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) August 8, 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 the quarter ended June 30, 2012, Potomac Bancshares, Inc. earned $346 thousand or 10 cents per share compared to $173 thousand or 5 cents a share for the quarter ended June 30, 2011. For the six months ended June 30, 2012, Potomac Bancshares, Inc. earned $666 thousand or 19 cents per share as compared to $430 thousand and 13 cents per share for the six months ended June 30, 2011.
The economy may be improving in our local market. For the first time in a number of years, we experienced loan growth during the second quarter. Loans were at $209 million at June 30, 2012 compared to $203 million at December 31, 2011, an annualized increase of nearly six percent. There are a number of reasons for the increase including good mortgage volume and some growth in our commercial loan portfolio. During the first six months of this year, we hired a fully dedicated mortgage loan officer for Berkeley County, West Virginia and a commercial lender for the Hagerstown/Washington County, Maryland market. Both of these folks are beginning to generate good quality loans in their respective areas which should help with profitability down the road. Local realtors also tell us that existing real estate listings in the panhandle continue to decline which may bode well for a resumption of housing construction in the near future. Only time will tell if there remains a permanent uptick in the economy but we are more optimistic than we have been in a number of years.
I often discuss the regulatory burden on small publicly traded companies like Potomac Bancshares and its detrimental impact to profitability. In April, the President signed into law the “Jobs Act” which permits publicly traded companies of less than 1,200 shareholders to deregister with the Securities and Exchange Commission. As I announced at the annual shareholders meeting, this is the most significant regulatory relief for small publicly traded companies in years and could result in substantial savings to Potomac in direct costs and man hours over the long term. Accordingly, in early June we filed our application to deregister with the SEC and we expect final approval in August. We will continue to release our results on a quarterly basis but will not be mailing a quarterly report. You may view results through our website (mybct.com) by clicking on the “Investor Relations” page. Should you want a paper copy of our quarterly results, contact Chief Financial Officer Dean Cognetti directly at (304)728-2434 and we’ll put you on our mailing list. Your stock will continue to trade on the OTC market and we will file an independently audited annual report at year end as we have in the past.
In closing, we are increasingly optimistic about the future but are choosing not to pay a dividend this quarter until a sustained economic recovery is evident. Please call me at any time at (304) 728-2431 if you have any questions or issues that you would like to discuss and thanks for your support!
| Sincerely, |
| Robert F. Baronner, Jr. |
| President and Chief Executive Officer |
POTOMAC BANCSHARES, INC. AND
SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
($
in thousands, except share data)
| (unaudited) | ||||||||
| June 30, | December 31, | |||||||
| 2012 | 2011 | |||||||
| Assets: | ||||||||
| Cash and due from banks | $ | 1 800 | $ | 1 485 | ||||
| Interest-bearing deposits in other financial institutions | 7 299 | 11 445 | ||||||
| Federal funds sold | - - | 794 | ||||||
| Securities available for sale, at fair value | 42 192 | 42 331 | ||||||
| Loans held for sale | 136 | 198 | ||||||
| Loans, net of allowance for loan losses of $4,452 and | ||||||||
| $4,484, respectively | 209 244 | 202 761 | ||||||
| Premises and equipment, net | 7 760 | 7 923 | ||||||
| Other real estate owned, net of valuation allowance of | ||||||||
| $1,922 and $2,197, respectively | 5 860 | 6 393 | ||||||
| Accrued interest receivable | 820 | 832 | ||||||
| Bank owned life insurance | 7 049 | 6 932 | ||||||
| Federal Home Loan Bank of Pittsburgh stock | 757 | 808 | ||||||
| Other assets | 5 083 | 5 491 | ||||||
| Total Assets | $ | 288 000 | $ | 287 393 | ||||
| Liabilities and Stockholders’ Equity: | ||||||||
| Liabilities: | ||||||||
| Deposits | ||||||||
| Noninterest-bearing | $ | 39 945 | $ | 37 050 | ||||
| Interest-bearing | 214 662 | 216 067 | ||||||
| Total Deposits | 254 607 | 253 117 | ||||||
| Securities sold under agreements to repurchase | 4 277 | 3 415 | ||||||
| Federal Home Loan Bank advances | 917 | 1 523 | ||||||
| Accrued interest payable | 163 | 204 | ||||||
| Other liabilities | 1 777 | 3 669 | ||||||
| Total Liabilities | $ | 261 741 | $ | 261 928 | ||||
| Stockholders’ Equity: | ||||||||
| Common stock, $1 per share par value; 5,000,000 shares | ||||||||
| authorized; 3,671,691 shares issued and outstanding | $ | 3 672 | $ | 3 672 | ||||
| Surplus | 3 944 | 3 943 | ||||||
| Undivided profits | 23 314 | 22 648 | ||||||
| Accumulated other comprehensive (loss), net | (1 805 | ) | (1 932 | ) | ||||
| $ | 29 125 | $ | 28 331 | |||||
| Less cost of shares acquired for the treasury, 281,513 shares | 2 866 | 2 866 | ||||||
| Total Stockholders’ Equity | $ | 26 259 | $ | 25 465 | ||||
| Total Liabilities and Stockholders’ Equity | $ | 288 000 | $ | 287 393 | ||||
POTOMAC BANCSHARES, INC. AND
SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
($ in thousands, except per share data)
(Unaudited)
| For the Three Months | For the Six Months | |||||||||||
| Ended June 30 | Ended June 30 | |||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||
| Interest and Dividend Income: | ||||||||||||
| Interest and fees on loans | $ | 2 739 | $ | 2 880 | $ | 5 491 | $ | 5 873 | ||||
| Interest on securities available for sale - taxable | 111 | 192 | 229 | 360 | ||||||||
| Interest on securities available for sale – nontaxable | 60 | 55 | 120 | 109 | ||||||||
| Interest on federal funds sold | - - | - - | - - | 1 | ||||||||
| Other interest and dividends | 14 | 11 | 26 | 19 | ||||||||
| Total Interest and Dividend Income | 2 924 | 3 138 | 5 866 | 6 362 | ||||||||
| Interest Expense: | ||||||||||||
| Interest on deposits | 401 | 757 | 851 | 1 652 | ||||||||
| Interest on securities sold under agreements to repurchase | 4 | 16 | 7 | 35 | ||||||||
| Federal Home Loan Bank advances | 5 | 11 | 11 | 22 | ||||||||
| Total Interest Expense | 410 | 784 | 869 | 1 709 | ||||||||
| Net Interest Income | 2 514 | 2 354 | 4 997 | 4 653 | ||||||||
| Provision for Loan Losses | 470 | 175 | 779 | 599 | ||||||||
| Net Interest Income after | ||||||||||||
| Provision for Loan Losses | 2 044 | 2 179 | 4 218 | 4 054 | ||||||||
| Noninterest Income: | ||||||||||||
| Trust and financial services | 229 | 230 | 475 | 451 | ||||||||
| Service charges on deposit accounts | 423 | 480 | 841 | 909 | ||||||||
| Secondary market fee income | 53 | 18 | 77 | 44 | ||||||||
| Visa/MC Fees | 204 | 195 | 401 | 369 | ||||||||
| Cash surrender value of life insurance | 58 | 59 | 117 | 116 | ||||||||
| Other operating income | 80 | 89 | 175 | 157 | ||||||||
| Total Noninterest Income | 1 047 | 1 071 | 2 086 | 2 046 | ||||||||
| Noninterest Expenses: | ||||||||||||
| Salaries and employee benefits | 1 213 | 1 247 | 2 432 | 2 483 | ||||||||
| Net occupancy expense of premises | 146 | 151 | 303 | 322 | ||||||||
| Furniture and equipment expenses | 252 | 210 | 494 | 410 | ||||||||
| Loss on sale of other real estate | 10 | 42 | 64 | 70 | ||||||||
| Accounting, audit and compliance | 42 | 40 | 84 | 80 | ||||||||
| Computer services and online banking | 101 | 78 | 206 | 147 | ||||||||
| FDIC assessment | 96 | 106 | 194 | 259 | ||||||||
| Director and committee fees | 33 | 47 | 67 | 81 | ||||||||
| Other professional fees | 42 | 64 | 87 | 94 | ||||||||
| Printing, stationery and supplies | 41 | 58 | 83 | 99 | ||||||||
| Communications | 47 | 46 | 100 | 93 | ||||||||
| ATM and check card expenses | 97 | 82 | 190 | 153 | ||||||||
| Foreclosed property expense | 79 | 265 | 213 | 381 | ||||||||
| Write down of other real estate | 58 | 284 | 200 | 284 | ||||||||
| Other operating expenses | 352 | 351 | 656 | 666 | ||||||||
| Total Noninterest Expenses | 2 609 | 3 071 | 5 373 | 5 622 | ||||||||
| Income before Income Tax Expense | 482 | 179 | 931 | 478 | ||||||||
| Income Tax Expense | 136 | 6 | 265 | 48 | ||||||||
| Net Income | $ | 346 | $ | 173 | $ | 666 | $ | 430 | ||||
| Earnings Per Share, basic and diluted | $ | .10 | $ | .05 | $ | .19 | $ | .13 | ||||
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 |
| August 8, 2012 |