POTOMAC BANCSHARES REPORTS INCREASE IN 2025 SECOND QUARTER EARNINGS OVER PRIOR YEAR

Potomac Bancshares, Inc. (the “Company”) (OTCID: PTBS), the bank holding company of Bank of Charles Town (the “Bank”), also known as The Community's Bank, reported net income of $2.1 million and basic and diluted earnings per common share of $0.50 for the second quarter of 2025. Net income increased $654 thousand, and basic and diluted earnings per share increased by $0.16 compared to net income of $1.4 million and basic and diluted earnings per common share of $0.34 for the second quarter of 2024.

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Net income was $4.3 million and basic and diluted earnings per common share totaled $1.03 for the six months ending June 30, 2025. Net income increased by $1.2 million, and basic and diluted earnings per share increased by $0.28 compared to net income of $3.1 million and basic and diluted earnings per common share of $0.75 for the six months ending June 30, 2024.

Three Months Ended June 30, March 31, June 30, 2025 2025 2024Net income $2,074 $2,188 $1,420Basic and diluted earnings per share $0.50 $0.53 $0.34Return on average assets 0.91% 1.01% 0.68%Return on average equity 10.83% 11.88% 8.40%Non-GAAP Measures:Adjusted net income $2,141 $2,188 $1,725Adjusted basic and diluted earnings per share $0.52 $0.53 $0.42Adjusted return on average assets 0.94% 1.01% 0.82%Adjusted return on average equity 11.18% 11.88% 10.20%Adjusted pre-provision, pre-tax earnings $2,986 $2,982 $2,339Adjusted pre-provision, pre-tax return on average 1.31% 1.37% 1.12%assetsNet interest margin 3.48% 3.51% 3.25%Efficiency ratio 68.19% 67.47% 71.80%

Note: see “Non-GAAP Financial Measures” and “Non-GAAP Reconciliations” for additional information and detailed calculations of adjustments.

“We're proud of our strong second quarter performance, with 9% annualized revenue growth and solid progress on our strategic goals,”said Alice P. Frazier, President and CEO of Potomac Bancshares.”Loan and deposit growth remained robust, and we continued to expand in key markets like Berkeley and Loudoun Counties, while deepening our SBA and government contracting lending niches.”

Frazier continued, “Despite a sluggish economy, we're optimistic about the year ahead and remain focused on delivering shareholder value-evident in our balance sheet growth, increased dividend, and 8% rise in book value per share. It was a pleasure seeing so many of our shareholders at the annual meeting in May. Your continued support means a great deal to all of us.”

SECOND QUARTER HIGHLIGHTS

Key highlights of the three-month period ending June 30, 2025, are as follows. Comparisons are to the three-month period ending March 31, 2025, unless otherwise stated:

— Adjusted return on assets of 0.94%

— Adjusted return on equity of 11.18%

— Loan balances increased 11%, annualized

— Deposit balances increased 12%, annualized

— Total revenue growth of 9%, annualized

— Asset quality metrics were excellent withNPAs at 0.24% of total assets

— Tangible book value per share (1) increased 8%, annualized, to $18.70

— Quarterly cash dividend on common stock increased 8% to $0.13 per share

NET INTEREST INCOME

Net interest income increased $280 thousand, or 4%, to $7.6 million for the second quarter of 2025 compared to the first quarter of 2025. Total interest and dividend income increased by $490 thousand and total interest expense increased by $210 thousand. While net interest income increased, the net interest margin (1) decreased by 3 basis points to 3.48%. The decrease in the net interest margin was attributable to a change in the composition of average earning assets and an increase in the cost of interest-bearing liabilities.

Total interest and dividend income increased $490 thousand and was attributable to a $181 thousand increase in interest income and fees on loans and a $315 thousand increase in interest income on deposits in other financial institutions. The increase in interest and fees on loans was attributable to a 2-basis point increase in yield and a $3.9 million increase in average balances. The increase in interest income on deposits in other financial institutions was attributable to a $23.3 million increase in average balances and a 10-basis point increase in yield. The yield on total earning assets decreased 2-basis points to 5.19% in the second quarter of 2025 from a change in the composition of average earning assets. The $23.3 million increase in average balances of interest-bearing deposits in other financial institutions was large enough to cause a decrease in the total yield on earning assets and a decrease in the net interest margin during the period.

Total interest expense increased $210 thousand and was attributable to a $219 thousand, or 7%, increase in interest expense on deposits. The increase in interest expense on deposits resulted from a 4-basis point increase in the cost of interest-bearing deposits and a $25.0 million increase in average balances. The total cost of funds was 1.81% for the second quarter, which was a 2-basis point increase compared to the first quarter of 2025.

NONINTEREST INCOME

Noninterest income totaled $1.8 million for the second quarter, which was a $63 thousand, or 3%, decrease from the first quarter of 2025. The decrease was primarily attributable to a $173 thousand decrease in other operating income, which was partially offset by a $104 thousand increase in secondary market mortgage income. Gains and fee income on mortgage loans increased from higher demand from clients. Other operating income decreased primarily from a $124 thousand recovery on a fraud loss included in the first quarter of 2025.

NONINTEREST EXPENSE

Noninterest expense totaled $6.5 million for the second quarter, which was a $298 thousand, or 5%, increase from the first quarter of 2025. The increase was primarily attributable to a $392 thousand, or 12%, increase in salaries and employee benefits. During the second quarter, the Company increased salaries and wages, which included cost-of-living and merit-based adjustments. Incentives and commissions earned by employees also contributed to the increase.

ASSET QUALITY

Overview

Asset quality remained excellent during the second quarter. Loans that were past due greater than 30 days and still accruing interest as a percentage of total loans were 0.12% on June 30, 2025, 0.07% on March 31, 2025, and 0.01% on June 30, 2024. Nonperforming assets as a percentage of total assets were 0.24% on June 30, 2025, 0.25% on March 31, 2025, and 0.34% on June 30, 2024. Annualized net charge-offs as a percentage of total loans were 0.02% for the second quarter of 2025, 0.00% for the first quarter of 2025, and 0.03% for the second quarter of 2024. The allowance for credit losses on loans totaled $7.4 million, or 1.00% of total loans on June 30, 2025, $7.2 million, or 1.00% of total loans on March 31, 2025, and $6.9 million, or 1.04% of total loans on June 30, 2024.

Provision for Credit Losses

Provision for credit losses totaled $225 thousand for the second quarter of 2025 compared to $250 thousand in the first quarter of 2025 and $129 thousand for the second quarter of 2024. While there were no changes in the specific reserve component of the allowance for credit losses, the general reserve component increased during the second quarter of 2025 from the impact of loan growth. There were no changes to qualitative factors in the general reserve component.

Allowance for Credit Losses on Loans

The allowance for credit losses on loans totaled $7.4 million on June 30, 2025, $7.2 million on March 31, 2025, and $6.9 million on June 30, 2024. Net charge-offs totaled $45 thousand in the second quarter of 2025, $1 thousand in the first quarter of 2025, and $47 thousand in the second quarter of 2024. Charge-offs were comprised primarily of 1-4 family residential mortgage loans.

The following table provides the changes in the allowance for credit losses on loans:

(dollars in thousands) Three Months Ended June 30, 2025 March 31, 2025 June 30, 2024Allowance for credit losses on loans, beginning of $7,180 $6,977 $6,832periodNet charge-offs (46) (1) (47)Provision for credit losses on loans 225 204 96Allowance for credit losses on loans, end of period $7,359 $7,180 $6,881

Allowance for Credit Losses on Unfunded Commitments

The allowance for credit losses on unfunded commitments totaled $448 thousand on June 30, 2025, $448 thousand on March 31, 2025, and $337 thousand on June 30, 2024. There was no provision for credit losses on unfunded commitments in the second quarter of 2025, compared to $46 thousand in the first quarter of 2025, and $33 thousand in the second quarter of 2024.

BALANCE SHEET

Assets totaled $920.3 million on June 30, 2025, which was an increase of $24.8 million, or 11% (annualized), from March 31, 2025, and a $87.8 million, or 11%, increase from June 30, 2024. The increase in total assets from the first quarter of 2025 was primarily due to a $19.9 million, or 11% (annualized), increase in loans, net of allowance for credit losses. Total loans increased from June 30, 2024, primarily from a $71.9 million, or 11%, increase in loans, net of the allowance for credit losses.

Loans totaled $736.4 million on June 30, 2025, an increase of $20.1 million, or 11% (annualized), from $716.3 million, on March 31, 2025. Quarterly average loans totaled $715.7 million, an increase of $3.9 million, or 2% (annualized), from the first quarter of 2025. On June 30, 2025, loans increased $72.4 million, or 11%, from one year ago, and quarterly average loans increased $61.6 million, or 9%.

Securities available for sale totaled $76.8 million on June 30, 2025, an increase of $24 thousand from March 31, 2025, and a decrease of $6.5 million from June 30, 2024. On June 30, 2025, net unrealized losses on the securities portfolio totaled $6.6 million, which was a $126 thousand increase from March 31, 2025, and a $1.9 million decrease from June 30, 2024.

Deposits totaled $794.9 million on June 30, 2025, an increase of $22.5 million, or 12% (annualized), from March 31, 2025. Quarterly average deposits increased from the first quarter of 2025 by $29.1 million. Total deposits increased $54.8 million, or 7%, from June 30, 2025, and quarterly average deposits for the second quarter of 2025 increased $38.7 million from the second quarter of 2024.

Other borrowings totaled $31.8 million on June 30, 2025, compared to $32.1 million on March 31, 2025. On June 30, 2025, other borrowings included $29.0 million of funds borrowed from the Federal Home Loan Bank of Pittsburgh and had a weighted average fixed interest rate of 4.21% with maturity dates on advances ranging from 2026 to 2028.

Shareholders' equity totaled $77.5 million on June 30, 2025, which was a $1.4 million increase from March 31, 2025, and an $8.2 million increase from June 30, 2024. The increases in shareholders' equity were primarily attributable to increases in retained earnings. Retained earnings increased by $1.5 million from March 31, 2025, and $6.0 million from June 30, 2025. Accumulated other comprehensive loss increased $94 thousand from March 31, 2025, and decreased $2.2 million from June 30, 2024.

The following table provides capital ratios at the end of the period:

For the Period Ended June 30, March 31, June 30, 2025 2025 2024Total capital ratio (2) 13.50% 13.61% 13.96%Tier 1 capital ratio (2) 12.43% 12.55% 12.87%Common equity Tier 1 capital ratio (2) 12.43% 12.55% 12.87%Leverage ratio (2) 9.91% 10.06% 9.99%Tangible common equity to tangible assets (1)(3) 8.42% 8.49% 8.32%

During the second quarter of 2025, the Company paid a quarterly cash dividend of $0.13 per common share, which was $0.01 per share, or an 8% increase, compared to the quarterly cash dividend paid in the first quarter of 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 the Company's management believes provide useful information for financial and operational decision making, evaluating trends, and comparing financial results to other financial institutions. The non-GAAP financial measures presented in this document include adjusted net income, adjusted basic and diluted earnings per share, adjusted return on average assets, adjusted return on average equity,pre-provision pre-tax earnings, adjusted pre-provision pre-tax earnings, fully taxable equivalent interest income, the net interest margin, the efficiency ratio, tangible book value per share, and tangible common equity to tangible assets.

The Company believes certain non-GAAP financial measures enhance the understanding of its business, performance, and financial position. 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, INC.

Potomac Bancshares, Inc. (OTCID: PTBS) is the bank holding company of Bank of Charles Town, which was founded in 1871. The Bank also does business under the names BCT and The Community's Bank. The Bank conducts operations through its nine branch offices and two loan production offices. The Bank's offices are in Jefferson and Berkeley Counties (WV), Washington County (MD), and Loudoun and Stafford Counties (VA). The Bank offers commercial lines and term loans, residential and commercial construction loans, commercial real estate loans, agricultural loans, and government contractor loans. The Bank is also a Small Business Administration (SBA) Preferred Lender. The Residential Lending division offers secondary market and portfolio mortgage loans, one-time close construction to permanent loans, as well as home equity loans and lines of credit. For over 70 years, BCT Wealth Advisors has provided caring and personalized trust services, growing into a premier financial management, investments, and estate services provider. The Bank also provides convenient online and mobile banking for individuals, businesses, and local governments plus free access to over 55,000 ATMs through the Allpoint® network plus another approximately 675 free access ATMs through another partnership. BCT was voted WINNER in the LoudounNow 2024 Loudoun's Favorite readers' poll in four categories: Bank, Mortgage Company, Banker, and Financial Planner. BCT was voted a “Best of the Best” winner in the 2024 Martinsburg Journal-News Readers' Choice Awards in three categories: Bank, Loan Services, and Financial Planning. In 2023, American Banker selected BCT as a “Top 200 Community Bank,” an annual listing of the best performing banks in the United States with assets under $2 billion. The Bank was named a “Best Bank to Work For” by American Banker five of the last six years.

The Company's shares are quoted on the OTCID marketplace under the symbol “PTBS.” Individuals may purchase shares under the symbol “PTBS” by contacting one's personal broker. For more information about Potomac Bancshares, Inc., and the Bank, please visit our website at www.mybct.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.

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, 2025 2025 2024 2025 2024Income StatementInterest and dividend income:Interest and fees on loans $ 9,682 $ 9,501 $ 8,361 $ 19,183 $ 16,586Taxable interest on securities 710 715 695 1,425 1,330Tax-exempt interest on securities 28 29 29 57 57Other interest and dividends 989 674 1,003 1,663 1,862Total interest and dividend income $ 11,409 $ 10,919 $ 10,088 $ 22,328 $ 19,835Interest expense:Interest on deposits $ 3,324 $ 3,105 $ 3,308 $ 6,429 $ 6,450Interest on short term borrowings 2 6 7 8 13Interest on long term borrowings 309 313 67 622 134Interest on subordinated debt 140 141 140 281 280Total interest expense $ 3,775 $ 3,565 $ 3,522 $ 7,340 $ 6,877Net interest income $ 7,634 $ 7,354 $ 6,566 $ 14,988 $ 12,958Provision for credit losses 225 250 129 475 309Net interest income after provision for credit $ 7,409 $ 7,104 $ 6,437 $ 14,513 $ 12,649lossesNoninterest Income:Wealth and investments $ 498 $ 505 $ 431 $ 1,003 $ 850Service charges on deposit accounts 225 260 265 485 511Gains / fees on sale of mortgage loans 351 247 274 598 470ATM and check card fees 518 475 521 993 1,014Income from bank owned life insurance 100 97 97 197 213Net losses on sale of securities – – (386) – (386)Net loss on disposal of premises & equipment – (2) – (2) -Other operating income 74 247 157 321 301Total noninterest income $ 1,766 $ 1,829 $ 1,359 $ 3,595 $ 2,973Noninterest expenses:Salaries and employee benefits $ 3,760 $ 3,368 $ 3,228 $ 7,128 $ 6,243Occupancy 310 344 266 654 542Equipment 344 376 367 720 735Accounting, audit, and compliance 70 69 44 139 109Advertising and public relations 112 118 116 230 184Data processing 453 452 459 905 923FDIC assessment 104 99 94 203 188Other professional fees 140 132 146 272 256Trust professional fees 144 171 123 315 231Director and committee fees 68 97 88 165 181Legal fees 23 33 117 56 182Supplies 66 79 62 145 138Communications 112 112 99 224 201ATM and check card expense 264 240 263 504 512Other operating expenses 529 511 500 1,040 1,009Total noninterest expenses $ 6,499 $ 6,201 $ 5,972 $ 12,700 $ 11,634Income before income tax expense $ 2,676 $ 2,732 $ 1,824 $ 5,408 $ 3,988Income tax expense 602 544 404 1,146 892Net income $ 2,074 $ 2,188 $ 1,420 $ 4,262 $ 3,096POTOMAC 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, 2025 2025 2024 2025 2024Common Share and Per Common Share DataEarnings per common share, basic $ 0.50 $ 0.53 $ 0.34 $ 1.03 $ 0.75Adjusted earnings per common share, basic (1) $ 0.52 $ 0.53 $ 0.42 $ 1.05 $ 0.82Weighted average shares, basic 4,144,561 4,144,561 4,144,561 4,144,561 4,144,561Earnings per common share, diluted $ 0.50 $ 0.53 $ 0.34 $ 1.03 $ 0.75Adjusted earnings per common share, diluted (1) $ 0.52 $ 0.53 $ 0.42 $ 1.05 $ 0.82Weighted average shares, diluted 4,144,561 4,144,561 4,144,561 4,144,561 4,144,561Shares outstanding at period end 4,144,561 4,144,561 4,144,561 4,144,561 4,144,561Tangible book value per share at period end (1) $ 18.70 $ 18.35 $ 16.72 $ 18.70 $ 16.72Cash dividends $ 0.13 $ 0.12 $ 0.12 $ 0.25 $ 0.22Key Performance RatiosReturn on average assets 0.91% 1.01% 0.68% 0.96% 0.74%Adjusted return on average assets (1) 0.94% 1.01% 0.82% 0.97% 0.82%Return on average equity 10.83% 11.88% 8.40% 11.35% 9.20%Adjusted return on average equity (1) 11.18% 11.88% 10.20% 11.52% 10.10%Net interest margin (1) 3.48% 3.51% 3.25% 3.40% 3.23%Efficiency ratio (1) 68.19% 67.47% 71.80% 67.83% 71.25%Average BalancesAverage assets $ 912,253 $ 881,490 $ 841,627 $ 896,863 $ 836,744Average earning assets 881,485 # 850,176 812,168 888,876 # 807,076Average shareholders' equity 76,808 # 74,694 67,987 75,757 # 67,684Asset QualityLoan charge-offs $ 58 $ 21 $ 80 $ 79 $ 137Loan recoveries 13 20 33 33 69Net charge-offs 45 1 47 46 68Non-accrual loans 2,244 2,245 2,963 2,245 2,963Other real estate owned, net – – – – -Nonperforming assets (5) 2,244 2,245 2,963 2,245 2,963Loans 30 to 89 days past due, accruing 726 523 60 726 60Loans over 90 days past due, accruing 151 – – 151 -Special mention loans 15,711 14,055 8,192 15,711 8,192Substandard loans, accruing 1,150 1,463 1,631 1,150 1,631Capital Ratios (2)Total capital $ 99,097 $ 97,302 $ 92,606 $ 99,097 $ 92,606Tier 1 capital 91,290 89,674 85,388 91,290 85,388Common equity tier 1 capital 91,290 89,674 85,388 91,290 85,388Total capital to risk-weighted assets 13.50% 13.61% 13.96% 13.50% 13.96%Tier 1 capital to risk weighted assets 12.43% 12.55% 12.87% 12.43% 12.87%Common equity Tier 1 capital to risk weighed assets 12.43% 12.55% 12.87% 12.43% 12.87%Leverage ratio 9.91% 10.06% 9.99% 9.91% 9.99%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, 2025 2025 2024 2024 2024Balance SheetCash and due from banks $ 4,638 $ 4,673 $ 5,143 $ 5,014 $ 4,061Interest-bearing deposits in other financial institutions 67,636 66,844 59,621 67,337 51,167Cash and cash equivalents $ 72,274 $ 71,517 $ 64,764 $ 72,351 $ 55,228Securities available for sale, at fair value 76,787 76,763 77,385 82,146 83,276Equity securities, at fair value 246 243 241 223 200Restricted securities 2,037 2,023 2,103 2,328 1,419Loans held for sale 5,682 2,234 1,506 1,219 1,395Loans, net of allowance for credit losses 729,065 709,160 697,132 679,558 657,188Premises and equipment, net 8,107 8,240 8,099 7,832 7,806Accrued interest receivable 2,439 2,478 2,283 2,382 2,413Bank owned life insurance 14,174 14,074 13,977 13,878 13,780Other assets 9,528 8,851 9,859 9,414 9,875Total assets $ 920,339 $ 895,583 $ 877,349 $ 871,331 $ 832,580Noninterest-bearing demand deposits $ 176,708 $ 186,182 $ 171,681 $ 172,941 $ 169,262Savings and interest-bearing demand deposits 618,155 586,200 582,677 576,809 570,834Total deposits $ 794,863 $ 772,382 $ 754,358 $ 749,750 $ 740,096Short term borrowings 2,793 3,052 3,170 3,503 3,031Long term borrowings 29,000 29,000 31,000 31,000 6,000Subordinated debt 9,989 9,973 9,958 9,942 9,927Accrued interest payable 1,148 987 1,266 1,041 875Other liabilities 5,056 4,140 4,181 3,586 3,347Total liabilities $ 842,849 $ 819,534 $ 803,933 $ 798,822 $ 763,276Common stock $ 4,493 $ 4,493 $ 4,493 $ 4,493 $ 4,493Surplus 14,547 14,547 14,547 14,547 14,547Retained Earnings 67,032 65,497 63,806 62,331 61,068Accumulated other comprehensive (loss), net (5,088) (4,994) (5,936) (5,368) (7,310) $ 80,984 $ 79,543 $ 76,910 $ 76,003 $ 72,798Less cost of shares acquired for the treasury (3,494) (3,494) (3,494) (3,494) (3,494)Total shareholders' equity $ 77,490 $ 76,049 $ 73,416 $ 72,509 $ 69,304Total liabilities and shareholders' equity $ 920,339 $ 895,583 $ 877,349 $ 871,331 $ 832,580Loan DataConstruction and land development $ 46,882 $ 42,954 $ 39,404 $ 35,260 $ 28,936Secured by farmland 6,732 6,707 6,769 6,820 6,814Secured by 1-4 family residential loans 253,798 250,436 247,299 244,125 240,053Other real estate loans 355,690 344,953 345,904 340,027 335,888Loans to farmers (except secured by real estate) 118 237 190 195 198Commercial and industrial loans (except those secured by 63,763 61,348 54,205 49,972 41,431real estate)Consumer installment loans 2,860 2,910 2,910 2,994 3,287Deposit overdraft 103 85 518 74 71All other loans 6,478 6,710 6,910 7,188 7,391Total loans $ 736,424 $ 716,340 $ 704,109 $ 686,655 $ 664,069Allowance for credit losses (7,359) (7,180) (6,977) (7,097) (6,881)Loans, net $ 729,065 $ 709,160 $ 697,132 $ 679,558 $ 657,188POTOMAC 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, 2025 2025 2024 2025 # 2024Adjusted Net IncomeNet income (GAAP) $ 2,074 $ 2,188 $ 1,420 $ 4,262 $ 3,096Add: Loss on sale of securities $ – $ – $ 386 $ – $ 386Add: Core system conversion expense 85 – – 85 -Total adjustments $ 85 $ – $ 386 $ 85 $ 386Subtract: Tax effect of adjustment (4) (18) – (81) (18) (81)Adjusted net income (non-GAAP) $ 2,141 $ 2,188 $ 1,725 $ 4,329 $ 3,401Adjusted Earnings Per Share, BasicWeighted average shares, basic 4,144,561 4,144,561 4,144,561 4,144,561 4,144,561Basic earnings per share (GAAP) $ 0.50 $ 0.53 $ 0.34 $ 1.03 $ 0.75Adjusted earnings per share, basic (Non-GAAP) $ 0.52 $ 0.53 $ 0.42 $ 1.05 $ 0.82Adjusted Earnings Per Share, DilutedWeighted average shares, diluted 4,144,561 4,144,561 4,144,561 4,144,561 4,144,561Diluted earnings per share (GAAP) $ 0.50 $ 0.53 $ 0.34 $ 1.03 $ 0.75Adjusted earnings per share, diluted (Non-GAAP) $ 0.52 $ 0.53 $ 0.42 $ 1.05 $ 0.82Adjusted Pre-Provision, Pre-tax earningsNet interest income $ 7,634 $ 7,354 $ 6,566 $ 14,988 $ 12,958Total noninterest income 1,766 1,829 1,359 3,595 2,973Net revenue $ 9,400 $ 9,183 $ 7,925 $ 18,583 $ 15,931Total noninterest expense 6,499 6,201 5,972 12,700 11,634Pre-provision, pre-tax earnings $ 2,901 $ 2,982 $ 1,953 $ 5,883 $ 4,297Add: Loss on sale of securities – – 386 – 386Add: Core system conversion expense 85 – – 85 -Adjusted pre-provision, pre-tax earnings $ 2,986 $ 2,982 $ 2,339 $ 5,968 $ 4,683Adjusted Performance RatiosAverage assets $ 912,253 $ 881,490 $ 841,627 $ 896,863 $ 836,744Return on average assets (GAAP) 0.91% 1.01% 0.68% 0.96% 0.74%Adjusted return on average assets (Non-GAAP) 0.94% 1.01% 0.82% 0.97% 0.82%Average shareholders' equity $ 76,808 $ 74,694 $ 67,987 $ 75,757 $ 67,684Return on average equity (GAAP) 10.83% 11.88% 8.40% 11.35% 9.20%Adjusted return on average equity (Non-GAAP) 11.18% 11.88% 10.20% 11.52% 10.10%Pre-provision, pre-tax return on average assets 1.28% 1.37% 0.93% 1.32% 1.03%Adjusted pre-provision, pre-tax return on average assets 1.31% 1.37% 1.12% 1.34% 1.13%Net Interest MarginTax-equivalent net interest income $ 7,640 $ 7,360 $ 6,572 $ 15,000 $ 12,970Average earning assets 881,485 850,176 812,168 888,876 807,076Net interest margin 3.48% 3.51% 3.25% 3.40% 3.23%Efficiency RatioTotal noninterest expense $ 6,499 $ 6,201 $ 5,972 $ 12,700 $ 11,634Subtract: Core sytstem conversion expense (85) – – (85) -Total noninterest expense subtotal $ 6,414 $ 6,201 $ 5,972 $ 12,615 $ 11,634Tax-equivalent net interest income $ 7,640 $ 7,360 $ 6,572 $ 15,000 $ 12,970Total noninterest income $ 1,766 $ 1,829 $ 1,359 $ 3,595 $ 2,973Add: Net losses on disposal of premises & equipment – 2 – 2 -Add: Net losses on sale of investment securities, AFS – – 386 – 386Total noninterest income subtotal 1,766 1,831 1,745 3,597 3,359Subtotal $ 9,406 $ 9,191 $ 8,317 $ 18,597 $ 16,329Efficiency ratio 68.19% 67.47% 71.80% 67.83% 71.25%Tax-Equivalent Net Interest IncomeGAAP measures:Interest income – loans $ 9,682 $ 9,501 $ 8,361 $ 19,183 $ 16,586Interest income – investments taxable 710 715 695 1,425 1,330Interest income – investments tax exempt 28 29 29 57 57Interest income – other 989 674 1,003 1,663 1,862Interest expense – deposits (3,324) (3,105) (3,308) (6,429) (6,450)Interest expense – short term borrowings (2) (6) (7) (8) (13)Interest expense – long term borrowings (309) (313) (67) (622) (134)Interest expense – subordinated debt (140) (141) (140) (281) (280)Net interest income $ 7,634 $ 7,354 $ 6,566 $ 14,988 $ 12,958Non-GAAP measures:Add: Tax benefit realized on non-taxable interest income – $ 6 $ 6 $ 6 $ 12 $ 12municipal securities (4)Tax benefit realized on non-taxable interest income $ 6 $ 6 $ 6 $ 12 $ 12Tax equivalent net interest income $ 7,640 $ 7,360 $ 6,572 $ 15,000 $ 12,970Tangible Book Value Per ShareTangible common equity $ 77,490 $ 76,049 $ 69,305 $ 77,490 $ 69,305Common shares outstanding, ending 4,144,561 4,144,561 4,144,561 4,144,561 4,144,561Tangible book value per share $ 18.70 $ 18.35 $ 16.72 $ 18.70 $ 16.72(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 Bank of Charles Town.(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 and other real estate owned.

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