UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
____________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported) March 2, 2012
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:
| o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | ||
| o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | ||
| o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | ||
| o | 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 March 2, 2012
Robert F. Baronner Jr., President and CEO of Potomac Bancshares, Inc., announced the following fourth quarter and full year 2011 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 12/31/11, Potomac Bancshares, Inc. generated net income of 11 cents per basic and diluted share which is 1 cent shy of the net income generated per share for the fourth quarter of 2010. For the twelve months ended 12/31/11, total net loss was $1.01 Million compared to net income of $1.79 Million for the twelve months ended 12/31/10. Basic and diluted loss per share for the year ended 12/31/11, was 30 cents compared to earnings in 2010 of 53 cents per basic and diluted share.
Contributing to the net loss for 2011 compared to 2010 was an increase in the loan loss provision of $1.7 million and increased costs associated with foreclosed properties of $2.6 million. As previously communicated to our shareholders, the charges primarily occurred in the third quarter of 2011.
For 2011, the bank was able to maintain a fairly strong non-interest income level of $4.4 million and net interest income of $9.7 million which is consistent with the previous two years.
Both Tier One Leverage Capital and Total Risked Based Capital levels in 2011 decreased from 2010 levels as evidenced by the table below. The decrease is the result of the net loss in 2011. Given the previous mentioned charges to earnings and its effect on capital we will not pay a dividend this quarter. Note that the bank continues to maintain its well capitalized status even after taking these charges to earnings. Once credit conditions begin to improve, then at that time we would expect improved profitability.
| (Unaudited) | ||||||||||
| Actual | Actual | |||||||||
| 12/31/11 | Ratio | 12/31/10 | Ratio | |||||||
| Total Capital (to risk weighted assets) | 27,481 | 13.13 | % | 30,798 | 14.24 | % | ||||
| Tier 1 Capital (to risk weighted assets) | 24,842 | 11.87 | % | 28,065 | 12.97 | % | ||||
| Tier 1 Capital (to average assets) | 24,842 | 8.56 | % | 28,065 | 9.36 | % | ||||
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POTOMAC BANCSHARES, INC. AND
SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
December 31, 2011 and 2010
($ in thousands, except share data)
| (unaudited) | |||||||
| 2011 | 2010 | ||||||
| ASSETS | |||||||
| Cash and due from banks | $ | 1 485 | $ | 2 185 | |||
| Interest-bearing deposits in other financial institutions | 11 445 | 7 995 | |||||
| Federal funds sold | 794 | 2 725 | |||||
| Securities available for sale, at fair value | 42 331 | 42 690 | |||||
| Loans held for sale | 198 | 76 | |||||
| Loans, net of allowance for loan losses of $4,484 | |||||||
| in 2011 and $5,012 in 2010 | 202 761 | 214 238 | |||||
| Premises and equipment, net | 7 923 | 8 270 | |||||
| Other real estate owned, net of valuation allowance | |||||||
| of $2,197 in 2011 and $95 in 2010 | 6 393 | 6 563 | |||||
| Accrued interest receivable | 832 | 960 | |||||
| Bank owned life | 6 932 | 6 397 | |||||
| Federal Home Loan Bank of Pittsburgh stock | 808 | 765 | |||||
| Other assets | 5 491 | 4 745 | |||||
| Total Assets | $ | 287 393 | $ | 297 609 | |||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
| LIABILITIES | |||||||
| Deposits | |||||||
| Noninterest-bearing | $ | 37 050 | $ | 26 695 | |||
| Interest-bearing | 216 067 | 230 727 | |||||
| Total Deposits | 253 117 | 257 422 | |||||
| Securities sold under agreements to repurchase | 3 415 | 7 382 | |||||
| Federal Home Loan Bank advances | 1 523 | 2 717 | |||||
| Accrued interest payable | 204 | 361 | |||||
| Other liabilities | 3 669 | 2 951 | |||||
| Total Liabilities | $ | 261 928 | $ | 270 833 | |||
| STOCKHOLDERS’ EQUITY | |||||||
| Common stock, $1 per share par value; 5,000,000 shares | |||||||
| authorized; 3,671,691 shares issued | $ | 3 672 | $ | 3 672 | |||
| Surplus | 3 943 | 3 932 | |||||
| Undivided profits | 22 648 | 23 725 | |||||
| Accumulated other comprehensive (loss), net | (1 932 | ) | (1 687 | ) | |||
| $ | 28 331 | $ | 29 642 | ||||
| Less cost of shares acquired for the treasury, 281,513 shares | 2 866 | 2 866 | |||||
| Total Stockholders’ Equity | $ | 25 465 | $ | 26 776 | |||
| Total Liabilities and Stockholders’ Equity | $ | 287 393 | $ | 297 609 | |||
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POTOMAC BANCSHARES, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended December 31, 2011, 2010 and 2009
($ in thousands, except
per share data)
| (Unaudited) | |||||||||||
| 2011 | 2010 | 2009 | |||||||||
| Interest and Dividend Income: | |||||||||||
| Interest and fees on loans | $ | 11 648 | $ | 12 923 | $ | 13 801 | |||||
| Interest on securities available for sale - taxable | 660 | 755 | 933 | ||||||||
| Interest on securities available for sale - nontaxable | 231 | 202 | 148 | ||||||||
| Interest on federal funds sold | 1 | 3 | 7 | ||||||||
| Other interest and dividends | 31 | 21 | 24 | ||||||||
| Total Interest and Dividend Income | $ | 12 571 | $ | 13 904 | $ | 14 913 | |||||
| Interest Expense: | |||||||||||
| Interest on deposits | $ | 2 804 | $ | 3 972 | $ | 4 772 | |||||
| Interest on securities sold under agreements to repurchase | |||||||||||
| and federal funds purchased | 59 | 84 | 148 | ||||||||
| Interest on Federal Home Loan Bank and Federal Reserve | |||||||||||
| Bank advances | 37 | 87 | 201 | ||||||||
| Total Interest Expense | $ | 2 900 | $ | 4 143 | $ | 5 121 | |||||
| Net Interest Income | $ | 9 671 | $ | 9 761 | $ | 9 792 | |||||
| Provision for Loan Losses | 3 343 | 1 599 | 6 690 | ||||||||
| Net Interest Income after Provision | |||||||||||
| for Loan Losses | $ | 6 328 | $ | 8 162 | $ | 3 102 | |||||
| Noninterest Income: | |||||||||||
| Trust and financial services | $ | 894 | $ | 842 | $ | 758 | |||||
| Service charges on deposit accounts | 1 831 | 1 854 | 2 205 | ||||||||
| Visa/MC Fees | 759 | 676 | 563 | ||||||||
| Cash surrender value of life insurance | 234 | 235 | 238 | ||||||||
| Miscellaneous income | 287 | 38 | 4 | ||||||||
| Gain on sale of securities | - - | - - | 42 | ||||||||
| Other operating income | 363 | 431 | 471 | ||||||||
| Total Noninterest Income | $ | 4 368 | $ | 4 076 | $ | 4 281 | |||||
| Noninterest Expenses: | |||||||||||
| Salaries and employee benefits | $ | 4 980 | $ | 4 731 | $ | 5 351 | |||||
| Net occupancy expense of premises | 629 | 648 | 570 | ||||||||
| Furniture and equipment expenses | 912 | 783 | 948 | ||||||||
| Accounting, audit and compliance | 189 | 145 | 194 | ||||||||
| Computer services and online banking | 331 | 184 | 91 | ||||||||
| Loss (gain) on sale of other real estate | 343 | (223 | ) | (776 | ) | ||||||
| FDIC assessment | 453 | 563 | 711 | ||||||||
| Printing, stationery and supplies | 195 | 182 | 207 | ||||||||
| Communications | 187 | 183 | 184 | ||||||||
| Foreclosed property expense | 551 | 677 | 1 272 | ||||||||
| Write down of other real estate | 2 182 | 17 | 303 | ||||||||
| ATM and check card expense | 344 | 291 | 326 | ||||||||
| Other operating expenses | 1 660 | 1 583 | 1 678 | ||||||||
| Total Noninterest Expenses | $ | 12 956 | $ | 9 764 | $ | 11 059 | |||||
| (Loss) Income Before Income Tax (Benefit) Expense | $ | (2 260 | ) | $ | 2 474 | $ | (3 676 | ) | |||
| Income Tax (Benefit) Expense | (1 250 | ) | 680 | (1 436 | ) | ||||||
| Net (Loss) Income | $ | (1 010 | ) | $ | 1 794 | $ | (2 240 | ) | |||
| (Loss) Earnings Per Share, basic and diluted | $ | (.30 | ) | $ | .53 | $ | (.66 | ) | |||
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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 |
| March 2, 2012 |
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