Potomac Bancshares, Inc. · OTC:PTBS
Potomac Bancshares — Shareholder Meeting (April 2020)
28 slides from Potomac Bancshares's shareholder meeting presentation, Apr 28, 2020
Slide 1: PTBS Shareholder Meeting
PTBS Shareholder Meeting April 28, 2020 Virtual Meeting Format
Slide 2: Forward-Looking Statements
Forward-Looking Statements A Warning about Forward-Looking Information This presentation contains statements that are based on other than historical data and that are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements provide curren
Slide 3: 2019 Results And Accomplishments
2019 Results And Accomplishments 3
Slide 4: Balance Sheet Growth
Balance Sheet Growth (‘000s) $600,000 $515,786 $500,000 $484,550 $449,880 $425,494 $424,127 $412,460 $400,000 $383,706 $372,159 $363,957 $351,757 $333,871 $346,768 $332,599 $303,535 $300,000 $280,111 $200,000 $100,000 $0 2015 2016 2017 2018 2019 Loans Deposits Assets OTC:PTBS 4
Slide 5: Net Income & Dividends
Net Income & Dividends Corporate growth investments and initiatives began July 2018 $4,000 Dividends 50% Net Income $3,500 $3,392 45% % Payout $3,141 $3,213 38% 40% $3,000 $2,580 36% 35% $2,500 $2,218 29% 30% 30% $2,000 28% 25% $1,500 $1,158 $1,005 20% $836 $902 $1,000 $710 15% $500 10% $0 5% 2015 2
Slide 6: Asset Quality
Asset Quality Non Performing Assets to Total Assets • Early 2018, strengthened credit culture and underwriting guidelines 0.80% • Early 2019, strengthened 0.70% 0.70% underwriting criteria for consumer lending 0.60% • Modified late pay behaviors in 0.50% consumer portfolios beginning 2018 0.40% • Se
Slide 7: Increased Non-Interest Income
Increased Non-Interest Income 2018 2019 Other Other 12% 10% Trust & Investments Trust & 26% Investments 24% Interchange Interchange Fees Fee 25% 28% Mortgage Banking Deposit 19% Service Deposit Charges Mortgage Service 24% Banking Charges 10% 22% Mortgage banking fee income increased 132% to $1.0 mi
Slide 8: Digital Banking Trends
Digital Banking Trends Online/Mobile User Trends Business Online Trends 9,000 500 471 8,000 7,683 450 7,000 400 6,000 350 5,059 281 5,000 300 4,000 250 200 3,000 150 117 2,000 1,041 100 1,000 50 0 Active Bill Payers Mobile Banking Active Online 0 Banking Cash Management Users Secure Tokens 2018 2019
Slide 9: 2019 Strategic Priorities
2019 Strategic Priorities Extraordinary Customer Experience at every interaction Provide a Differentiated (face to face, digital, phone or community) that begins Customer Experience with the Employee Experience • Profitable Commercial loan, non-interest bearing Improve Net Interest deposit and fee i
Slide 10: Priority One: Provide an Amazing Customer Experience
PRIORITY ONE: Provide an Amazing Customer Experience • Begins with an Amazing Employee Experience • Employee survey completed by an independent third party • 2019 Customer Experience Survey requests implemented: • Ability to view all items within a deposit through Online Banking • Ebill added to Bil
Slide 11: Priority Two: Manage Net Interest Margin By Increasing Non-Interest Bearing Deposits
PRIORITY TWO: Manage Net Interest Margin By Increasing Non-Interest Bearing Deposits • Increase Non-Interest Bearing Deposits Cost of Funds 83 bps • Continue Loudoun County Expansion • April 2019 opening of Leesburg, VA branch (3rd branch and LPO in Loudoun) • Total deposits in Loudoun increased 700
Slide 12: Priority Three: Leverage Technology for Customer Experience and Efficiency
PRIORITY THREE: Leverage Technology for Customer Experience and Efficiency • Hired Chief Technology Officer to drive technology projects • Renegotiated core banking contract with significant savings over next five years • Completed Online Banking and Mobile Banking selection for 4Q 2020 conversion •
Slide 13: 2020 Focus and Initiatives
2020 Focus and Initiatives 13
Slide 14: 2020 Strategic Priorities
2020 Strategic Priorities Amazing Customer Experience at every interaction (face Provide a Differentiated to face, digital, phone or community) that begins with Customer Experience the Employee Experience • Profitable Commercial loan, non-interest bearing Improve Overall deposit and fee income growt
Slide 15: COVID-19 Impact and First Quarter Results
COVID-19 Impact and First Quarter Results 15
Slide 16: COVID-19 Priorities: Protect our Employees, Support our Clients and Communities
COVID-19 Priorities: Protect our Employees Support our Clients and Communities • Implement a work-from-home strategy for those whose jobs can be performed remotely, 50% capability to remote Employees • Alternative schedules and geographic relocation for retail and operations teams whose Provide a sa
Slide 17: Payment Protection Program Loans
Payment Protection Program Loans 4,064 Round One - $349 Billion Jobs CARES ACT Stimulus Loan Size # of Aggregate Total Average Size of Loans of Loans Loans <$350,000 240 $15,395,866 $64,149 $350,001-$1,000,000 23 $12,175, 592 $529,374 >$1,000,000 7 $12,736,500 $1,819,500 Total 270 $40,307,960 $149,2
Slide 18: First Quarter 2020 Balance Sheet Growth
First Quarter 2020 Balance Sheet Growth(‘000s) $600,000 $540,615 $510,557 $515,845 $496,441 $505,040 $500,000 $472,395 $447,917 $442,246 $451,790 $436,507 $412,460 $418,545 $400,030 $389,859 $400,000 $372,392 $300,000 $200,000 $100,000 $- 1Q2019 2Q2019 3Q2019 4Q2019 1Q2020 Loans Deposits Total Asset
Slide 19: First Quarter 2020 Net Income
First Quarter 2020 Net Income (Unaudited - dollars in thousands, except per share) 3/31/2019 12/31/2019 3/31/2020 Income Statement & Profitability Ratios Interest and Dividend Income $ 4,774 $ 5,193 $ 5,220 Interest Expense 858 989 976 Net Interest Income $ 3,916 $ 4,204 $ 4,244 Provision For Loan L
Slide 20: Strong Liquidity Position as of March 31, 2020
Strong Liquidity Position as of March 31, 2020 Liquidity Options Investment Portfolio • Loan growth funded by core deposits • 1Q Core deposit growth $20.6 million SBA 1% • Cash of $42 million Municipals • $199 million of unused borrowing 3% capacity Agencies 21% • Federal Reserve $15 million • FHLB
Slide 21: Strong Capital Position as of March 31, 2020
Strong Capital Position as of March 31, 2020 16.00% 14.76% 14.00% 13.70% 13.70% 12.00% 10.42% 10.50% 10.00% 10.00% 8.50% 8.00% 8.00% 7.00% 6.50% 6.00% 5.00% 4.00% 4.00% 2.00% 0.00% Tier 1 to Average Assets Tier 1 to Risk Weighted CET 1 to Risk Weighted Total Capital to Risk Assets Assets Weighted As
Slide 22: Going Forward: Interest Rate Risk Position
Going Forward: Interest Rate Risk Position Net Interest Income Sensitivity • Net Interest Income Sensitivity reflects recent 150 Basis Points decrease by As of January 31, 2020 Federal Reserve Year 1 Year 2 • 39% of all loans have interest rate Up 200BP -0.70% 4.70% floors Base -1.90% • 68% of loans
Slide 23: Diversified Loan Portfolio – March 31, 2020
Diversified Loan Portfolio – March 31, 2020 Overall Loan Portfolio Commercial Loan Portfolio Retail Home 2% Equity 5% C&I Other 7% 19% CRE AD&C Owner Occ 1-4 Family 10% 24% 31% Commercial 62% CRE Non Owner Occ 40% Commercial Loan Portfolio = $260 million OTC:PTBS 23
Slide 24: Balance Sheet: Providing Relief to our Customers
Balance Sheet: Providing Relief to our Customers Commercial Loan % of Modifications by Industry Commercial • Commercial loan modifications have Loans stabilized Outstanding • Quickly addressed high-risk segments Restaurants 2.04% • Case by case modification strategy Residential Investment 1.24% • Co
Slide 25: Hotel Lending Exposure
Hotel Lending Exposure • Twelve hotels with flags of Hilton, Marriott, Choice, Wyndham and Intercontinental. Only one independent hotel. • Ten stabilized properties before COVID-19. Two properties in early stage construction which has been halted. • Hotel concentration capped at 60% of capital in Ju
Slide 26: Allowance for Loan Losses (ALLL)
Allowance for Loan Losses (ALLL) • Prudent and conservative build to ALLL for growth • Qualitative Economic factors increased due to high unemployment and significant uncertainty around duration and impact of COVID-19 OTC:PTBS 26
Slide 27: Managing CRE Concentrations
Managing CRE Concentrations 400 350 300 CRE guidance of 300% of capital 250 200 150 100 AD&C guidance of 100% of Capital 50 0 12/31/16 12/31/17 12/31/18 12/31/19 3/31/20 100% AD&C Guideline 300% CRE Guideline Commercial Real Estate Concentrations are managed within guidance and regular in depth moni
Slide 28: Potomac Bancshares Q&A
POTOMAC *\" BANCSHARES O&A OTC: PTBS 28
Potomac Bancshares — Shareholder Meeting (April 2020) on 6ix