8-K: PB Bankshares Reports Strong 2024 Performance, Focuses on Strategic Growth Initiatives

PB Bankshares, Inc., parent company of Presence Bank, announces its 2024 annual performance, highlighting growth in assets, deposits, and loans, alongside strategic priorities for continued success.

Summary

• PB Bankshares, Inc. released a slide presentation on February 26, 2025, detailing the company's operating and growth strategies, as well as its financial performance.
• Presence Bank began as the Industrial Building and Loan Association in Coatesville, PA in 1919.
• In 2021, Presence Bank received a Bauer Financial 5-Star Rating and was recognized as one of the Best Places to work in PA.
• The bank achieved its third consecutive year with Bauer 5-Star and BPW in 2024 and was named Chester County's Best Bank, opening a new administrative office in Lancaster.
• The company's core operating markets are the Chester, Lancaster, and Capital Regions, covering a 10-county market in Southcentral Pennsylvania.
• Presence Bank focuses on relationship-based 'white glove' customer service.
• The bank's top five priorities include deposit growth, cash management and not-for-profit growth, loan growth, retaining and recruiting banking talent, and maintaining safe and sound business risks and credit quality.
• As of December 31, 2024, Presence Bank's uninsured and uncollateralized deposits were 11.0% of total deposits.
• The bank can cover its uninsured deposits by 544.9% with cash on hand and liquidity sources.
• The bank has seen strong long-term growth in total assets, deposits, and loans.
• The year ended December 31, 2022, included an $821,000 gain on sale of premises and equipment within pretax income.
• The year ended December 31, 2024, included a $487,000 gain on sale of premises and equipment within pretax income.
• The company is monitoring its commercial real estate portfolio and concentration, assessing associated risks.
• Stress testing has been completed on 83.5% or $126.2 million of the CRE portfolio.
• The CRE portfolio has an average loan-to-value ratio of 59.2%.
• The baseline debt service coverage ratio is 1.41 times without sponsor or guarantor support.
• The bank has $25.5 million in hospitality loans with an average loan-to-value of 58.5% and a baseline debt service coverage ratio of 1.90 times.
• The bank supports a child's wish locally living in our 3 core operating markets and has raised $71,745 to date as of 12/31/24.

Sentiment

Score: 8

Explanation: The document presents a positive outlook with strong financial performance, strategic growth initiatives, and a focus on community engagement. The bank's key metrics and risk management practices contribute to a favorable sentiment.

Positives

• Presence Bank has a Bauer Financial 5-Star Rating.
• The bank was recognized as one of the Best Places to work in PA.
• The bank was named Chester County's Best Bank.
• The bank's uninsured and uncollateralized deposits were 11.0% of total deposits as of December 31, 2024, which is well below the banking systems average.
• The bank can cover its uninsured deposits by 544.9% with cash on hand and liquidity sources.
• The CRE portfolio has an average loan-to-value ratio of 59.2%.
• The baseline debt service coverage ratio is 1.41 times without sponsor or guarantor support.
• The bank has $25.5 million in hospitality loans with an average loan-to-value of 58.5% and a baseline debt service coverage ratio of 1.90 times.
• The bank has raised $71,745 to date as of 12/31/24 to support a child's wish locally living in our 3 core operating markets.

Risks

• The presentation contains a disclaimer regarding forward-looking statements, noting that actual results may differ materially due to various risks and uncertainties.
• The company acknowledges the need to monitor the commercial real estate portfolio and concentration, assessing its associated risks.

Future Outlook

The bank's top five priorities include deposit growth, cash management and not-for-profit growth, loan growth, retaining and recruiting banking talent, and maintaining safe and sound business risks and credit quality.

Industry Context

Community banks are increasingly focused on relationship-based banking and serving local markets, as highlighted by Presence Bank's strategy. The emphasis on cash management services and support for non-profit organizations aligns with the needs of businesses and communities in their operating regions. Maintaining a strong capital base and managing credit quality are also key priorities for community banks in the current economic environment.

Comparison to Industry Standards

• Presence Bank's focus on relationship banking and local market expertise aligns with the strategies of other successful community banks like Fulton Financial Corporation and S&T Bancorp.
• The bank's efforts to maintain a strong capital base and manage credit quality are consistent with industry best practices, as demonstrated by institutions like PNC Financial Services and M&T Bank.
• The bank's uninsured deposit level of 11% is lower than the industry average, which is a positive sign for stability.
• The bank's CRE loan portfolio stress testing and LTV ratios are in line with regulatory expectations and industry standards.

Stakeholder Impact

• Shareholders will benefit from the bank's strong financial performance and growth strategies.
• Employees will benefit from the bank's focus on being a 'Best Places to Work' company.
• Customers will benefit from the bank's relationship-based 'white glove' customer service.
• The local community will benefit from the bank's support for local charities and organizations.

Next Steps

• The bank will continue to focus on deposit growth, cash management and not-for-profit growth, and loan growth.
• The bank will continue to retain, recruit and grow our banking talent.
• The bank will continue to maintain safe and sound business risks and credit quality.

Key Dates