Skip to Sitemap
Peoples State Bank

Press Release

PSB Reports Second Quarter 2020 Earnings of $3.2 Million or $0.72 Per Share; Earnings Supported By Record Mortgage Refinancings; Total Assets Exceed $1.0 Billion

Company Release - 7/27/2020 8:30 AM ET

WAUSAU, Wis., July 27, 2020 (GLOBE NEWSWIRE) -- PSB Holdings, Inc. (“PSB”) (OTCQX: PSBQ), the holding company for Peoples State Bank serving North Central and Southeastern Wisconsin, reported second quarter earnings ending June 30, 2020 of $0.72 per share on net income of $3.19 million, compared to earnings of $0.36 per share on net income of $1.61 million during the March 31, 2020 quarter, and $0.57 per share on earnings of $2.57 million during the second quarter a year ago.  Second quarter earnings benefitted from record mortgage refinance income and lower compensation and benefit expenses related to expense deferrals on the origination of Paycheck Protection Program (“PPP”) loans offset in part by higher loan loss provisions and a lower net interest margin. 

“We are pleased with the success of our operations during the first full quarter of the COVID-19 pandemic.  During the quarter, we were able to generate record 1st mortgage originations of $84.2 million, originate over $116.4 million in PPP loans and provide loan accommodations on $143 million of loans despite many staff members working remotely.  Meanwhile, we continued our outreach to borrowers to determine their financial health and adjust our risk-weighting accordingly. Though the balance of our “Watch Risk” loans increased during the quarter, we are currently seeing a large portion of these borrowers making payments or agreeing to return to payments in the third quarter.  We maintained the same loan loss provision during the quarter as in the previous quarter and continued strong core operating income that supported an increase in our reserve ratio to 1.32% of gross loans less our PPP loans,” stated Scott Cattanach, President and CEO.

Loan Accommodations: As of June 30, 2020, PSB has provided 114 loan accommodations totaling $143 million to defer payments or make interest only payments for 90 days in response to challenges for borrowers resulting from COVID-19.  As the initial 90-day accommodation period now ends, we expect approximately 90 of the loans totaling $97.3 million to return to making regularly scheduled payments in the third quarter.  The remaining 24 loans totaling $45.7 million have, or are expected to, request an extended deferral of an additional 90 days, including $19.9 million of loans requesting a full payment deferral.  “For each relationship, we assign a risk weighting to identify and quantify the risk of loss prior to origination of the loan and periodically afterwards.  As requests for payment deferrals 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 the resulting 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 $38.6 million of loans to the “Watch Risk” category in 2020, which are largely related to businesses materially affected by the mandatory closing of their operation by executive order.  Thirteen of the loans where we anticipate extended deferrals totaling $28.6 million are weighted as average or acceptable risk, ten loans totaling $16.9 million are weighted as watch, and one loan totaling less than $200,000 is considered impaired,” continued Cattanach.

As of June 30, 2020, the bank had granted a 90-day payment deferral on 88 residential related loans totaling $10.3 million. As with the commercial loan deferrals, the majority of customers are expected to return to regular principal and interest payments during the third quarter 2020.

Commercial, Commercial Real Estate, Construction & Development, Agricultural and Government Loans
($000)
Risk Rating 12/2015  12/2016  12/2017  12/2018  12/2019  03/2020  06/2020
Rating 1"High Quality"$79 $- $- $- $- $71 $55
Rating 2"Minimal Risk" 59,882  67,468  76,710  85,382  57,904  59,101  72,601
Rating 3"Average Risk" 227,020  253,673  292,496  323,627  349,002  324,378  374,709
Rating 4"Acceptable Risk" 85,206  91,367  65,024  79,271  128,932  123,296  154,302
Rating 5"Watch Risk" 12,520  10,774  18,049  15,551  15,933  33,999  54,522
Rating 6"Substandard Risk" 621  2,678  500  489  2,568  2,732  4,545
Rating 7"Impaired Loans" 9,877  7,758  9,952  8,707  5,518  7,811  6,130
  $ 395,205 $ 433,718 $ 462,731 $ 513,027 $ 559,857 $ 551,388 $ 666,864
Includes undisbursed Construction & Development lines of credit. PPP loan balances are assigned a risk-weighting of "3".  

Industry Exposure: PSB has identified the following fifteen industries with the highest portfolio concentrations, and identified Hotels, Restaurants, Retail Stores and Services as concentrations that may be adversely impacted by the Safer-At-Home Order and the on-going pandemic.  Though these industries may change, management believes these industries are where PSB may have exposure or where credit weightings are elevated. Percentages and weightings are of the total commercial related portfolio credit extensions including PPP loans.

The following table indicates PSB’s Top Industry Risk Exposure sorted by weighted average risk rating as of June 30, 2020:

Total Industry Risk Exposure

IndustryNo. of LoansTotal Loans% of Ln PortfolioWeighted Avg Risk Rating
Hotels4834,479,0594.39%4.23
Restaurant13622,837,4362.91%3.90
Agricultural9010,751,6761.37%3.87
Other117,310,5520.93%3.76
Recreation598,343,8481.06%3.67
Wood, Log, Sawmill, Lumber6112,167,2981.55%3.66
Retail Stores9723,574,3613.00%3.58
Non-Owner Occupied (Residential)324103,744,62913.22%3.52
Lessors of Residential Buildings and Dwellings Multi-Family2869,104,2428.80% 
Lessors of Residential Buildings and Dwellings29634,640,3874.42% 
Automotive and Marine Dealerships (Includes Maint.)9922,159,3232.82%3.36
Religious Organizations313,124,8710.40%3.25
Non-Owner Occupied (Commercial)19494,049,52111.98%3.23
Lessors of Nonresidential Buildings (except Miniwarehouses)14479,063,62110.07% 
Lessors of Miniwarehouses and Self-Storage Units259,724,1521.24% 
Lessors of Other Real Estate Property255,261,7480.67% 
Trucking12246,100,1125.87%3.17
Land (Res. And Com.)358,565,8781.09%3.16
Manufacturing218129,082,34116.44%3.16
Services42070,119,1298.93%3.14
     
Loan portfolio includes unused loan commitments. Balances do not include any consumer loans.

Weighted average loan to collateral values at June 30, 2020 were 64%, 64% and 72% in the Hotels, Restaurant and Retail industry categories, respectively. 

Loan Loss Reserve:  For the quarter ended June 30, 2020, PSB added provisions for loan losses totaling $1.8 million, the same level provided during the prior quarter.  The provision replaced existing specific reserves related to a charge-off of approximately $500,000 on a Shopko store loan moved into foreclosed property in addition to provisions taken due to changes in risk ratings associated with loan classifications as a result of the ongoing pandemic. Loan loss provisions are expected to remain elevated in the third quarter as better clarity on the impact of the economic slowdown from the COVID-19 pandemic materializes.  Allowance for loan losses totaled $9.17 million at June 30, 2020 which includes $3.18 million of allowances for loans with risk weightings at 5 and above (“Watch and Impaired”) and $5.99 million for loans with risk weightings at 4 and below (“Acceptable and Average”).  At June 30, 2020, allowance for loan losses totaled 1.12% of gross loans and 1.32% of gross loans less PPP loans guaranteed through the SBA.

Net Interest Margin Impact:  PSB’s net interest margin declined to 3.09% for the quarter ended June 30, 2020 from 3.45% the prior quarter due to the swift reduction in short term interest rates in March, and the resulting effect of loans and investments repricing at lower rates, and the addition of PPP loans with 1% coupon yields.  “The addition of PPP loans combined with a large liquid position fueled in part by strong deposit growth in a low interest rate market influenced the net interest margin.  Excluding the impact of our PPP lending, the net interest margin would have been 3.25% for the most recent quarter,” said Mark C. Oldenberg, Chief Financial Officer.

Paycheck Protection Program Participation and Deposit Growth:  During the second quarter of 2020, PSB originated 718 loans, 152 to new customers, for a total of $116.4 million in PPP loans and generated total loan fees receivable of $3.9 million.  These fees are currently deferred and will be realized over the life of the loan or will be recognized in proportion to the amount of loan when forgiven by the SBA.  We expect customers to begin the process of requesting loan forgiveness during the third quarter and receipt of the loan funds from the SBA to begin taking place during the fourth quarter. Additionally, during the June 2020 quarter, PSB deferred direct salary and compensation expenses associated with the origination of the loans totaling $861,000 and will recognize this expense during the period in which the origination fee is recognized in income.  These factors combined during the quarter resulting in total net deferred loan fees at June 30, 2020 of $2.6 million compared to net deferred costs of $388,000 at March 31, 2020.

Main Street Lending Program:  We have reviewed the requirements for the program and stand ready to participate on behalf of our customers who need and qualify for the program. As of June 30, 2020, we have not received any borrower requests that could benefit from the program.

Capital Management:  At June 30, 2020, the holding company’s tangible equity to asset ratio was 8.95% and the bank’s capital was well in-excess of all regulatory requirements.  As the PPP loans paydown or are forgiven resulting in a declining asset base, management expects capital ratios to return to historical levels exceeding 9.00%.

June 2020 Quarterly Financial Highlights (at or for the periods ended June 30, 2020, compared to March 31, 2020 and / or June 30, 2019, as applicable):

  • Return on shareholders’ equity was 13.38% for the quarter compared to 6.84% one quarter earlier and 11.90% for the second quarter one year earlier.  Return on average assets was 1.20% for the second quarter of 2020, compared to 0.67% the previous quarter and 1.15% for the second quarter one year earlier. 
     
  • Gains on the sale of mortgage loans increased to $1.75 million for the quarter ended June 30, 2020 from $987,000 the previous quarter and $432,000 for the same quarter ended one year earlier.  The gains were slightly offset by a decline in net mortgage loan servicing rights to a loss of $165,000 compared to a loss of $23,000 the prior quarter and a gain of $84,000 for the same quarter ended one year earlier.  Through the beginning of the third quarter of fiscal 2020, mortgage banking activity remains robust.
     
  • PSB realized a sizable increase in the value of investments held for sale as the market value improved for four collateralized loan obligations.  During the quarter ended June 30, 2020, the net unrealized gain on securities available for sale increased $2.61 million from a loss of $342,000 during the March 2020 quarter, mostly due to the recovery in value related to $20 million of Collateralized Loan Obligations Peoples State Bank holds with ratings of A or better.  These obligations had been impacted by unusual volatility in the bond market and temporary illiquidity during the prior quarter.  
     
  • Tangible net book value was $21.97 per share at June 30, 2020, compared to $20.89 per share as of March 31, 2020, and $19.41 per share at June 30, 2019.  Over the past year, tangible book value per share has grown 13.19%.

Balance Sheet and Asset Quality Review

Total assets were $1.093 billion as of June 30, 2020, compared to $970 million as of March 31, 2020, an increase of $123 million, or 12.7%.  Total loans receivable increased by $101.0 million, or 14.3% due primarily to the addition of PPP loans.  With the addition of PPP loans to the commercial/agricultural non-real estate loan portfolio, commercial/agricultural non-real estate loans became the largest loan concentration.  The commercial/agricultural non-real estate loan portfolio increased to $252.0 million at June 30, 2020 from $139.2 million three months earlier.  Commercial/agricultural non-real estate loans represented 30.8% of gross loans at June 30, 2020, followed by non-owner occupied commercial real estate loans at 26.5%, owner occupied commercial/agricultural real estate loans at 22.1%, residential real estate loans at 20.1%, and consumer loans at 0.5%.  Total agricultural related loans represent 0.9% of the total loan portfolio.    

The allowance for loan losses increased to 1.12% of gross loans at June 30, 2020 and 1.32% of gross loans less the PPP guaranteed loans.  The annualized net charge-offs to average loans was 0.25% for the quarter ended June 30, 2020, compared to 0.49% the previous quarter and 0.00% one year earlier.  The charge-offs in the most recent quarter related to the previously disclosed bankruptcy of the retailer Shopko, where approximately $500,000 was charged-off, and a $50,000 write-down was taken on a former branch office held for sale that is in foreclosed assets.  Non-performing assets decreased to 0.49% of total assets at June 30, 2020, compared to 0.54% at March 31, 2020, and 0.42% at June 30, 2019.  At June 30, 2020, non-performing assets consisted of $3.0 million in non-accrual loans, $244,000 in non-accrual restructured loans, $650,000 in restructured loans not on non-accrual, and $1.53 million in other real estate owned. 

Accrued interest receivable increased during the quarter to $3.6 million from $2.8 million in the first quarter of 2020, due to the loan payment deferrals and interest-only payments related to COVID-19 accommodations.  We expect the accrued interest receivable levels to decline in the third quarter as borrowers return to regular payments.

At June 30, 2020, cash and cash equivalents totaled $60.3 million compared to $48.1 million at March 31, 2020 and $18.7 million one year earlier.  Current cash levels are elevated due to the depositing of PPP funds and to accommodate potential cash needs related to the pandemic.  Investment securities totaled $178.6 million at June 30, 2020 compared to $171.1 million at March 31, 2020 and $165.7 million one year earlier.  All investment securities during the prior three quarters were considered available for sale and carried at market value.   

Foreclosed assets increased to $1.53 million at June 30, 2020 from $425,000 at March 31, 2020 and $172,000 one year earlier.  The increase primarily reflects our foreclosure on the Shopko property which is currently listed for sale and carried at an appraised value obtained in May 2020. 

Total deposits increased 15.3% to $882.2 million at June 30, 2020 compared to $765.3 million at March 31, 2020, led by an $83.4 million increase in non-interest demand deposits.  A large portion of the increase was related to PPP funds deposited at the Bank.  At June 30, 2020, interest-bearing demand and savings deposits accounted for 30.4% of total deposits, followed by noninterest-bearing demand deposits at 27.4%, money market deposits at 23.0%, and retail and local time deposits at 14.6%.  Broker and national time deposits accounted for 4.6% of total deposits at June 30, 2020 versus 3.9% the prior quarter and 5.9% one year earlier. As a result of the Safer-At-Home Order and ongoing pandemic, we have seen customer increase mobile banking enrollment by 12% and active mobile deposit product usage of 24%.

FHLB advances decreased to $87.0 million at June 30, 2020 compared to $88.7 million at March 31, 2020 and other borrowings increased to $3.9 million from $3.5 million over the same time period.

For the quarter ended June 30, 2020, stockholders’ equity increased $4.8 million to $98.0 million, compared to $93.2 million at March 31, 2020.  Stockholders’ equity was impacted by earnings, our recently declared $0.21 per share dividend payment 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 $21.97 per share, at June 30, 2020, compared to $20.89 per share at March 31, 2020.  PSB’s tangible equity to total assets was 8.95% at June 30, 2020 compared to 9.59% at March 31, 2020.  Adjusted for $116.4 million of PPP loans, tangible equity would have been 10.03% at June 30, 2020. As previously disclosed, we have suspended our share repurchase program and will consider reinstatement of the program at a future date.

Operations Review

Net interest income totaled $7.8 million (on a net margin of 3.09%) for the second quarter of 2020, compared to $7.8 million (on net margin of 3.45%) for the first quarter of 2020 and $7.8 million (on a net margin of 3.72%) for the second quarter of 2019.  For the six months ended June 30, 2020, net interest income was $15.6 million compared to $15.4 million for the same six-month period one year earlier.  Compared to the preceding quarter, loans and investment yields decreased 61 basis points to 3.69% during the second quarter of 2020 from 4.30% one quarter earlier while deposit and borrowing costs declined 26 basis points to 0.84% from 1.10% over the same period.  The decline in loan and investment yields was partially due to a larger average balance of cash and cash equivalents held during the quarter, a decrease in the prime lending rate due to actions by the Federal Reserve and the addition of PPP loans with coupon yields of 1.00%.  Loan yields decreased to 4.14% during the quarter, 4.45% adjusted to exclude the PPP loan volume, from 4.78% during the first quarter of 2020, as many floating rate loans repriced lower as the prime rate declined towards the end of the first quarter.  “We expect the net-interest margin adjusted for low yielding PPP loans to stabilize in the third quarter near the 3.25% level as we intend to reduce the elevated level of liquidity during the quarter,” stated Oldenberg.

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 $1.08 million for the second quarter of 2020 from $1.48 million the previous quarter.  Interest costs on borrowings declined $5,000 for the second quarter of 2020 to $448,000 from $453,000 the previous quarter.

The provision for loan losses totaled $1.8 million during the second quarter of 2020 compared to $1.8 million for the prior linked quarter.  The provision primarily relates to our charge-off on a Shopko related loan and an increased need for reserves related to anticipated losses related to a more difficult economic climate.  For the six months ended June 30, 2020, provision for loan losses totaled $3.6 million compared to $550,000 for the same period one year earlier.

For the six months ended June 30, 2020, total noninterest income was $5.5 million compared to $4.0 million for the six-months ended June 30, 2019.  The six-month increase was largely due to gains on the sale of mortgage loans.  Total noninterest income for the second quarter of 2020 increased to $3.1 million from $2.4 million for the first quarter of 2020.  Gains on sale of mortgage loans increased to $1.7 million for the second quarter from $987,000 in the first quarter of 2020 and remained strong as lower long-term U.S.Treasury rates have spurred mortgage refinance activity by borrowers.  We expect active mortgage originations during the third quarter though the wave of refinancing activity appears to have peaked.  The gains on sale of mortgage loans were partially offset by a loss on mortgage loan servicing of $165,000 for the second quarter of 2020 compared to a loss of $23,000 the previous quarter. 

Deposit and service fee income in the second quarter were down to $278,000 compared to $391,000 during the preceding quarter of 2020.  The service fee income was down as Peoples State Bank provided waivers on service fees through June 30, 2020 and recorded less overdraft income as depositors had higher average balances from stimulus money received.  Net gains on sale of securities was $194,000 for the second quarter of 2020 compared to $123,000 for the first quarter of 2020 and $121,000 for the quarter one year earlier.  Commissions on customer investment and insurance sales decreased to $259,000 from $349,000 the prior quarter as sales activity slowed during the pandemic and advisory fees tied to market values declined.  At June 30, 2020, Peoples State Bank had wealth assets under management totaling $234.4 million compared to $217.5 million at March 31, 2020 and $236.6 million at June 30, 2019.  The volatility over the past year in assets under management was has been primarily related to stock market value declines.  Other non-interest income for the second quarter was higher year over year due to $332,000 of fee income earned on loans originated with swap like features originated during the quarter.

Noninterest expense was $4.9 million for the second quarter of 2020, compared to $6.3 million for the first quarter of 2020.  For the second quarter of 2020, noninterest expense decreased due to lower salaries and employee benefits costs related to the deferral of $861,000 in loan origination costs associated with the PPP loans.  The deferred expenses will be recognized over the life of the loan or, in the case of PPP loans, when forgiven by the SBA.  Salary and employee benefit expenses were $2.6 million for the second quarter compared to $3.8 million in the first quarter of 2020, from the deferred costs and a separate $375,000 reduction related to lower benefits expenses.  Second quarter expenses were also $115,000 less than first quarter on lower donations expense.  The second quarter 2020 results reflect renewed FDIC insurance premiums compared to zero during the prior three quarters as the FDIC insurance fund had reached its targeted level.  It is expected FDIC insurance premiums will continue to be incurred throughout the pandemic.  For the six-months ended June 30, 2020, total noninterest expense was $11.2 million compared to $11.9 million for the same period one year earlier.

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 and southeastern 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.

Investor Relations Contact
PSB Holdings, Inc.
1905 Stewart Avenue
Wausau, WI 54401
888.929.9902
InvestorRelations@bankpeoples.com



PSB Holdings, Inc. 
Quarterly Financial Summary 
(dollars in thousands, except per share data)Quarter ended
    Jun. 30,Mar. 31,Dec. 31,Sep. 30,Jun. 30,
Earnings and dividends:  2020202020192019 2019
         
 Interest income  $9,291 $9,726 $9,988 $10,098 $9,839 
 Interest expense  $1,528 $1,935 $2,019 $2,154 $2,041 
 Net interest income  $7,763 $7,791 $7,969 $7,944 $7,798 
 Provision for loan losses  $1,800 $1,800 $150 $150 $150 
 Other noninterest income $3,138 $2,355 $1,839 $1,802 $1,903 
 Other noninterest expense $4,879 $6,330 $5,947 $5,437 $6,167 
 Net income  $3,190 $1,610 $2,813 $3,131 $2,572 
                   
 Basic earnings per share (3) $0.72 $0.36 $0.63 $0.70 $0.57 
 Diluted earnings per share (3) $0.72 $0.36 $0.63 $0.70 $0.57 
 Dividends declared per share (3) $0.21 $- $0.20 $- $0.20 
 Tangible net book value per share (4) $21.97 $20.89 $20.72 $20.24 $19.41 
                   
 Semi-annual dividend payout ratio  14.50% n/a  15.04% n/a  16.95%
 Average common shares outstanding  4,453,225  4,464,956  4,471,173  4,473,583  4,486,022 
         
Balance sheet - average balances:      
         
 Loans receivable, net of allowances for loss$786,785 $705,333 $700,469 $689,057 $666,008 
 Assets  $1,067,466 $963,191 $951,409 $928,282 $893,998 
 Deposits  $855,155 $761,268 $745,455 $721,788 $713,910 
 Stockholders' equity  $95,909 $94,735 $93,189 $89,139 $86,656 
         
Performance ratios:       
         
 Return on average assets (1)  1.20% 0.67% 1.17% 1.34% 1.15%
 Return on average stockholders' equity (1) 13.38% 6.84% 11.98% 13.94% 11.90%
 Average stockholders' equity less accumulated    
 other comprehensive income (loss) to     
 average assets   8.83% 9.75% 9.68% 9.52% 9.68%
 Net loan charge-offs to average loans (1) 0.25% 0.49% 0.01% 0.01% 0.00%
 Nonperforming loans to gross loans  0.47% 0.67% 0.68% 0.70% 0.53%
 Nonperforming assets to total assets  0.49% 0.54% 0.55% 0.57% 0.42%
 Allowance for loan losses to gross loans 1.13% 1.10% 0.97% 0.97% 0.97%
 Nonperforming assets to tangible equity     
 plus the allowance for loan losses (4) 5.11% 5.24% 5.45% 5.69% 4.13%
 Net interest rate margin (1)(2)  3.09% 3.45% 3.53% 3.60% 3.72%
 Net interest rate spread (1)(2)  2.85% 3.20% 3.24% 3.31% 3.42%
 Service fee revenue as a percent of      
   average demand deposits (1)  0.49% 1.04% 1.00% 0.90% 1.14%
 Noninterest income as a percent      
 of gross revenue   25.25% 19.49% 15.55% 15.14% 16.21%
 Efficiency ratio (2)   44.23% 61.59% 59.90% 55.14% 62.83%
 Noninterest expenses to average assets (1) 1.84% 2.64% 2.48% 2.32% 2.77%
 Tangible equity to actual assets  8.95% 9.59% 9.50% 9.53% 9.65%
         
Stock price information:       
         
 High  $24.75 $28.25 $28.25 $27.50 $24.75 
 Low  $18.55 $19.50 $26.00 $23.55 $22.00 
 Last trade value at quarter-end $18.55 $24.75 $27.50 $26.49 $24.00 
         
(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,Jun. 30,Mar. 31,Dec. 31,Sep. 30,Jun. 30,
except per share data - unaudited)20202020201920192019
         
Interest and dividend income:     
Loans, including fees$8,175 $8,445 $8,691$8,823$8,629
Securities:     
Taxable 622  733  768 769 730
Tax-exempt 446  431  387 378 389
Other interest and dividends 48  117  142 128 91
         
Total interest and dividend income 9,291  9,726  9,988 10,098 9,839
         
Interest expense:     
Deposits 1,080  1,482  1,544 1,654 1,634
FHLB advances 323  320  328 323 230
Other borrowings 6  14  26 58 57
Senior subordinated notes 28  28  29 28 28
Junior subordinated debentures 91  91  92 91 92
         
Total interest expense 1,528  1,935  2,019 2,154 2,041
         
Net interest income 7,763  7,791  7,969 7,944 7,798
Provision for loan losses 1,800  1,800  150 150 150
         
Net interest income after provision for loan losses    5,963  5,991  7,819 7,794 7,648
         
Noninterest income:     
Service fees 278  391  411 348 403
Gain on sale of mortgage loans 1,747  987  452 463 432
Mortgage loan servicing, net (165) (23) 57 89 84
Investment and insurance sales commissions 259  349  301 276 310
Net gain on sale of securities 194  123  71 - 121
Increase in cash surrender value of life insurance    104  104  104 105 101
Other noninterest income 721  424  443 521 452
         
Total noninterest income 3,138  2,355  1,839 1,802 1,903
         
Noninterest expense:     
Salaries and employee benefits 2,583  3,819  3,523 3,372 3,322
Occupancy and facilities 508  544  506 510 591
Loss on foreclosed assets 23  71  69 4 3
Data processing and other office operations 675  644  739 654 646
Advertising and promotion 94  141  182 107 120
FDIC insurance premiums 23  -  - - 63
Other noninterest expenses 973  1,111  928 790 1,422
         
Total noninterest expense 4,879  6,330  5,947 5,437 6,167
         
Income before provision for income taxes 4,222  2,016  3,711 4,159 3,384
Provision for income taxes 1,032  406  898 1,028 812
         
Net income$3,190 $1,610 $2,813$3,131$2,572
Basic earnings per share$0.72 $0.36 $0.63$0.70$0.57
Diluted earnings per share$0.72 $0.36 $0.63$0.70$0.57
         



PSB Holdings, Inc.
Consolidated Statements of Income     
    Three Months Ended Six Months Ended
(dollars in thousands,June June
except per share data - unaudited)20202019 20202019
         
Interest and dividend income:     
Loans, including fees$8,175$8,629 $16,620$16,963
Securities:     
Taxable 622 730  1,355 1,443
Tax-exempt 446 389  877 785
Other interest and dividends 48 91  165 252
         
Total interest and dividend income 9,291 9,839  19,017 19,443
         
Interest expense:     
Deposits 1,080 1,634  2,562 3,187
FHLB advances 323 230  643 539
Other borrowings 6 57  20 108
Senior subordinated notes 28 28  56 56
Junior subordinated debentures 91 92  182 183
         
Total interest expense 1,528 2,041  3,463 4,073
         
Net interest income 7,763 7,798  15,554 15,370
Provision for loan losses 1,800 150  3,600 550
         
Net interest income after provision for loan losses    5,963 7,648  11,954 14,820
         
Noninterest income:     
Service fees 278 403  669 784
Gain on sale of mortgage loans - -  - -
Mortgage banking income 1,582 516  2,546 816
Investment and insurance sales commissions 259 310  608 643
Net gain on sale of securities 194 121  317 139
Increase in cash surrender value of life insurance    104 101  208 199
Other noninterest income 721 452  1,145 1,439
         
Total noninterest income 3,138 1,903  5,493 4,020
         
Noninterest expense:     
Salaries and employee benefits 2,583 3,322  6,402 6,750
Occupancy and facilities 508 591  1,052 1,192
Loss on foreclosed assets 23 3  94 7
Data processing and other office operations 675 646  1,319 1,223
Advertising and promotion 94 120  235 220
FDIC insurance premiums 23 63  23 122
Other noninterest expenses 973 1,422  2,084 2,398
         
Total noninterest expense 4,879 6,167  11,209 11,912
         
Income before provision for income taxes 4,222 3,384  6,238 6,928
Provision for income taxes 1,032 812  1,438 1,625
         
Net income$3,190$2,572 $4,800$5,303
Basic earnings per share$0.72$0.57 $1.08$1.18
Diluted earnings per share$0.72$0.57 $1.08$1.18
         



PSB Holdings, Inc.     
Consolidated Statements of Comprehensive Income    
         
    Three Months Ended Six Months Ended
    June 30, June 30,
(dollars in thousands - unaudited) 2020  2019   2020  2019 
         
Net income$3,190 $2,572  $4,800 $5,303 
         
Other comprehensive income, net of tax:     
         
 Unrealized gain on securities available     
  for sale 2,608  995   2,266  2,510 
         
 Reclassification adjustment for security     
  gain included in net income (141) (88)  (230) (101)
         
 Amortization of unrealized gain included in net    
  income on securities available for sale     
  transferred to securities held to maturity -  (1)  -  (6)
         
 Unrealized loss on interest rate swap (3) (142)  (343) (218)
         
 Reclassification adjustment of interest rate     
  swap settlements included in earnings 32  6   50  9 
         
Other comprehensive income 2,496  770   1,743  2,194 
         
Comprehensive income$5,686 $3,342  $6,543 $7,497 
         



PSB Holdings, Inc. 
Consolidated Balance Sheets 
June 30, and March 31, 2020, September 30, and June 30, 2019, unaudited,
December 31, 2019 derived from audited financial statements 
 Jun. 30,Mar. 31,Dec. 31,Sep. 30,Jun. 30,
(dollars in thousands, except per share data)20202020201920192019
Assets     
      
Cash and due from banks$13,016 $9,665 $23,005 $17,954 $11,825 
Interest-bearing deposits 1,483  1,349  839  1,059  2,306 
Federal funds sold 45,796  37,071  25,184  30,415  4,552 
      
Cash and cash equivalents 60,295  48,085  49,028  49,428  18,683 
Securities available for sale (at fair value) 178,635  171,054  174,448  127,587  123,586 
Securities held to maturity (fair values of $0, $0, $0, $41,311 and     
$42,511 respectively) -  -  -  40,791  42,074 
Bank certificates of deposit (at cost) 1,738  3,234  4,983  1,984  1,984 
Loans held for sale 3,755  1,394  545  335  50 
Loans receivable, net 805,243  706,584  707,651  691,289  678,247 
Accrued interest receivable 3,590  2,847  2,776  2,803  2,844 
Foreclosed assets 1,525  425  460  572  172 
Premises and equipment, net 11,067  11,098  10,457  10,212  9,749 
Mortgage servicing rights, net 1,623  1,668  1,747  1,720  1,738 
Federal Home Loan Bank stock (at cost) 2,283  2,283  2,073  2,173  1,662 
Cash surrender value of bank-owned life insurance 16,981  16,877  16,773  16,668  16,564 
Other assets 6,611  4,330  3,952  4,101  3,961 
      
TOTAL ASSETS$1,093,346 $969,879 $974,893 $949,663 $901,314 
      
Liabilities     
      
Non-interest-bearing deposits$241,914 $158,505 $177,002 $159,897 $143,423 
Interest-bearing deposits 640,307  606,781  604,788  576,288  571,794 
      
Total deposits 882,221  765,286  781,790  736,185  715,217 
      
Federal Home Loan Bank advances 87,000  88,682  73,496  85,496  59,915 
Other borrowings 3,941  3,504  6,131  17,411  19,179 
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 11,998  9,024  10,553  9,715  9,668 
      
Total liabilities 995,392  876,728  882,202  859,039  814,211 
      
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 - 6,000,000 shares; Issued - 5,490,798 shares     
Outstanding - 4,452,287, 4,453,472, 4,467,217, 4,471,216 and     
4,480,585 shares, respectively 1,830  1,830  1,830  1,830  1,830 
Additional paid-in capital 7,712  7,632  7,597  7,543  7,490 
Retained earnings 98,901  96,646  95,037  93,117  89,986 
Accumulated other comprehensive income, net of tax 3,045  550  1,302  1,103  543 
Treasury stock, at cost - 1,038,511, 1,037,326, 1,023,581, 1,019,582 and     
1,010,213 shares, respectively (13,534) (13,507) (13,075) (12,969) (12,746)
      
Total stockholders' equity 97,954  93,151  92,691  90,624  87,103 
      
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$1,093,346 $969,879 $974,893 $949,663 $901,314 
      



PSB Holding, Inc. 
Loan Composition by Purpose 
Quarter-ended (dollars in thousands)Jun 30, 2020Mar 31, 2020Dec 31, 2019Sep 30, 2019Jun 30, 2019
Total Loans     
Residential real estate     
 One to four family$118,049 $122,276 $121,548 $119,620 $117,093 
 HELOC loans 19,550  20,795  21,668  22,855  22,158 
 Residential construction & development 23,129  22,963  23,633  21,273  20,937 
 Residential vacant land 3,417  3,745  3,908  4,299  4,680 
 Total Residential real estate 164,145  169,779  170,757  168,047  164,868 
       
Commercial/Agricultural real estate     
 Owner occupied     
 Commercial real estate 164,483  164,851  156,275  158,423  149,507 
 SBA commercial real estate 1,539  1,571  1,647  1,367  1,386 
 Agriculture real estate 4,885  5,041  5,901  5,139  5,764 
 Construction and land development 7,294  8,297  13,228  12,742  7,832 
 Commercial vacant land 2,241  1,560  929  -  - 
 Total Owner occupied 180,442  181,320  177,980  177,671  164,489 
       
 Non-owner occupied     
 Commercial real estate 193,550  188,525  192,160  179,136  168,809 
 SBA commercial real estate 793  824  844  863  141 
 Agricultural real estate -  -  -  -  - 
 Construction and land development 11,927  16,406  17,061  13,301  22,159 
 Commercial vacant land 10,135  13,965  14,280  14,532  14,702 
 Total Non-owner occupied 216,405  219,720  224,345  207,832  205,811 
       
Commercial/Agricultural non-real estate     
 Municipal non-real estate 7,826  5,933  11,601  6,384  9,017 
 Commercial line 55,317  59,266  54,538  62,991  65,252 
 Other commercial non-real estate 69,267  70,467  65,690  64,418  65,500 
 SBA commercial non-real estate 117,436  1,453  1,733  1,819  2,252 
 Agricultural non-real estate 2,148  2,075  2,402  3,606  3,491 
 Total Commercial/Agricultural non-real estate 251,994  139,194  135,964  139,218  145,512 
       
Consumer non-real estate     
 Consumer installment 3,512  3,344  3,454  3,319  3,093 
 Consumer line 243  328  1,354  1,343  304 
 Other consumer 160  183  189  197  195 
 Total Consumer non-real estate 3,915  3,855  4,997  4,859  3,592 
Gross loans 816,901  713,868  714,043  697,627  684,272 
       
 Net deferred loan (fees) costs (2,617) 388  326  295  300 
 Overdrafts 133  199  221  168  339 
 Allowance for loan losses (9,174) (7,871) (6,939) (6,801) (6,664)
Total loans receivable$ 805,243 $ 706,584 $ 707,651 $ 691,289 $ 678,247 
       



PSB Holdings, Inc.    
Nonperforming Assets as of:    
  June December 31,
(dollars in thousands) 2020  2019   2019
      
Nonaccrual loans (excluding restructured loans)$2,964 $2,306  $3,697 
Nonaccrual restructured loans 244  270   499 
Restructured loans not on nonaccrual 650  1,048   676 
Accruing loans past due 90 days or more -  -   - 
      
Total nonperforming loans 3,858  3,624   4,872 
Other real estate owned 1,525  172   460 
      
Total nonperforming assets$5,383 $3,796   $5,332 
      
Nonperforming loans as a % of gross loans receivable 0.47% 0.53%  0.68%
Total nonperforming assets as a % of total assets 0.49% 0.42%  0.55%
Allowance for loan losses as a % of nonperforming loans  237.79% 183.89%  142.43%
      



PSB Holdings, Inc.        
Deposit Composition        
  June 30,    December 31,
(dollars in thousands)2020 2019 2019
 $% $% $%
         
Non-interest bearing demand$241,91427.40% $143,42320.10% $177,00222.60%
Interest-bearing demand and savings 267,87430.40%  237,92233.30%  257,48632.90%
Money market deposits 202,70823.00%  165,91823.20%  183,37023.50%
Retail and local time deposits <= $250 103,91711.80%  100,56014.00%  104,45513.40%
         
Total core deposits 816,41392.60%   647,82390.60%  722,31392.40%
Retail and local time deposits > $250 24,3992.80%  25,0773.50%  25,4313.30%
Broker & national time deposits <= $250 15,3761.70%  3,4700.50%  5,4570.70%
Broker & national time deposits > $250 26,0332.90%  38,8475.40%  28,5893.60%
Totals$882,221100.00%  $715,217100.00% $781,790100.00%
         



PSB Holdings, Inc. 
Average Balances ($000) and Interest Rates
(dollars in thousands) 
              
              
   Quarter ended June 30, 2020 Quarter ended March 31, 2020 Quarter ended June 30, 2019
   Average Yield / Average Yield / Average Yield /
   BalanceInterestRate BalanceInterestRate BalanceInterestRate
Assets            
Interest-earning assets:           
Loans (1)(2)$795,337 $8,1864.14% $712,402 $8,4614.78% $672,576 $8,6415.15%
Taxable securities 99,621  6222.51%  110,980  7332.66%  106,737  7302.74%
Tax-exempt securities (2) 70,105  5653.24%  66,958  5463.28%  61,851  4923.19%
FHLB stock 2,283  254.40%  2,121  264.93%  1,593  246.04%
Other  58,776  230.16%  30,253  911.21%  11,470  672.34%
              
Total (2)  1,026,122  9,4213.69%  922,714  9,8574.30%  854,227  9,9544.67%
              
Non-interest-earning assets:           
Cash and due from banks 10,760     11,621     10,837   
Premises and equipment,           
net  11,116     10,779     10,422   
Cash surrender value ins 16,918     16,811     16,506   
Other assets 11,102     8,335     8,574   
Allowance for loan           
losses  (8,552)    (7,069)    (6,568)  
              
  Total $1,067,466     $963,191    $893,998   
              
Liabilities & stockholders' equity          
Interest-bearing liabilities:           
Savings and demand           
deposits $261,942 $1270.20% $261,704 $3300.51% $239,929 $4170.70%
Money market deposits 197,571  2130.43%  188,507  3730.80%  161,070  3920.98%
Time deposits 169,398  7401.76%  159,294  7791.97%  171,501  8251.93%
FHLB borrowings 90,623  3231.43%  80,486  3201.60%  51,014  2301.81%
Other borrowings 5,857  60.41%  6,394  140.88%  22,302  571.03%
Senior sub. notes 2,500  284.50%  2,500  284.50%  2,500  284.49%
Junior sub. debentures 7,732  914.73%  7,732  914.73%  7,732  924.77%
              
Total  735,623  1,5280.84%  706,617  1,9351.10%  656,048  2,0411.25%
              
Non-interest-bearing liabilities:          
Demand deposits 226,244     151,763     141,410   
Other liabilities 9,690     10,076     9,884   
Stockholders' equity 95,909     94,735     86,656   
              
Total $1,067,466     $963,191    $893,998   
              
Net interest income $7,893   $7,922   $7,913 
Rate spread   2.85%   3.20%   3.42%
Net yield on interest-earning assets 3.09%   3.45%   3.72%
              
(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%. 



PSB Holdings, Inc.       
Average Balances ($000) and Interest Rates     
(dollars in thousands)       
   Six months ended June 30, 2020 Six months ended June 30, 2019
   Average Yield/ Average Yield/
   BalanceInterestRate BalanceInterestRate
Assets        
Interest-earning assets:       
Loans (1)(2)$753,869 $16,6474.44% $668,732 $16,9865.12%
Taxable securities 105,300  1,3552.59%  105,933  1,4432.75%
Tax-exempt securities (2) 68,532  1,1103.26%  63,472  9943.16%
FHLB stock 2,202  514.66%  1,803  596.60%
Other  45,051  1140.51%  16,701  1932.33%
          
Total (2)  974,954  19,2773.98%  856,641  19,6754.63%
          
Non-interest-earning assets:       
Cash and due from banks 11,190     11,080   
Premises and equipment,       
net  10,948     10,402   
Cash surrender value ins 16,864     16,456   
Other assets 9,717     8,782   
Allowance for loan       
losses  (7,810)    (6,415)  
          
Total $1,015,863     $896,946   
          
Liabilities & stockholders' equity      
Interest-bearing liabilities:       
Savings and demand       
deposits $261,823 $4570.35% $246,577 $8890.73%
Money market deposits 193,329  5860.61%  153,988  6910.90%
Time deposits 164,346  1,5191.86%  173,515  1,6071.87%
FHLB borrowings 85,555  6431.51%  57,635  5391.89%
Other borrowings 6,125  200.66%  21,052  1081.03%
Senior sub. notes 2,500  564.50%  2,500  564.52%
Junior sub. debentures 7,732  1824.73%  7,732  1834.77%
          
Total  721,410  3,4630.97%  662,999  4,0731.24%
          
Non-interest-bearing liabilities:      
Demand deposits 189,004     139,623   
Other liabilities 10,008     9,670   
Stockholders' equity 95,441     84,654   
          
Total $1,015,863     $896,946   
          
Net interest income $15,814   $15,602 
Rate spread   3.01%   3.39%
Net yield on interest-earning assets 3.26%   3.67%
          
(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 tax rate of 21%.      

 



 

 


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