Potomac Bancshares, Inc. · OTC:PTBS
Potomac Bancshares — Debt Investor Presentation (September 2020)
34 slides from Potomac Bancshares's debt investor presentation, September 2020
Slide 1: Subordinated Notes Offering Investor Presentation
Subordinated Notes Offering Investor Presentation August/September 2020
Slide 2: Disclaimer
Disclaimer Forward-Looking Statements In addition to historical information, this presentation may contain certain forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements provide current expectations or forecasts of future events and
Slide 3: Terms of Proposed Offering
POTOMAC "=" BANCSHARES Terms of Proposed Offering Issuer Potomac Bancshares, Inc. (OTCPK:PTBS) Security Subordinated Notes Amount $7.5 Million Sub Debt Rating Unrated Structure Fixed-to-Floating Rate Issuance Type Regulation D Private Placement Term 10 years Call Date 5 Years General corporate purpo
Slide 4: Overview of Potomac Bancshares
sve POTOMAC N *" BANCSHARES Il. Overview of Potomac Bancshares
Slide 5: Experienced Leadership Team
POTOMAC BANCSHARES Experienced Leadership Team Proven Leadership Alice P. Frazier joined Potomac Bancshares Inc. in 2017 as President & Chief Executive Officer. She has 29 years of banking experience. Prior to Potomac Bancshares Inc., she served as Executive Vice President and Chief Operating Office
Slide 6: Overview of Potomac Bancshares
SK POTOMAC “© BANCSHARES Overview of Potomac Bancshares ($ in thousands) 2018Y 2019Y 6/30/2020 Balance Sheet Total Assets $484,550 $515,786 $606,951 Total Loans 363,957 412,460 475,712 PPP Loans - - 53,124 Total Deposits 424,127 449,880 534,653 (Rats (ENSEIENES Ihe (OTC Pink: PTBS) Shareholders’ Equ
Slide 7: Well Positioned in Outstanding Markets
POTOMAC BANCSHARES Well Positioned in Outstanding Markets = Ninebanking offices and one LPO serving four adjoining counties in three states = Loudoun County, VA and Jefferson County, WV are included in the Washington DC MSA = Loudoun County, VA is the 25th fastest growing county in the USA with the
Slide 8: Focused Growth Strategy — Investing into the Future
POTOMAC BANCSHARES Focused Growth Strategy — Investing into the Future = Increased non-interest income through expansion of mortgage banking in all markets served o April 2018 — hired a top producing Director of Mortgage Banking with 20 years experience in mortgage banking (Loudoun County) and 30 ye
Slide 9: Positioning PTBS For Future Success
POTOMAC "=" BANCSHARES Positioning PTBS For Future Success Provide a Differentiated Customer Experience Enhance Overall Profitability Digital Transformation Ensure a consistent Amazing Customer Experience (ACE) at every interaction with the ACE Playbook Must be equally present in the physical and di
Slide 10: Deposit Market Share
POTOMAC "=" BANCSHARES Deposit Market Share June 30, 2019 June 30, 2019 Total Total Deposits In Total Deposits In 2019 Local #of Market Market 2019 Local #of Market Rank Rank Company Name Branches ($000) Share(%) Rank Rank Company Name Branches ($000) Jefferson County, WV Berkeley County, WV 1 1 Pot
Slide 11: Covid-19 Pandemic Response
sve POTOMAC N *" BANCSHARES Il. Covid-19 Pandemic Response
Slide 12: Employees and Clients COVID-19 Response
Implement a work-from-home strategy for those whose jobs can be performed remotely, 50% capability to work remotely Alternative schedules and geographic relocation for retail and operations teams whose job is Employees performed onsite Provide a safe Commitment to full compensation through pan
Slide 13: PPP Loans by Loan Size
Average Size Loan Size # of PPP loans % of PPP loans Total PPP Loans of Loans $0-$150,000 471 85% $15,752,029 $33,444 $150,000 - $350,000 45 8% 8,968,686 199,304 $350,000 - $2.0 million 38 7% 23,436,189 616,742 > $2.0 million 3 1% 6,826,500 2,275,500 Total 557 100% $54,983,404 $98,713
Slide 14: Financial Overview
ae POTOMAC =" BANCSHARES lll. Financial Overview
Slide 15: Consistent Balance Sheet Growth
POTOMAC "=" BANCSHARES Consistent Balance Sheet Growth Total Assets Total Loans‘ (Dollars in millions) (Dollars in millions) $476 $607 $412 $516 $485 $347 (ee fj 2016Y 2017Y 2018Y 20197 202002 2016Y 2017Y 2018Y 20197 202002 Total Deposits Total Shareholders’ Equity (Dollars in millions) (Dollars in
Slide 16: Second Quarter Financial Highlights
POTOMAC BANCSHARES Second Quarter Financial Highlights ¢ isands except EPS data) 2Q19 1Q20 2Q20 a 4 = Surpassed $600 million in assets during Earnings Q2 2020 Net Interest Income $4,074 $4,244 $4,403 : a = Total assets increased $96.4 million, or Pre-Provision Net Revenue $1,157 $1,368 $1,569 149% o
Slide 17: Prudent Credit Culture Drives Asset Quality
POTOMAC BANCSHARES Prudent Credit Culture Drives Asset Quality Improved Underwriting Guidelines NPAs / Total Assets = Early 2018, strengthened credit culture and underwriting guidelines = Semi-annual credit score monitoring of consumer portfolios = Focused commercial business development efforts wit
Slide 18: Diversified Loan Portfolio — June 30, 2020
Diversified Loan Portfolio — June 30, 2020 Loan Portfolio Breakdown POTOMAC BANCSHARES Industry Monitoring by NAICS Codes Dollar Values in Thousands Cal HELOCs 14.6% ) 2.6% Other Largest Loan Types by NAICS Code Consumer 1.9% 1.7% Real Estate: Lessors of CRE Gnene Lessors of Residential RE 17.2% Sto
Slide 19: Nonperforming Assets and Asset Quality Ratios
Dollar values in thousands 12/31/2019 6/30/2020 Nonaccrual Loans $952 $923 90+ Days Delinquent Accruing 387 0 Other Real Estate Owned 53 0 Nonperforming Assets $1,392 $923 Restructured Loans $1,594 $1,380 Loan Loss Reserve $3,716 $4,732 Asset Quality Ratios (%) NPAs / Assets 0.27% 0.15% Reserves / L
Slide 20: Commercial Loan Modifications by Industry
% of Loan Portfolio Type of Loan Balance Type Consumer, Mortgages and HELOCs $5,282,315 3.25% C&I, Commerical Real Estate 32,077,915 12.49% Total $37,360,231 8.91% Commercial Loans Modifications by Industry Hotel $14,284,728 Residential Investment 3,006,645 Restaurant 2,919,922 o Education 2,849
Slide 21: Hotel Lending Exposure
POTOMAC BANCSHARES Hotel Lending Exposure m June 30, 2020 balance of portfolio is $25.5 = Credit quality metrics (LTV, DSCR, Sponsor) million with another $4.4 million unfunded for were strong entering pandemic construction projects ee = LTV ranged from 39% - 77%. Supported by = 13 total relationshi
Slide 22: Map of Hotel Loans
POTOMAC BANCSHARES Map of Hotel Loans IARRISBURG Chambersburg PEN NSYLVANIA seston d si MARYLAND © Martinsburg, WE ST erick VIRGINIA Eyl ‘ iz} Leesburg/Purcellville Dulle: ternational Airport =~ x INGTON VIRGINIA larrisonburg rsa 2 Da Note: one hotel relationship (#13) not shown represents one out o
Slide 23: Hotel and Restaurant Loan Detail
6/30/2020 Active # of 6/30/2020 Brand Name Balance LTV State Deferral? Payment Notes Restaurant Style Locations Balance 1 Major Flag $5,487,512 65.94% WV Yes Active Deferral White Table Dining 1 $2,433,604 2 Major Flag 1,012,859 75.03% WV Yes Active Deferral Restaurant Group 8 1,462,083 3 Major Flag
Slide 24: Retail Exposure
Retail Exposure by State Retail Exposure by Loan Size Key Anchor Tenants
Slide 25: Review of Deposit Portfolio as of June 30, 2020
POTOMAC BANCSHARES Review of Deposit Portfolio as of June 30, 2020 Stable, Low Cost Core Deposits Non-Interest Bearing Deposit Growth (Dollars in millions) $107 $71 J 2016Y 2017Y 2018Y 2019Y 202002 Low Cost of Deposits (2020) Savings & MMDA, 50.83% $534.7mm 0.84% 0.84% Retail Time, (<$100k), 15.11%
Slide 26: Securities Portfolio and Liquidity
POTOMAC BANCSHARES Securities Portfolio and Liquidity as of June 30, 2020 Securities Investment Portfolio Dollar Values in Thousands Book Unrealized Fair Investment Portfolio Value Gains Losses Value Oblig of US Govt Spons Agencies $12,328 $260 ($11) = $12,577 Mortgage-Backed Securities 31,955 1,184
Slide 27: Strong Earnings Power
POTOMAC Strong Earnings Power Net Income, ROAA and ROATCE ” BANCSHARES Pre-Provision Net Revenue / Avg. Assets mm Net Income ROAA ROATCE am co AN0. AS 1.25% 1.15% —— 1.04% 1.07% ala seer $4,664 d $4,595 eae 5.85% $4,193 $2,937 2016Y 2017Y 2018Y 2019Y 2020 YTD 2016Y 2017Y 2018Y 2019Y 2020 YTD Fee Inc
Slide 28: Pro Forma Regulatory Capital
Actual Pro Forma (Dollars in thousands) 6/30/2020 Adjustments 6/30/2020 Regulatory Capital Common Equity Tier 1 Capital $55,182 $55,182 Tier 1 Capital 55,182 55,182 ALLL 4,732 4,732 Sub Debt -- $7,500 7,500 Tier 2 Capital 4,732 7,500 12,232 Total Capital 59,914 7,500 67,414 Total Assets for Regu
Slide 29: Pro Forma Regulatory Capital (Alternative)
Actual Pro Forma (Dollars in thousands) 6/30/2020 Adjustments 6/30/2020 Regulatory Capital Common Equity Tier 1 Capital $54,969 $4,000 $58,969 Tier 1 Capital 54,969 4,000 58,969 ALLL 4,732 -- 4,732 Sub Debt -- -- -- Tier 2 Capital 4,732 -- 4,732 Total Capital 59,701 4,000 63,701 Total Assets for
Slide 30: Double Leverage and Interest Coverage
$ in thousands Assumptions Interest Rate 6.00% For the Twelve Months Ended Six Months Ended 12/31/2016 12/31/2017 12/31/2018 12/31/2019 6/30/2020 Double Leverage Investments in Subsidiaries $31,982 $35,378 $49,015 $51,736 $53,389 Consolidated Equity 33,183 35,819 49,524 51,922 53,602 Double Leverage
Slide 31: Appendix
7 POTOMAC =" BANCSHARES Appendix
Slide 32: Balance Sheet
Dollar Values in Thousands 2016 2017 2018 2019 6/30/2020 Assets Cash and Cash Equivalents $11,477 $33,070 $56,421 $32,506 $63,852 Available for Sale Securities 23,411 31,316 48,463 50,471 48,674 Held to Maturity Securities – – – – – Other Securities – – 132 133 111 Total Cash & Securities 34,888 64,
Slide 33: Income Statement
Dollar Values in Thousands YTD Except EPS Data 2016 2017 2018 2019 6/30/2020 Interest Income $14,334 $16,105 $17,565 $20,075 $10,517 Interest Expense 1,763 2,115 2,699 3,783 1,870 Net Interest Income 12,571 13,990 14,866 16,292 8,648 Provision for Loan Losses 928 180 312 474 991 Trust and Financial
Slide 34: Diversified Board of Directors
POTOMAC BANCSHARES Diversified Board of Directors In addition to its top notch management team, the Company is extremely proud of its board of directors and believes that it serves a critical role in formulating strategy while exemplifying sound corporate governance. The board is very diverse in ter
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