Potomac Bancshares, Inc. · OTC:PTBS
Potomac Bancshares — Janney Montgomery Scott Investor Presentation (September 2024)
42 slides from Potomac Bancshares's conference presentation, Sep 16, 2024
Slide 1: Janney Montgomery Scott Investor Presentation
Janney Montgomery Scott Investor Presentation September 16, 2024
Slide 2: Forward Looking Statements
Forward Looking Statements Certain statements made in this document 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
Slide 3: I. Overview of Potomac Bancshares
I. Overview of Potomac Bancshares 3
Slide 4: Overview of Potomac Bancshares
Overview of Potomac Bancshares 4
Slide 5: Well Positioned in Our Markets
Well Positioned in Our Markets • Nine banking offices in four fast growing counties in the suburbs/exburbs of Washington, DC MSA • Loan production offices in Loudoun County, VA and Fredericksburg, VA; Leesburg LPO new office in eastern Loudoun County in New Loudon One LPO Dec. 2024 Fredericksburg LP
Slide 6: Market Opportunity – By Population Growth
Market Opportunity – By Population Growth 2024 Total Population Population Change Age (Years) 6
Slide 7: Market Opportunity – By Household Income
Market Opportunity – By Household Income Jefferson and Berkeley County Economic 2024 Median Household Income Growth • Ideally located on Route 81 provides access to 75% of East Coast within 7 hours' drive • Most recent business investment announcements • Handcraft investing $59 million with 220 jobs
Slide 8: Consistent Execution of 2018 Plan
Consistent Execution of 2018 Plan Increased non-interest income through expansion of mortgage banking in all markets served • Hired a top producing Director of Mortgage Banking with 20 years of experience in mortgage lending (2018) • Improved secondary market platform for improved closing times and
Slide 9: The Experience Culture
The Experience Culture Client Testimonials Client Social Recognition 9
Slide 10: Differentiated Experiences are Recognized
Differentiated Experiences are Recognized Readers’ Choice Award: Eastern Panhandle, Readers’ Choice Award: West Virginia Loudoun County, Virginia Martinsburg Journal-News LoudounNow Best Bank – 2024 Best Bank – 2023, 2022, 2021, 2020 Best Mortgage Company – 2024 Best Loan Service – 2023, 2022, 2021,
Slide 11: Deposit Market Share – West Virginia, Maryland
Deposit Market Share – West Virginia, Maryland 11
Slide 12: Deposit Market Share – Virginia
Deposit Market Share – Virginia • Rapid Virginia market share growth since 2018 with deposits fueled by commercial banking focus • FDIC deposit market share improvement • 6/2023 Rank: 11th • 6/2018 Rank: 21st 12
Slide 13: Diversified Markets
Diversified Markets Diversified Markets Loan Portfolio by Region (6/30/24) Deposit Portfolio by Region (6/30/24) (In millions) (In millions) 1.67% COF Virginia strategic expansion began in 2018 13
Slide 14: Unleashed Geographic Boundaries
Unleashed Geographic Boundaries Loans Deposits Pindrop map of all loan and deposit accounts demonstrates penetration deep into Washington DC MSA BCT Branch BCT Loan Production Office Future Loan Production Office 14
Slide 15: Future of Fintech Investing
Future of Fintech Investing • Six-year involvement in the ICBA ThinkTech program • Selection Committee exposure • In-depth demos/coaching • Anchor investment in BankTech Venture Fund • Access to Fintech ecosystem • Total commitment - $500,000 • Direct investment in KBS Analytics, LLC, dba KlariVis •
Slide 16: Net Income
(in thousands) $8,000 $7,000 526 1,627 $6,000 $5,000 $4,000 855 6,785 ae $3,000 $2,000 $1,000 $0 2018 2019 2020 2021 2022 2023 mCore PPP POTOMAC 2S" BANCSHARES OTC: PTBS
Slide 17: Positioning PTBS for Future Success
Positioning PTBS for Future Success 2024-2026 Focused Growth Strategies Berkeley County: Garner Significant Market Share in A Coaching Culture for Berkeley County Moving BCT to Relationship-Building with Create a Grow the Predominant Locally-owned Accountability to "We A.R.E." - Attracting, Coaching
Slide 18: Scalable Fee Income Based Business Lines
Scalable Fee Income Based Business Lines • Partnered with • Partnered with Lender • Partnered with Sterling Clearstead Advisors for Solutions for all back- Financial Management, Investment Management office functions a registered LPL • Outsourced back office to • Better execution for Advisory Firm F
Slide 19: II. Financial Overview
ll. Financial Overview A POTOMAC 2" BANCSHARES OTC: PTBS
Slide 20: Consistent Balance Sheet Growth
Consistent Balance Sheet Growth (Dollars in millions) Total Assets Total Loans Total Deposits Total Shareholders’ Equity 20
Slide 21: Second Quarter Financial Highlights
Second Quarter Financial Highlights • Drivers of the Efficiency Ratio were primarily due to investments in information technology and human capital as well as slowing growth in net interest income 21
Slide 22: Thoughtful Diversification of Commercial Specialties
Thoughtful Diversification of Commercial Specialties Traditional C&I lending in our Core Markets led by seasoned, well-known Community Market Presidents Commercial Real Estate led by seasoned, well-known banker with contacts throughout Washington DC MSA (2019) Team lift-out in May 2021 of 3 seasoned
Slide 23: Proactive Credit Risk Management Practices
Proactive Credit Risk Management Practices Proactive Underwriting Culture CRE and ADC Concentration Ratios • Strengthened credit culture and underwriting guidelines during the uncertainties of the pandemic and future conditions to position ourselves to weather any potential economic downturn • Conti
Slide 24: Diversified Loan Portfolio
Diversified Loan Portfolio As of 6/30/2024 Loan Portfolio Breakdown By Call Code • Consistent monitoring of portfolio maintenance balance • Commercial portfolio now accounts for 57% of loan portfolio 24
Slide 25: Commercial Real Estate – Non-Owner Occupied
Commercial Real Estate – Non-Owner Occupied As of 6/30/2024 Exposure by Asset Class 25
Slide 26: Commercial Real Estate – Office Buildings (not including medical)
Commercial Real Estate – Office Buildings (not including medical) As of 6/30/2024 • Office real estate is primarily “Main Street” and not major city centers; tenants are commonly local real estate agents, accountants, and attorneys • Total exposure $32.7 million across 20 assets/ facilities • Larges
Slide 27: Commercial Real Estate – Owner Occupied
Commercial Real Estate – Owner Occupied As of 6/30/2024 Diverse Across Multiple Industries 27
Slide 28: Diversified Loan Portfolio
Diversified Loan Portfolio As of 6/30/2024 COIs and LOCs • In late 2022, we pivoted the loan portfolio for greater diversity by focusing on C&I Lending and Lines of Credit diversification • The bank pivoted business development focus to operating companies with deposit, equipment and working capital
Slide 29: Credit Culture Drives Asset Quality
Credit Culture Drives Asset Quality Proactive Risk Management Culture Non-Accrual Loans & Asset Quality Ratios • Increase in NPA primarily based on one relationship which is well secured • Annual third-party loan reviews – 42% coverage • Semi-annual soft credit analysis on consumer loans NPAs / Tota
Slide 30: Stable, Low-Cost Core Deposits
Stable, Low-Cost Core Deposits As of 6/30/2024 Non-Interest-Bearing Deposit Balances ($ in millions) ($ in millions) Relationship Pricing Drives Lower Cost of Deposits 30
Slide 31: Securities Portfolio and Liquidity
Securities Portfolio and Liquidity As of 6/30/2024, unless otherwise noted Interest Rate Risk as of 4/30/2024 Investment Portfolio (Tax Equivalent) Total portfolio $92.15 million with market value loss of $8.37 million Overall portfolio tax equivalent yield of • Balanced Interest Rate Risk Position
Slide 32: Stable Earnings
Stable Earnings Net Income, ROAA and ROAE Pre-Provision Net Revenue / Average Assets ($ in thousands) ($ in thousands) 32
Slide 33: Strong Fee Income
Strong Fee Income Fee Income / Operating Revenue • Significant consumer deposit base drives interchange income • BCT Wealth and BCT Investments fee income growth driven by increase in Assets Under Management • BCT Residential Lending is experiencing a 50% increase in production in 2024 over 2023 as
Slide 34: Operating Productivity
Operating Productivity Pre-Tax Net Income Per Employee (Bank Only) Efficiency Ratio and NIE / Average Assets ($ in thousands) * Annualized – Peer Group Defined in Appendix 34
Slide 35: Strong Capital Position
Strong Capital Position As of 6/30/2024 35
Slide 36: Rewarding Shareholders
Rewarding Shareholders Announced 20% increase on April 16, 2024 $0.12 per share Target Dividend Payout Range of 25% - 35% 36
Slide 37: Appendix
Appendix se POTOMAC 2" BANCSHARES OTC: PTBS
Slide 38: Experienced Leadership Team/Proven Leadership
Experienced Leadership Team/Proven Leadership Alice P. Frazier joined Potomac Bancshares, Inc. in 2017 as President & Chief Executive Officer. She has over 33 years of banking experience. Prior to Potomac Bancshares Inc., she served as Executive Vice President and Chief Operating Officer of Cardinal
Slide 39: Diversified Board of Directors
Diversified Board of Directors In addition to its top-notch management team, the Company is 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 terms of backgrounds, perspectiv
Slide 40: Local Peer Group
Local Peer Group Financials as of 6/30/2024 Select Banks Headquartered Within 35 Miles of Charles Town Source: S&P Capital IQ Pro Note(s): Where current operating information was unavailable, bank-level or most recent available reporting period was used. NA = not available; NM = not meaningful Exclu
Slide 41: National Peer Group
National Peer Group Nationwide Banks with Assets $500 Million - $1 Billion, TCE / TA 7% - 10% and LTM Core ROATCE 9% - 13% Source: S&P Capital IQ Pro Note(s): Where current operating information was unavailable, bank-level or most recent available reporting period was used. NA = not available; NM =
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