Executive Summary

This report highlights 24 publicly traded banks based in D.C., Delaware, Maryland, Northern Virginia (“NOVA”) with assets between $500 million and $20 billion. We believe banks in this size range are large enough to operate efficiently and small enough to deliver personalized services. These stocks typically trade “under the radar screen” – they are not widely followed by brokerages or institutional investors for several reasons, including relatively low market caps and little trading volume.
Spread income – as is the case with community banks nationally – represents the major source of revenue. Cash and investment securities are elevated, which requires more active management to profitably deploy these funds without taking on outsized interest rate and extension risk.
Third quarter 2021 earnings results for our selected banks were generally good. Most of the banks in our highlighted regions have strong balance sheets (including ample loan loss reserves), which provided enough financial flexibility to overcome tepid third quarter loan growth and net interest margin (“NIM”) pressure. For some banks, loan originations were offset by paydowns and payoffs. Several banks, however, commented that loan pipelines were improving, which along with the recent rise in interest rates, should bode well for earnings in the foreseeable future. Credit quality was not a serious issue and many banks recorded low, or even negative, loan loss provisions. Economic activity is returning to pre-pandemic levels and many banks decreased specific allocations within the allowance for loan losses.
The highlighted banks generally have solid balance sheets with acceptable capital ratios. That said, many banks should consider taking advantage of favorable capital markets to provide “progressive padding” for an upcoming regulatory cycle that appears likely to become more scrutinizing. 

PNC FIG Advisory suggests that sensitivity models tailored to individual banks can best identify additional capital needs.

Banks across all asset sizes have a greater need for scale. The pandemic has demonstrated that major and permanent changes are coming to the community banking industry through the effective use of financial technology. Although there are many financial and economic reasons to merge, banks should consider potential regulatory delays regarding deal approvals when pursuing mergers.


  • Maryland, Delaware, Northern Virginia (NOVA), and Washington, D.C. – the subjects of this Industry Report – are home to approximately 70 regulated depository institutions, of which 34 are publicly traded banks and thrifts. Our definition of NOVA includes Alexandria, Arlington, Fairfax, Fauquier, and Loudoun counties.
  • The top five banking institutions in Maryland combine for 65% of the state’s deposit market share. Bank of America Corporation (NYSE: BAC) leads with a 23% market share. Sandy Spring and Eagle have about 4.7% and 2.4%, respectively.
  • Opportunistic banks continue to raise sub debt. Because it is unlikely pricing can improve much, we believe there is limited value for prospective issuers to wait for better conditions. Community bank sub debt coupon rates for rated deals have trended down as certain new issue sub debt deals were recently priced with coupons below 3.00%.

For more information, please visit pnc.com/fig or contact PNC FIG Advisory by calling 1-610-351-1633.

Flying Under the Radar: Small & Micro-Cap Banks in D.C., DE, MD & N. VA