Potomac Bancshares Reports 60% Increase in Second Quarter Earnings

CHARLES TOWN, W.Va., July 29, 2026 /PRNewswire/ — Potomac Bancshares, Inc. (the “Company”) (OTCID: PTBS), the bank holding company of Potomac Bank (the “Bank”), reported net income of $3.3 million, or $0.80 per basic and diluted earnings per common share, for the second quarter of 2026. This represents a 9% increase from the first quarter of 2026 and a 60% increase from the second quarter of 2025. Return on average assets was 1.32% and return on average equity was 15.52% for the quarter.

For the six months ending June 30, 2026, the Company reported net income of $6.4 million, or $1.54 per share. This represents an increase of $2.1 million, or 49% increase, compared to the same period in 2025 when net income was $4.3 million, or $1.03 per share.

Quarterly Financial Highlights
(in thousands, except per share data)

	Q2 2026	Q1 2026	Q2 2025
Net Income	$3,320	$3,044	$2,074
EPS (basic and diluted)	$0.80	$0.73	$0.50
ROA	1.32 %	1.28 %	0.91 %
ROE	15.52 %	14.68 %	10.83 %

Non-GAAP Measures¹:
Adj. Net Income	$ 3,320	$2,865	$2,159
Adj. EPS (basic and diluted)	$0.80	$0.69	$0.52
Adj. ROA	1.32 %	1.21 %	0.95 %
Adj. ROE	15.52 %	13.82 %	11.27 %
Adj. Pre-Provision, Pre-Tax Earnings	$4,552	$3,860	$3,008
Adj. Pre-Provision, Pre-Tax ROA	1.82 %	1.63 %	1.32 %
Net Interest Margin	3.76 %	3.66 %	3.48 %
Efficiency Ratio	61.15 %	64.84 %	67.96 %

¹Non-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.

“We are extremely pleased with our second quarter performance, which produced record quarterly earnings, strong revenue growth, and continued improvement in profitability metrics,” said Alice Frazier, President and CEO of Potomac Bancshares. “We experienced strong organic growth across our core markets. Despite early payoffs, loans increased 2% during the quarter and asset quality remained exceptional. Our growth opportunities remain strong for delivering long-term value to our shareholders.”

Expansion in New and Existing Markets

The Bank previously announced its plans to expand into the Winchester-Frederick County, Virginia market and hired experienced bankers to lead the expansion. Early returns are positive ahead of the first branch expected to open in downtown Winchester late in the third quarter. The Bank’s market president will join other employees in the new branch to enable more comprehensive service to business and personal clients.

Commercial deposit growth remains a strategic priority, leading to the recruitment of an experienced commercial banker dedicated to expanding treasury management services and growing the Bank’s commercial deposit portfolio across its markets.

Second Quarter Highlights

Key highlights of the three-month period ending June 30, 2026, are as follows, with comparisons to the three-month period ending March 31, 2026, unless otherwise noted:

Net income increased 9% linked-quarter and 60% year-over-year
Return on assets improved to 1.32%
Return on equity increased to 15.52%
Net interest margin expanded to 3.76%
Loans increased 7% (annualized) and 5% year-over-year
Deposits increased 1% (annualized) and 7% year-over-year
Book value per share increased to $20.97, or 12% year-over-year
Cash dividend increased to $0.15 per share, or 15% over the prior quarter

Net Interest Income

Net interest income was $9.1 million for the second quarter of 2026, representing a 9% increase from the first quarter of 2026. Total interest and dividend income increased by $883 thousand, which was partially offset by a $141 thousand increase in total interest expense.

The increase in interest and dividend income was primarily attributable to a $577 thousand, or 6%, increase in interest income and fees on loans and a $207 thousand, or 25%, increase in other interest income and dividend income. The increases were primarily a result of higher balances of loans and interest-bearing deposits in banks, and $139 thousand of accelerated deferred loan fee income on a loan that was paid off prior to its maturity date during the second quarter.

The increase in total interest expense was attributable to an increase in interest expense on deposits from higher average interest-bearing deposits. The cost of deposits decreased by 2 basis points to 1.55% for the quarter.

The net interest margin increased to 3.76% compared to 3.66% for the first quarter of 2026. Approximately 5 basis points of the increase resulted from the recognition of $139 thousand in accelerated deferred loan fee income from a loan that paid off prior to its maturity date. Excluding the favorable impact of the accelerated fee income, net interest margin would have increased to 3.71% for the second quarter, reflecting a favorable trend in earning asset yields and disciplined deposit pricing.

Noninterest Income

Noninterest income totaled $2.6 million for the second quarter, which was a 9% decrease from the first quarter of 2026, reflecting a $145 thousand decrease in gains on sales of mortgage loans and a $308 thousand decrease in gains on sales of SBA loans. There was less demand for mortgage loans in the second quarter compared to recent periods. The decrease in gains on sales of SBA loans was attributable to the total dollar amount of loans sold in the first quarter of 2026 being unusually high. The decreases were partially offset by increases in wealth management income, debit card interchange income, and other operating income. Other operating income increased from a $201 thousand loan prepayment penalty on a loan that paid off prior to its maturity date.

Compared to the second quarter of 2025, noninterest income increased $827 thousand, or 47%, driven by growth in wealth management income, debit card interchange income, other operating income, and gains on sales of SBA loans. Wealth management income increased $292 thousand, or 59%, from the implementation of a new client fee schedule and estate fee income. Other operating income increased $376 thousand from a $201 thousand from income from a prepayment penalty on a loan and the receipt of an annual incentive based on debit card transactions totaling $120 thousand.

Noninterest Expense

Noninterest expense totaled $7.2 million, which was a slight increase from the first quarter of 2026. Expenses were comparable to the first quarter of 2026 except for marketing and other operating expenses. Increases in marketing expenses were partially offset by decreases in other operating expenses. Marketing expenses increased $84 thousand from business development costs in the Bank’s new market area, initiatives to increase market share in existing markets, and the cost of sponsorships of community events and local non-profit organizations. Other operating expenses decreased $80 thousand from a decrease in fraud losses in the second quarter.

Asset Quality

Overview

Asset quality metrics remained favorable as of June 30, 2026. Loans past due greater than 30 days and still accruing interest as a percentage of total loans were 0.56% on June 30, 2026, compared to 0.23% on March 31, 2026, and 0.42% on June 30, 2025. Nonperforming assets as a percentage of total assets were 0.05% on June 30, 2026, compared to 0.03% on March 31, 2026, and 0.24% on June 30, 2025. Annualized net charge-offs as a percentage of total loans were 0.13% for the second quarter of 2026 and the allowance for credit losses on loans totaled $7.9 million, or 1.03% of total loans.

Provision for Credit Losses

Provision for credit losses totaled $250 thousand for the second quarter of 2026 compared to $200 thousand for the first quarter of 2026 and $225 thousand for the second quarter of 2025. The provision for credit losses was comprised of a $60 thousand provision for loans and a $40 thousand provision for unfunded commitments.

Allowance for Credit Losses on Loans

The allowance for credit losses on loans totaled $7.9 million, or 1.03% of total loans on June 30, 2026, compared to 1.05% of total loans on March 31, 2026, and 0.99% of total loans on June 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)
	Q2 2026	Q1 2026	Q2 2025
Allowance for credit losses on loans, beginning	$7,972	$7,796	$7,180
Net charge-offs	(244)	(17)	(46)
Provision for credit losses on loans	210	193	225
Allowance for credit losses on loans, ending	$7,938	$7,972	$7,359

Allowance for Credit Losses on Unfunded Commitments

The allowance for credit losses on unfunded commitments totaled $477 thousand on June 30, 2026, and $437 thousand on March 31, 2026. The provision for credit losses on unfunded commitments was $40 thousand, compared to the provision for credit losses on unfunded commitments of $7 thousand for the first quarter of 2026.

Balance Sheet

Assets totaled $981.4 million on June 30, 2026, which was a 2% increase (annualized) from March 31, 2026, and a 7% increase year-over-year. There was no significant change in the Bank’s asset composition when comparing balances on June 30, 2026, to balances on March 31, 2026, and June 30, 2025.

Securities available for sale increased $3.9 million, or 17% annualized, during the second quarter, and increased $19.9 million, or 26% from one year ago. Net unrealized losses on the securities portfolio totaled $5.8 million on June 30, 2026, which was an increase of $574 thousand from March 31, 2026, and a decrease of $728 thousand from June 30, 2025.

Total (gross) loans increased $13.2 million, or 7% annualized, during the second quarter, which was primarily attributable to an $8.1 million increase in other real estate loans (secured by commercial real estate) and a $3.8 million increase in construction and land development loans. The loan growth occurred despite approximately $12.0 million of loans that paid off prior to their maturity dates during the second quarter. On a year-over-year basis, total loans increased $35.3 million, or 5%.

Total deposits increased $2.4 million, or 1% annualized, during the second quarter, and increased $52.9 million, or 7%, year-over-year. Noninterest-bearing deposits totaled 23% of total deposits at the end of the period, which was up from 22% on March 31, 2026.

Other borrowings totaled $30.0 million on June 30, 2026, compared to $29.2 million on March 31, 2026, and $31.8 million one year ago. This included $27.0 million borrowed from the Federal Home Loan Bank of Pittsburgh, with a weighted average fixed interest rate of 4.21% and maturity dates ranging from 2026 to 2028.

Shareholders’ equity totaled $86.9 million on June 30, 2026, an increase of $2.3 million, or 11% annualized from March 31, 2026, and $9.4 million, or 12%, from one year ago. The increases were primarily attributable to increases in retained earnings. Retained earnings increased $2.7 million, or 15% annualized, quarter-over-quarter, and $8.8 million, or 13%, year-over-year. Accumulated other comprehensive loss increased $431 thousand from the first quarter of 2026 and decreased $594 thousand 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:

	Q2 2026	Q1 2026	Q2 2025
Total capital ratio ⁽²⁾	14.04 %	13.98 %	13.46 %
Tier 1 capital ratio ⁽²⁾	12.97 %	12.87 %	12.40 %
Common equity Tier 1 capital ratio ⁽²⁾	12.97 %	12.87 %	12.40 %
Leverage ratio ⁽²⁾	9.85 %	10.02 %	9.91 %
Tangible common equity to tangible assets ⁽¹⁾⁽³⁾	8.86 %	8.67 %	8.42 %

Dividends

During the second quarter of 2026, the Company paid a quarterly cash dividend of $0.15 per common share, which was a 15% increase compared to $0.13 per share paid during the first quarter of 2026.

The Company recently announced that a quarterly cash dividend of $0.15 per common share was declared for the third quarter of 2026 by its Board of Directors. The dividend was declared for all shareholders of record as of August 6, 2026, and payable on August 13, 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 six 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 nine-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 President and CEO (304) 728-2431 afrazier@potomac.bank	M. Shane Bell Executive Vice President and CFO (304) 728-2434 sbell@potomac.bank

POTOMAC BANCSHARES, INC.
Performance Summary
(in thousands, except share and per share data)
(unaudited)

	For the Three Months Ended				For the Six Months Ended
		June 30,	March 31,	June 30,	June 30,	June 30,
		2026	2026	2025	2026	2025
Income Statement
Interest and dividend income:
Interest and fees on loans		$ 11,062	$ 10,485	$ 9,682	$ 21,547	$ 19,183
Taxable interest on securities		894	796	710	1,690	1,425
Tax-exempt interest on securities		30	29	28	59	57
Other interest and dividends		1,040	833	989	1,873	1,663
Total interest and dividend income		$ 13,026	$ 12,143	$ 11,409	$ 25,169	$ 22,328
Interest expense:
Interest on deposits		$ 3,379	$ 3,243	$ 3,324	$ 6,622	$ 6,429
Interest on short term borrowings		6	3	2	9	8
Interest on long term borrowings		287	290	309	577	622
Interest on subordinated debt		219	214	140	433	281
Total interest expense		$ 3,891	$ 3,750	$ 3,775	$ 7,641	$ 7,340
Net interest income		$ 9,135	$ 8,393	$ 7,634	$ 17,528	$ 14,988
Provision for credit losses		250	200	225	450	475
Net interest income after provision for credit losses		$ 8,885	$ 8,193	$ 7,409	$ 17,078	$ 14,513
Noninterest Income:
Wealth and investments		$ 790	$ 745	$ 498	$ 1,535	$ 1,003
Service charges on deposit accounts		240	234	225	474	485
Gains / fees on sale of mortgage loans		349	494	351	843	598
ATM and check card fees		563	499	518	1,062	993
Income from bank owned life insurance		102	101	100	203	197
Net loss on disposal of premises & equipment		(1)	(9)	–	(10)	(2)
Net gain on sale of SBA loans		100	408	–	508	–
Other operating income		450	368	74	818	321
Total noninterest income		$ 2,593	$ 2,840	$ 1,766	$ 5,433	$ 3,595
Noninterest expenses:
Salaries and employee benefits		$ 4,083	$ 4,049	$ 3,742	$ 8,132	$ 7,092
Occupancy		321	334	310	655	654
Equipment		301	269	344	570	720
Accounting, audit, and compliance		58	73	70	131	139
Marketing		231	147	112	378	230
Data processing		471	485	453	956	905
FDIC assessment		114	108	104	222	203
Other professional fees		139	135	140	274	272
Trust professional fees		209	206	144	415	315
Director and committee fees		117	126	68	243	165
Legal fees		16	17	23	33	56
Supplies		71	89	66	160	145
Communications		129	121	112	250	224
ATM and check card expense		282	273	264	555	504
Other operating expenses		634	714	547	1,348	1,076
Total noninterest expenses		$ 7,176	$ 7,146	$ 6,499	$ 14,322	$ 12,700
Income before income tax expense		$ 4,334	$ 3,887	$ 2,676	$ 8,189	$ 5,408
Income tax expense		1,014	843	602	1,889	1,146
Net income		$ 3,320	$ 3,044	$ 2,074	$ 6,301	$ 4,262

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 Six Months Ended
	June 30,	March 31,	June 30,	June 30,	June 30,
	2026	2026	2025	2026	2025
Common Share and Per Common Share Data
Earnings per common share, basic	$ 0.80	$ 0.73	$ 0.50	$ 1.54	$ 1.03
Adjusted earnings per common share, basic ⁽¹⁾	$ 0.80	$ 0.69	$ 0.52	$ 1.49	$ 1.05
Weighted average shares, basic	4,144,561	4,144,561	4,144,561	4,144,561	4,144,561
Earnings per common share, diluted	$ 0.80	$ 0.73	$ 0.50	$ 1.54	$ 1.03
Adjusted earnings per common share, diluted ⁽¹⁾	$ 0.80	$ 0.69	$ 0.52	$ 1.49	$ 1.05
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⁾	$ 20.97	$ 20.42	$ 18.70	$ 20.97	$ 18.70
Cash dividends	$ 0.15	$ 0.13	$ 0.13	$ 0.28	$ 0.25

Key Performance Ratios
Return on average assets	1.32 %	1.28 %	0.91 %	1.30 %	0.96 %
Adjusted return on average assets ⁽¹⁾	1.32 %	1.21 %	0.95 %	1.27 %	0.98 %
Return on average equity	15.52 %	14.68 %	10.83 %	15.11 %	11.41 %
Adjusted return on average equity ⁽¹⁾	15.52 %	13.82 %	11.27 %	14.68 %	11.63 %
Net interest margin ⁽¹⁾	3.76 %	3.66 %	3.48 %	3.71 %	3.51 %
Efficiency ratio ⁽¹⁾	61.15 %	64.84 %	67.96 %	62.94 %	67.72 %

Average Balances
Average assets	$ 1,005,077	$ 961,992	$ 912,253	$ 983,653	$ 891,935
Average earning assets	973,898	930,543	881,485	952,339	861,090
Average shareholders’ equity	85,786	84,077	76,808	84,936	75,341

Asset Quality
Loan charge-offs	$ 251	$ 23	$ 65	$ 274	$ 86
Loan recoveries	7	6	20	13	40
Net charge-offs	244	17	45	261	46
Non-accrual loans	500	257	2,245	–	2,245
Other real estate owned, net	–	–	–	–	–
Nonperforming assets ⁽⁵⁾	500	257	2,245	–	2,245
Loans 30 to 89 days past due, accruing	3,663	1,491	726	3,663	726
Loans over 90 days past due, accruing	128	–	151	128	151
Special mention loans	21,078	20,344	15,711	21,078	15,711
Substandard loans, accruing	418	432	1,150	418	1,150
Non performing assets/total assets	0.05 %	0.03 %	0.24 %	0.00 %	0.24 %
Past due loans/total loans	0.56 %	0.23 %	0.42 %	0.49 %	0.42 %

Capital Ratios ⁽²⁾
Total capital	$ 108,010	$ 105,495	$ 99,097	$ 108,129	$ 99,097
Tier 1 capital	99,746	97,087	91,290	99,864	91,290
Common equity tier 1 capital	99,746	97,087	91,290	99,864	91,290
Total capital to risk-weighted assets	14.04 %	13.98 %	13.46 %	14.06 %	13.46 %
Tier 1 capital to risk weighted assets	12.97 %	12.87 %	12.40 %	12.98 %	12.40 %
Common equity Tier 1 capital to risk weighed assets	12.97 %	12.87 %	12.40 %	12.98 %	12.40 %
Leverage ratio	9.85 %	10.02 %	9.91 %	9.86 %	9.91 %

POTOMAC BANCSHARES, INC.
Performance Summary
(in thousands, except share and per share data)
(unaudited)
	For the Period Ended
	June 30,		March 31,	December 31,	September 30,	June 30,
	2026		2026	2025	2025	2025
Balance Sheet
Cash and due from banks	$ 4,884		$ 6,133	$ 3,603	$ 4,648	$ 4,638
Interest-bearing deposits in other financial institutions	74,980		87,754	76,046	115,174	67,636
Cash and cash equivalents	$ 79,864		$ 93,887	$ 79,649	$ 119,822	$ 72,274
Securities available for sale, at fair value	96,642		92,713	80,905	77,935	76,787
Equity securities, at fair value	309		280	258	278	246
Restricted securities	2,122		1,852	1,932	1,932	2,037
Loans held for sale	3,321		1,771	2,804	2,946	5,682
Loans, net of allowance for credit losses	763,774		750,548	743,808	724,611	729,065
Premises and equipment, net	8,776		8,734	8,759	8,164	8,107
Accrued interest receivable	2,800		2,719	2,309	2,592	2,439
Bank owned life insurance	14,103		14,002	14,378	14,275	14,174
Other assets	9,687		9,340	9,482	9,456	9,528
Total assets	$ 981,398		$ 975,846	$ 944,284	$ 962,011	$ 920,339

Noninterest-bearing demand deposits	$ 196,835		$ 187,715	$ 183,461	$ 204,355	$ 176,708
Savings and interest-bearing demand deposits	650,911	U	657,665	629,568	629,062	618,155
Total deposits	$ 847,746		$ 845,380	$ 813,029	$ 833,417	$ 794,863
Short term borrowings	2,967		2,241	2,451	3,013	2,793
Long term borrowings	27,000		27,000	29,000	29,000	29,000
Subordinated debt	10,000		10,000	10,000	10,000	9,989
Accrued interest payable	993		936	1,052	1,037	1,148
Other liabilities	5,789		5,652	6,309	5,185	5,056
Total liabilities	$ 894,495		$ 891,209	$ 861,841	$ 881,652	$ 842,849

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	75,852		73,154	70,649	68,815	67,032
Accumulated other comprehensive (loss), net	(4,494)		(4,063)	(3,752)	(4,002)	(5,088)
	$ 90,398		$ 88,131	$ 85,937	$ 83,853	$ 80,984
Less cost of shares acquired for the treasury	(3,494)		(3,494)	(3,494)	(3,494)	(3,494)
Total shareholders’ equity	$ 86,904		$ 84,637	$ 82,443	$ 80,359	$ 77,490
Total liabilities and shareholders’ equity	$ 981,398		$ 975,846	$ 944,284	$ 962,011	$ 920,339

Loan Data
Construction and land development	$ 41,585		$ 37,751	$ 45,537	$ 45,979	$ 46,882
Secured by farmland	7,351		7,435	7,509	7,594	6,732
Secured by 1-4 family residential properties	270,734		270,027	258,467	256,974	253,798
Secured by multifamily residential properties	38,906		38,205	39,280	39,928	39,246
Secured by owner-occupied nonfarm nonresidential properties	122,061		114,770	114,078	117,053	118,883
Secured by other nonfarm nonresidential properties	218,096		217,282	205,548	188,227	197,561
Loans to farmers (except secured by real estate)	101		109	120	128	118
Commercial and industrial loans (except those secured by real estate)	62,967		63,517	72,158	66,965	63,763
Consumer installment loans	2,830		2,859	2,757	2,845	2,860
Deposit overdraft	–		–	–	–	–
All other loans	7,081		6,565	6,150	6,424	6,581
Total loans	$ 771,712		$ 758,520	$ 751,604	$ 732,117	$ 736,424
Allowance for credit losses	(7,938)		(7,972)	(7,796)	(7,506)	(7,359)
Loans, net	$ 763,774		$ 750,548	$ 743,808	$ 724,611	$ 729,065

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 Six Months Ended
	June 30,		March 31,		June 30,	June 30,	June 30,
	2026		2026		2025	2026	2025
Adjusted Net Income
Net income (GAAP)	$ 3,320		$ 3,044		$ 2,074	$ 6,364	$ 4,262
Add: Loss on sale of securities	–		–		–	–	–
Add: Core system conversion expense	–		–		85	–	85
Add: Renaming expense	–		–		22	–	22
Subtract: Interest income recognized on nonaccrual loans from prior periods	–		–		–	–	–
Subtract: BOLI death benefit	–		(227)		–	(227)	–
Total adjustments	$ –		$ (227)		$ 107	$ (227)	$ 107
Subtract: Tax effect of adjustment ⁽⁴⁾	–		48		(22)	48	(22)
Adjusted net income (non-GAAP)	$ 3,320		$ 2,865		$ 2,159	$ 6,184	$ 4,347


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)	$ 0.80		$ 0.73		$ 0.50	$ 1.54	$ 1.03
Adjusted earnings per share, basic (Non-GAAP)	$ 0.80		$ 0.69		$ 0.52	$ 1.49	$ 1.05


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)	$ 0.80		$ 0.73		$ 0.50	$ 1.54	$ 1.03
Adjusted earnings per share, diluted (Non-GAAP)	$ 0.80		$ 0.69		$ 0.52	$ 1.49	$ 1.05


Adjusted Pre-Provision, Pre-tax earnings
Net interest income	$ 9,135		$ 8,393		$ 7,634	$ 17,528	$ 14,988
Total noninterest income	2,593		2,840		1,766	5,433	3,595
Net revenue	$ 11,728		$ 11,233		$ 9,400	$ 22,961	$ 18,583
Total noninterest expense	7,176		7,146		6,499	14,322	12,700
Pre-provision, pre-tax earnings	$ 4,552		$ 4,087		$ 2,901	$ 8,639	$ 5,883
Add: Loss on sale of securities	–		–		–	–	–
Add: Core system conversion expense	–		–		85	–	85
Add: Bank renaming expense	–		–		22	–	22
Subtract: Interest income recognized on nonaccrual loans from prior periods	–		–		–	–	–
Subtract: BOLI death benefit	–		(227)		–	(227)	–
Adjusted pre-provision, pre-tax earnings	$ 4,552		$ 3,860		$ 3,008	$ 8,412	$ 5,990


Adjusted Performance Ratios
Average assets	$ 1,005,077		$ 961,992		$ 912,253	$ 983,653	$ 891,935
Return on average assets (GAAP)	1.32 %		1.28 %		0.91 %	1.30 %	0.96 %
Adjusted return on average assets (Non-GAAP)	1.32 %		1.21 %		0.95 %	1.27 %	0.98 %

Average shareholders’ equity	$ 85,786		$ 84,077		$ 76,808	$ 84,936	$ 75,341
Return on average equity (GAAP)	15.52 %		14.68 %		10.83 %	15.11 %	11.41 %
Adjusted return on average equity (Non-GAAP)	15.52 %		13.82 %		11.27 %	14.68 %	11.63 %

Pre-provision, pre-tax return on average assets	1.82 %		1.72 %		1.28 %	1.77 %	1.33 %
Adjusted pre-provision, pre-tax return on average assets	1.82 %		1.63 %		1.32 %	1.72 %	1.35 %


Net Interest Margin
Tax-equivalent net interest income	$ 9,141		$ 8,399		$ 7,640	$ 17,540	$ 15,000
Average earning assets	973,898		930,543		881,485	952,339	861,090
Net interest margin	3.76 %		3.66 %		3.48 %	3.71 %	3.51 %


Efficiency Ratio
Total noninterest expense	$ 7,176		$ 7,146		$ 6,499	$ 14,322	$ 12,700
Subtract: Core system conversion expense	–		–		(85)	–	(85)
Subtract: Renaming expense	–		–		(22)	–	(22)
Total noninterest expense subtotal	$ 7,176		$ 7,146		$ 6,392	$ 14,322	$ 12,593
Tax-equivalent net interest income	$ 9,141		$ 8,399		$ 7,640	$ 17,540	$ 15,000
Total noninterest income	$ 2,593		$ 2,840		$ 1,766	$ 5,433	$ 3,595
Add: Net losses on sale of investment securities, AFS	–		–		–	–	–
Add: Net losses on disposal of premises & equipment	1		9		–	10	2
Subtract: Bank owned life insurance death benefit	–		(227)		–	(227)	–
Total noninterest income subtotal	$ 2,594		$ 2,622		$ 1,766	$ 5,216	$ 3,597
Subtotal	$ 11,735		$ 11,021		$ 9,406	$ 22,756	$ 18,597

Efficiency ratio	61.15 %		64.84 %		67.96 %	62.94 %	67.72 %

Tax-Equivalent Net Interest Income
GAAP measures:
Interest income – loans	$ 11,062		$ 10,485		$ 9,682	$ 21,547	$ 19,183
Interest income – investments taxable	894	U	796		710	1,690	1,425
Interest income – investments tax exempt	30		29		28	59	57
Interest income – other	1,040		833		989	1,873	1,663
Interest expense – deposits	(3,379)		(3,243)		(3,324)	(6,622)	(6,429)
Interest expense – short term borrowings	(6)		(3)		(2)	(9)	(8)
Interest expense – long term borrowings	(287)		(290)		(309)	(577)	(622)
Interest expense – subordinated debt	(219)		(214)	U	(140)	(433)	(281)
Net interest income	$ 9,135		$ 8,393		$ 7,634	$ 17,528	$ 14,988
Non-GAAP measures:
Subtract: Interest income recognized on non-accrual loans from prior periods	–		–		–	–	–
Add: Tax benefit realized on non-taxable interest income – municipal securities ⁽⁴⁾	$ 6		$ 6		$ 6	$ 12	$ 12
Tax equivalent net interest income	$ 9,141		$ 8,399		$ 7,640	$ 17,540	$ 15,000

Tangible Book Value Per Share
Tangible common equity	$ 86,904		$ 84,637		$ 77,490	$ 86,904	$ 77,490
Common shares outstanding, ending	4,144,561		4,144,561		4,144,561	4,144,561	4,144,561
Tangible book value per share	$ 20.97		$ 20.42		$ 18.70	$ 20.97	$ 18.70

⁽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.

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SOURCE Potomac Bancshares, Inc.

Potomac Bancshares Reports 60% Increase in Second Quarter Earnings

Cision PR Newswire

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