PSB Holdings, Inc. Reports Fourth Quarter 2022 Earnings of $0.80 Per Share and Record Fiscal 2022 Earnings of $3.07 Per Share
WAUSAU, Wis., Jan. 25, 2023 (GLOBE NEWSWIRE) -- PSB Holdings, Inc. (“PSB”) (OTCQX: PSBQ), the holding company for Peoples State Bank (“Peoples”) serving Northcentral and Southeastern Wisconsin reported fourth quarter earnings ending December 31, 2022 of $0.80 per share on net income of $3.5 million, compared to $0.80 per share on net income of $3.5 million during the third quarter ending September 30, 2022, and $0.71 per share on net income of $3.1 million during the fourth quarter ending December 31, 2021. Fiscal 2022 earnings increased to a record $3.07 per share from $2.88 per share for fiscal 2021.
PSB’s fourth quarter 2022 operating results reflected the following changes from the third quarter of 2022: (1) higher net interest income due to increased allocation to higher yielding loans and investments; (2) higher noninterest income primarily due to an increase in investment sales commissions; and (3) higher salary and employee benefit expenses due to inflationary pressures and funding of year-end benefit plans. Loans grew 2.7% during the quarter ending December 31, 2022, reflecting primarily growth in adjustable-rate residential mortgage loans and increased commercial and industrial loans and lines of credit.
“Our record fiscal 2022 earnings reflect the benefits of increased net interest income and improved efficiency over 2021 which included costs related to the acquisition of Sunset Bank. Improvements in already strong credit quality required no provision for loan losses which offset a significant reduction in residential mortgage banking income. Despite ongoing challenges in 2023 as the Federal Reserve combats inflation, we are well positioned to take advantage of new opportunities. During the fourth quarter, we increased our capital and liquidity positions to facilitate additional growth and manage capital,” stated Scott Cattanach, President and CEO.
December 31, 2022 Highlights:
Net interest income increased to $10.6 million for the quarter ended December 31, 2022, compared to $10.1 million for the quarter ended September 30, 2022, and $9.2 million for the quarter ended December 31, 2021.
Noninterest income increased to $1.8 million for the quarter ended December 31, 2022, from $1.7 million the previous quarter. The increase largely reflected additional investment sales commissions.
Noninterest expense increased $499,000 for the fourth quarter of 2022, to $7.7 million from $7.2 million the prior quarter. The increase was primarily related to higher salary and benefit costs.
Loans receivable increased $25 million, or 2.7%, to $962 million at December 31, 2022 from $937 million one quarter earlier. For the fiscal year ended December 31, 2022, loans increased $85.5 million, or 9.8%.
Asset quality improved and continued to remain strong. At December 31, 2022, non-performing assets declined $4.8 million to 0.48% of total assets from 1.06% one year earlier. No loan loss provisions were recorded during 2022 due to strong credit quality.
Tangible book value per common share increased to $21.37 at December 31, 2022 from $20.83 one quarter earlier. Return on tangible common equity was 15.12% for the quarter ended December 31, 2022, compared to 14.58% the prior quarter.
On December 19, 2022, PSB announced that it has adopted a program to repurchase up to 5% of outstanding shares of its common stock. Through the end of the fourth quarter of 2022, PSB repurchased 55,113 shares as part of this plan.
Balance Sheet and Asset Quality Review
Total assets increased slightly to $1.34 billion at December 31, 2022, from $1.32 billion at September 30, 2022. Cash and cash equivalents decreased $11.3 million to $29.4 million from $40.7 million during the quarter, while investment securities increased $3.6 million to $280.0 million at December 31, 2022, from $276.4 million one quarter earlier.
Total loans receivable increased $25.2 million to $961.9 million at December 31, 2022, from $936.7 million at September 30, 2022. New one-to-four family loans were added to the portfolio as well as commercial loans which reflected strong origination activity. Management believes loan originations could slow in coming quarters in response to lower customer demand as a result of cumulative short-term interest rate increases by the Federal Reserve to slow inflation.
The allowance for loan losses decreased slightly to 1.26% of gross loans at December 31, 2022, from 1.30% the prior quarter and 1.38% of gross loans one year earlier. Annualized net charge-offs to average loans were minimal for the quarter ended December 31, 2022 at 0.03%. Non-performing assets declined to 0.48% of total assets at December 31, 2022, compared to 0.85% at September 30, 2022, and 1.06% at December 31, 2021. At December 31, 2022, non-performing assets consisted of $5.9 million in non-accrual loans, $62,000 in non-accrual restructured loans, $270,000 in restructured loans not on non-accrual and $160,000 in foreclosed assets. During the fourth quarter, an accruing restructured loan totaling $4.6 million was upgraded to performing from impaired status.
Total deposits remained flat at $1.15 billion at December 31, 2022 and the composition of deposits changed slightly from the prior quarter. At December 31, 2022, interest-bearing demand and savings deposits increased to 34.5% of total deposits from 32.9% of total deposits the prior quarter, while noninterest-bearing demand deposits decreased to 25.4% from 26.0% at September 30, 2022. Money market deposits decreased to 18.8% of total deposits at December 31, 2022 from 19.9%, and retail and local time deposits increased to 13.5% from 13.4% at September 30, 2022. Broker and national time deposits remained at 7.8% of total deposits at December 31, 2022.
FHLB advances increased to $43.0 million at December 31, 2022, compared to $40.0 million at September 30, 2022, while other borrowings increased to $13.0 million at December 31, 2022 compared to $10.4 million at September 30, 2022.
Senior subordinated notes increased to $5.5 million at December 31, 2022 from $2.5 million at September 30, 2022. The increased senior subordinated notes reflect the issuance of new subordinated debt of $4.8 million on November 1, 2022, which included $1.8 million of refinanced existing notes.
Tangible stockholder equity as a percent of total tangible assets increased to 7.42% at December 31, 2022, from 6.98% at September 30, 2022. On November 1, 2022, PSB sold $7.2 million of non-cumulative 6.75% preferred stock. PSB has the option to redeem the preferred stock in whole or in part beginning November 1, 2027.
Tangible book value per common share was $21.37 at December 31, 2022, compared to $20.83 per common share one quarter earlier. Relative to the prior quarter, accumulated other comprehensive loss was unchanged with the unrealized loss on securities available for sale remaining at $24.2 million. At December 31, 2022, fair values on all securities were 12.3% less than amortized purchase cost.
Operations Review
Net interest income increased to $10.6 million (on a net margin of 3.41%) for the fourth quarter of 2022, compared to $10.1 million (on a net margin of 3.24%) for the third quarter of 2022, and $9.2 million (on a net margin of 3.01%) for the fourth quarter of 2021. Earning asset yields increased 40 basis points to 4.21% during the fourth quarter of 2022, from 3.81% during the third quarter of 2022, while deposit and borrowing costs increased 34 basis points to 1.11% compared to 0.77% during the third quarter of 2022.
The increase in earning asset yields was partially due to higher yields on investment securities during the quarter ended December 31, 2022. Taxable security yields increased to 2.45% for the quarter ended December 31, 2022, from 1.94% in the quarter ended September 30, 2022. Loan yields also increased during the fourth quarter to 4.67% from 4.30% for the third quarter of 2022 as loans repriced to higher indices from Federal Reserve and market rate increases and new loans were added to the portfolio. Along with a further increase in asset yields, funding costs are expected to increase during the Federal Reserve’s increasing interest rate posture and as existing loans, securities, and deposits reprice to higher levels.
Total noninterest income increased for the fourth quarter of 2022 to $1.8 million from $1.7 million for the third quarter of 2022, due primarily to an increase in investment sales commissions. Mortgage loan servicing income also increased slightly during the fourth quarter, though the increase was mostly offset by a reduction in gains on the sale of mortgage loans. At December 31, 2022, the Bank serviced $382.4 million in secondary market residential mortgage loans for others.
Noninterest expense increased to $7.7 million for the fourth quarter of 2022, compared to $7.2 million for the third quarter of 2022. The fourth quarter of 2022 included higher salaries and employee benefit expenses. Salary and employee benefit expenses were $4.7 million for the fourth quarter of 2022, compared to $4.3 million for the third quarter of 2022.
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 northcentral and southeastern Wisconsin from ten full-service banking locations in Marathon, Oneida, Vilas, Milwaukee and Waukesha 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
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on current expectations, estimates and projections about PSB’s business based, in part, on assumptions made by management and include, without limitation, statements with respect to the potential growth of PSB, its future profits, expected stock repurchase levels, future dividend rates, future interest rates, and the adequacy of its capital position. Forward-looking statements can be affected by known and unknown risks, uncertainties, and other factors, including, but not limited to, strength of the economy, the effects of government policies, including interest rate policies, risks associated with the execution of PSB’s vision and growth strategy, including with respect to current and future M&A activity, and risks associated with global economic instability relating to the COVID-19 pandemic and its effect on PSB and Peoples, and their customers, and other risks. The forward-looking statements in this press release speak only as of the date on which they are made and PSB does not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of this release.
PSB Holdings, Inc. | |||||||||||||||
Consolidated Balance Sheets | |||||||||||||||
December 31, September 30, June 30, and March 31, 2022, unaudited, December 31, 2021 derived from audited financial statements | |||||||||||||||
Dec. 31, | Sep. 30, | Jun. 30, | Mar. 31, | Dec. 31, | |||||||||||
(dollars in thousands, except per share data) | 2022 | 2022 | 2022 | 2022 | 2021 | ||||||||||
Assets | |||||||||||||||
Cash and due from banks | $ | 28,561 | $ | 16,659 | $ | 19,149 | $ | 18,322 | $ | 16,896 | |||||
Interest-bearing deposits | 758 | 3,267 | 3,545 | 5,158 | 6,579 | ||||||||||
Federal funds sold | 90 | 20,751 | 16,689 | 14,356 | 30,068 | ||||||||||
Cash and cash equivalents | 29,409 | 40,677 | 39,383 | 37,836 | 53,543 | ||||||||||
Securities available for sale (at fair value) | 192,197 | 188,425 | 190,478 | 289,704 | 308,744 | ||||||||||
Securities held to maturity (fair values of $80,926, $77,467, $82,567, $0 and | |||||||||||||||
$0 respectively) | 87,816 | 87,993 | 88,216 | - | - | ||||||||||
Equity securities | 2,032 | 1,870 | 1,781 | 1,720 | 1,701 | ||||||||||
Bank certificates of deposit (at cost) | - | - | 245 | 245 | 245 | ||||||||||
Loans held for sale | - | - | 270 | - | 3,061 | ||||||||||
Loans receivable, net | 961,865 | 936,686 | 925,260 | 875,588 | 876,337 | ||||||||||
Accrued interest receivable | 4,006 | 3,493 | 3,285 | 3,219 | 3,256 | ||||||||||
Foreclosed assets | 160 | 160 | 160 | 1,103 | 1,103 | ||||||||||
Premises and equipment, net | 13,164 | 13,129 | 12,981 | 12,906 | 12,695 | ||||||||||
Mortgage servicing rights, net | 1,610 | 1,651 | 1,711 | 1,770 | 1,714 | ||||||||||
Federal Home Loan Bank stock (at cost) | 2,516 | 2,516 | 2,646 | 2,646 | 2,646 | ||||||||||
Cash surrender value of bank-owned life insurance | 24,922 | 24,765 | 24,608 | 24,455 | 24,305 | ||||||||||
Core deposit intangible | 382 | 415 | 449 | 487 | 534 | ||||||||||
Goodwill | 2,541 | 2,541 | 2,541 | 2,541 | 2,541 | ||||||||||
Other assets | 15,069 | 15,248 | 13,550 | 11,725 | 6,286 | ||||||||||
TOTAL ASSETS | $ | 1,337,689 | $ | 1,319,569 | $ | 1,307,564 | $ | 1,265,945 | $ | 1,298,711 | |||||
Liabilities | |||||||||||||||
Non-interest-bearing deposits | $ | 292,338 | $ | 298,335 | $ | 283,592 | $ | 272,611 | $ | 284,477 | |||||
Interest-bearing deposits | 856,417 | 850,483 | 829,867 | 816,794 | 820,763 | ||||||||||
Total deposits | 1,148,755 | 1,148,818 | 1,113,459 | 1,089,405 | 1,105,240 | ||||||||||
Federal Home Loan Bank advances | 43,000 | 40,000 | 67,000 | 47,000 | 47,000 | ||||||||||
Other borrowings | 12,985 | 10,449 | 4,601 | 4,304 | 6,677 | ||||||||||
Senior subordinated notes | 5,549 | 2,500 | 2,500 | 2,500 | 2,500 | ||||||||||
Junior subordinated debentures | 12,819 | 12,793 | 12,768 | 12,742 | 12,717 | ||||||||||
Accrued expenses and other liabilities | 12,639 | 10,114 | 10,938 | 10,208 | 13,315 | ||||||||||
Total liabilities | 1,235,747 | 1,224,674 | 1,211,266 | 1,166,159 | 1,187,449 | ||||||||||
Stockholders' equity | |||||||||||||||
Preferred stock - no par value: | |||||||||||||||
Authorized - 30,000 shares | |||||||||||||||
Outstanding - 7,200, 0, 0, 0, and 0 shares, respectively | 7,200 | - | - | - | - | ||||||||||
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 - 4,297,279, 4,414,651, 4,423,037, 4,434,840 and | |||||||||||||||
4,440,329 shares, respectively | 1,830 | 1,830 | 1,830 | 1,830 | 1,830 | ||||||||||
Additional paid-in capital | 8,300 | 8,294 | 8,238 | 8,183 | 8,059 | ||||||||||
Retained earnings | 126,003 | 123,559 | 120,043 | 117,957 | 114,627 | ||||||||||
Accumulated other comprehensive income (loss), net of tax | (24,220 | ) | (24,200 | ) | (19,423 | ) | (14,097 | ) | 628 | ||||||
Treasury stock, at cost - 1,193,519, 1,076,147, 1,067,761, 1,055,958 and | |||||||||||||||
1,050,469 shares, respectively | (17,171 | ) | (14,588 | ) | (14,390 | ) | (14,087 | ) | (13,882 | ) | |||||
Total stockholders' equity | 101,942 | 94,895 | 96,298 | 99,786 | 111,262 | ||||||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 1,337,689 | $ | 1,319,569 | $ | 1,307,564 | $ | 1,265,945 | $ | 1,298,711 | |||||
PSB Holdings, Inc. | |||||||||||||||
Consolidated Statements of Income | |||||||||||||||
Quarter Ended | |||||||||||||||
(dollars in thousands, | Dec. 31, | Sep. 30, | Jun. 30, | Mar. 31, | Dec. 31, | ||||||||||
except per share data - unaudited) | 2022 | 2022 | 2022 | 2022 | 2021 | ||||||||||
Interest and dividend income: | |||||||||||||||
Loans, including fees | $ | 11,251 | $ | 10,225 | $ | 9,295 | $ | 9,054 | $ | 8,918 | |||||
Securities: | |||||||||||||||
Taxable | 1,218 | 978 | 859 | 762 | 631 | ||||||||||
Tax-exempt | 539 | 540 | 537 | 533 | 505 | ||||||||||
Other interest and dividends | 141 | 163 | 52 | 42 | 31 | ||||||||||
Total interest and dividend income | 13,149 | 11,906 | 10,743 | 10,391 | 10,085 | ||||||||||
Interest expense: | |||||||||||||||
Deposits | 2,060 | 1,341 | 595 | 443 | 476 | ||||||||||
FHLB advances | 167 | 209 | 234 | 169 | 192 | ||||||||||
Other borrowings | 38 | 14 | 4 | 2 | 4 | ||||||||||
Senior subordinated notes | 55 | 28 | 28 | 28 | 29 | ||||||||||
Junior subordinated debentures | 224 | 202 | 179 | 166 | 165 | ||||||||||
Total interest expense | 2,544 | 1,794 | 1,040 | 808 | 866 | ||||||||||
Net interest income | 10,605 | 10,112 | 9,703 | 9,583 | 9,219 | ||||||||||
Provision for loan losses | - | - | - | - | - | ||||||||||
Net interest income after provision for loan losses | 10,605 | 10,112 | 9,703 | 9,583 | 9,219 | ||||||||||
Noninterest income: | |||||||||||||||
Service fees | 381 | 409 | 392 | 388 | 382 | ||||||||||
Gain on sale of mortgage loans | 56 | 98 | 182 | 277 | 451 | ||||||||||
Mortgage loan servicing, net | 179 | 130 | 117 | 176 | 114 | ||||||||||
Investment and insurance sales commissions | 498 | 357 | 404 | 456 | 500 | ||||||||||
Net gain on sale of securities | - | - | - | - | - | ||||||||||
Increase in cash surrender value of life insurance | 157 | 157 | 152 | 150 | 151 | ||||||||||
Other noninterest income | 553 | 558 | 686 | 531 | 646 | ||||||||||
Total noninterest income | 1,824 | 1,709 | 1,933 | 1,978 | 2,244 | ||||||||||
Noninterest expense: | |||||||||||||||
Salaries and employee benefits | 4,700 | 4,302 | 4,548 | 4,390 | 4,669 | ||||||||||
Occupancy and facilities | 641 | 687 | 629 | 665 | 596 | ||||||||||
Loss (gain) on foreclosed assets | 2 | 4 | - | (6 | ) | (347 | ) | ||||||||
Data processing and other office operations | 910 | 906 | 912 | 861 | 855 | ||||||||||
Advertising and promotion | 180 | 185 | 173 | 152 | 155 | ||||||||||
Core deposit intangible amortization | 34 | 34 | 38 | 47 | 47 | ||||||||||
Other noninterest expenses | 1,219 | 1,069 | 1,151 | 1,083 | 1,382 | ||||||||||
Total noninterest expense | 7,686 | 7,187 | 7,451 | 7,192 | 7,357 | ||||||||||
Income before provision for income taxes | 4,743 | 4,634 | 4,185 | 4,369 | 4,106 | ||||||||||
Provision for income taxes | 1,143 | 1,119 | 993 | 1,039 | 960 | ||||||||||
Net income | $ | 3,600 | $ | 3,515 | $ | 3,192 | $ | 3,330 | $ | 3,146 | |||||
Preferred stock dividends declared | $ | 81 | $ | - | $ | - | $ | - | $ | - | |||||
Net income available to common shareholders | |||||||||||||||
