of Q2 2024. As of Q2 2023, non-owner-occupied office property loans were$45.0 million or 7.0% of the total loan portfolio. Most of the office property loans are for main street, small offices.
- Non-owner-occupied office property loans were
- Securities portfolio duration as of Q2 2024 was 4.27 compared to 4.08 as of Q2 2023.
- Net unrealized losses in the AFS portfolio were
$8.4 million as of Q2 2024 and$10.6 million as of Q2 2023.
- Net unrealized losses in the AFS portfolio were
- Total deposits increased
$33.4 million or 4.7%. Noninterest-bearing deposits were down$219 thousand or 0.1%, while interest-bearing deposits were up$33.6 million or 6.3%. - The Tier 1 leverage capital ratio for BCT was 9.99% as of Q2 2024 compared to 10.04% as of Q2 2023. The tangible equity / tangible assets ratio for the Company was 8.33% as of Q2 2024 and 7.86% as of Q2 2023.
- Net interest margin was 3.21% for Q2 2024 compared to 3.28% in Q2 2023.
- The earning asset yield increased 48 bps to 4.94% compared to Q2 2023.
- The cost of interest-bearing deposits increased 74 bps to 2.29% compared to Q2 2023.
- See Table 4 for additional details.
- The allowance for credit losses was 1.04% of total loans outstanding as of Q2 2024 and 1.05% as of Q2 2023.
- Non-performing assets as a percentage of total assets was 0.36% as of Q2 2024, and 0.33% as of Q2 2023.
- Non-interest income for the quarter was
$1.7 million , an increase of$70 thousand or 4.2% compared to Q2 2023. Increases are centered in secondary market income and other operating income. Other operating income increased due to increases from CSV Life Insurance due to the restructuring in 2023, and income from equity security valuations. See Table 3 for additional details. - Non-interest expense excluding investment security losses was
$6.0 million for Q2 2024, an increase of$497 thousand or 9.1% over Q2 2023. Increases are in salaries and employee benefits, computer services and communications, other professional services, and other operating expenses. See Table 3 for additional details.- Salary and employee benefits were up due to increased salaries, group insurance, 401(k), partly offset by a reduction in incentives.
- Computer services and communications are up due to investments in technology to support growth and business continuity.
- Other professional services are up due to increases in legal fees, Trust outsourcing expenses, human capital initiatives, and staff recruitment.
- Other operating expenses are up due to check fraud losses, franchise taxes, and net expenses in our bank tech investment.
Dividend Announcement
At our
About the Company
Founded in 1871, BCT -
The Company's shares are quoted on the OTC Pink Sheet marketplace under the symbol "PTBS." For more information about
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. Factors that could cause actual results to differ from those discussed in such forward-looking statements include, but are not limited to, the following: (1) general economic conditions, especially in the communities and markets in which the Company conducts its business; (2) credit risk, including risk that negative credit quality trends may lead to a deterioration of asset quality, risk that our allowance for credit losses may not be sufficient to absorb actual losses in the Company's loan portfolio, and risk from concentrations in the Company's loan portfolio; (3) changes in the real estate market, including the value of collateral securing portions of the Company's loan portfolio; (4) changes in the interest rate environment; (5) operational risk, including cybersecurity risk and risk of fraud, data processing system failures, and network breaches; (6) changes in technology and increased competition, including competition from non-bank financial institutions; (7) changes in consumer preferences, spending and borrowing habits, demand for our products and services, and customers' performance and creditworthiness; (8) difficulty growing loan and deposit balances; (9) the Company's ability to effectively execute its business plan; (10) changes in regulations, laws, taxes, government policies, monetary policies and accounting policies affecting bank holding companies and their subsidiaries, including changes in deposit insurance premiums; (11) deterioration in the financial condition of the
CONSOLIDATED FINANCIAL HIGHLIGHTS |
||||||
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||||||
Table 1 |
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|
|
|
|
|
|
Six Months Ended |
||
( Unaudited - dollars in thousands, except per share data) |
|
|
|
|
||
|
|
|
|
|
|
|
Earnings Performance |
|
|
|
|
||
|
Interest and dividend income |
|
|
|
|
|
|
Interest expense |
|
6,877 |
|
3,781 |
|
|
Net interest income |
|
12,958 |
|
12,799 |
|
|
Provision for credit losses |
|
309 |
|
222 |
|
|
Non-interest income |
|
3,351 |
|
3,004 |
|
|
Non-interest expense |
|
12,012 |
** |
10,653 |
|
|
|
Income Before Income Tax Expense |
|
3,988 |
|
4,928 |
|
Income tax expense |
|
892 |
|
1,103 |
|
|
|
Net Income |
|
|
|
|
|
|
|
|
|
|
|
|
Return on average equity |
|
9.64 % |
|
12.45 % |
|
|
Return on average assets |
|
0.78 % |
|
1.00 % |
|
|
Net interest margin |
|
3.19 % |
|
3.42 % |
|
|
|
|
|
|
|
|
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|
Balance Sheet Highlights |
|
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||
|
Total assets |
|
|
|
|
|
|
Investment securities |
|
83,476 |
|
85,350 |
|
|
Loans held for sale |
|
1,396 |
|
2,086 |
|
|
Loans, net of allowance for credit losses of |
|
657,188 |
|
638,381 |
|
|
Deposits |
|
|
740,096 |
|
706,660 |
|
Long term FHLB borrowings |
|
6,000 |
|
6,000 |
|
|
Subordinated debt, net of issuance costs |
|
9,927 |
|
9,868 |
|
|
Shareholders' equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Shareholders' Value (per share) |
|
|
|
|
||
|
Earnings per share, basic |
|
|
|
|
|
|
Earnings per share, diluted |
|
0.75 |
|
0.92 |
|
|
Cash dividends declared (per share) |
|
0.22 |
|
0.18 |
|
|
Book value at period end (per share) |
|
|
|
|
|
|
End of period number of shares outstanding |
|
4,144,561 |
|
4,144,561 |
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Safety and Soundness |
|
|
|
|
||
|
Tier 1 capital ratio (leverage ratio)* |
|
9.99 % |
|
10.04 % |
|
|
Tangible Equity/Tangible Assets |
|
8.33 % |
|
7.86 % |
|
|
Non-performing assets as a percentage of |
|
|
|
|
|
|
|
total assets including OREO |
|
0.36 % |
|
0.33 % |
|
Allowance for credit losses as a percentage of |
|
|
|
|
|
|
|
period end loans |
|
1.04 % |
|
1.05 % |
|
Ratio of net charge offs (recoveries) annualized during the period to |
|
|
|
|
|
|
|
average loans outstanding during the period |
|
0.021 % |
|
-0.010 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* The capital ratio presented is for |
||||||
** Non-Interest Expense includes the Loss on Sale of |
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CONSOLIDATED FINANCIAL HIGHLIGHTS |
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||||||||
TABLE 2 |
|
Quarterly Financial Data |
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|
Three Months Ended |
||||||||
( Unaudited - dollars in thousands, except per share data) |
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|
||
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|
|
|
|
Earnings Performance |
|
|
|
|
|
|
|
|
|
||
|
Interest and dividend income |
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
3,521 |
|
3,356 |
|
3,034 |
|
2,752 |
|
2,272 |
|
|
Net interest income |
6,567 |
|
6,391 |
|
6,793 |
|
6,424 |
|
6,276 |
|
|
Provision for credit losses |
129 |
|
180 |
|
- |
|
- |
|
191 |
|
|
Non-interest income |
1,737 |
|
1,614 |
|
1,662 |
|
1,633 |
|
1,667 |
|
|
Non-interest expense |
6,350 |
**** |
5,662 |
|
6,266 |
** |
5,821 |
*** |
5,467 |
|
|
|
Income Before Income Tax Expense |
1,825 |
|
2,163 |
|
2,189 |
|
2,236 |
|
2,285 |
|
Income tax expense |
404 |
|
488 |
|
479 |
|
507 |
|
502 |
|
|
|
Net Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on average equity |
9.73 % |
|
10.00 % |
|
11.21 % |
|
11.86 % |
|
11.41 % |
|
|
Return on average assets |
0.79 % |
|
0.81 % |
|
0.85 % |
|
0.93 % |
|
0.91 % |
|
|
Net interest margin |
3.21 % |
|
3.16 % |
|
3.29 % |
|
3.23 % |
|
3.28 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Balance Sheet Highlights |
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|
|
||
|
Total assets |
|
|
|
|
|
|
|
|
|
|
|
Investment securities |
83,476 |
|
84,972 |
|
84,127 |
|
82,575 |
|
85,350 |
|
|
Loans held for sale |
1,396 |
|
2,210 |
|
678 |
|
2,159 |
|
2,086 |
|
|
Loans, net of allowance for credit losses |
657,188 |
|
648,804 |
|
644,687 |
|
643,921 |
|
638,381 |
|
|
Deposits |
740,096 |
|
762,927 |
|
739,680 |
|
721,253 |
|
706,660 |
|
|
Long term FHLB borrowings |
6,000 |
|
6,000 |
|
6,000 |
|
6,000 |
|
6,000 |
|
|
Subordinated debt, net of issuance costs |
9,927 |
|
9,912 |
|
9,897 |
|
9,882 |
|
9,868 |
|
|
Shareholders' equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
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|
Shareholders' Value (per share) |
|
|
|
|
|
|
|
|
|
||
|
Earnings per share, basic |
|
|
|
|
|
|
|
|
|
|
|
Earnings per share, diluted |
0.34 |
|
0.40 |
|
0.41 |
|
0.42 |
|
0.43 |
|
|
Cash dividends declared (per share) |
0.12 |
|
0.10 |
|
0.10 |
|
0.10 |
|
0.09 |
|
|
Book value at period end (per share) |
|
|
|
|
|
|
|
|
|
|
|
End of period number of shares outstanding |
4,144,561 |
|
4,144,561 |
|
4,144,561 |
|
4,144,561 |
|
4,144,561 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Safety and Soundness |
|
|
|
|
|
|
|
|
|
||
|
Tier 1 capital ratio (leverage ratio)* |
9.99 % |
|
9.98 % |
|
9.77 % |
|
9.93 % |
|
10.04 % |
|
|
Tangible Equity/Tangible Assets |
8.33 % |
|
7.92 % |
|
8.05 % |
|
7.75 % |
|
7.86 % |
|
|
Non-performing assets as a percentage of |
|
|
|
|
|
|
|
|
|
|
|
|
total assets including OREO |
0.36 % |
|
0.32 % |
|
0.32 % |
|
0.33 % |
|
0.33 % |
|
Allowance for credit losses as a percentage of |
|
|
|
|
|
|
|
|
|
|
|
|
period end loans |
1.04 % |
|
1.04 % |
|
1.02 % |
|
1.04 % |
|
1.05 % |
|
Ratio of net charge offs (recoveries) annualized during the period to |
|
|
|
|
|
|
|
|
||
|
|
average loans outstanding during the period |
0.029 % |
|
0.013 % |
|
0.046 % |
|
0.004 % |
|
-0.011 % |
|
|
|
|
|
|
|
|
|
|
|
|
* The capital ratio presented is for |
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** Includes |
|||||||||||
*** Includes |
|||||||||||
**** Includes |
|
|
|
|
CONSOLIDATED FINANCIAL HIGHLIGHTS |
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|
||||||||
|
|
|
|
Noninterest Income & Noninterest Expense |
||||||||
TABLE 3 |
|
|
|
Three Months Ended |
||||||||
( Unaudited - dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest Income: |
|
|
|
|
|
|
|
|
|
|
||
|
Wealth and Investments |
|
|
|
|
|
|
|
|
|
|
|
|
Service charges on deposit accounts |
|
265 |
|
246 |
|
254 |
|
266 |
|
266 |
|
|
Secondary market income |
|
274 |
|
196 |
|
140 |
|
223 |
|
232 |
|
|
Interchange fees |
|
520 |
|
493 |
|
506 |
|
515 |
|
523 |
|
|
Other operating income |
|
246 |
|
261 |
|
291 |
|
176 |
|
221 |
|
|
|
Total Noninterest Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest Expenses: |
|
|
|
|
|
|
|
|
|
|
||
|
Salaries and employee benefits |
|
|
|
|
|
|
|
|
|
|
|
|
Net occupancy expense of premises |
|
266 |
|
276 |
|
256 |
|
261 |
|
254 |
|
|
Furniture and equipment expenses |
|
367 |
|
367 |
|
341 |
|
349 |
|
369 |
|
|
Advertising and public relations |
|
116 |
|
68 |
|
92 |
|
105 |
|
133 |
|
|
Computer services and communications |
|
535 |
|
529 |
|
485 |
|
486 |
|
454 |
|
|
Other professional services |
|
429 |
|
348 |
|
410 |
|
329 |
|
258 |
|
|
ATM and check card expenses |
|
263 |
|
249 |
|
258 |
|
243 |
|
275 |
|
|
Loss on sale of AFS securities |
|
386 |
|
- |
|
154 |
|
274 |
|
- |
|
|
Other operating expenses |
|
791 |
|
841 |
|
922 |
|
691 |
|
663 |
|
|
|
Total Noninterest Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Noninterest Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
Excluding loss on sale of AFS securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSOLIDATED FINANCIAL HIGHLIGHTS |
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|
||||||||||
|
|
AVERAGE BALANCE SHEET, INTEREST AND RATES |
||||||||||
TABLE 4 |
|
|
|
|
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|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Three Months Ended |
Three Months Ended |
|||||||
( Unaudited - dollars in thousands) |
|
|
|
|
||||||||
ASSETS: |
Average |
Interest |
Average |
|
Average |
Interest |
Average |
|
Average |
Interest |
Average |
|
Interest Earning Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
Loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans held for sale |
$ 1,775 |
$ 30 |
6.80 % |
|
$ 1,144 |
$ 14 |
4.92 % |
|
$ 3,824 |
$ 42 |
4.41 % |
|
Portfolio loans (1) |
654,120 |
8,361 |
5.14 % |
|
652,667 |
8,225 |
5.07 % |
|
634,716 |
7,561 |
4.78 % |
Available for sale securities (2) |
92,975 |
724 |
3.13 % |
|
93,519 |
664 |
2.86 % |
|
96,567 |
542 |
2.25 % |
|
|
70,581 |
926 |
5.28 % |
|
62,804 |
801 |
5.13 % |
|
31,099 |
361 |
4.66 % |
|
Other interest earning assets |
2,172 |
47 |
8.70 % |
|
2,357 |
43 |
7.34 % |
|
2,237 |
42 |
7.53 % |
|
Total Interest Earning Assets |
821,623 |
$ 10,088 |
4.94 % |
|
812,491 |
$ 9,747 |
4.82 % |
|
768,443 |
$ 8,548 |
4.46 % |
|
Other Assets |
19,997 |
|
|
|
19,361 |
|
|
|
17,987 |
|
|
|
Total Assets |
$ 841,620 |
|
|
|
$ 831,852 |
|
|
|
$ 786,430 |
|
|
|
Liabilities and Stockholders' Equity |
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing Deposits |
$ 581,787 |
$ 3,307 |
2.29 % |
|
$ 576,456 |
$ 3,142 |
2.19 % |
|
$ 533,088 |
$ 2,056 |
1.55 % |
|
Federal Funds and repurchase agreements |
3,706 |
7 |
0.76 % |
|
3,343 |
7 |
0.84 % |
|
4,468 |
8 |
0.72 % |
|
Subordinated debt |
9,918 |
140 |
5.68 % |
|
9,902 |
140 |
5.69 % |
|
9,859 |
139 |
5.65 % |
|
FHLB advances |
6,000 |
67 |
4.49 % |
|
6,000 |
67 |
4.49 % |
|
6,000 |
69 |
4.61 % |
|
Total Interest-Bearing Liabilities |
601,411 |
$ 3,521 |
2.35 % |
|
595,701 |
$ 3,356 |
2.27 % |
|
553,415 |
$ 2,272 |
1.65 % |
|
Non-interest-bearing deposits and other liabilities |
172,221 |
|
|
|
168,770 |
|
|
|
170,339 |
|
|
|
Total Liabilities |
773,632 |
|
|
|
764,471 |
|
|
|
723,754 |
|
|
|
Stockholders' Equity |
67,988 |
|
|
|
67,381 |
|
|
|
62,676 |
|
|
|
Total Liabilities and Stockholders' Equity |
$ 841,620 |
|
|
|
$ 831,852 |
|
|
|
$ 786,430 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest Rate Spread |
|
|
2.59 % |
|
|
|
2.55 % |
|
|
|
2.81 % |
|
Net Interest Income |
|
$ 6,567 |
|
|
|
$ 6,391 |
|
|
|
$ 6,276 |
|
|
Net Interest Margin |
|
|
3.21 % |
|
|
|
3.16 % |
|
|
|
3.28 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Total loan interest income includes amortization of deferred loan fees, net of deferred loan costs. |
|
|
|
|
|
|
|
|||||
(2) Average balances exclude unrealized gains/losses. |
|
|
|
|
|
|
|
|
|
|
View original content to download multimedia:https://www.prnewswire.com/news-releases/potomac-bancshares-inc-reports-2024-second-quarter-results-302211654.html
SOURCE