UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported) February 17, 2011
Potomac Bancshares, Inc.
(Exact Name of Registrant as Specified in Charter)
West Virginia
(State of Other Jurisdiction of Incorporation)
0-24958
(Commission File Number)
55-0732247
(IRS Employer Identification No.)
111 E. Washington St., PO Box 906, Charles Town WV 25414-0906
(Address of Principal Executive Offices) (Zip Code)
304-725-8431
Registrant’s telephone number, including area code
N/A
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Section 2 – Financial Information
| Item 2.02. | Results of Operations and Financial Condition. |
For Immediate Release February 17, 2011
Robert F. Baronner Jr., President and CEO of Potomac Bancshares, Inc., announced the following fourth quarter unaudited results for Potomac Bancshares, Inc., the one bank holding company for Bank of Charles Town located in Charles Town, West Virginia.
For the fourth quarter ended 12/31/10, Potomac Bancshares, Inc. generated net income of 12 cents per basic and diluted share which is equal to the net income generated per share for the fourth quarter of 2009. For the twelve months ended 12/31/10, total net income was $1.79 Million compared to a loss of $2.24 Million for the twelve months ended 12/31/2009. Basic and diluted earnings per share for the year ended 12/31/10 were 53 cents compared to a loss in 2009 of 66 cents per basic and diluted share. This represents the 5th consecutive quarter of profitability for the company as it continues to work through a challenged real estate market and overall poor economy.
For 2010, and in spite of the regulatory uncertainty caused by the Dodd-Frank Act, the bank was able to maintain fairly strong non-interest income levels of $4.08 Million for the year. Although this was actually down slightly from 2009 levels of $4.28 Million, it still compares very favorably to banks of similar size. Non-interest expense control was well managed as overhead was reduced about 11.7% or $1.3 Million from 2009 levels.
Credit quality as a result of the economic downturn is still a concern, but is moving in the right direction as evidenced by the reduction in foreclosed property expense, a reduced loan loss provision, and a declining net charge off rate. The bank continues to maintain a strong reserve for loan losses at $5.01 Million which is 2.29% of total loans and 224% of non-accruing loans. However, the real estate market appears not to have hit bottom which makes any type of sustained economic recovery problematic.
Both Tier One Leverage Capital and Total Risked Based Capital levels in 2010 improved over 2009 levels as evidenced by the table below. This has been accomplished through close monitoring of balance sheet size and temporarily suspending the dividend. A strong capital base is an essential foundation for weathering the current economy. As economic conditions improve, having sufficient capital to grow earnings is essential to resuming cash dividends to shareholders.
| Actual 12/31/10 |
Ratio | Actual 12/31/09 |
Ratio | |||||||||||||
| Total Capital (to risk weighted assets) |
30,798 | 14.24 | % | 29,528 | 12.92 | % | ||||||||||
| Tier 1 Capital (to risk weighted assets) |
28,065 | 12.97 | % | 26,635 | 11.65 | % | ||||||||||
| Tier 1 Capital (to average assets) |
28,065 | 9.36 | % | 26,635 | 8.75 | % | ||||||||||
It was recently announced that Macy’s is constructing a $150 Million distribution center in the Eastern Panhandle which will employ 1,200 full time workers and as many as 900 seasonal workers. This positive news for the panhandle will likely help the troubled real estate market and boost local employment.
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POTOMAC BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
December 31, 2010 and 2009
(in thousands, except share data)
| (unaudited) 2010 |
2009 | |||||||
| ASSETS | ||||||||
| Cash and due from banks |
$ | 3,669 | $ | 2,493 | ||||
| Interest-bearing deposits in other financial institutions |
6,511 | 4,180 | ||||||
| Federal funds sold |
2,725 | 5,950 | ||||||
| Securities available for sale, at fair value |
42,690 | 34,313 | ||||||
| Loans held for sale |
76 | 97 | ||||||
| Loans, net of allowance for loan losses of $5,012 in 2010 and $5,718 in 2009 |
214,238 | 228,993 | ||||||
| Premises and equipment, net |
8,270 | 8,726 | ||||||
| Other real estate owned, net of valuation allowance of $95 in 2010 and $303 in 2009 |
6,563 | 5,632 | ||||||
| Accrued interest receivable |
960 | 952 | ||||||
| Federal Home Loan Bank of Pittsburgh stock |
765 | 805 | ||||||
| Other assets |
10,385 | 11,048 | ||||||
| Total Assets |
$ | 296,852 | $ | 303,189 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| LIABILITIES |
||||||||
| Deposits |
||||||||
| Noninterest-bearing |
$ | 26,695 | $ | 27,953 | ||||
| Interest-bearing |
230,727 | 236,514 | ||||||
| Total Deposits |
$ | 257,422 | $ | 264,467 | ||||
| Securities sold under agreements to repurchase |
7,382 | 7,340 | ||||||
| Federal Home Loan Bank advances |
2,717 | 3,856 | ||||||
| Accrued interest payable |
361 | 405 | ||||||
| Other liabilities |
2,194 | 1,549 | ||||||
| Commitments and contingent liabilities |
— | — | ||||||
| Total Liabilities |
$ | 270,076 | $ | 277,617 | ||||
| STOCKHOLDERS’ EQUITY |
||||||||
| Common stock, $1 per share par value; 5,000,000 shares authorized; 3,671,691 shares issued |
$ | 3,672 | $ | 3,672 | ||||
| Surplus |
3,932 | 3,898 | ||||||
| Undivided profits |
23,725 | 21,931 | ||||||
| Accumulated other comprehensive (loss), net |
(1,687 | ) | (1,063 | ) | ||||
| $ | 29,642 | $ | 28,438 | |||||
| Less cost of shares acquired for the treasury, 281,513 shares |
2,866 | 2,866 | ||||||
| Total Stockholders’ Equity |
$ | 26,776 | $ | 25,572 | ||||
| Total Liabilities and Stockholders’ Equity |
$ | 296,852 | $ | 303,189 | ||||
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POTOMAC BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended December 31, 2010, 2009 and 2008
(in thousands, except per share data)
| (unaudited) 2010 |
2009 | 2008 | ||||||||||
| Interest and Dividend Income: |
||||||||||||
| Interest and fees on loans |
$ | 12,923 | $ | 13,801 | $ | 15,201 | ||||||
| Interest on securities available for sale - taxable |
755 | 933 | 1,415 | |||||||||
| Interest on securities available for sale - nontaxable |
202 | 148 | 110 | |||||||||
| Interest on federal funds sold |
3 | 7 | 249 | |||||||||
| Other interest and dividends |
21 | 24 | 383 | |||||||||
| Total Interest and Dividend Income |
$ | 13,904 | $ | 14,913 | $ | 17,358 | ||||||
| Interest Expense: |
||||||||||||
| Interest on deposits |
$ | 3,972 | $ | 4,772 | $ | 6,162 | ||||||
| Interest on securities sold under agreements to repurchase and federal funds purchased |
84 | 148 | 255 | |||||||||
| Interest on Federal Home Loan Bank and Federal Reserve Bank advances |
87 | 201 | 60 | |||||||||
| Total Interest Expense |
$ | 4,143 | $ | 5,121 | $ | 6,477 | ||||||
| Net Interest Income |
$ | 9,761 | $ | 9,792 | $ | 10,881 | ||||||
| Provision for Loan Losses |
1,599 | 6,690 | 2,934 | |||||||||
| Net Interest Income after Provision for Loan Losses |
$ | 8,162 | $ | 3,102 | $ | 7,947 | ||||||
| Noninterest Income: |
||||||||||||
| Trust and financial services |
$ | 842 | $ | 758 | $ | 807 | ||||||
| Service charges on deposit accounts |
1,854 | 2,205 | 2,340 | |||||||||
| Visa/MC Fees |
676 | 563 | 516 | |||||||||
| Cash surrender value of life insurance |
235 | 238 | 240 | |||||||||
| Miscellaneous income |
38 | 4 | 246 | |||||||||
| Gain (loss) on sale of real estate |
— | — | (185 | ) | ||||||||
| Gain on sale of securities |
— | 42 | — | |||||||||
| Other operating income |
431 | 471 | 391 | |||||||||
| Total Noninterest Income |
$ | 4,076 | $ | 4,281 | $ | 4,355 | ||||||
| Noninterest Expenses: |
||||||||||||
| Salaries and employee benefits |
$ | 4,731 | $ | 5,351 | $ | 5,146 | ||||||
| Net occupancy expense of premises |
648 | 570 | 542 | |||||||||
| Furniture and equipment expenses |
783 | 948 | 933 | |||||||||
| Advertising and marketing |
137 | 176 | 266 | |||||||||
| FDIC assessment |
563 | 711 | 84 | |||||||||
| Printing, stationery and supplies |
182 | 207 | 181 | |||||||||
| Communications |
183 | 184 | 167 | |||||||||
| Foreclosed property expense |
379 | 759 | 167 | |||||||||
| ATM and check card expense |
291 | 326 | 313 | |||||||||
| Other operating expenses |
1,867 | 1,827 | 1,788 | |||||||||
| Total Noninterest Expenses |
$ | 9,764 | $ | 11,059 | $ | 9,587 | ||||||
| Income (Loss) Before Income Tax Expense (Benefit) |
$ | 2,474 | $ | (3,676 | ) | $ | 2,715 | |||||
| Income Tax Expense (Benefit) |
680 | (1,436 | ) | 853 | ||||||||
| Net Income (Loss) |
$ | 1,794 | $ | (2,240 | ) | $ | 1,862 | |||||
| Earnings (Loss) Per Share, basic and diluted |
$ | .53 | $ | (.66 | ) | $ | .55 | |||||
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Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| POTOMAC BANCSHARES, INC. |
| /s/ Robert F. Baronner, Jr. |
| Robert F. Baronner, Jr., President and CEO |
| February 17, 2011 |
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