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     108  0 Kommentare PSB Reports First Quarter 2020 Earnings of $1.6 Million or $0.36 Per Share; COVID-19 Preparations Begin

    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
    Manufacturing 104,324,682 15.79%
    Non-Owner Occupied (Commercial) 101,365,497 15.35%
    Non-Owner Occupied (Residential) 88,475,930 13.39%
    Services 59,017,480 8.93%
    Construction, Remodeling (Res. And Com.) 58,076,718 8.79%
    Medical 44,813,107 6.78%
    Hotels 34,023,864 5.15%
    Trucking 31,861,145 4.82%
    Restaurant 28,925,419 4.38%
    Gas Stations and Oil Production 26,414,732 4.00%
    Retail Stores 18,589,256 2.81%
    Automotive and Marine Dealerships (Includes Maint.) 17,979,590 2.72%

    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    12/2015 12/2016 12/2017 12/2018 03/2019 06/2019 09/2019 12/2019 03/2020
    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: 2020 2019 2019 2019 2019
               
    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 $   158,505 20.70%   $   138,124 19.30%   $    177,002 22.60%
    Interest-bearing demand and savings     254,762 33.30%       243,463 34.00%       257,486 32.90%
    Money market deposits     192,933 25.20%       160,927 22.50%       183,370 23.50%
    Retail and local time deposits <= $250     104,930 13.70%       99,679 13.90%       104,455 13.40%
                           
    Total core deposits     711,130 92.90%       642,193 89.70%       722,313 92.40%
    Wholesale interest-bearing demand     -  0.0%       -  0.0%       -  0.0%
    Retail and local time deposits > $250     24,423 3.20%       24,990 3.50%       25,431 3.30%
    Broker & national time deposits <= $250     7,682 1.00%       2,732 0.40%       5,457 0.70%
    Broker & national time deposits > $250     22,051 2.90%       45,472 6.40%       28,589 3.60%
    Totals $    765,286 100.00%   $    715,387 100.0%   $    781,790 100.0%
                           


     
    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%.                                                  


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