Potomac Bancshares Surpasses $1 Billion in Assets and Reports Third Quarter 2026 Results
CHARLES TOWN, W.Va., Oct. 28, 2026 /PRNewswire/ -- Potomac Bancshares, Inc. (the "Company") (OTCID: PTBS), the bank holding company of Potomac Bank (the "Bank"), reported net income of $2.6 million, or $0.63 per basic and diluted earnings per common share, for the third quarter of 2026. This represents a 12% increase from the third quarter of 2025. Return on average assets was 1.02% and return on average equity was 11.70% for the quarter.
For the nine months ending September 30, 2026, the Company reported net income of $9.0 million, or $2.16 per share. This represents an increase of $2.4 million, or 36%, compared to the same period in 2025 when net income was $6.6 million, or $1.59 per share.
Quarterly Financial Highlights (in thousands, except per share data) | |||
Q3 2026 | Q2 2026 | Q3 2025 | |
Net income | $2,591 | $3,320 | $2,322 |
EPS, basic and diluted | $0.63 | $0.80 | $0.56 |
ROA | 1.02 % | 1.32 % | 0.98 % |
ROE | 11.70 % | 15.52 % | 11.62 % |
Non-GAAP Measures(1): | |||
Adj. Net income | $ 2,591 | $3,320 | $2,387 |
Adj. EPS (basic and diluted) | $0.63 | $0.80 | $0.58 |
Adj. ROA | 1.02 % | 1.32 % | 1.01 % |
Adj. ROE | 11.70 % | 15.52 % | 11.94 % |
Adj. Pre-provision, pre-tax earnings | $3,684 | $4,552 | $3,275 |
Adj. Pre-provision, pre-tax ROA | 1.46 % | 1.82 % | 1.39 % |
Net interest margin | 3.79 % | 3.76 % | 3.54 % |
Efficiency ratio | 68.01 % | 61.16 % | 67.14 % |
(1) | Non-GAAP financial measures provide additional insight into the Company's core operating performance by excluding certain non-recurring items. See "Non-GAAP Financial Measures" and "Non-GAAP Reconciliations" for additional information and detailed calculations of adjustments. |
Alice Frazier, President and CEO of Potomac Bancshares stated, "While net income in the third quarter was lower than the preceding quarter, our second quarter results benefited from several revenue items that were not indicative of our ongoing earnings run rate. In contrast, third quarter performance reflects the strength of our core banking franchise, with continued expansion in net interest margin, strong deposit growth, solid loan production, and favorable asset quality. Reaching the $1 billion asset milestone while delivering a return on assets above 1.00% demonstrates the durability of our earnings and the effectiveness of our long-term growth strategy."
Expansion in New and Existing Markets
During the third quarter, the Bank opened a bank branch location in downtown Winchester, Virginia, which is located in one of Virginia's fastest-growing metro areas. The branch offers comprehensive banking services to individuals and businesses. The expansion into the new market is being led by an experienced market president and branch business development officer.
Strategic Talent Investments
To support its strategic growth objectives, the Bank invested in key leadership additions and organizational enhancements during the third quarter of 2026. These investments included the appointment of a Chief Operations Officer to strengthen operational capabilities and support future growth, and a Director of Digital and Payment Strategy to advance the Bank's digital banking and payments platforms. In addition, the Bank's Chief Information Officer recently transitioned to the Chief Innovation and Strategy Officer, which expanded his leadership role to include enterprise-wide innovation and strategic transformation initiatives. Collectively, these leadership investments are designed to support market expansion, enhance operational efficiency, accelerate digital initiatives, and position the Bank for continued long-term growth.
Refinanced Subordinated Debt
The Company issued $15.0 million of subordinated debt on August 20, 2026, with a fixed interest rate of 6.50% until September 15, 2031, and a maturity date of September 15, 2036. Net proceeds of the issuance were used to fully redeem $10.0 million of subordinated debt, with a floating interest rate of 8.54%, on September 15, 2026. The remainder of the proceeds is available to invest in the Bank's capital to support asset growth or other strategic initiatives.
Third Quarter Highlights
Key highlights of the three-month period ending September 30, 2026, are as follows, with comparisons to the three-month period ending June 30, 2026, unless otherwise noted:
- Total assets surpassed $1.0 billion for the first time
- Net income increased 12% year-over-year
- Net interest margin expanded to 3.79%
- Return on assets was 1.02%
- Return on equity was 11.70%
- Loans increased 3% (annualized) and 6% year-over-year
- Deposits increased 24% (annualized) and 8% year over year
- Book value per share increased to $21.13, or 9% year-over-year
Net Interest Income
Third Quarter 2026 compared to Second Quarter 2026
Net interest income was $9.3 million for the third quarter of 2026, representing an increase of $132 thousand, or 1%, over the second quarter of 2026. Total interest and dividend income increased by $89 thousand, while total interest expense decreased by $43 thousand. Interest income on loans was elevated in the second quarter of 2026 from accelerated loan fee income totaling $139 thousand from the payoff of a loan prior to its maturity date. If the accelerated fee income were excluded from second quarter results, net interest income would have increased $271 thousand, or 12% annualized, in the third quarter.
The increase in interest and dividend income was attributable to an increase of $86 thousand, or 1%, from interest income and fees on loans and an increase of $41 thousand, or 5%, from interest income on securities. The increases were partially offset by a $38 thousand decrease in other interest and dividend income. The increases resulted from higher yields and balance of the loans and securities portfolios. The decrease in other interest income and dividends was attributable to a decrease in the balance of interest-bearing deposits held in other financial institutions.
The decrease in total interest expense was attributable to a $52 thousand, or 2%, decrease in interest expense on deposits, and a $73 thousand, or 25%, decrease in interest expense on long term borrowings, which were partially offset by an $82 thousand, or 38%, increase in interest expense on subordinated debt. Interest expense on deposits decreased from a lower cost of deposits, while interest expense on long term borrowings decreased from lower borrowed amounts during the third quarter.
The increase in interest expense on subordinated debt resulted primarily from the timing of refinancing activities during the third quarter. The Company issued $15.0 million of subordinated debt on August 20, 2026, and used the proceeds to fully redeem $10.0 million of previously issued subordinated debt on September 15, 2026. Due to the timing of the transactions, there was a period in which the entire $25.0 million was outstanding.
Third Quarter 2026 compared to Third Quarter 2025
Net interest income increased by $1.2 million, or 15%. Total interest and dividend income increased by $868 thousand, or 7%, while total interest expense decreased by $334 thousand, or 8%.
The increase in interest and dividend income was attributable to an increase of $702 thousand, or 7%, from interest income and fees on loans and an increase of $225 thousand, or 32%, from interest income on securities. The increases were partially offset by a decrease of $58 thousand, or 5%, from other interest income and dividends. The increases resulted from higher yields on loans and securities and growth in the loan and securities portfolios. The decrease in other interest income and dividends was attributable to a decrease in interest-bearing deposits held in other financial institutions.
The decrease in total interest expense was primarily attributable to a $381 thousand, or 10%, decrease in interest expense on deposits. The decrease in interest expense was attributable to a lower cost of deposits, which was 1.52% compared to 1.82% for the same period one year ago.
Noninterest Income
Third Quarter 2026 compared to Second Quarter 2026
Noninterest income totaled $2.3 million for the third quarter, which was a 13% decrease from the second quarter of 2026, reflecting a $100 thousand decrease in gains on sales of SBA loans and a $306 thousand decrease in other operating income. Although the Bank continued to originate SBA loans, there were no loans sold during the third quarter. Other operating income was elevated in the second quarter from a $201 thousand loan prepayment penalty and other income earned from incentives on debit card transactions. The decreases in gains on SBA loans and other operating income were partially offset by increases in service charges on deposit accounts, gains on the sale of mortgage loans, and debit card interchange income.
Third Quarter 2026 compared to Third Quarter 2025
Noninterest income increased by 18%, compared to the same period in the prior year, driven by growth in wealth and investment income, service charges on deposits, and debit card interchange income. Wealth and investment income increased $254 thousand, or 48%, primarily from the implementation of a new client fee schedule in the first quarter of 2026. Service charges on deposit accounts increased $48 thousand, or 22%, from an increase in overdraft activity and debit card interchange fee income increased $35 thousand, or 6%, from an increase in transaction volume.
Noninterest Expense
Third Quarter 2026 compared to Second Quarter 2026
Noninterest expense totaled $7.8 million, which was a 9% increase over the second quarter of 2026. The increase was primarily attributable to a $391 thousand increase in salaries and employee benefits and a $143 thousand increase in other operating expenses. Salaries and employee benefits increased from the addition of employees to support growth initiatives and an increase in incentive expense and commissions. Other operating expenses increased from an increase in losses from fraudulent transactions in customer accounts.
Third Quarter 2026 compared to Third Quarter 2025
Noninterest expense increased $1.1 million, or 16%, compared to the third quarter of 2025. The increase was primarily a result of a $757 thousand increase in salaries and employee benefits, a $96 thousand increase in data processing, a $55 thousand increase in marketing expenses, and a $62 thousand increase in other operating expenses. Salaries and employee benefits increased primarily from the addition of employees to support growth initiatives and an increase in incentive compensation. Data processing expense increased from annual software updates, enhancements to fraud detection software, and network upgrades Marketing expense increased as a result of the Bank's growth and expansion initiatives and other operating expenses increased from an increase in losses from fraudulent transactions in customer accounts.
Asset Quality
Overview
Asset quality metrics remained favorable as of September 30, 2026. Loans past due greater than 30 days and still accruing interest as a percentage of total loans totaled 0.17% on September 30, 2026, compared to 0.43% on June 30, 2026, and 0.09% on September 30, 2025. Nonperforming assets as a percentage of total assets were 0.06% on September 30, 2026, compared to 0.05% on June 30, 2026, and 0.22% on September 30, 2025. Annualized net charge-offs as a percentage of total loans were 0.27% for the third quarter of 2026 and the allowance for credit losses on loans totaled $7.8 million, or 1.00% of total loans.
Provision for Credit Losses
Provision for credit losses totaled $350 thousand for the third quarter of 2026 compared to $250 thousand for the second quarter of 2026 and $200 thousand for the third quarter of 2025. The provision for credit losses was comprised of a $350 thousand provision for loans and no provision for unfunded commitments. The increase in provision for credit losses during the third quarter over prior periods was attributable to an increase in net charge-offs during the period.
Allowance for Credit Losses on Loans
The allowance for credit losses on loans totaled $7.8 million, or 1.00% of total loans on September 30, 2026, compared to 1.03% of total loans on June 30, 2026, and 1.03% of total loans on September 30, 2025.
The following table provides the changes in the allowance for credit losses on loans for the three-month periods ended:
(dollars in thousands) | |||
Q3 2026 | Q2 2026 | Q3 2025 | |
Allowance for credit losses on loans, beginning | $7,938 | $7,972 | $7,359 |
Net charge-offs | (537) | (244) | (13) |
Provision for credit losses on loans | 350 | 210 | 160 |
Allowance for credit losses on loans, ending | $7,751 | $7,938 | $7,506 |
Allowance for Credit Losses on Unfunded Commitments
The allowance for credit losses on unfunded commitments totaled $477 thousand on September 30, 2026, and $477 thousand on June 30, 2026. There was no provision for credit losses on unfunded commitments in the third quarter, compared to the provision for credit losses on unfunded commitments of $40 thousand for the second quarter of 2026.
Balance Sheet
Assets totaled $1.0 billion on September 30, 2026, which was a 19% increase (annualized) from June 30, 2026, and a 7% increase year-over-year. There was no meaningful change in the Bank's asset composition when comparing balances on September 30, 2026, to balances on June 30, 2026, and September 30, 2025.
Interest-bearing deposits held in other financial institutions increased by $37.1 million during the third quarter and decreased by $3.1 million from one year ago.
Securities available for sale increased $2.3 million, or 9% annualized, during the third quarter, and increased $21.0 million, or 27% from one year ago. Net unrealized losses in the securities portfolio totaled $7.5 million on September 30, 2026, which was an increase of $1.7 million from June 30, 2026, and an increase of $2.5 million from September 30, 2025. The increases were attributable to changes in market rates.
Total (gross) loans increased $6.5 million, or 3% annualized, during the third quarter, which was primarily attributable to an $8.5 million increase in other real estate loans (secured by commercial real estate). The loan growth occurred despite a larger than expected amount of loans that paid off prior to their maturity dates during the quarter. On a year-over-year basis, total loans increased $46.1 million, or 6%.
Total deposits increased $51.6 million, or 24% annualized, during the third quarter, and increased $66.0 million, or 8%, year over year. Noninterest-bearing deposits totaled 23% of total deposits as of September 30, 2026, and June 30, 2026.
Other borrowings decreased to $17.9 million on September 30, 2026, compared to $30.0 million on June 30, 2026, and $32.0 million one year ago. The decrease was attributable to an FHLB advance that matured in the third quarter. On September 30, 2026, other borrowings was comprised of two FHLB advances totaling $14.5 million with a weighted average fixed interest rate of 4.12% and maturity dates ranging from 2027 to 2028.
Shareholders' equity totaled $87.6 million on September 30, 2026, an increase of $665 thousand, or 3% annualized from June 30, 2026, and $7.2 million, or 9%, from one year ago. The increases were attributable to growth in retained earnings. Retained earnings increased $2.0 million, or 10% annualized, quarter-over-quarter, and $9.0 million, or 13%, year-over-year. Accumulated other comprehensive loss increased $1.3 million from the second quarter of 2026 and increased $1.8 million year-over-year from changes in market rates. The Bank remained well-capitalized based on capital ratios at the end of the following quarterly periods:
Q3 2026 | Q2 2026 | Q3 2025 | |
Total capital ratio(2) | 14.09 % | 14.06 % | 13.74 % |
Tier 1 capital ratio(2) | 13.04 % | 12.97 % | 12.66 % |
Common equity Tier 1 capital ratio(2) | 13.04 % | 12.97 % | 12.66 % |
Leverage ratio(2) | 10.04 % | 9.85 % | 9.84 % |
Tangible common equity to tangible assets(1)(3) | 8.53 % | 8.86 % | 8.35 % |
Dividends
During the third quarter of 2026, the Company paid a quarterly cash dividend of $0.15 per common share, which was equal to the dividend paid during the second quarter of 2026.
The Company recently announced that a quarterly cash dividend of $0.15 per common share was declared for the fourth quarter of 2026. The dividend was declared for all shareholders of record as of November 5, 2026, and payable on November 12, 2026.
Stock Repurchase Plan
On October 19, 2025, the Company's board of directors authorized a stock repurchase plan pursuant to which Potomac Bancshares, Inc. may repurchase up to the aggregate of 100,000 shares or $2.0 million of the Company's outstanding common stock. The plan ends on October 19, 2027, unless the entire amount authorized to be repurchased has been acquired before that date. There were no repurchases of common stock during the first nine months of 2026 or during 2025.
Non-GAAP Financial Measures
In addition to financial statements prepared in accordance with U.S. generally accepted accounting principles ("GAAP"), the Company uses certain non-GAAP financial measures that management believes provide useful information for financial and operational decision making, evaluating trends, and comparing financial results to other financial institutions. Non-GAAP financial measures are supplemental and not a substitute for, or more important than, financial measures prepared in accordance with GAAP and may not be comparable to those reported by other financial institutions. A reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measure is included at the end of this release.
About Potomac Bancshares
Potomac Bancshares, Inc. (OTCID: PTBS) is the bank holding company of Potomac Bank, which was founded in 1871 as Bank of Charles Town and renamed Potomac Bank on November 3, 2025. The Bank conducts operations through its ten-branch network and one loan production office serving the Eastern Panhandle of West Virginia, Washington County, Maryland, and Northern Virginia. The Bank offers comprehensive financial solutions through its consumer and commercial banking divisions, Trust and Wealth, and BCT Investments divisions, and its Residential Lending mortgage division. The Bank is also proud to serve its communities as a Small Business Administration (SBA) Preferred Lender. Over the past several years, the Bank has received many awards and recognitions, including American Banker's "Top Performing Banks" and "Best Banks to Work For," the Journal-News "Best of the Best" award, and the LoudounNow "Loudoun's Favorite" award.
The Company's shares are quoted on the OTCID marketplace under the symbol "PTBS." For more information about Potomac Bancshares, Inc., and the Bank, please visit our website at www.potomac.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. 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 U.S. banking system may impact the valuations of investments the Company has made in the securities of other financial institutions; (12) regulatory enforcement actions and adverse legal actions; (13) difficulty attracting and retaining key employees; and (14) other economic, competitive, technological, operational, governmental, regulatory, and market factors affecting the Company's operations. 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.
Contacts | |
Alice P. Frazier | M. Shane Bell Executive Vice President and CFO |
POTOMAC BANCSHARES, INC. | |||||||||
Performance Summary | |||||||||
(in thousands, except share and per share data) | |||||||||
(unaudited) | |||||||||
For the Three Months Ended | For the Nine Months Ended | ||||||||
September 30, | June 30, | September 30, | September 30, | September 30, | |||||
2026 | 2026 | 2025 | 2026 | 2025 | |||||
Income Statement | |||||||||
Interest and dividend income: | |||||||||
Interest and fees on loans | $ 11,149 | $ 11,063 | $ 10,447 | $ 32,696 | $ 29,630 | ||||
Taxable interest on securities | 934 | 893 | 709 | 2,623 | 2,134 | ||||
Tax-exempt interest on securities | 29 | 29 | 30 | 88 | 87 | ||||
Other interest and dividends | 1,002 | 1,040 | 1,060 | 2,875 | 2,723 | ||||
Total interest and dividend income | $ 13,114 | $ 13,025 | $ 12,246 | $ 38,282 | $ 34,574 | ||||
Interest expense: | |||||||||
Interest on deposits | $ 3,328 | $ 3,380 | $ 3,709 | $ 9,950 | $ 10,146 | ||||
Interest on short term borrowings | 6 | 6 | 9 | 15 | 9 | ||||
Interest on long term borrowings | 214 | 287 | 312 | 791 | 934 | ||||
Interest on subordinated debt | 300 | 218 | 152 | 733 | 433 | ||||
Total interest expense | $ 3,848 | $ 3,891 | $ 4,182 | $ 11,489 | $ 11,522 | ||||
Net interest income | $ 9,266 | $ 9,134 | $ 8,064 | $ 26,793 | $ 23,052 | ||||
Provision for credit losses | 350 | 250 | 200 | 800 | 675 | ||||
Net interest income after provision for credit losses | $ 8,916 | $ 8,884 | $ 7,864 | $ 25,993 | $ 22,377 | ||||
Noninterest Income: | |||||||||
Wealth and investments | $ 779 | $ 790 | $ 525 | $ 2,314 | $ 1,528 | ||||
Service charges on deposit accounts | 265 | 240 | 217 | 739 | 702 | ||||
Gains / fees on sale of mortgage loans | 393 | 350 | 408 | 1,237 | 1,006 | ||||
ATM and check card fees | 578 | 563 | 543 | 1,640 | 1,536 | ||||
Income from bank owned life insurance | 104 | 102 | 102 | 307 | 299 | ||||
Net loss on disposal of premises & equipment | - | (1) | (1) | (10) | (3) | ||||
Net gain on sale of SBA loans | - | 100 | - | 508 | - | ||||
Other operating income | 144 | 450 | 120 | 962 | 441 | ||||
Total noninterest income | $ 2,263 | $ 2,594 | $ 1,914 | $ 7,697 | $ 5,509 | ||||
Noninterest expenses: | |||||||||
Salaries and employee benefits | $ 4,474 | $ 4,083 | $ 3,717 | $ 12,606 | $ 10,860 | ||||
Occupancy | 340 | 321 | 310 | 995 | 964 | ||||
Equipment | 344 | 301 | 351 | 914 | 1,071 | ||||
Accounting, audit, and compliance | 89 | 58 | 72 | 220 | 211 | ||||
Marketing | 170 | 231 | 115 | 548 | 345 | ||||
Data processing | 509 | 471 | 413 | 1,465 | 1,318 | ||||
FDIC assessment | 113 | 114 | 111 | 335 | 314 | ||||
Other professional fees | 150 | 139 | 208 | 424 | 480 | ||||
Trust professional fees | 219 | 209 | 190 | 634 | 505 | ||||
Director and committee fees | 126 | 117 | 93 | 369 | 258 | ||||
Legal fees | 37 | 16 | 47 | 70 | 103 | ||||
Supplies | 85 | 71 | 55 | 245 | 200 | ||||
Communications | 121 | 129 | 119 | 371 | 343 | ||||
ATM and check card expense | 291 | 282 | 269 | 846 | 773 | ||||
Other operating expenses | 777 | 634 | 715 | 2,125 | 1,740 | ||||
Total noninterest expenses | $ 7,845 | $ 7,176 | $ 6,785 | $ 22,167 | $ 19,485 | ||||
Income before income tax expense | $ 3,334 | $ 4,302 | $ 2,993 | $ 11,523 | $ 8,401 | ||||
Income tax expense | 743 | 982 | 671 | 2,568 | 1,817 | ||||
Net income | $ 2,591 | $ 3,320 | $ 2,322 | $ 8,955 | $ 6,584 | ||||
POTOMAC BANCSHARES, INC. | |||||||||
Performance Summary | |||||||||
(in thousands, except share and per share data) | |||||||||
(unaudited) | |||||||||
As of or For the Three Months Ended | As of or for the Nine Months Ended | ||||||||
September 30, | June 30, | September 30, | September 30, | September 30, | |||||
2026 | 2026 | 2025 | 2026 | 2025 | |||||
Common Share and Per Common Share Data | |||||||||
Earnings per common share, basic | $ 0.63 | $ 0.80 | $ 0.56 | $ 2.16 | $ 1.59 | ||||
Adjusted earnings per common share, basic (1) | $ 0.63 | $ 0.80 | $ 0.58 | $ 2.12 | $ 1.62 | ||||
Weighted average shares, basic | 4,144,561 | 4,144,561 | 4,144,561 | 4,144,561 | 4,144,561 | ||||
Earnings per common share, diluted | $ 0.63 | $ 0.80 | $ 0.56 | $ 2.16 | $ 1.59 | ||||
Adjusted earnings per common share, diluted (1) | $ 0.63 | $ 0.80 | $ 0.58 | $ 2.12 | $ 1.62 | ||||
Weighted average shares, diluted | 4,144,561 | 4,144,561 | 4,144,561 | 4,144,561 | 4,144,561 | ||||
Shares outstanding at period end | 4,144,561 | 4,144,561 | 4,144,561 | 4,144,561 | 4,144,561 | ||||
Tangible book value per share at period end (1) | $ 21.13 | $ 20.97 | $ 19.39 | $ 21.13 | $ 19.39 | ||||
Cash dividends | $ 0.15 | $ 0.15 | $ 0.13 | $ 0.43 | $ 0.39 | ||||
Key Performance Ratios | |||||||||
Return on average assets | 1.02 % | 1.32 % | 0.98 % | 1.21 % | 0.97 % | ||||
Adjusted return on average assets (1) | 1.02 % | 1.32 % | 1.01 % | 1.18 % | 0.99 % | ||||
Return on average equity | 11.70 % | 15.52 % | 11.62 % | 13.93 % | 11.48 % | ||||
Adjusted return on average equity (1) | 11.70 % | 15.52 % | 11.94 % | 13.65 % | 11.74 % | ||||
Net interest margin (1) | 3.79 % | 3.76 % | 3.54 % | 3.74 % | 3.52 % | ||||
Efficiency ratio (1) | 68.01 % | 61.16 % | 67.14 % | 64.68 % | 67.52 % | ||||
Average Balances | |||||||||
Average assets | $ 1,003,240 | $ 1,005,076 | $ 936,572 | $ 990,253 | $ 906,923 | ||||
Average earning assets | 971,386 | 973,898 | 905,307 | 958,759 | 875,936 | ||||
Average shareholders' equity | 87,892 | 85,785 | 79,290 | 85,932 | 76,667 | ||||
Asset Quality | |||||||||
Loan charge-offs | $ 543 | $ 251 | $ 23 | $ 816 | $ 110 | ||||
Loan recoveries | 6 | 7 | 10 | 19 | 50 | ||||
Net charge-offs | 537 | 244 | 13 | 797 | 60 | ||||
Non-accrual loans | 657 | 500 | 2,138 | 657 | 2,138 | ||||
Nonperforming assets (5) | 657 | 500 | 2,138 | 657 | 2,138 | ||||
Loans 30 to 89 days past due, accruing | 1,331 | 3,163 | 694 | 1,331 | 694 | ||||
Loans over 90 days past due, accruing | 15 | 128 | - | 15 | - | ||||
Special mention loans | 23,999 | 21,078 | 15,635 | 23,999 | 15,635 | ||||
Substandard loans, accruing | 1,039 | 418 | 1,125 | 1,039 | 1,125 | ||||
Annualized net charge-offs/total loans | 0.27 % | 0.13 % | 0.01 % | 0.14 % | 0.01 % | ||||
Non performing assets/total assets | 0.06 % | 0.05 % | 0.22 % | 0.06 % | 0.22 % | ||||
Accruing past due loans/total loans | 0.17 % | 0.43 % | 0.09 % | 0.17 % | 0.09 % | ||||
Capital Ratios (2) | |||||||||
Total capital | $ 109,945 | $ 108,160 | $ 100,914 | $ 109,945 | $ 100,914 | ||||
Tier 1 capital | 101,716 | 99,746 | 92,921 | 101,716 | 92,921 | ||||
Common equity tier 1 capital | 101,716 | 99,746 | 92,921 | 101,716 | 92,921 | ||||
Total capital to risk-weighted assets | 14.09 % | 14.06 % | 13.74 % | 14.09 % | 13.74 % | ||||
Tier 1 capital to risk weighted assets | 13.04 % | 12.97 % | 12.66 % | 13.04 % | 12.66 % | ||||
Common equity Tier 1 capital to risk weighed assets | 13.04 % | 12.97 % | 12.66 % | 13.04 % | 12.66 % | ||||
Leverage ratio | 10.04 % | 9.85 % | 9.84 % | 10.04 % | 9.84 % | ||||
POTOMAC BANCSHARES, INC. | |||||||||
Performance Summary | |||||||||
(in thousands, except share and per share data) | |||||||||
(unaudited) | |||||||||
For the Period Ended | |||||||||
September 30, | June 30, | March 31, | December 31, | September 30, | |||||
2026 | 2026 | 2026 | 2025 | 2025 | |||||
Balance Sheet | |||||||||
Cash and due from banks | $ 4,031 | $ 4,884 | $ 6,133 | $ 3,603 | $ 4,648 | ||||
Interest-bearing deposits in other financial | 112,075 | 74,980 | 87,754 | 76,046 | 115,174 | ||||
Cash and cash equivalents | $ 116,106 | $ 79,864 | $ 93,887 | $ 79,649 | $ 119,822 | ||||
Securities available for sale, at fair value | 98,915 | 96,642 | 92,713 | 80,905 | 77,935 | ||||
Equity securities, at fair value | 331 | 309 | 280 | 258 | 278 | ||||
Restricted securities | 1,410 | 2,122 | 1,852 | 1,932 | 1,932 | ||||
Loans held for sale | 2,710 | 3,321 | 1,771 | 2,804 | 2,946 | ||||
Loans, net of allowance for credit losses | 770,441 | 763,774 | 750,548 | 743,808 | 724,611 | ||||
Premises and equipment, net | 9,168 | 8,776 | 8,734 | 8,759 | 8,164 | ||||
Accrued interest receivable | 2,741 | 2,800 | 2,719 | 2,309 | 2,592 | ||||
Bank owned life insurance | 14,207 | 14,103 | 14,002 | 14,378 | 14,275 | ||||
Other assets | 11,115 | 9,744 | 9,340 | 9,482 | 9,708 | ||||
Total assets | $ 1,027,144 | $ 981,455 | $ 975,846 | $ 944,284 | $ 962,263 | ||||
Noninterest-bearing demand deposits | $ 211,123 | $ 196,835 | $ 187,715 | $ 183,461 | $ 204,355 | ||||
Savings and interest-bearing demand deposits | 688,257 | 650,911 | 657,665 | 629,568 | 629,062 | ||||
Total deposits | $ 899,380 | $ 847,746 | $ 845,380 | $ 813,029 | $ 833,417 | ||||
Short term borrowings | 3,423 | 2,967 | 2,241 | 2,451 | 3,013 | ||||
Long term borrowings | 14,500 | 27,000 | 27,000 | 29,000 | 29,000 | ||||
Subordinated debt | 14,597 | 10,000 | 10,000 | 10,000 | 10,000 | ||||
Accrued interest payable | 902 | 993 | 936 | 1,052 | 1,037 | ||||
Other liabilities | 6,773 | 5,846 | 5,652 | 6,309 | 5,437 | ||||
Total liabilities | $ 939,575 | $ 894,552 | $ 891,209 | $ 861,841 | $ 881,904 | ||||
Common stock | $ 4,493 | $ 4,493 | $ 4,493 | $ 4,493 | $ 4,493 | ||||
Surplus | 14,547 | 14,547 | 14,547 | 14,547 | 14,547 | ||||
Retained Earnings | 77,821 | 75,852 | 73,154 | 70,649 | 68,815 | ||||
Accumulated other comprehensive (loss), net | (5,798) | (4,495) | (4,063) | (3,752) | (4,002) | ||||
$ 91,063 | $ 90,397 | $ 88,131 | $ 85,937 | $ 83,853 | |||||
Less cost of shares acquired for the treasury | (3,494) | (3,494) | (3,494) | (3,494) | (3,494) | ||||
Total shareholders' equity | $ 87,569 | $ 86,903 | $ 84,637 | $ 82,443 | $ 80,359 | ||||
Total liabilities and shareholders' equity | $ 1,027,144 | $ 981,455 | $ 975,846 | $ 944,284 | $ 962,263 | ||||
Loan Data | |||||||||
Construction and land development | $ 41,982 | $ 41,585 | $ 37,751 | $ 45,537 | $ 45,979 | ||||
Secured by farmland | 7,306 | 7,351 | 7,435 | 7,509 | 7,594 | ||||
Secured by 1-4 family residential properties | 270,257 | 270,734 | 270,027 | 258,467 | 256,974 | ||||
Secured by multifamily residential properties | 38,400 | 38,906 | 38,205 | 39,280 | 39,928 | ||||
Secured by owner-occupied nonfarm nonresidential | 128,574 | 122,061 | 114,770 | 114,078 | 117,053 | ||||
Secured by other nonfarm nonresidential properties | 220,067 | 218,096 | 217,282 | 205,548 | 188,227 | ||||
Loans to farmers (except secured by real estate) | 432 | 101 | 109 | 120 | 128 | ||||
Commercial and industrial loans (except those | 62,052 | 62,967 | 63,517 | 72,158 | 66,965 | ||||
Consumer installment loans | 2,752 | 2,830 | 2,859 | 2,757 | 2,845 | ||||
All other loans | 6,370 | 7,081 | 6,565 | 6,150 | 6,424 | ||||
Total loans | $ 778,192 | $ 771,712 | $ 758,520 | $ 751,604 | $ 732,117 | ||||
Allowance for credit losses | (7,751) | (7,938) | (7,972) | (7,796) | (7,506) | ||||
Loans, net | $ 770,441 | $ 763,774 | $ 750,548 | $ 743,808 | $ 724,611 | ||||
POTOMAC BANCSHARES, INC. | |||||||||
Non-GAAP Reconciliations | |||||||||
(in thousands, except share and per share data) | |||||||||
(unaudited) | |||||||||
As of or for the Three Months Ended | As of or for the Nine Months Ended | ||||||||
September 30, | June 30, | September 30, | September 30, | September 30, | |||||
2026 | 2026 | 2025 | 2026 | 2025 | |||||
Adjusted Net Income | |||||||||
Net income (GAAP) | $ 2,591 | $ 3,320 | $ 2,322 | $ 8,955 | $ 6,584 | ||||
Add: Core system conversion expense | - | - | - | - | 85 | ||||
Add: Renaming expense | - | - | 82 | - | 104 | ||||
Subtract: BOLI death benefit | - | - | - | (227) | - | ||||
Total adjustments | $ - | $ - | $ 82 | $ (227) | $ 189 | ||||
Subtract: Tax effect of adjustment (4) | - | - | (17) | 48 | (40) | ||||
Adjusted net income (non-GAAP) | $ 2,591 | $ 3,320 | $ 2,387 | $ 8,776 | $ 6,733 | ||||
Adjusted Earnings Per Share, Basic | |||||||||
Weighted average shares, basic | 4,144,561 | 4,144,561 | 4,144,561 | 4,144,561 | 4,144,561 | ||||
Basic earnings per share (GAAP) | $ 0.63 | $ 0.80 | $ 0.56 | $ 2.16 | $ 1.59 | ||||
Adjusted earnings per share, basic (Non-GAAP) | $ 0.63 | $ 0.80 | $ 0.58 | $ 2.12 | $ 1.62 | ||||
Adjusted Earnings Per Share, Diluted | |||||||||
Weighted average shares, diluted | 4,144,561 | 4,144,561 | 4,144,561 | 4,144,561 | 4,144,561 | ||||
Diluted earnings per share (GAAP) | $ 0.63 | $ 0.80 | $ 0.56 | $ 2.16 | $ 1.59 | ||||
Adjusted earnings per share, diluted (Non-GAAP) | $ 0.63 | $ 0.80 | $ 0.58 | $ 2.12 | $ 1.62 | ||||
Adjusted Pre-Provision, Pre-tax earnings | |||||||||
Net interest income | $ 9,266 | $ 9,134 | $ 8,064 | $ 26,793 | $ 23,052 | ||||
Total noninterest income | 2,263 | 2,594 | 1,914 | 7,697 | 5,509 | ||||
Net revenue | $ 11,529 | $ 11,728 | $ 9,978 | $ 34,490 | $ 28,561 | ||||
Total noninterest expense | 7,845 | 7,176 | 6,785 | 22,167 | 19,485 | ||||
Pre-provision, pre-tax earnings | $ 3,684 | $ 4,552 | $ 3,193 | $ 12,323 | $ 9,076 | ||||
Add: Core system conversion expense | - | - | - | - | 85 | ||||
Add: Bank renaming expense | - | - | 82 | - | 104 | ||||
Subtract: BOLI death benefit | - | - | - | (227) | - | ||||
Adjusted pre-provision, pre-tax earnings | $ 3,684 | $ 4,552 | $ 3,275 | $ 12,096 | $ 9,265 | ||||
Adjusted Performance Ratios | |||||||||
Average assets | $ 1,003,240 | $ 1,005,076 | $ 936,572 | $ 990,253 | $ 906,923 | ||||
Return on average assets (GAAP) | 1.02 % | 1.32 % | 0.98 % | 1.21 % | 0.97 % | ||||
Adjusted return on average assets (Non-GAAP) | 1.02 % | 1.32 % | 1.01 % | 1.18 % | 0.99 % | ||||
Average shareholders' equity | $ 87,892 | $ 85,785 | $ 79,290 | $ 85,932 | $ 76,667 | ||||
Return on average equity (GAAP) | 11.70 % | 15.52 % | 11.62 % | 13.93 % | 11.48 % | ||||
Adjusted return on average equity (Non-GAAP) | 11.70 % | 15.52 % | 11.94 % | 13.65 % | 11.74 % | ||||
Pre-provision, pre-tax return on average assets | 1.46 % | 1.82 % | 1.35 % | 1.66 % | 1.34 % | ||||
Adjusted pre-provision, pre-tax return on average | 1.46 % | 1.82 % | 1.39 % | 1.63 % | 1.37 % | ||||
Net Interest Margin | |||||||||
Tax-equivalent net interest income | $ 9,272 | $ 9,140 | $ 8,070 | $ 26,811 | $ 23,070 | ||||
Average earning assets | 971,386 | 973,898 | 905,307 | 958,759 | 875,936 | ||||
Net interest margin | 3.79 % | 3.76 % | 3.54 % | 3.74 % | 3.52 % | ||||
Efficiency Ratio | |||||||||
Total noninterest expense | $ 7,845 | $ 7,176 | $ 6,785 | $ 22,167 | $ 19,485 | ||||
Subtract: Core system conversion expense | - | - | - | - | (85) | ||||
Subtract: Renaming expense | - | - | (82) | - | (104) | ||||
Total noninterest expense subtotal | $ 7,845 | $ 7,176 | $ 6,703 | $ 22,167 | $ 19,296 | ||||
Tax-equivalent net interest income | $ 9,272 | $ 9,140 | $ 8,070 | $ 26,811 | $ 23,070 | ||||
Total noninterest income | $ 2,263 | $ 2,594 | $ 1,914 | $ 7,697 | $ 5,509 | ||||
Add: Net losses on disposal of premises & | - | (1) | (1) | (10) | (3) | ||||
Subtract: Bank owned life insurance death benefit | - | - | - | (227) | - | ||||
Total noninterest income subtotal | $ 2,263 | $ 2,593 | $ 1,913 | $ 7,460 | $ 5,506 | ||||
Subtotal | $ 11,535 | $ 11,733 | $ 9,983 | $ 34,271 | $ 28,576 | ||||
Efficiency ratio | 68.01 % | 61.16 % | 67.14 % | 64.68 % | 67.52 % | ||||
Tax-Equivalent Net Interest Income | |||||||||
GAAP measures: | |||||||||
Interest income - loans | $ 11,149 | $ 11,063 | $ 10,447 | $ 32,696 | $ 29,630 | ||||
Interest income - investments taxable | 934 | 893 | 709 | 2,623 | 2,134 | ||||
Interest income - investments tax exempt | 29 | 29 | 30 | 88 | 87 | ||||
Interest income - other | 1,002 | 1,040 | 1,060 | 2,875 | 2,723 | ||||
Interest expense - deposits | (3,328) | (3,380) | (3,709) | (9,950) | (10,146) | ||||
Interest expense - short term borrowings | (6) | (6) | (9) | (15) | (9) | ||||
Interest expense - long term borrowings | (214) | (287) | (312) | (791) | (934) | ||||
Interest expense - subordinated debt | (300) | (218) | (152) | (733) | (433) | ||||
Net interest income | $ 9,266 | $ 9,134 | $ 8,064 | $ 26,793 | $ 23,052 | ||||
Non-GAAP measures: | |||||||||
Add: Tax benefit realized on non-taxable interest | $ 6 | $ 6 | $ 6 | $ 18 | $ 18 | ||||
Tax equivalent net interest income | $ 9,272 | $ 9,140 | $ 8,070 | $ 26,811 | $ 23,070 | ||||
Tangible Book Value Per Share | |||||||||
Tangible common equity | $ 87,569 | $ 86,903 | $ 80,359 | $ 87,569 | $ 80,359 | ||||
Common shares outstanding, ending | 4,144,561 | 4,144,561 | 4,144,561 | 4,144,561 | 4,144,561 | ||||
Tangible book value per share | $ 21.13 | $ 20.97 | $ 19.39 | $ 21.13 | $ 19.39 | ||||
(1) Non-GAAP financial measures. See "Non-GAAP Financial Measures" and "Non-GAAP Reconciliations" for additional information and detailed calculations of adjustments. | |||||||||
(2) Capital ratios are for Potomac Bank. | |||||||||
(3) Capital ratios are for Potomac Bancshares, Inc. | |||||||||
(4) The tax rate utilized in calculating the tax benefit is 21% | |||||||||
(5) Nonperforming assets are comprised of nonaccrual loans. There was no other real estate owned for the periods presented. | |||||||||
SOURCE Potomac Bancshares, Inc.
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