Skip to Sitemap
Peoples State Bank

Press Release

PSB Reports First Quarter 2020 Earnings of $1.6 Million or $0.36 Per Share; COVID-19 Preparations Begin

Company Release - 4/27/2020 8:30 AM ET

WAUSAU, Wis., April 27, 2020 (GLOBE NEWSWIRE) -- PSB Holdings, Inc. (“PSB”) (OTCQX: PSBQ), the holding company for Peoples State Bank serving North Central Wisconsin, reported first quarter earnings ending March 31, 2020 of $0.36 per PSB share on net income of $1.61 million, compared to earnings of $0.63 per share on net income of $2.81 million during the December 31, 2019 quarter, and $0.61 per share  on earnings of $2.73 million during the first quarter a year ago.  First quarter earnings reflect the initial impact of COVID-19 preparations and the Safer-At-Home Order by Governor Evers effective March 25, 2020, resulting in the closing of businesses or a substantial reduction in business activity.  Our first quarter operating results reflected: (1) significantly higher loan loss provisions related to the COVID-19 pandemic and its expected credit impact from a slowing economy, (2) a lower net interest margin due in part to a higher level of liquidity amidst a declining interest rate environment, (3) higher non-interest expenses related to higher health insurance claims, significant donations and prepayment penalties on FHLB advances, offset by (4) higher fee income from the sale of mortgage loans.

“The health and well-being of our workforce and customers is critical to the success of our daily banking operations.  As such, PSB began preparations for the COVID-19 pandemic during mid-February, which led to closing branch lobbies as of March 19th, sending selected personnel to work from home and providing appropriate IT equipment and services to accommodate the Safer-At Home Order.  Our lending teams have reached out to borrowers that have been affected by the declining economic activity and offered assistance in various forms including deferred payments, interest-only payments and fee waivers.  We are particularly focused on customers that may have difficulty re-opening their businesses in sufficient time to re-generate the cash-flow needed to sustain their operation.  We have worked with our customers to file applications for the Paycheck Protection Program (“PPP”) offered through the Small Business Administration and expect the Program to provide some short-term relief in their efforts to sustain operations. Meanwhile, we are closely monitoring loan payments and requests for modifications daily.  In anticipation of future credit losses, we increased our loan loss provision during the quarter, and we elevated our liquidity levels in anticipation of higher cash needs by our customers. Our actions are intended to be proactive and I believe early identification of potential problem credits allows us to minimize future loan charge-offs,” stated Scott Cattanach, President and CEO.

COVID-19 Preparations:

Industry Exposure: PSB has identified various industries that may be adversely impacted by the Safer-At-Home Order.  Though these industries may change, management believes the following industries are where PSB has exposure that will experience the most immediate impacts; Percentages are of the total commercial related portfolio credit extensions: Non-Owner Occupied Commercial Real Estate (15.35%), Hotel and Restaurants (9.53%), Medical (6.78%), Retail Stores (2.81%), and Recreation (0.95%).

The following table indicates PSB’s Top Industry Concentrations by total credit extension (both used and unused lines) and as a percentage of total commercial related credit extension as of March 31, 2020:

Top Industry Concentration
Industry Total Loans % of Ln Portfolio
Manufacturing104,324,68215.79%
Non-Owner Occupied (Commercial)101,365,49715.35%
Non-Owner Occupied (Residential)88,475,93013.39%
Services59,017,4808.93%
Construction, Remodeling (Res. And Com.)58,076,7188.79%
Medical44,813,1076.78%
Hotels34,023,8645.15%
Trucking31,861,1454.82%
Restaurant28,925,4194.38%
Gas Stations and Oil Production26,414,7324.00%
Retail Stores18,589,2562.81%
Automotive and Marine Dealerships (Includes Maint.)17,979,5902.72%

Loan Accommodations: During the quarter-ended March 31, 2020, PSB recorded loan accommodations to defer payments or make interest only payments for 90 days in response to challenges for borrowers resulting from COVID-19. The loan accommodations were only made to borrowers that were current and in good standing at the time of the request.  “For each relationship, we assign a risk weighting to identify and quantify the risk of loss prior to origination of the loan.  As requests for 90 days deferral of payments or modifications for interest only payments are made, we review the credit risk rating and adjust as forward-looking circumstances warrant.  We believe this system helps us monitor the risks inherent in our loan portfolio and appropriately track the impact caused by the pandemic and slowing economy.  As shown in the table below, our “impaired loans” and “substandard risk” loans did not change materially from the prior quarter. However, we did move approximately $18.1 million of loans to the “watch” list which are largely related to businesses materially affected by the mandatory closing of their operation by executive order,” added Cattanach. Cattanach continued, “PSB was already an approved lender under the Paycheck Protection Program through the Small Business Administration in accordance with the Coronavirus Aid, Relief, and Economic Security (CARES) Act.  These PPP loans provide further temporary cash flow to support small business payroll expense.”

Commercial, Commercial Real Estate, Construction & Development, Agricultural and Government Loans
($000)
 Risk Rating  12/201512/201612/201712/201803/201906/201909/201912/201903/2020
Rating 1"High Quality"$  79 - - $- $  513 $  541 $  529 - $  71
Rating 2"Minimal Risk"  59,882  67,468  76,710  85,382  71,479  75,066   65,792  57,904  59,101
Rating 3"Averge Risk"  227,020  253,673  292,496  323,627  319,289  335,029  347,386  349,002  324,378
Rating 4"Acceptable Risk"  85,206  91,367  65,024  79,271  96,011  105,187  109,565  128,932  123,296
Rating 5"Watch Risk"  12,520  10,774  18,049  15,551  13,206  17,481  18,975  15,933  33,999
Rating 6"Substandard Risk"  621  2,678  500  489  2,674  2,653  290   2,568  2,732
Rating 7"Impaired Loans"  9,877  7,758  9,952  8,707  11,216  7,704  6,600  5,518  7,811
  $395,205 $433,718 $462,731 $513,027 $514,388 $543,661 $549,137 $559,857 $551,388
Includes undispersed Construction & Development lines of credit      

Loan Loss Reserve:  Though PSB’s asset quality has not changed materially over the quarter as measured by delinquent loan payments, management determined it prudent to increase its loan loss reserves through the addition of $1.8 million in loan loss provisions for the quarter-ended March 31, 2020 compared to $150,000 the previous quarter and $400,000 one year earlier.  The increased provision replaced existing specific reserves related to write-offs of approximately $870,000 on two customer relationships and provisions taken in anticipation of changes in risks associated with loan classification assignments and a slowing economy. Loan loss provisions are expected to remain elevated in the second quarter as better clarity on the impact of the economic slowdown from the COVID-19 pandemic materializes. “While there is significant uncertainty regarding the eventual impacts on the national and local economies from the pandemic and Safer-At-Home order, our local markets are expected to perform in line with the national market as a whole. However, to the extent the Wisconsin Safer-At Home order is extended beyond May 26, 2020, customers in our northern Wisconsin market, to whom we have approximately $158.5 million in loans outstanding, could experience outsized impacts due to greater dependency on recreation and tourism activities,” said Cattanach.

Liquidity Changes: “In anticipation of market volatility and customer demands related to the COVID-19 pandemic, PSB borrowed $10 million from the Federal Home Loan Bank and increased its liquidity levels during the quarter,” said Mark C. Oldenberg, Chief Financial Officer. At March 31, 2020, cash and cash equivalents totaled $48.1 million compared to $22.2 million one year earlier. PSB’s liquidity levels remain well in excess of regulatory requirements.

Operational Changes and Non-Typical Expenses:  To protect the well-being of its staff and customers, PSB allowed personnel to work from home.  To facilitate the move, we allocated existing and excess laptop computers to staff and enhanced our ability to network offsite with upgrades of various software licensing, which has resulted in approximately 30% of our team working from home.  Use of bank issued laptops and network connection security protocol and tools allows customer and bank information to remain private even as some employees work from home.  Except at our new West Allis branch in metro Milwaukee, our branch drive-throughs are currently open to customers on our normal schedule.

Net Interest Margin Impact:  PSB’s net interest margin declined to 3.45% for the quarter ended March 31, 2020 from 3.53% the prior quarter due to the swift reduction in short term interest rates and the resulting effect on yields in the loan and investment portfolios.  “Since the sharp decline in interest rates did not occur until late in the quarter, the full effect of the lower interest rate environment had not yet been realized at quarter end.  We expect to see further margin compression during the second quarter,” continued Oldenberg.

Growth and Paycheck Protection Program Participation:  PSB’s total assets decreased $5.0 million during the quarter ended March 31, 2020 due primarily to a reduction in cash and securities and lower deposit balances.  During the second quarter of 2020, PSB expects loan balances will sharply increase due to originations for PPP before being paid down in the third quarter through forgiveness grants from the Small Business Administration. Loans pledged to the Federal Reserve Payment Protection Plan Liquidity Fund (PPPLF) will not require the Bank to carry additional equity capital. “Outside of the loan activity related to the PPP, the Bank expects organic loan origination activity to slow due to a weakened economy brought on by the COVID-19 pandemic which may result in a shrinking asset base,” added Oldenberg.  Through April 20, 2020, PSB processed approximately $96 million of approved PPP loans. 

Capital Management:  At March 31, 2020, the holding company’s tangible equity to asset ratio was 9.59% and the bank’s capital was well in excess of all regulatory requirements.  With the likelihood of limited near term loan growth, outside of PPP, management expects to maintain capital ratios within regulatory compliance.  “At the present time, we have temporarily ceased all stock repurchasing activity and the bank has sufficiently funded the holding company with cash to continue paying debt obligations and dividends for more than a year without the need to pursue additional cash from the bank or external sources,” said Oldenberg.

March 2020 Quarterly Financial Highlights (at or for the periods ended March 31, 2020, compared to December 31, 2019 and / or March 31, 2019, as applicable):

  • Return on shareholders’ equity was 6.84% for the quarter compared to 11.98% one quarter earlier and 13.42% for the first quarter one year earlier. Without provision expense, return on equity would have been 12.48% for the current quarter compared to 12.61% last quarter and 15.39% in the quarter-ended one year earlier.  Return on average assets was 0.67% for the first quarter of 2020, compared to 1.17% the previous quarter and 1.23% for the first quarter one year earlier.  The decline in returns primarily relate to loan loss provisions taken in the current quarter related to two loans and in anticipation of a slowing economy from COVID-19 impacts.
     
  • Gains on the sale of mortgage loans more than doubled for the quarter ended March 31, 2020 to $987,000 from $452,000 the previous quarter due to a robust refinancing market fueled by lower interest rates.  This increase was slightly offset by a decline in net mortgage loan servicing rights to a loss of $23,000 compared to a gain of $57,000 the prior quarter.  Through the beginning of the second quarter of fiscal 2020, mortgage banking activity remains robust.
     
  • The net unrealized loss on securities available for sale declined $342,000 during the March 2020 quarter compared to an increase of $179,000 one quarter earlier due primarily to a decline in market value of four collateralized loan obligations with a book value of approximately $20 million.  These obligations have been impacted by unusual volatility in the bond market and temporary illiquidity.
     
  • Tangible net book value was $20.89 per share at March 31, 2020, compared to $20.72 per share as of December 31, 2019 and $18.89 per share at March 31, 2019.  Over the past year, tangible book value per share has grown 10.59%.

Balance Sheet and Asset Quality Review

Total assets were $969.9 million as of March 31, 2020, compared to $974.9 million as of December 31, 2019, a decrease of $5.0 million, or 0.5%.  Total loans receivable decreased slightly by $1.1 million, or 0.2%. The commercial/agricultural real estate loan portfolio decreased to $399.4 million at March 31, 2020 from $401.4 million three months earlier. Non-owner occupied commercial real estate loans represented the largest component of the loan portfolio at 30.8% of gross loans at March 31, 2020, followed by owner occupied commercial real estate loans at 25.4%, residential real estate at 23.8%, commercial/agricultural non-real estate loans at 19.5% and consumer loans at 0.5%.  Total agricultural related loans represent 1.0% of the total loan portfolio.  The non-owner occupied commercial real estate portfolio represents the largest portion of loan growth over the past year as the balance grew 10.3% from $199.2 million at March 31, 2019 to $219.7 million at March 31, 2020. 

The allowance for loan losses increased to 1.10% of gross loans at March 31, 2020.  The annualized net charge-offs to average loans was 0.49% for the quarter ended March 31, 2020, compared to the previous quarter 0.01% and 0.08% one year earlier. The charge-offs in the most recent quarter relate to the previously disclosed bankruptcy of the retailer Shopko where approximately $600,000 was charged-off and a $255,000 charge-off related to a non-profit. Both charge-offs were supported by specific reserves in place at December 31, 2019.  Non-performing assets decreased to 0.54% of total assets at March 31, 2020, compared to 0.55% at December 31, 2019, and 0.84% at March 31, 2019.  At March 31, 2020, non-performing assets consisted of $3.9 million in non-accrual loans, $232,000 in non-accrual restructured loans, $672,000 in restructured loans not on non-accrual, and $425,000 in other real estate owned. 

At March 31, 2020, cash and cash equivalents totaled $48.1 million compared to $49.0 million at December 31, 2019 and $22.3 million one year earlier.  As previously mentioned, current cash levels are elevated to accommodate cash needs related to the pandemic.  Investment securities totaled $171.1 million at March 31, 2020 compared to $174.4 million at December 31, 2019 and $170.4 million one year earlier.  All investment securities during the prior two quarters were considered available for sale and carried at market value.   

Total deposits decreased 2.1% to $765.3 million at March 31, 2020 compared to $781.8 million at December 31, 2019, led by an $18.5 million decline in non-interest demand deposits.  At March 31, 2020, interest-bearing demand and savings deposits accounted for 33.3% of total deposits, followed by money market deposits at 25.2%, noninterest-bearing demand deposits at 20.7% and retail and local time deposits at 16.9%.  Broker and national time deposits accounted for 4.6% of total deposits at March 31, 2020 versus 4.3% the prior quarter and 6.8% one year earlier.

FHLB advances increased to $88.7 million at March 31, 2020 compared to $73.5 million at December 31, 2019 and other borrowings decreased to $3.5 million from $6.1 million over the same time period.  The increase in FHLB advances was to fund anticipated pandemic related liquidity needs.      

For the quarter ended March 31, 2020, stockholders’ equity increased $460,000 to $93.2 million, compared to $92.7 million at December 31, 2019.  Stockholders’ equity was impacted by earnings, stock repurchases and other comprehensive income adjustments, including the change in unrealized gains and losses on securities available for sale.  Tangible net book value per share increased to $20.89 per share, at March 31, 2020, compared to $20.72 per share at December 31, 2019.  PSB’s tangible equity to total assets was 9.59% at March 31, 2020, compared to 9.50% at December 31, 2019. 

To support stock liquidity for shareholders as needed, PSB regularly repurchases its shares directly from shareholders holding shares in certificate form and on the open market at prevailing prices as opportunities arise. During the quarter ended March 31, 2020, PSB repurchased 18,434 shares of its common stock at an average cost of $25.95 per share.

Operations Review

Net interest income totaled $7.8 million (on a net margin of 3.45%) for the first quarter of 2020, compared to $8.0 million (on net margin of 3.53%) for the fourth quarter of 2019 and $7.6 million (on a net margin of 3.63%) for the first quarter of 2019.  Compared to the preceding quarter, loans and investment yields decreased 11 basis points to 4.30% during the first quarter of 2020 from 4.41% one quarter earlier while deposit and borrowing costs declined 7 basis points to 1.10% from 1.17% over the same time period.  The decline in loan and investment yields were partially due to a larger average balance of cash and cash equivalents held during the quarter and a decrease in the prime lending rate due to actions by the Federal Reserve.  Loan yields decreased to 4.78% from 4.88% during the first quarter of 2020, as many floating rate loans repriced lower as the prime rate declined. 

The cost of interest-bearing liabilities decreased during the quarter, reflecting lower rates associated with money market accounts and time deposits. Deposit costs decreased to $1.48 million for the first quarter of 2020 from $1.54 million the previous quarter. Interest costs on borrowings declined $22,000 for the first quarter of 2020 to $453,000 from $475,000 the previous quarter.

The provision for loan losses totaled $1.8 million during the first quarter of 2020 compared to $150,000 for the prior linked quarter.  The larger provision primarily relates to our March 31, 2020 increased need for reserves related to an anticipated deteriorating economic climate.

Total noninterest income for the first quarter of 2020 increased to $2.4 million from $1.8 million for the fourth quarter of 2019.  Service fees in the first quarter were $391,000 compared to $411,000 during the fourth quarter of 2019.  Gains on sale of mortgage loans increased to $987,000 for the first quarter from $452,000 in the fourth quarter of 2019 and remained strong as falling long-term U.S.Treasury rates have spurred mortgage refinance activity.  We expect continued elevated gains on sale of mortgage loans in the second quarter.  Commissions on investment and insurance sales increased to $349,000 from $301,000 the prior quarter.  At March 31, 2020, PSB had wealth assets under management totaling $217.5 million compared to $248.5 million at December 31, 2019 and $229.8 million at March 31, 2019.  The year over year reduction in assets under management was 5.35% and primarily related to stock market value declines.  Net gains on sale of securities was $123,000 for the first quarter of 2020 compared to $71,000 for the fourth quarter of 2019.

Noninterest expense was $6.3 million for the first quarter of 2020, compared to $5.9 million for the fourth quarter.  For the first quarter of 2020, noninterest expense increased due to an increase in salaries and employee benefits costs that totaled $296,000, donations to non-profits of $115,000 and prepayment penalties associated with FHLB advances of $25,000.  Additionally, the Bank opened a new branch office in Milwaukee during the quarter which added new operational expenses of approximately $68,000.  Similar to the prior quarter, the first quarter 2020 results reflect the elimination of FDIC insurance premiums as the FDIC insurance fund reached its targeted level.  However, in the current deteriorating economic climate, it is expected future FDIC insurance premiums will be incurred.

“In the first quarter of 2020, we experienced higher personnel expenses, office expenses, depreciation and advertising costs associated with the opening of our new branch in Milwaukee,” said Oldenberg.

About PSB Holdings, Inc.

PSB Holdings, Inc. is the parent company of Peoples State Bank. Peoples is a community bank headquartered in Wausau, Wisconsin, serving north central Wisconsin from nine full-service banking locations in Marathon, Oneida, Vilas and Milwaukee counties and a loan production office in Stevens Point, Wisconsin. Peoples also provides investment and insurance products, along with retirement planning services, through Peoples Wealth Management, a division of Peoples.  PSB Holdings, Inc. is traded under the stock symbol PSBQ on the OTCQX Market.  More information about PSB, its management, and its financial performance may be found at www.psbholdingsinc.com.

Forward-Looking Statements

Certain matters discussed in this news release, including without limitation those relating to potential loan and deposit growth, future profits, changes in noninterest income and expenses, pro-forma impacts to income from non-recurring or unusual income and expense items, and future interest rates, are forward-looking statements and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements involve risks and uncertainties which may cause results to differ materially from those set forth in this release. Among other things, these risks and uncertainties include the strength of the economy, the effects of government policies, including, in particular, interest rate policies, and other risks and assumptions. Risk and uncertainties also include the effect of the COVID-19 pandemic, including the bank’s credit quality and business operations, as well as its impact on general economic and financial market conditions. PSB Holdings, Inc. assumes no obligation to update or supplement forward-looking statements that become untrue because of events subsequent to this press release.

 
PSB Holdings, Inc.
Quarterly Financial Summary
(dollars in thousands, except per share data)Quarter ended
 Mar. 31,Dec. 31,Sep. 30,Jun. 30,Mar. 31,
Earnings and dividends:20202019201920192019
      
Interest income$  9,726  $  9,988  $  10,098  $  9,839  $  9,604 
Interest expense$  1,935  $  2,019  $  2,154  $  2,041  $  2,032 
Net interest income$  7,791  $  7,969  $  7,944  $  7,798  $  7,572 
Provision for loan losses$  1,800  $  150  $  150  $  150  $  400 
Other noninterest income$  2,355  $  1,839  $  1,802  $  1,903  $  2,117 
Other noninterest expense$  6,330  $  5,947  $  5,437  $  6,167  $  5,745 
Net income$  1,610  $  2,813  $  3,131  $  2,572  $  2,731 
      
Basic earnings per share (3)$  0.36  $  0.63  $  0.70  $  0.57  $  0.61 
Diluted earnings per share (3)$  0.36  $  0.63  $  0.70  $  0.57  $  0.61 
Dividends declared per share (3)$-  $  0.20  -  $  0.20  - 
Tangible net book value per share (4)$  20.89  $  20.72  $  20.24  $  19.41  $  18.89 
      
Semi-annual dividend payout ratio n/a   15.04%  n/a   16.95%    n/a 
Average common shares outstanding 4,464,956   4,471,173   4,473,583   4,486,022   4,494,568 
      
Balance sheet - average balances:     
      
Loans receivable, net of allowances for loss$  705,333  $  700,469  $  689,057  $  666,008  $  658,586 
Assets$  963,191  $  951,409  $  928,282  $  893,998  $  899,263 
Deposits$  761,268  $  745,455  $  721,788  $  713,910  $  713,257 
Stockholders' equity$  94,735  $  93,189  $  89,139  $  86,656  $  82,516 
      
Performance ratios:     
      
Return on average assets (1) 0.67%  1.17%  1.34%  1.15%  1.23%
Return on average stockholders' equity (1) 6.84%  11.98%  13.94%  11.90%  13.42%
Average stockholders' equity less accumulated     
other comprehensive income (loss) to     
average assets 9.75%  9.68%  9.52%  9.68%  9.27%
Net loan charge-offs to average loans (1) 0.49%  0.01%  0.01%  0.00%  0.08%
Nonperforming loans to gross loans 0.67%  0.68%  0.70%  0.53%  1.11%
Nonperforming assets to total assets 0.54%  0.55%  0.57%  0.42%  0.84%
Allowance for loan losses to gross loans 1.10%  0.97%  0.97%  0.97%  0.98%
Nonperforming assets to tangible equity     
plus the allowance for loan losses (4) 5.24%  5.45%  5.69%  4.13%  8.40%
Net interest rate margin (1)(2) 3.45%  3.53%  3.60%  3.72%  3.63%
Net interest rate spread (1)(2) 3.20%  3.24%  3.31%  3.42%  3.36%
Service fee revenue as a percent of     
average demand deposits (1) 1.04%  1.00%  0.90%  1.14%  1.12%
Noninterest income as a percent     
of gross revenue 19.49%  15.55%  15.14%  16.21%  18.06%
Efficiency ratio (2) 61.59%  59.90%  55.14%  62.83%  58.59%
Noninterest expenses to average assets (1) 2.64%  2.48%  2.32%  2.77%  2.59%
Tangible equity to actual assets 9.59%  9.50%  9.53%  9.65%  9.50%
      
Stock price information:     
      
High$  28.25  $  28.25  $  27.50  $  24.75  $  23.45 
Low$  19.50  $  26.00  $  23.55  $  22.00  $  21.25 
Last trade value at quarter-end$  24.75  $  27.50  $  26.49  $  24.00  $  22.75 
      
(1) Annualized     
(2) The yield on tax-exempt loans and securities is computed on a tax-equivalent   
basis using a federal tax rate of 21%.     
(3) Due to rounding, cumulative quarterly per share performance may not equal annual per share totals. 
(4) Tangible stockholders' equity excludes intangible assets.    
      


 
PSB Holdings, Inc.
Consolidated Statements of Income
   Quarter Ended 
(dollars in thousands,Mar. 31,  Dec. 31, Sep. 30, Jun. 30, Mar. 31,
except per share data - unaudited)2020  2019 2019 2019 2019
           
Interest and dividend income:          
Loans, including fees$  8,445  $  8,691 $  8,823 $  8,629 $  8,334
Securities:          
Taxable  733    768   769   730   713
Tax-exempt  431    387   378   389   396
Other interest and dividends  117    142   128   91   161
           
Total interest and dividend income  9,726    9,988   10,098   9,839   9,604
           
Interest expense:          
Deposits  1,482    1,544   1,654   1,634   1,553
FHLB advances  320    328   323   230   309
Other borrowings  14    26   58   57   51
Senior subordinated notes  28    29   28   28   28
Junior subordinated debentures  91    92   91   92   91
           
Total interest expense  1,935    2,019   2,154   2,041   2,032
           
Net interest income  7,791    7,969   7,944   7,798   7,572
Provision for loan losses  1,800    150   150   150   400
           
Net interest income after provision for loan losses  5,991    7,819   7,794   7,648   7,172
           
Noninterest income:          
Service fees  391    411   348   403   381
Gain on sale of mortgage loans  987    452   463   432   175
Mortgage loan servicing, net  (23)   57   89   84   125
Investment and insurance sales commissions  349    301   276   310   333
Net gain on sale of securities  123    71   -    121   18
Increase in cash surrender value of life insurance  104    104   105   101   98
Other noninterest income  424    443   521   452   987
           
Total noninterest income  2,355    1,839   1,802   1,903   2,117
           
Noninterest expense:          
Salaries and employee benefits  3,819    3,523   3,372   3,322   3,428
Occupancy and facilities  544    506   510   591   601
Loss on foreclosed assets  71    69   4   3   4
Data processing and other office operations  644    739   654   646   577
Advertising and promotion  141    182   107   120   100
FDIC insurance premiums  -     -    -    63   59
Other noninterest expenses  1,111    928   790   1,422   976
           
Total noninterest expense  6,330    5,947   5,437   6,167   5,745
           
Income before provision for income taxes  2,016    3,711   4,159   3,384   3,544
Provision for income taxes  406    898   1,028   812   813
           
Net income$  1,610  $  2,813 $  3,131 $  2,572 $  2,731
Basic earnings per share$  0.36  $  0.63 $  0.70 $  0.57 $  0.61
Diluted earnings per share$  0.36  $  0.63 $  0.70 $  0.57 $  0.61
           


 
PSB Holdings, Inc.
Consolidated Statements of Comprehensive Income
  
 Three Months Ended
  March 31,   December 31,   March 31, 
(dollars in thousands - unaudited) 2020   2019   2019 
            
Net income$ 1,610  $  2,813  $  2,731 
            
Other comprehensive income, net of tax:           
            
Unrealized gain (loss) on securities available           
for sale   (342)    179     1,515 
            
Reclassification adjustment for security           
gain included in net income   (89)    (51)    (13)
            
Amortization of unrealized loss (gain) included in net       
income on securities available for sale           
transferred to securities held to maturity   -      3     (4)
            
Unrealized gain (loss) on interest rate swap   (339)    55     (77)
            
Reclassification adjustment of interest rate           
swap settlements included in earnings   18     13     3 
            
            
Other comprehensive income (loss)   (752)    199     1,424 
            
Comprehensive income$   858  $  3,012  $   4,155 
            


 
PSB Holdings, Inc. 
Consolidated Balance Sheets 
March 31, 2020, September 30, June 30, and March 31, 2019, unaudited, December 31, 2019 derived from audited financial statements                   
   Mar. 31,     Dec. 31,     Sep. 30,     Jun. 30,     Mar. 31,  
(dollars in thousands, except per share data) 2020   2019   2019   2019   2019 
Assets                   
                    
Cash and due from banks$  9,665  $  23,005  $   17,954  $   11,825  $   8,917 
Interest-bearing deposits   1,349     839     1,059     2,306     349 
Federal funds sold   37,071     25,184     30,415     4,552     12,989 
                    
Cash and cash equivalents   48,085     49,028     49,428     18,683     22,255 
Securities available for sale (at fair value)   171,054     174,448     127,587     123,586     127,368 
Securities held to maturity (fair values of $0,  $0,  $41,311,  $42,511  and                   
$43,338 respectively   -      -      40,791     42,074     43,061 
Bank certificates of deposit (at cost)   3,234     4,983     1,984     1,984     2,976 
Loans held for sale   1,394     545     335     50     245 
Loans receivable, net   706,584     707,651     691,289     678,247     660,756 
Accrued interest receivable   2,847     2,776     2,803     2,844     2,826 
Foreclosed assets   425     460     572     172     113 
Premises and equipment, net   11,098     10,457     10,212     9,749     10,426 
Mortgage servicing rights, net   1,668     1,747     1,720     1,738     1,781 
Federal Home Loan Bank stock (at cost)   2,283     2,073     2,173     1,662     1,657 
Cash surrender value of bank-owned life insurance   16,877     16,773     16,668     16,564     16,463 
Other assets   4,330     3,952     4,101     3,961     3,836 
                    
TOTAL ASSETS$ 969,879  $  974,893  $   949,663  $  901,314  $  893,763 
                    
Liabilities                   
                    
Non-interest-bearing deposits$   158,505  $  177,002  $  159,897  $   143,423  $   138,124 
Interest-bearing deposits   606,781     604,788     576,288     571,794     577,263 
                    
Total deposits   765,286     781,790     736,185     715,217     715,387 
                    
Federal Home Loan Bank advances   88,682     73,496     85,496     59,915     51,165 
Other borrowings   3,504     6,131     17,411     19,179     22,870 
Senior subordinated notes   2,500     2,500     2,500     2,500     2,500 
Junior subordinated debentures   7,732     7,732     7,732     7,732     7,732 
Accrued expenses and other liabilities   9,024     10,553     9,715     9,668     9,047 
                    
Total liabilities   876,728     882,202     859,039     814,211     808,701 
                    
Stockholders' equity                   
                    
Preferred stock - no par value:                   
Authorized - 30,000 shares; no shares issued or outstanding   -      -      -      -      -  
Common stock - no par value with a stated value of $1.00 per share:                   
Authorized - 18,000,000 shares; Issued - 5,490,798 shares                   
Outstanding - 4,453,472,  4,467,217,  4,471,216,  4,480,585  and                    
4,495,110 shares, respectively   1,830     1,830     1,830     1,830     1,830 
Additional paid-in capital   7,632     7,597     7,543     7,490     7,497 
Retained earnings   96,646     95,037     93,117     89,986     88,314 
Accumulated other comprehensive income (loss), net of tax   550     1,302     1,103     543     (227)
Treasury stock, at cost - 1,037,326,  1,023,581,  1,019,582,  1,010,213  and                   
995,688  shares, respectively   (13,507)    (13,075)    (12,969)    (12,746)    (12,352)
                    
Total stockholders' equity   93,151     92,691     90,624     87,103     85,062 
                    
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$  969,879  $  974,893  $   949,663  $   901,314  $   893,763 
                    


 
PSB Holding, Inc.
Loan Composition by Purpose
Quarter-ended (dollars in thousands) Mar. 31, 2020   Dec 31, 2019   Sep 30, 2019   Jun 30, 2019   Mar 31, 2019 
Total Loans                   
Residential real estate                   
One to four family$   122,276  $ 121,548  $   119,620  $  117,093  $  116,393 
HELOC loans 20,795   21,668   22,855   22,158   23,631 
Residential construction & development 22,963   23,633   21,273   20,937   18,893 
Residential vacant land 3,745   3,908   4,299   4,680   5,052 
Total Residential real estate   169,779     170,757     168,047     164,868     163,969 
                    
Commercial/Agricultural real estate                   
Owner occupied                   
Commercial real estate  164,851     156,275     158,423     149,507     147,435 
SBA commercial real estate 1,571     1,647     1,367     1,386     1,741 
Agriculture real estate 5,041     5,901     5,139     5,764     5,078 
Construction and land development 8,297     13,228     12,742     7,832     6,523 
Commercial vacant land 1,560     929     -     -     - 
Total Owner occupied   181,320     177,980     177,671     164,489     160,777 
                    
Non-owner occupied                   
Commercial real estate 188,525     192,160     179,136     168,809     161,647 
SBA commercial real estate 824     844     863     141     146 
Agricultural real estate   -     -     -     -     - 
Construction and land development 16,406     17,061     13,301     22,159     22,014 
Commercial vacant land 13,965     14,280     14,532     14,702     15,404 
Total Non-owner occupied   219,720     224,345     207,832     205,811     199,211 
                    
Commercial/Agricultural non-real estate                   
Municipal non-real estate 5,933     11,601     6,384     9,017     6,353 
Commercial line 59,266     54,538     62,991     65,252     58,117 
Other commercial non-real estate 70,467     65,690     64,418     65,500     69,073 
SBA commercial non-real estate 1,453     1,733     1,819     2,252     2,169 
Agricultural non-real estate 2,075     2,402     3,606     3,491     3,699 
Total Commercial/Agricultural non-real estate   139,194     135,964     139,218     145,512     139,411 
                    
Consumer non-real estate                   
Consumer installment 3,344     3,454     3,319     3,093     2,793 
Consumer line 328     1,354     1,343     304     344 
Other consumer 183     189     197     195     190 
Total Consumer non-real estate   3,855     4,997     4,859     3,592     3,327 
Gross loans   713,868     714,043     697,627     684,272     666,695 
                    
Net deferred loan costs   388,049     326     295     300     272 
Overdrafts   197,434     220,369     168     339     296 
Allowance for loan losses   (7,870,675)    (6,939)    (6,801)    (6,664)    (6,507)
Total loans receivable$   (6,571,324) $  927,799  $   691,289  $   678,247  $   660,756 
                    


 
Nonperforming Assets as of:
 March 31,  December 31, 
(dollars in thousands) 2020   2019   2019 
            
Nonaccrual loans (excluding restructured loans)$  3,868  $   4,827  $   3,697 
Nonaccrual restructured loans   232     283     499 
Restructured loans not on nonaccrual   672     2,305     676 
Accruing loans past due 90 days or more   -      -      -  
            
Total nonperforming loans   4,772     7,415     4,872 
Other real estate owned   425     113     460 
            
Total nonperforming assets$   5,197  $   7,528  $ 5,332 
            
Nonperforming loans as a % of gross loans receivable 0.67%  1.11%  0.68%
Total nonperforming assets as a % of total assets 0.54%  0.84%  0.55%
Allowance for loan losses as a % of nonperforming loans 164.94%  87.75%  142.43%
            


 
PSB Holdings, Inc. 
Deposit Composition 
   March 31,    December 31,
(dollars in thousands)2020 2019 2019
  $%  $%  $%
            
Non-interest bearing demand$  158,50520.70% $  138,12419.30% $   177,00222.60%
Interest-bearing demand and savings   254,76233.30%    243,46334.00%    257,48632.90%
Money market deposits   192,93325.20%    160,92722.50%    183,37023.50%
Retail and local time deposits <= $250   104,93013.70%    99,67913.90%    104,45513.40%
            
Total core deposits   711,13092.90%    642,19389.70%    722,31392.40%
Wholesale interest-bearing demand   - 0.0%    - 0.0%    - 0.0%
Retail and local time deposits > $250   24,4233.20%    24,9903.50%    25,4313.30%
Broker & national time deposits <= $250   7,6821.00%    2,7320.40%    5,4570.70%
Broker & national time deposits > $250   22,0512.90%    45,4726.40%    28,5893.60%
Totals$   765,286100.00% $   715,387100.0% $   781,790100.0%
            


 
PSB Holdings, Inc.
Average Balances ($000) and Interest Rates
(dollars in thousands) 
                              
                              
  Quarter ended March 31, 2020   Quarter ended December 31, 2019   Quarter ended March 31, 2019 
  Average   Yield /  Average     Yield /  Average     Yield /
  Balance   Interest Rate  Balance    Interest  Rate  Balance    Interest  Rate
Assets                             
Interest-earning assets:                             
Loans (1)(2)$   712,402  $   8,461 4.78% $  707,336  $   8,709 4.88% $  664,845  $  8,346 5.09%
Taxable securities   110,980     733 2.66%    111,697     768 2.73%    105,120     713 2.75%
Tax-exempt securities (2)   66,958     546 3.28%    59,511     490 3.27     65,111     501 3.12%
FHLB stock   2,121     26 4.93%    2,091     25 4.74     2,015     35 7.04%
Other   30,253     91 1.21%    29,443     117 1.58     21,342     126 2.39%
                              
Total (2)   922,714     9,857 4.30%    910,078     10,109 4.41     858,433     9,721 4.59%
                              
Non-interest-earning assets:                             
Cash and due from banks   11,621           12,284           11,325       
Premises and equipment,                             
net   10,779           10,333           10,382       
Cash surrender value ins   16,811           16,713           16,405       
Other assets   8,335           8,868           8,977       
Allowance for loan                             
losses   (7,069)          (6,867)          (6,259)      
                              
Total$   963,191        $  951,409        $  899,263       
                              
Liabilities & stockholders' equity                         
Interest-bearing liabilities:                             
Savings and demand                             
deposits$   261,704  $   330 0.51% $  239,613  $   307 0.51% $   253,299  $  472 0.76%
Money market deposits   188,507     373 0.80%    180,262     418 0.92%    146,625     299 0.83%
Time deposits   159,294     779 1.97%    162,726     819 2.00%    175,550     782 1.81%
FHLB borrowings   80,486     320 1.60%    77,920     328 1.67%    64,330     309 1.95%
Other borrowings   6,394     14 0.88%    14,374     26 0.72%    19,788     51 1.05%
Senior sub. notes   2,500     28 4.50%    2,500     29 4.60%    2,500     28 4.54%
Junior sub. debentures   7,732     91 4.73%    7,732     92 4.72%    7,732     91 4.77%
                              
Total   706,617     1,935 1.10%    685,127     2,019 1.17%    669,824     2,032 1.23%
                              
Non-interest-bearing liabilities:                         
Demand deposits   151,763           162,854           137,783       
Other liabilities   10,076           10,239           9,140       
Stockholders' equity   94,735           93,189           82,516       
                              
Total$   963,191        $   951,409        $   899,263       
                              
Net interest income    $   7,922        $  8,090        $   7,689   
Rate spread       3.20%        3.24%        3.36%
Net yield on interest-earning assets   3.45%        3.53%        3.63%
                              
(1) Nonaccrual loans are included in the daily average loan balances outstanding.               
(2) The yield on tax-exempt loans and securities is computed on a tax-equivalent               
  basis using a federal tax rate of 21%.                         

Source: PSB Holdings, Inc.
Copyright 2020, © S&P Global Market Intelligence  Terms of Use