U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
XX Quarterly report under Section 13 or 15(d) of the Securities
- ---- Exchange Act of 1934
For quarterly period ended March 31, 1999
--------------------------
Transition report under Section 13 or 15(d) of the Exchange Act
- ----
For the transition period from to
Commission file number 0-24958
Potomac Bancshares, Inc.
(Exact Name of Small Business Issuer as Specified in Its Charter)
West Virginia 55-0732247
(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification Number)
111 East Washington Street, Charles Town WV 25414-1071
(Address of Principal Executive Offices) (Zip Code)
304-725-8431
(Issuer's Telephone Number, Including Area Code)
NO CHANGE
(Former Name, Former Address and Former Fiscal Year, if Changed
Since Last Report)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes XXX No
-------- --------
APPLICABLE ONLY TO ISSUERS INVOLVED IN
BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required
to be filed by Section 12, 13 or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by a court.
Yes No Not applicable
--------- ---------
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date: 600,000
shares
Transitional Small Business Disclosure Format (check one):
Yes No XXX
--------- ----------
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
POTOMAC BANCSHARES, INC.
CONSOLIDATED BALANCE SHEETS
(000 OMITTED)
(Unaudited)
March 31 December 31
1999 1998
---------------- ---------------
Assets:
Cash and due from banks $ 5 178 $ 4 646
Securities (fair value: March 31, 1999, $50,499;
December 31, 1998, $50,530) 50 306 50 208
Securities purchased under agreements to resell
and federal funds sold 11 430 13 483
Loans 78 304 77 807
Less reserve for loan losses (1 131) (1 140)
----------- ------------
Net loans 77 173 76 667
Bank premises and equipment, net 1 179 1 224
Accrued interest receivable 1 204 1 168
Other assets 698 708
----------- ------------
Total Assets $ 147 168 $ 148 104
=========== ============
Liabilities and Stockholders' Equity:
Liabilities:
Non-interest bearing deposits $ 15 917 $ 17 422
Interest bearing deposits 113 201 113 244
----------- ------------
Total Deposits 129 118 130 666
Accrued interest payable 330 350
Other liabilities 1 170 892
----------- ------------
Total Liabilities $ 130 618 $ 131 908
----------- ------------
Stockholders' Equity:
Common stock par value $1.00 per share (5,000,000 shares
authorized, 600,000 shares issued and outstanding) $ 600 $ 600
Surplus 5 400 5 400
Accumulated other comprehensive income 31 105
Undivided profits 10 519 10 091
----------- ------------
Total Stockholders' Equity 16 550 16 196
----------- ------------
Total Liabilities and Stockholders' Equity $ 147 168 $ 148 104
=========== ============
See Accompanying Notes to Consolidated Financial Statements
POTOMAC BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(000 omitted except for per share data)
(Unaudited)
For the Three Months
Ended March 31
-------------------------------
1999 1998
-------------- ---------------
Interest Income:
Interest and fees on loans $ 1 650 $ 1 768
Interest on investment securities
Taxable 364 400
Interest and dividends on securities available for sale
Taxable 324 186
Dividends 7 6
Interest on securities purchased under agreements
to resell and federal funds sold 120 99
---------- ----------
Total Interest Income $ 2 465 $ 2 459
Interest Expense:
Interest on deposits $ 1 074 $ 1 028
Interest on federal funds purchased -- --
---------- ----------
Total Interest Expense $ 1 074 $ 1 028
---------- ----------
Net Interest Income $ 1 391 $ 1 431
Provision for Loan Losses -- --
---------- ----------
Net Interest Income after
Provision for Loan Losses $ 1 391 $ 1 431
---------- ----------
Other Income:
Commissions and fees from fiduciary activities $ 193 $ 143
Service charges on deposit accounts 84 93
Fees for other customer services 39 37
Other operating income 60 8
---------- ----------
Total Other Income $ 376 $ 281
---------- ----------
Other Expenses:
Salaries and employee benefits $ 634 $ 650
Net occupancy expense of premises 48 45
Furniture and equipment expenses 102 84
Other operating expenses 306 240
---------- ----------
Total Other Expenses $ 1 090 $ 1 019
---------- ----------
Income before Income Tax Expense $ 677 $ 693
Income Tax Expense 249 258
---------- ----------
Net Income $ 428 $ 435
========== ==========
Earnings Per Share, basic and diluted $ .71 $ .73
========== ==========
See Accompanying Notes to Consolidated Financial Statements
POTOMAC BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998
(000 Omitted)
(Unaudited)
Accumulated
Other
Common Capital Undivided Comprehensive Comprehensive
Stock Surplus Profits Income Income Total
------- --------- --------- ------------- --------------- ----------
Balances, December 31, 1998 $ 600 $ 5 400 $ 10 091 $ 105 $ 16 196
Comprehensive income
Net income -- -- 428 -- $ 428 428
Other comprehensive income
net of tax, unrealized
holding (losses) arising
during the period -- -- -- (74) (74) (74)
--------
Comprehensive income $ 354
========
------- -------- --------- -------
Balances, March 31, 1999 $ 600 $ 5 400 $ 10 519 $ 31 $ 16 550
======= ======== ========= ======= ========
Balances, December 31, 1998 $ 600 $ 5 400 $ 9 292 $ 6 $ 15 298
Comprehensive income
Net income -- -- 435 -- $ 435 435
Other comprehensive income
net of tax, unrealized
holding (losses) arising
during the period -- -- -- 3 3 3
--------
Comprehensive income $ 438
========
------- -------- --------- ------- --------
Balances, March 31, 1999 $ 600 $ 5 400 $ 9 727 $ 9 $ 15 736
======= ======== ========= ======= ========
See Accompanying Notes to Consolidated Financial Statements
POTOMAC BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(000 Omitted)
(Unaudited)
For the Three Months Ended
--------------------------------------
March 31 March 31
1999 1998
-------------------- -----------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 428 $ 435
Adjustments to reconcile net income to net cash provided by
operating activities:
Provision for loan losses -- --
Depreciation 62 46
Amortization 9 3
Discount accretion and premium amortization on
securities, net 10 1
Gain on sale of real estate (54) --
(Increase) in accrued interest receivable (36) (71)
(Increase) decrease in other assets 11 (50)
(Decrease) in accrued interest payable (20) (2)
Increase in other liabilities 278 232
----------- ---------
Net cash provided by operating activities $ 688 $ 594
----------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from maturity of investment securities $ -- $ 1 000
Proceeds from maturity of securities available for sale 3 000 1 000
Purchase of investment securities -- (6 009)
Purchase of securities available for sale (3 221) --
Net (increase) in loans (587) (49)
Purchases of bank premises and equipment (17) (45)
Proceeds from sale of real estate 163 --
----------- ---------
Net cash (used in) investing activities $ (662) $ (4 103)
----------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in demand deposits, NOW accounts and
savings accounts $ (1 405) $ 4 062
Net increase (decrease) in certificates of deposit (142) 1 265
----------- ---------
Net cash provided by (used in) financing activities $ (1 547) $ 5 327
----------- ---------
Increase (decrease) in cash and cash equivalents $ (1 521) $ 1 818
CASH AND CASH EQUIVALENTS
Beginning 18 129 13 118
----------- ---------
Ending $ 16 608 $ 14 936
=========== =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash payments for:
Interest $ 1 095 $ 1 030
=========== =========
Income taxes $ -- $ 7
=========== =========
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING
AND FINANCING ACTIVITIES
Other real estate acquired in settlement of loans $ 125 $ --
=========== =========
Loans made on sale of real estate $ 191 $ --
=========== =========
Unrealized gain (loss) on securities available for sale $ (113) $ 5
=========== =========
See Accompanying Notes to Consolidated Financial Statements
POTOMAC BANCSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1999 (UNAUDITED) AND DECEMBER 31, 1998
1. In the opinion of management, the accompanying financial statements
contain all adjustments (consisting of only normal recurring accruals)
necessary to present fairly the financial position as of March 31,
1999, and December 31, 1998, and the results of operations and cash
flows for the three months ended March 31, 1999 and 1998. The
statements should be read in conjunction with Notes to Consolidated
Financial Statements included in the Potomac Bancshares, Inc. annual
report for the year ended December 31, 1998. The results of operations
for the three month periods ended March 31, 1999 and 1998, are not
necessarily indicative of the results to be expected for the full year.
2. Securities held to maturity as of March 31, 1999 and December
31, 1998 are summarized below:
(000 Omitted)
March 31, 1999
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains (Losses) Value
----------- ------------- -------------- --------------
Securities held to maturity:
U.S. Treasury securities $ 8 013 $ 60 $ -- $ 8 073
Obligations of U.S. Government
agencies 17 009 132 -- 17 141
--------- --------- -------- ---------
$ 25 022 $ 192 $ -- $ 25 214
========= ========= ======== =========
(000 Omitted)
December 31, 1998
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains (Losses) Value
----------- ------------- -------------- --------------
Securities held to maturity:
U.S. Treasury securities $ 17 009 $ 229 $ -- $ 17 238
Obligations of U.S. Government
agencies 8 021 92 -- 8 113
--------- --------- -------- ---------
$ 25 030 $ 321 $ -- $ 25 351
========= ========= ======== =========
Securities available for sale as of March 31, 1999 and December 31,
1998 are summarized below:
(000 Omitted)
March 31, 1999
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains (Losses) Value
----------- ------------- -------------- --------------
Securities available for sale:
U.S. Treasury securities $ 2 000 $ 26 $ -- $ 2 026
Obligations of U.S. Government
agencies 22 788 21 -- 22 809
Federal Home Loan Bank stock 450 -- -- 450
--------- --------- -------- ---------
$ 25 238 $ 47 $ -- $ 25 285
========= ========= ======== =========
(000 Omitted)
December 31, 1998
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains (Losses) Value
----------- ------------- -------------- --------------
Securities held to maturity:
U.S. Treasury securities $ 5 000 $ 43 $ -- $ 5 043
Obligations of U.S. Government
agencies 19 570 140 (24) 19 686
Federal Home Loan Bank stock 450 -- -- 450
--------- --------- -------- ---------
$ 25 020 $ 183 $ (24) $ 25 179
========= ========= ======== =========
3. The consolidated loan portfolio, stated at face amount, is composed
of the following:
(000 Omitted)
March 31 December 31
1998 1998
----------- ---------------
Real estate loans:
Construction and land development $ 157 $ 652
Secured by farmland 1 974 1 394
Secured by 1-4 family residential 44 083 42 541
Other real estate loans 12 077 12 624
Loans to farmers (except those secured by real estate) 438 246
Commercial and industrial loans (except those secured
by real estate) 2 133 2 188
Loans to individuals for personal expenditures 17 105 17 738
All other loans 337 424
--------- ---------
Total loans $ 78 304 $ 77 807
========= =========
4. The following is a summary of transactions in the reserve for loan
losses:
(000 Omitted)
March 31 December 31
1999 1998
----------------- --------------
Balance at beginning of period $ 1 140 $ 1 139
Provision charged to operating expense -- 125
Recoveries added to the reserve 5 43
Loan losses charged to the reserve (14) (167)
--------- ---------
Balance at end of period $ 1 131 $ 1 140
========= =========
5. Information about impaired loans as of March 31, 1999 and December
31, 1998 is as follows:
(000 Omitted)
-----------------------------------
March 31 December 31
1999 1998
-------------- --------------
Impaired loans for which a reserve has been provided $ 398 $ 398
Impaired loans for which no reserve has been provided -- --
-------- --------
Total impaired loans $ 398 $ 398
======== ========
Reserve provided for impaired loans, included in the
reserve for loan losses $ 199 $ 199
======== ========
Average balance in impaired loans $ 398 $ 398
======== ========
Interest income recognized $ 9 $ 34
======== ========
Nonaccrual loans excluded from impaired loan disclosures under FASB 114
amounted to $-0- at March 31, 1999 and $285,150 at December 31, 1998.
If interest on these loans had been accrued, such income would have
been $-0- for the first three months of 1999 and $29,267 in 1998.
6. The "Year 200 Problem" exists because computers and computer
programs were written using only a two digit field for the year
rather than a four digit field. As we move into the Year 2000 and
continue to use "00" for the date, many computers, computer
programs, and any equipment using date sensitive microchips may
not recognize "00" as the Year 2000, but may "think" it is the
year 1900. For many businesses and industries, this misconception
may cause problems. Hence, the challenge facing the world has been to
prepare for the Year 2000 by ensuring that all equipment is
appropriately date sensitive to the four digit date 2000 and beyond.
The Subsidiary Bank depends heavily on computer processing in
connection with its business activities. Failure of its computer
systems could have a significant impact on its operations.
During 1997 the Subsidiary Bank began preparing to meet the challenge
by sending letters to third party vendors and suppliers requesting
written documentation regarding their planning, renovation, and testing
of computer systems and software and other equipment containing
embedded microchips to ensure Year 2000 compliance. Vendors contacted
included all parties that supplied service that the Subsidiary Bank
believed could be affected by embedded microchips, such as electric,
water, computer hardware and software providers. In January 1998, the
Subsidiary Bank's Board of Directors approved the appointment of a Year
2000 Committee composed of directors, officers and staff. The Committee
has written a Year 2000 Plan that was approved by the Board of
Directors which details steps to be taken for Year 2000 compliance.
The Plan includes the following phases of procedure: awareness,
assessment, renovation, validation and implementation. The awareness
phase was educating all personnel within the organization including
directors, officers and staff so that everyone understood the
definition of the problem. All personnel also needed to understand that
the Corporation was seriously undertaking the challenge to complete all
the remaining phases of the Plan in a timely manner. The assessment
phase included identifying all systems and equipment that would be
affected by the problem. The renovation phase included performing
repairs, upgrades and/or replacements of all computer systems and
equipment containing embedded microchips that were identified in the
assessment phase as needing renovation. The validation phase includes
testing of all systems and equipment. The implementation phase occurs
when all previous phases are complete and all systems have been
certified as Year 2000 compliant.
The status of these phases as of March 31, 1999 is listed below:
Awareness Complete
Assessment Complete
Renovation Substantially Complete. Remaining renovation
includes replacement of optical disk storage
system hardware and software, two personal
computers, one server and hub. Expected
completion June 30, 1999.
Validation Progressing on schedule. Remaining validation
expected to be substantially complete within
guidelines of the Federal Financial Institutions
Examination Council (FFIEC), whose completion
deadline is June 30, 1999.
Implementation Progressing on schedule. As renovation and
validation phases progress so does completion of
this phase. Expected completion will be within
FFIEC guidelines.
The Subsidiary Bank does not maintain a formal budget. Therefore,
expenses related to the Year 2000 are reviewed and approved by the
Board of Directors on an as needed basis. As of March 31, 1999, actual
costs were $187,632. Most of the costs were for computers and related
equipment. There have also been expenditures for testing of our major
software vendors. It is estimated that the total costs for the Year
2000 will not exceed $350,000, assuming that the Subsidiary Bank has
identified the most significant Year 2000 issues. These costs do not
include the costs of personnel who have performed Year 2000 functions
in addition to their regular responsibilities during this time of
preparation.
The Subsidiary Bank has continued to communicate with third party
vendors and suppliers to update documentation from them in regard to
their Year 2000 readiness. The majority of these vendors and suppliers
have stated that they have successfully completed their renovations and
testing. Questionnaires were mailed to significant loan customers
(limited to commercial purpose loans) to determine the effectiveness of
their Year 2000 preparation including anticipated problems and proposed
solutions. Written responses were requested with approximately 69%
responding as of mid-March 1999. Response and no response customers are
being evaluated (95% evaluated to date) by loan personnel, and
additions to the reserve for loan losses will be made if necessary. At
this time, the Subsidiary Bank does not expect any of these loan
customer Year 2000 situations to have an adverse material impact on
Bank operations. The aggregate balances (including available and
outstanding amounts on lines of credit) of the loan customers
questioned represent approximately 27% of the Bank's total loan
portfolio. Questionnaires have been sent to significant deposit
customers and responses will be evaluated upon receipt. The aggregate
balances of the deposit customers who will be questioned represent 2%
of the total deposit portfolio.
The Year 2000 Committee has identified customer awareness as an
important part of Year 2000 preparation. We have a Customer Awareness
Policy and have mailed several communications to customers regarding
Year 2000 plans. It is necessary that all customers understand that the
Subsidiary Bank's deposits are insured by the Federal Deposit Insurance
Corporation. We anticipate more communications with the customers
beginning in the near future.
The Year 2000 Committee has written a Year 2000 Contingency Plan which
has been approved by the Board of Directors. Many issues were discussed
during the development and planning for business resumption and
remediation contingency plans. Responsibility and reporting structure
have been designated. Critical personnel have been designated to be
available as needed. Special staffing and hours have been approved as
needed. Core business processes were identified. Event timelines were
designated including critical testing dates. Numerous failure scenarios
were discussed including power outages from complete to localized,
telecommunications outages, water outages, various hardware and
software failures, and lack of vendor supplies. Considerations were
given to the following factors during the planning process:
estimated costs, feasibility, functionality, and appropriateness.
The most likely worst-case scenario would be a localized disruption or
failure of power and/or telecommunications, although the Subsidiary
Bank has no reason to conclude that these events will happen. If these
events did occur, the Subsidiary Bank would implement its contingency
plan. It is important for customers to understand that if a contingency
plan is implemented there may be some customer inconvenience since
service levels may not be at peak.
Finally, we must admit that even after detailed preparation as
described above, there are no guarantees that the assumptions,
estimates, tests, and validation will be as we expect. The Corporation
is still dependent on third party vendors and suppliers for a large
part of our business operations. If events are not as the Corporation
and our vendors expect, the Subsidiary Bank's business, results of
operations and financial position could be materially adversely
affected.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Between December 31, 1998 and March 31, 1999, total assets have decreased
slightly. The March 31 annualized return on average assets is 1.16% compared to
1.07% at December 31. At March 31 the annualized return on average equity is
10.46% compared to 9.39% at December 31. The leverage capital (equity to assets)
ratio is 11.25% at March 31 compared to 11.15% at December 31.
The table shown below is an analysis of the Corporation's reserve for loan
losses. Net charge-offs for the Corporation have been very low when compared
with the size of the total loan portfolio. Management monitors the loan
portfolio on a quarterly basis with the procedures that allow for problem loans
and potentially problem loans to be highlighted and watched. Based on
experience, the loan policies and the current monitoring program, management
believes the loan loss reserve is adequate.
(000 Omitted)
March 31, 1999
--------------
Balance at beginning of period $ 1 140
Charge-offs:
Commercial, financial and agricultural --
Real estate - construction --
Real estate - mortgage --
Consumer 14
-------
Total charge-offs 14
Recoveries:
Commercial, financial and agricultural --
Real estate - construction --
Real estate - mortgage --
Consumer 5
-------
Total recoveries 5
-------
Net charge-offs 9
Additions charged to operations --
-------
Balance at end of period $ 1 131
=======
Ratio of net charge-offs during the period to average
loans outstanding during the period .0115%
=======
Loans are placed on nonaccrual status when a loan is specifically determined to
be impaired or when principal or interest is delinquent for 90 days or more.
Interest income generally is not recognized on specific impaired loans unless
the likelihood of further loss is remote. Interest income on other nonaccrual
loans is recognized only to the extent of interest payments received. Following
is a table showing the risk elements in the loan portfolio.
(000 Omitted)
March 31, 1999
Nonaccrual loans $ 144
Restructured loans --
Foreclosed properties 76
------
Total nonperforming assets $ 220
======
Loans past due 90 days accruing interest $ 161
======
Reserve for loan losses to period end loans 1.44%
======
Nonperforming assets to period end loans and foreclosed properties .281%
======
At March 31, 1999, other potential problem loans totalled $24,305. Loans are
viewed as potential problem loans according to the ability of such borrowers to
comply with current repayment terms. These loans are subject to constant
management attention, and their status is reviewed on a regular basis.
Management has allocated a portion of the reserve for these loans according to
the review of the potential loss in each loan situation.
Total deposits have decreased $1,500,000 as of March 31, 1999 compared with
December 31, 1998. Non-interest bearing demand deposits have decreased about
$1,400,000. Balances of other types of accounts have changed some between the
account types.
The comparison of the income statements for the three months ended March 31,
1999 and 1998 shows a decrease of 2% in net income in 1999. Net interest income
decreased 3%, interest income increased less than 1%, and interest expense
increased 5%.
The increase in interest expense as of March 31, 1999 compared with March 31,
1998, is due to the increase in deposits overall of which a significant portion
went to Select Checking as well as the movement of funds into Select Checking
from existing deposit accounts paying a lower interest rate.
Noninterest income increased 34% as of March 31, 1999 compared to March 31,
1998. There was an increase in income from fiduciary activities and a gain on
sale of foreclosed real estate. Noninterest expense increased almost 7%. This
included an increase in furniture and equipment expenses due to replacement of
equipment for Year 2000 compliance as well as a combination of increases and
decreases in numerous other operating expenses. Two particular operating
expenses with changes are the legal and professional fees increase compared to
1998 because of a reimbursement received in 1998 for legal expenses on a
foreclosure that actually reduced 1998 expenses and the increase in West
Virginia business franchise tax because of a change in the taxing of financial
institutions.
Liquid assets of the Corporation include cash and due from banks, securities
purchased under agreements to resell, securities available for sale, and loans
and investments maturing within one year. The Corporation's statement of cash
flows details this liquidity. Net income after certain adjustments for noncash
transactions provided cash from operating activities. Funds from maturity of
investment securities were used to fund investing activities. Financing
activities used funds total deposits decreased. Cash and cash equivalents
decreased during this period, but liquidity of the Corporation is more than
adequate to meet present and future financial obligations.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
There are no material legal proceedings to which the Registrant or its
subsidiary, directors or officers is a party or by which they, or any of them,
are threatened. All legal proceedings presently pending or threatened against
Potomac Bancshares, Inc. and its subsidiary involve routine litigation
incidental to the business of the Company or the subsidiary and are either not
material in respect to the amount in controversy or fully covered by insurance.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits:
2. Plan of acquisition, reorganization, arrangement,
liquidation or succession.
Not applicable
4. Instruments defining the rights of security holders,
including indentures.
Not applicable
10. Material contracts.
Not applicable
11. Statement re: computation of per share earnings.
Not applicable
15. Letter on unaudited interim financial information.
Not applicable
18. Letter on change in accounting principles.
Not applicable
19. Reports furnished to security holders.
Not applicable
22. Published report regarding matters submitted to vote of
security holders.
Not applicable
23. Consent of experts and counsel.
Not applicable
24. Power of attorney.
Not applicable
27. Financial Data Schedule.
99. Additional exhibits.
Not applicable
(b) Reports on Form 8-K:
NONE
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
POTOMAC BANCSHARES, INC.
Date May 11, 1999 /s/ Charles W. LeMaster
________________ ____________________________________
Charles W. LeMaster, President & CEO
Date May 11, 1999 /s/ L. Gayle Marshall Johnson
________________ ____________________________________
L. Gayle Marshall Johnson, Vice
President and Chief Financial Officer