POTOMAC BANCSHARES, INC. REPORTS FOURTH QUARTER AND FULL YEAR RESULTS

About this update from Potomac Bancshares, Inc.

POTOMAC BANCSHARES, INC. 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REPORTS FOURTH QUARTER AND FULL YEAR RESULTS PR Newswire CHARLES TOWN, W.Va., Jan. 31, 2025 CHARLES TOWN, W.Va. , Jan. 31, 2025 /PRNewswire/ -- Potomac Bancshares, Inc. (the "Company") (OTCPK: PTBS), the bank holding company of Bank of Charles Town (the "Bank" or "BCT"), reported unaudited consolidated net income of $2.0 million and basic and diluted earnings per common share of $0.48 for the fourth quarter of 2024 and adjusted net income (1) of $2.3 million and adjusted basic and diluted earnings per common share (1) of $0.55 . Net income was $6.8 million and basic and diluted earnings per common share was $1.65 for the year ended December 31, 2024 , and adjusted net income (1) was $7.4 million and adjusted basic and diluted earnings per common share (1) was $1.80 for the year ended December 31, 2024 . Three Months Ended December 31, 2024 September 30, 2024 December 31, 2023 Net income $1,972 $1,761 $1,710 Basic and diluted earnings per share $0.48 $0.42 $0.41 Return on average assets 0.89 % 0.79 % 0.81 % Return on average equity 10.81 % 9.92 % 10.66 % Non-GAAP Measures: Adjusted net income $2,286 $1,761 $1,832 Adjusted basic and diluted earnings per share $0.55 $0.42 $0.44 Adjusted return on average assets 1.04 % 0.79 % 0.87 % Adjusted return on average equity 12.53 % 9.92 % 11.41 % Adjusted pre-provision, pre-tax earnings $2,951 $2,460 $2,343 Adjusted pre-provision, pre-tax return on average assets 1.34 % 1.11 % 1.11 % Net interest margin 3.37 % 3.24 % 3.34 % Efficiency ratio 67.98 % 71.69 % 72.23 % NOTE: See "Non-GAAP Financial Measures" and "Non-GAAP Reconciliations" for additional information and detailed calculations of adjustments. "We are pleased to report a strong finish to the year with all business lines contributing to another successful year. During the fourth quarter, the Company improved our net interest margin thanks to disciplined loan and deposit pricing," stated Alice P. Frazier , President and CEO. "We also benefited from a 13% increase in wealth management revenue driven by growth in assets under management and a 110% increase in secondary market mortgage revenue. In addition, we are encouraged that our strategic initiatives have resulted in an adjusted return on average assets of 1.04% for the same period." Frazier continued, "In keeping with our commitment to expand and continually improve client experiences, we recently renovated our Martinsburg, West Virginia , branch and will move our Leesburg, Virginia , lending office to a beautiful facility in Ashburn, Virginia , in early 2025.  These results are from the earnest efforts of the dedicated team at BCT.  I am thankful for their daily commitment to our clients and the communities we serve." FOURTH QUARTER HIGHLIGHTS Key highlights of the three-month period ending December 31, 2024 , are as follows. Comparisons are to the three-month period ending September 30, 2024 , unless otherwise stated: Adjusted ROA and ROE (1) of 1.04% and 12.53%, respectively Net interest margin (1) improved 13 basis points to 3.37% Loan balances increased by 10%, annualized Secondary market mortgage revenue increased by 110% Wealth management revenue increased 13% Tangible book value per share (1) increased to $17.71 from $16.14 one year ago Loan production office relocating in northern Virginia with capacity for growth LOAN PRODUCTION OFFICE RELOCATING WITH CAPACITY FOR GROWTH In support of the Company's strategic plan, which includes market expansion and continued growth, the Bank will open a new lending office in Ashburn, Virginia , located within Loudoun County , in early 2025. The new office will house professional bankers who offer both commercial loans and residential real estate loans. These employees currently report to an office in Leesburg, Virginia , which is also in Loudoun County . The new Ashburn office will provide capacity for growth. NET INTEREST INCOME Net interest income increased $211 thousand , or 3%, to $7.2 million for the fourth quarter of 2024 compared to the third quarter of 2024. Although total interest and dividend income decreased by $73 thousand , or 1%, it was offset by a $284 thousand , or 7%, decrease in total interest expense. The net interest margin (1) increased to 3.37%, which was up 13-basis points from 3.24% for the third quarter. Total interest and dividend income decreased $73 thousand and was primarily attributable to a $367 thousand decrease in interest income on deposits in other financial institutions, which was partially offset by a $302 thousand increase in interest income on loans. The decrease in interest income on deposits in other financial institutions was attributable to an $18.6 million decrease in average balances and a 66-basis point decrease in yield. The increase in interest and fees on loans was attributable to a 6-basis point increase in the yield and a $14.4 million increase in average balances. The yield on total earning assets increased to 5.12% in the fourth quarter from 5.11% in the third quarter. Total interest expense decreased $284 thousand and was primarily attributable to a $410 thousand , or 11%, decrease in interest expense on deposits, which was partially offset by a $125 thousand increase in interest expense on other borrowings. The decrease in interest expense on deposits resulted from a $22.1 million decrease in average balances and a 19-basis point decrease in the cost of deposits. The increase in interest expense on other borrowings was attributable to a higher average balance of other borrowings in the fourth quarter compared to the third quarter. The total cost of funds was 1.85% for the fourth quarter, which was an 11-basis point decrease compared to the third quarter. NONINTEREST INCOME Total noninterest income, excluding net losses on sales of securities, totaled $2.1 million for the fourth quarter of 2024, which was a $312 thousand , or 18%, increase from the third quarter of 2024. The increase was primarily a result of a significant increase in secondary market loan income and an increase in wealth and investment revenue. Secondary market loan income increased $186 thousand , or 110%, and was attributable to a new mortgage team who recently joined the Bank combined with an increase in client demand for mortgage loans.  Wealth and investment income increased $69 thousand , or 13%, and was attributable to several new sizeable relationships and the addition to existing client assets under management . Net losses on the sale of securities available for sale totaled $397 thousand during the fourth quarter of 2024 and resulted from the decision to reposition the investment portfolio by selling lower yielding securities and reinvesting proceeds in higher yielding securities. The securities transactions lessoned the risk of reduced earnings in falling interest rate environments and are expected to increase the yield on securities in future periods. NONINTEREST EXPENSE Total noninterest expenses totaled $6.3 million for the fourth quarter of 2024, which was a $32 thousand , or 1%, increase from the third quarter of 2024. The increase was primarily attributable to a $94 thousand increase in salaries and employee benefits and an $84 thousand increase in trust professional fees.  The increases were partially offset by a $167 thousand decrease in other operating expenses, which was attributable to losses on fraudulent checks in the third quarter of 2024. ASSET QUALITY Overview There was not a meaningful change in asset quality during the fourth quarter. Loans that were past due greater than 30 days and still accruing interest as a percentage of total loans were 0.07% on December 31, 2024 , 0.04% on September 30, 2024 , and 0.11% on December 31, 2023 . Nonperforming assets ("NPAs") as a percentage of total assets were 0.31% on December 31, 2024 , compared to 0.30% on September 30, 2024 , and 0.32% on December 31, 2023 . Annualized net charge-offs as a percentage of total loans were 0.04% for the fourth quarter of 2024, compared to annualized net recoveries of 0.02% for the third quarter of 2024, and annualized net charge offs of 0.05% for the fourth quarter of 2023. The allowance for credit losses on loans totaled $7.0 million , or 0.99% of total loans on December 31, 2024 , $7.1 million , or 1.03% of total loans on September 30, 2024 , and $6.7 million , or 1.02% of total loans on December 31, 2023 . Provision for Credit Losses The Bank did not record a provision for credit losses for the fourth quarter of 2024, compared to $202 thousand for the third quarter of 2024, and no provision for credit losses in for the fourth quarter of 2023. There were no significant changes in the general reserve or specific reserve components of the allowance for credit losses on loans during the period. The impact of loan growth during the fourth quarter was offset by changes to qualitative factors in the general reserve component. Qualitative factors related to economic conditions and the operating environment were upgraded and qualitative factors related to loan growth and asset quality were downgraded. Allowance for Credit Losses on Loans The allowance for credit losses on loans totaled $7.0 million on December 31, 2024 , $7.1 million on September 30, 2024 , and $6.7 million on December 31, 2023 . There was no notable change in the general or specific reserve components of the allowance during the fourth quarter of 2024. Net charge-offs totaled $79 thousand in the fourth quarter and were primarily comprised of commercial and industrial loans. The following table provides the changes in the allowance for credit losses on loans for the three-month periods ended (dollars in thousands): Three Months Ended December 31, 2024 September 30, 2024 December 31, 2023 Allowance for credit losses on loans, beginning of period $7,097 $6,881 $6,768 Net (charge-offs) recoveries (79) 37 (75) Provision for (recovery of) credit losses on loans (41) 179 (20) Allowance for credit losses on loans, end of period   $6,977   $7,097   $6,673 The allowance for credit losses on loans as a percentage of total loans totaled 0.99% on December 31, 2024 , 1.03% on September 30, 2024 , and 1.02% on December 31, 2023 . Allowance for Credit Losses on Unfunded Commitments The allowance for credit losses on unfunded commitments totaled $402 thousand on December 31, 2024 , $361 thousand on September 30, 2024 , and $304 thousand on December 31, 2023 . There was a $41 thousand provision for credit losses on unfunded commitments in the fourth quarter of 2024, a $23 thousand provision for credit losses on unfunded commitments in the third quarter of 2024, and a $20 thousand provision for credit losses on unfunded commitments in the fourth quarter of 2023. BALANCE SHEET Assets totaled $877.3 million on December 31, 2024 , which was an increase of $6.0 million , or 3% (annualized), from September 30, 2024 , and a $46.6 million , or 6%, increase from December 31, 2023 . The increase in total assets from the third quarter of 2024 was primarily due to a $17.6 million increase in loans, net of allowance for credit losses, which was partially offset by a $7.7 million decrease in interest-bearing deposits in other banks and a $4.8 million decrease in securities, available for sale. Total assets increased from December 31, 2023 , primarily from a $52.4 million , or 8%, increase in loans, net of the allowance for credit losses, which was partially offset by a $5.6 million decrease in the interest-bearing deposit in other financial institutions and a $6.5 million decrease in securities, available for sale. On December 31, 2024 , loans totaled $704.1 , an increase of $17.4 million or 10% (annualized) from $686.7 million , on September 30, 2024 . Quarterly average loans totaled $690.2 million , an increase of $14.4 million or 8% (annualized) from the third quarter of 2024. On December 31, 2024 , loans increased $52.7 million , or 8%, from one year ago, and quarterly average loans increased $39.8 million , or 6%, when comparing the fourth quarter of 2024 to the same period in 2023. On December 31, 2024 , securities available for sale totaled $77.4 million , a decrease of $4.8 million from September 30, 2024 , and a decrease of $6.5 million from December 31, 2023 . On December 31, 2024 , net unrealized losses on the securities portfolio totaled $7.6 million , an increase of $1.8 million from net unrealized losses on securities available for sale that totaled $5.8 million on September 30, 2024 . On December 31, 2024 , total deposits were $754.4 million , an increase of $4.6 million or 2% (annualized) from September 30, 2024 . Quarterly average deposits decreased from the third quarter of 2024 by $20.0 million . Total deposits increased $14.7 million , or 2%, from December 31, 2023 , and quarterly average deposits for the fourth quarter of 2024 increased $7.9 million from the fourth quarter of 2023. On December 31, 2024 , and September 30, 2024 , other borrowings totaled $34.2 million and $34.5 million , respectively, and included $31.0 million of funds borrowed from the Federal Home Loan Bank of Pittsburgh ("FHLB"). On December 31, 2024 , borrowings from FHLB had a weighted average fixed interest rate of 4.25% with maturity dates ranging from January 2025 to August 2027 . The following table provides capital ratios at the period ended: Three Months Ended December 31, 2024 September 30, 2024 December 31, 2023 Total capital ratio (2) 13.57 % 13.79 % 13.97 % Tier 1 capital ratio (2) 12.52 % 12.69 % 12.89 % Common equity Tier 1 capital ratio (2)                     12.52 % 12.69 % 12.89 % Leverage ratio (2)            9.92 % 9.67 % 9.77 % Tangible common equity to tangible assets (1)(3) 8.37 % 8.32 % 8.05 % During the fourth quarter of 2024, the Company declared and paid cash dividends of $0.12 per common share, which was consistent with the third quarter of 2024, and an increase from $0.10 per share paid during the fourth quarter of 2023. 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 the Company's management believes provide useful information for financial and operational decision making, evaluating trends, and comparing financial results to other financial institutions. The non-GAAP financial measures presented in this document include adjusted net income, adjusted basic and diluted earnings per share, adjusted return on average assets, adjusted return on average equity, pre-provision pre-tax earnings, adjusted pre-provision pre-tax earnings, fully taxable equivalent interest income, the net interest margin, the efficiency ratio, tangible book value per share, and tangible common equity to tangible assets. The Company believes certain non-GAAP financial measures enhance the understanding of its business, performance, and financial position. 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, INC. Potomac Bancshares, Inc. (OTCPK: PTBS) is the bank holding company of Bank of Charles Town , which was founded in 1871. The Bank also does business under the names BCT and The Community's Bank.  The Bank conducts operations through its main office, an additional eight branch offices, and two loan production offices. The Bank's offices are in Jefferson and Berkeley Counties (WV), Washington County (MD), and Loudoun and Stafford Counties (VA). The Bank offers commercial lines and term loans, residential and commercial construction loans, commercial real estate loans, agricultural loans, and government contractor loans. The Bank is also a Small Business Administration (SBA) Preferred Lender. The Residential Lending division offers secondary market and portfolio mortgage loans, one-time close construction to permanent loans, as well as home equity loans and lines of credit. For over 70 years, BCT Wealth Advisors has provided caring and personalized trust services, growing into a premier financial management, investments, and estate services provider. The Bank also provides convenient online and mobile banking for individuals, businesses, and local governments plus free access to over 55,000 ATMs through the Allpoint® network plus another approximately 675 free access ATMs through another partnership. BCT was voted WINNER in the LoudounNow 2024 Loudoun's Favorites readers' poll in four categories: Bank, Mortgage Company, Banker, and Financial Planner. 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 2024 Journal-News Readers' Choice Awards in three categories:  Bank, Loan Services, and Financial Planning. The Bank was named a "Best Bank to Work For" by American Banker five of the last six years. 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. 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 5 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.   POTOMAC BANCSHARES, INC. Performance Summary (in thousands, except share and per share data) (unaudited) As of or For the Twelve Months As of or For the Three Months Ended Ended Dec 31, Sep 30, Dec 31, Dec 31, Dec 31, 2024 2024 2023 2024 2023 Income Statement Interest and dividend income: Interest and fees on loans  $               9,287 $               8,985 $               8,205 $             34,858 $             31,145 Taxable interest on securities 647 678 609 2,656 2,162 Tax-exempt interest on securities 29 29 29 114 114 Other interest and dividends  929 1,273 984 4,064 2,162 Total interest and dividend income  $             10,892 $             10,965 $               9,827 $             41,692 $             35,583 Interest expense: Interest on deposits  $               3,238 $               3,648 $               2,819 $             13,336 $               8,676 Interest on short term borrowings 9 7 8 30 84 Interest on long term borrowings 340 217 68 691 250 Interest on subordinated debt 141 140 139 560 557 Total interest expense  $               3,728 $               4,012 $               3,034 $             14,617 $               9,567 Net interest income  $               7,164 $               6,953 $               6,793 $             27,075 $             26,016 Provision for credit losses - 202 - 511 222 Net interest income after provision for credit losses                      $               7,164 $               6,751 $               6,793 $             26,564 $             25,794 Noninterest Income: Wealth and investments $                   584 $                   515 $                   471 $               1,948 $               1,740 Service charges on deposit accounts  273 273 254 1,057 1,015 Secondary market income 355 169 140 994 678 Net losses on sale of securities (397) - (154) (783) (428) ATM and check card fees  530 522 506 2,065 2,028 Income from bank owned life insurance 99 98 85 410 322 Other operating income  226 178 203 706 595 Total noninterest income  $               1,670 $               1,755 $               1,505 $               6,397 $               5,950 Noninterest expenses: Salaries and employee benefits  $               3,427 $               3,333 $               3,350 $             13,003 $             12,362 Occupancy  308 278 256 1,128 1,030 Equipment  352 353 341 1,439 1,393 Accounting, audit, and compliance 70 83 56 261 254 Advertising and public relations 104 103 91 391 396 Computer services and online banking 385 393 388 1,572 1,450 FDIC assessment  100 99 80 387 361 Other professional fees 185 206 214 648 518 Trust professional fees 203 119 86 554 359 Director and committee fees 100 75 90 356 353 Legal fees 34 31 55 246 155 Supplies  55 57 50 249 255 Communications  114 99 97 414 384 ATM and check card expenses  238 247 258 998 1,003 Other operating expenses  605 772 697 2,515 2,118 Total noninterest expenses  $               6,280 $               6,248 $               6,109 $             24,161 $             22,391 Income before income tax expense   $               2,554 $               2,258 $               2,189 $               8,800 $               9,353 Income tax expense   582 497 479 1,971 2,089 Net income $               1,972 $               1,761 $               1,710 $               6,829 $               7,264   POTOMAC BANCSHARES, INC. Performance Summary (in thousands, except share and per share data) (unaudited) As of or For the Twelve Months For the Three Months Ended Ended Dec 31, Sep 30, Dec 31, Dec 31, Dec 31, 2024 2024 2023 2024 2023 Common Share and Per Common Share Data Earnings per common share, basic $            0.48 $            0.42 $            0.41 $              1.65 $              1.75 Adjusted earnings per common share, basic (1) $            0.55 $            0.42 $            0.44 $              1.80 $              1.83 Weighted average shares, basic 4,144,561 4,144,561 4,144,561 4,144,561 4,144,561 Earnings per common share, diluted $            0.48 $            0.42 $            0.41 $              1.65 $              1.75 Adjusted earnings per common share, diluted (1) $            0.55 $            0.42 $            0.44 $              1.80 $              1.83 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) $          17.71 $          17.49 $          16.14 $           17.71 $           16.14 Cash Dividends $            0.12 $            0.12 $            0.10 $              0.46 $              0.38 Key Performance Ratios Return on average assets 0.89 % 0.79 % 0.81 % 0.80 % 0.91 % Adjusted return on average assets (1) 1.04 % 0.79 % 0.87 % 0.87 % 0.95 % Return on average equity 10.81 % 9.92 % 10.66 % 9.80 % 11.59 % Adjusted return on average equity (1) 12.53 % 9.92 % 11.41 % 10.69 % 12.13 % Net interest margin (1) 3.37 % 3.24 % 3.34 % 3.27 % 3.39 % Efficiency ratio (1) 67.98 % 71.69 % 72.23 % 70.48 % 69.07 % Average Balances Average assets $     877,813 $     884,167 $     835,807 $      858,988 $      796,673 Average earning assets 847,248 853,527 807,129 829,174 768,728 Average shareholders' equity 72,588 70,637 63,663 69,659 62,690 Asset Quality Loan charge-offs $             101 $                22 $             114 $               260 $               265 Loan recoveries 22 59 39 150 216 Net charge-offs (recoveries) 79 (37) 75 110 49 Non-accrual loans 2,738 2,638 2,695 2,738 2,695 Other real estate owned, net - - - - - Nonperforming assets (5) 2,738 2,638 2,695 2,738 2,695 Loans 30 to 89 days past due, accruing 474 299 739 474 739 Loans over 90 days past due, accruing - 1 - - - Special mention loans 10,627 2,267 9,964 10,627 9,964 Substandard loans, accruing 4,238 4,391 3,571 4,238 3,571 Capital Ratios (2) Total capital $       95,449 $       93,943 $       90,139 $         95,449 $         90,139 Tier 1 capital 88,070 86,485 83,160 88,070 83,160 Common equity tier 1 capital 88,070 86,485 83,160 88,070 83,160 Total capital to risk-weighted assets 13.57 % 13.79 % 13.97 % 13.73 % 13.97 % Tier 1 capital to risk weighted assets 12.52 % 12.69 % 12.89 % 12.65 % 12.89 % Common equity Tier 1 capital to risk weighed assets 12.52 % 12.69 % 12.89 % 12.65 % 12.89 % Leverage ratio 9.92 % 9.67 % 9.77 % 9.91 % 9.77 %   POTOMAC BANCSHARES, INC. Performance Summary (in thousands, except share and per share data) (unaudited) For the Period Ended Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, 2024 2024 2024 2024 2023 Balance Sheet Cash and due from banks  $           5,143 $           5,014 $           4,061 $           3,662 $           3,521 Interest-bearing deposits in other financial institutions  59,621 67,337 51,167 82,816 65,181 Cash and cash equivalents $         64,764 $         72,351 $         55,228 $         86,478 $         68,702 Securities available for sale, at fair value  77,385 82,146 83,276 84,768 83,929 Equity securities, at fair value  241 223 200 205 198 Loans held for sale 1,506 1,219 1,395 2,210 678 Loans, net of allowance for credit losses 697,132 679,558 657,188 648,804 644,687 Premises and equipment, net  8,099 7,832 7,806 5,882 5,965 Accrued interest receivable  2,283 2,382 2,413 2,309 2,003 Bank owned life insurance 13,977 13,878 13,780 13,683 13,566 FHLB of Pittsburgh stock  2,103 2,328 1,419 1,481 1,571 Other assets  9,859 9,414 9,875 9,151 9,415 Total assets $      877,349 $      871,331 $      832,580 $      854,971 $      830,714 Noninterest-bearing  demand deposits $      171,681 $      172,941 $      169,262 $      170,933 $      161,622 Savings and interest-bearing demand deposits 582,677 576,809 570,834 591,994 578,058 Total deposits $      754,358 $      749,750 $      740,096 $      762,927 $      739,680 Short term borrowings 5,170 5,503 5,031 5,657 2,839 Long term borrowings 29,000 29,000 4,000 4,000 6,000 Subordinated debt 9,958 9,942 9,927 9,912 9,897 Accrued interest payable  1,266 1,041 875 658 763 Other liabilities  4,181 3,586 3,347 4,057 4,661 Total liabilities  $      803,933 $      798,822 $      763,276 $      787,211 $      763,840 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 63,806 62,331 61,068 60,145 58,884 Accumulated other comprehensive (loss), net  (5,936) (5,368) (7,310) (7,931) (7,556) $         76,910 $         76,003 $         72,798 $         71,254 $         70,368 Less cost of shares acquired for the treasury (3,494) (3,494) (3,494) (3,494) (3,494) Total shareholders' equity  73,416 72,509 69,304 67,760 66,874 Total liabilities and shareholders' equity  $      877,349 $      871,331 $      832,580 $      854,971 $      830,714 Loan Data Construction and land development $         39,404 $         35,260 $         28,936 $         27,437 $         27,653 Secured by farmland 6,769 6,820 6,814 6,915 7,019 Secured by 1-4 family resident 247,299 244,125 240,053 235,861 238,298 Other real estate loans 345,904 340,027 335,888 340,289 332,029 Loans to farmers (except secured by real estate) 190 195 198 195 195 Commercial and industrial loans (except those secured by real estate) 54,205 49,972 41,431 33,791 34,548 Consumer installment loans 2,910 2,994 3,287 3,359 3,689 Deposit overdraft 518 74 71 132 92 All other loans 6,910 7,188 7,391 7,657 7,837 Total loans $      704,109 $      686,655 $      664,069 $      655,636 $      651,360 Allowance for credit losses (6,977) (7,097) (6,881) (6,832) (6,673) Loans, net $      697,132 $      679,558 $      657,188 $      648,804 $      644,687   POTOMAC BANCSHARES, INC. Non-GAAP Reconciliations (in thousands, except share and per share data) (unaudited) As of or For the Twelve Months As of or For the Three Months Ended Ended Dec 31, Sep 30, Dec 31, Dec 31, Dec 31, 2024 2024 2023 2024 2023 Adjusted Net Income Net income (GAAP) $           1,972 $           1,761 $           1,710 $           6,829 $           7,264 Add: Loss on sale of securities 397 - 154 783 428 Subtract: Tax effect of adjustment (4) (83) - (32) (164) (90) Adjusted net income (non-GAAP) $           2,286 $           1,761 $           1,832 $           7,448 $           7,602 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) $              0.48 $              0.42 $              0.41 $              1.65 $              1.75 Adjusted earnings per share, basic (Non-GAAP) $              0.55 $              0.42 $              0.44 $              1.80 $              1.83 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) $              0.48 $              0.42 $              0.41 $              1.65 $              1.75 Adjusted earnings per share, diluted (Non-GAAP) $              0.55 $              0.42 $              0.44 $              1.80 $              1.83 Adjusted Pre-Provision, Pre-tax earnings Net interest income $           7,164 $           6,953 $           6,793 $         27,075 $         26,016 Total noninterest income 1,670 1,755 1,505 6,397 5,950 Net revenue $           8,834 $           8,708 $           8,298 $         33,472 $         31,966 Total noninterest expense 6,280 6,248 6,109 24,161 22,391 Pre-provision, pre-tax earnings $           2,554 $           2,460 $           2,189 $           9,311 $           9,575 Add: Loss on sale of securities 397 - 154 783 428 Adjusted pre-provision, pre-tax earnings $           2,951 $           2,460 $           2,343 $         10,094 $         10,003 Adjusted Performance Ratios Average assets $      877,813 $      884,167 $      835,807 $      858,988 $      796,673 Return on average assets (GAAP) 0.89 % 0.79 % 0.81 % 0.80 % 0.91 % Adjusted return on average assets (Non-GAAP) 1.04 % 0.79 % 0.87 % 0.87 % 0.95 % Average shareholders' equity $         72,588 $         70,637 $         63,663 $         69,659 $         62,690 Return on average equity (GAAP) 10.81 % 9.92 % 10.66 % 9.80 % 11.59 % Adjusted return on average equity (Non-GAAP) 12.53 % 9.92 % 11.41 % 10.69 % 12.13 % Pre-provision, pre-tax return on average assets 1.16 % 1.11 % 1.04 % 1.08 % 1.20 % Adjusted pre-provision, pre-tax return on average assets 1.34 % 1.11 % 1.11 % 1.18 % 1.26 % Net Interest Margin Tax-equivalent net interest income $           7,170 $           6,959 $           6,799 $         27,099 $         26,040 Average earning assets 847,248 853,527 807,129 829,174 768,728 Net interest margin 3.37 % 3.24 % 3.34 % 3.27 % 3.39 % Efficiency Ratio Total noninterest expense $           6,280 $           6,248 $           6,109 $         24,161 $         22,391 Tax-equivalent net interest income $           7,170 $           6,959 $           6,799 $         27,099 $         26,040 Total noninterest income $           1,670 $           1,755 $           1,505 $           6,397 $           5,950 Add: Loss on disposal of property and equipment 1 1 - 2 - Add: Loss on sale of investment securities, AFS 397 - 154 783 428 Total noninterest income subtotal 2,068 1,756 1,659 7,182 6,378 Subtotal $           9,238 $           8,715 $           8,458 $         34,281 $         32,418 Efficiency ratio 67.98 % 71.69 % 72.23 % 70.48 % 69.07 % Tax-Equivalent Net Interest Income GAAP measures: Interest income - loans $           9,287 $           8,985 $           8,205 $         34,858 $         31,145 Interest income - investments taxable 647 678 609 2,656 2,162 Interest income - investments tax exempt 29 29 29 114 114 Interest income - other 929 1,273 984 4,064 2,162 Interest expense - deposits (3,238) (3,648) (2,819) (13,336) (8,676) Interest expense - short term borrowings (9) (7) (8) (30) (84) Interest expense - long term borrowings (340) (217) (68) (691) (250) Interest expense - subordinated debt (141) (140) (139) (560) (557) Net interest income $           7,164 $           6,953 $           6,793 $         27,075 $         26,016 Non-GAAP measures: Add: Tax benefit realized on non-taxable interest income -  municipal securities (4) $                    6 $                    6 $                    6 $                 24 $                 24 Tax benefit realized on non-taxable interest income $                    6 $                    6 $                    6 $                 24 $                 24 Tax equivalent net interest income $           7,170 $           6,959 $           6,799 $         27,099 $         26,040 Tangible Book Value Per Share Tangible common equity $         73,417 $         72,509 $         66,874 $         73,417 $         66,874 Common shares outstanding, ending 4,144,561 4,144,561 4,144,561 4,144,561 4,144,561 Tangible book value per share $           17.71 $           17.49 $           16.14 $           17.71 $           16.14 (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 Bank of Charles Town. (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 and other real estate owned.   View original content to download multimedia: https://www.prnewswire.com/news-releases/potomac-bancshares-inc-reports-fourth-quarter-and-full-year-results-302365231.html SOURCE Potomac Bancshares, Inc.

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