WAUSAU, Wis., April 29, 2019 (GLOBE NEWSWIRE) -- PSB Holdings, Inc. (“PSB”) (PSBQ), the holding company for Peoples State Bank serving North Central Wisconsin, reported first quarter earnings ending March 31, 2019 of $2.73 million, or $0.61 per share, compared to earnings of $0.56 per share on net income of $2.53 million one quarter earlier and $0.52 per share one year earlier on earnings of $2.36 million. The first quarter earnings included a $534,000 gain on equity securities, or $.09 per share, due to a change in accounting principle.
“We continue to realize organic loan, deposit, and earnings growth year-over-year. March 2019 quarter return on equity of 13.42% was strong and has ranged from 12.62% to 14.57% over the past five quarters. Before the positive impact of the change in accounting principle and resulting gain on securities, March 2019 net income was similar to the prior year quarter as increased net interest income from higher net margin was offset by higher provision for loan losses,” stated Scott Cattanach, President and CEO. “To enhance the visibility of our common stock, we recently moved to the OTCQX trading platform in an effort to appeal to a wider group of investors.”
Financial Highlights (at or for the periods ended March 31, 2019, compared to December 31, 2018 and/or March 31, 2018, as applicable):
- The net interest margin increased to 3.63% for the quarter ended March 31, 2019, compared to 3.58% the previous quarter and 3.49% for the first quarter one year earlier.
- Return on shareholders’ equity was 13.42% for the quarter ended March 31, 2019 compared to 12.62% one quarter earlier and 12.90% for the first quarter one year earlier. Return on average assets was 1.23% for the first quarter of 2019 compared to 1.14% the previous quarter and 1.13% for the first quarter one year earlier. Excluding the gain on equity securities due to the change in accounting principle, quarter ended March 31, 2019, return on shareholders’ equity was 11.41% and return on average assets was 1.05%.
- Non-interest income, due to a change in accounting principle, increased $534,000 during the quarter ended March 31, 2019.
- Loan loss provisions increased to $400,000 for the quarter ended March 31, 2019 reflecting reserves against an increasing loan portfolio and a specific reserve established on a credit exposed to the bankruptcy of the retailer Shopko.
- The efficiency ratio was 58.59% for the quarter ended March 31, 2019 compared to 62.54% one quarter earlier and 63.08% in the year ago quarter. Excluding the equity securities gain for the quarter ended March 31, 2019, the efficiency ratio was 61.89%.
- Tangible net book value was $18.89 per share at March 31, 2019, an increase of 5.06% from $17.98 per share as of December 31, 2018 and 14.35% from $16.52 per share at March 31, 2018.
Balance Sheet and Asset Quality Review
Total assets were $893.8 million as of March 31, 2019, compared to $916.0 million as of December 31, 2018. Relative to the prior quarter, assets decreased $22.2 million, or 2.42%. Total loans receivable increased $2.28 million which continued to be partially fueled by origination activity in our loan production office in Milwaukee. Organic loan growth was offset by seasonal paydowns of commercial lines of credit of $11.2 million. Most of the loan growth was in the commercial/agricultural real estate loan portfolio, which increased to $360.0 million at March 31, 2019 from $349.4 million at December 31, 2018. The growth in commercial real estate loans was partially offset by the decline in commercial/agricultural non-real estate loans which declined $7.8 million to $139.4 million at March 31, 2019 from $147.2 million at December 31, 2018. Non-owner occupied commercial/agricultural real estate loans represented the largest component of the loan portfolio at 30.7% of gross loans at March 31, 2019, followed by residential real estate loans at 24.6%, owner occupied commercial/agricultural real estate loans at 23.3%, commercial loans at 20.9% and consumer loans at 0.5%. The allowance for loan losses was 0.98% of gross loans at March 31, 2019, compared to 0.94% at the end of the previous quarter and 1.04% one year earlier. The annualized net charge-offs to average loans was 0.08% for the quarter ended March 31, 2019 compared to 0.07% at the end of the previous quarter and 0.03% one year earlier.
Non-performing assets were 0.84% of total assets at March 31, 2019, compared to 0.67% at December 31, 2018, and 0.79% at March 31, 2018. The slight increase in non-performing assets relates to a commercial real estate credit that leases property to the retailer Shopko. The retailer announced bankruptcy filing in mid-January 2019 and subsequently announced on March 19, 2019 the liquidation of all stores by June 2019. At March 31, 2019, we had two Shopko related credits with a balance of $3.7 million of which one credit was listed as non-performing for $1.5 million. At March 31, 2019, non-performing assets consisted of $4.8 million in non-accruing loans, $2.3 million in restructured loans not on non-accrual, $283,000 in non-accrual restructured loans and $113,000 in foreclosed assets. Nonperforming assets aggregating to $500,000 or more, measured by gross principal outstanding per credit relationship, included three relationships at March 31, 2019, totaling $3.3 million. Specific reserves maintained on these large problem loans were $577,000 at March 31, 2019.
At March 31, 2019, cash and investments totaled $195.7 million compared to $219.1 million at December 31, 2018. “During the most recent quarter, we sold some shorter-term bonds and repurchased bonds with longer maturities to extend the duration of our investment portfolio and paid off some wholesale borrowings. The impact increased our investment yield as the interest rate environment appears to have stabilized and our maturity schedule aligns with our investment needs. Additionally, the reduction of wholesale funding sources has improved our net interest margin,” said Mark Oldenberg, Chief Financial Officer.
Total deposits decreased $10.4 million to $715.4 million at March 31, 2019 from $725.8 million at December 31, 2018. At March 31, 2019, interest-bearing demand and savings deposits accounted for 34.0% of total deposits, followed by money market deposits at 22.5%, noninterest-bearing demand deposits at 19.3% and retail and local time deposits at 17.4%. Broker and national time deposits accounted for 6.8% of total deposits at March 31, 2019 versus 7.6% the prior quarter and 8.5% one year earlier.
FHLB advances decreased $29.9 million to $51.2 million at March 31, 2019, from $81.1 million at December 31, 2018 as wholesale funding needs were reduced and repayments were made from liquid investments. Total borrowings decreased to $84.3 million at March 31, 2019, from $99.7 million at the end of the prior quarter.
For the quarter ended March 31, 2019, stockholders’ equity increased $4.2 million, or 5.26%, to $85.1 million, compared to $80.8 million at December 31, 2018. Tangible net book value per share increased 5.06% to $18.89 per share, at March 31, 2019, compared to $17.98 per share at December 31, 2018. PSB’s tangible equity to total assets increased to 9.50% at March 31, 2019, compared to 8.81% at December 31, 2018.
Net interest income totaled $7.6 million (on a net margin of 3.63%) for the first quarter of 2019, compared to $7.5 million (on net margin of 3.58%) for the fourth quarter of 2018 and $6.8 million (on a net margin of 3.49%) for the first quarter of 2018. Net interest income growth from the prior quarter was mainly due to a higher net interest margin as loans and investments repriced slightly faster than the funding sources and the benefit realized from extending bond duration. Compared to the December 2018 quarter, loans and investment yields increased 12 bps to 4.59% during the quarter ended March 31, 2019 while deposit and borrowing costs rose only 8 bps to 1.23%. Loan yields increased to 5.09% from 4.95% during the quarter ended March 31, 2019.
The cost of interest-bearing liabilities increased during the quarter but at a slower rate than the yield on interest-earning assets as less wholesale funding sources were utilized and lower costing core deposits funded a larger portion of loans and investments. The largest change in interest expense during the current quarter came from interest cost associated with savings and demand deposits where costs increased from $370,000 to $472,000. Interest cost related to time deposits, however, declined over the quarter from $785,000 to $782,000 due primarily to a smaller deposit balance. Interest cost related to FHLB advances also declined over the quarter to $309,000 from $315,000 as average borrowings declined slightly. The net impact was a 5 bp increase in the net interest margin which increased to 3.63% for the quarter ended March 31, 2019 from 3.58% the previous quarter ended December 31, 2018.
The provision for loan losses totaled $400,000 during the first quarter of 2019 compared to a provision of $60,000 for the prior linked quarter. The increased provision primarily relates to establishing reserves related to a credit associated with the bankruptcy of Shopko and reserves against the growing loan portfolio.
Total noninterest income for the first quarter of 2019 was $2.1 million compared to $1.7 million during the preceding quarter and $1.6 million for the first quarter of 2018. The increase from the previous quarter was primarily related to a gain realized on an equity investment of approximately $534,000, due to a change in accounting principle. Commissions on investment and insurance sales declined to $333,000 from $430,000 the prior quarter. Service fees and gains on the sale of mortgage loans in the first quarter were $381,000 and $175,000, respectively, compared to $388,000 and $284,000 during the first quarter of 2018. The decrease in gain on sale of mortgage loans was due to fewer units sold into the secondary market as limited local housing inventory and seasonal factors hurt sales volume.
Noninterest expense was $5.7 million for the first quarter of 2019 compared to $5.8 million for the fourth quarter of 2018 and $5.4 million for the first quarter of 2018. For the first quarter of 2019 noninterest expense decreased due to decreased salaries and benefit expenses, data processing/other office operation expenses and lower advertising and promotion expenses.
Results of Annual Meeting of Shareholders
PSB Holdings, Inc. today announced that shareholders approved all proposals and re-elected all director nominees at its 2019 Annual Meeting held April 16, 2019 in Wausau, WI. The proposals included the election of directors, an amendment to the Articles of Incorporation to increase the authorized shares outstanding, an amendment to the Articles of Incorporation to stagger the election terms of board members and the ratification of auditors.
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, and Vilas counties and loan production offices in Milwaukee and 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. 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:||2019||2018||2018||2018||2018|
|Net interest income||$||7,572||$||7,477||$||7,258||$||7,279||$||6,814|
|Provision for loan losses||$||400||$||60||$||10||$||30||$||30|
|Other noninterest income||$||2,117||$||1,718||$||1,615||$||1,553||$||1,590|
|Other noninterest expense||$||5,745||$||5,829||$||5,373||$||5,145||$||5,366|
|Basic earnings per share (3)||$||0.61||$||0.56||$||0.59||$||0.62||$||0.52|
|Diluted earnings per share (3)||$||0.61||$||0.56||$||0.59||$||0.62||$||0.52|
|Dividends declared per share (3)||$||-||$||0.18||$||-||$||0.18||$||-|
|Tangible net book value per share (4)||$||18.89||$||17.98||$||17.37||$||16.90||$||16.52|
|Semi-annual dividend payout ratio||n/a||15.56%||n/a||15.49%||n/a|
|Average common shares outstanding||4,494,568||4,488,397||4,490,621||4,492,059||4,515,384|
|Balance sheet - average balances:|
|Loans receivable, net of allowances for loss||$||658,586||$||646,063||$||634,469||$||619,251||$||608,203|
|Return on average assets (1)||1.23||%||1.14||%||1.20||%||1.31||%||1.13||%|
|Return on average stockholders' equity (1)||13.42||%||12.62||%||13.64||%||14.57||%||12.90||%|
|Average stockholders' equity less accumulated|
|other comprehensive income (loss) to|
|Net loan charge-offs to average loans (1)||0.08||%||0.07||%||-0.06||%||0.16||%||0.03||%|
|Nonperforming loans to gross loans||1.11||%||0.91||%||0.84||%||0.81||%||1.05||%|
|Nonperforming assets to total assets||0.84||%||0.67||%||0.67||%||0.67||%||0.79||%|
|Allowance for loan losses to gross loans||0.98||%||0.94||%||0.98||%||0.97||%||1.04||%|
|Nonperforming assets to tangible equity|
|plus the allowance for loan losses (4)||8.40||%||7.20||%||7.14||%||7.37||%||8.47||%|
|Net interest rate margin (1)(2)||3.63||%||3.58||%||3.48||%||3.67||%||3.49||%|
|Net interest rate spread (1)(2)||3.36||%||3.32||%||3.23||%||3.46||%||3.31||%|
|Service fee revenue as a percent of|
|average demand deposits (1)||1.12||%||1.15||%||1.16||%||1.13||%||1.15||%|
|Noninterest income as a percent|
|of gross revenue||18.06||%||15.50||%||15.12||%||15.17||%||16.45||%|
|Efficiency ratio (2)||58.59||%||62.54||%||59.75||%||57.56||%||63.08||%|
|Noninterest expenses to average assets (1)||2.59||%||2.62||%||2.42||%||2.44||%||2.59||%|
|Tangible equity to actual assets||9.50||%||8.81||%||8.83||%||8.61||%||8.79||%|
|Stock price information:|
|Last trade value at quarter-end||$||22.75||$||22.50||$||27.20||$||24.67||$||23.58|
|(2) The yield on tax-exempt loans and securities is computed on a tax-equivalent basis using a federal tax rate of 21%.|
|(3) Due to rounding, cumulative quarterly per share performance may not equal annual per share totals.|
|(4) Tangible stockholders' equity excludes intangible assets and any preferred stock capital elements.|
|PSB Holdings, Inc.|
|Consolidated Statements of Income|
|(dollars in thousands,||Mar. 31,||Dec. 31,||Sept. 30,||Jun. 30,||Mar. 31,|
|except per share data - unaudited)||2019||2018||2018||2018||2018|
|Interest and dividend income:|
|Loans, including fees||$||8,334||$||8,125||$||7,814||$||7,579||$||6,971|
|Other interest and dividends||161||102||123||65||94|
|Total interest and dividend income||9,604||9,365||9,063||8,685||8,076|
|Senior subordinated notes||28||28||28||29||26|
|Junior subordinated debentures||91||92||93||75||66|
|Total interest expense||2,032||1,888||1,805||1,406||1,262|
|Net interest income||7,572||7,477||7,258||7,279||6,814|
|Provision for loan losses||400||60||10||30||30|
|Net interest income after provision for loan losses||7,172||7,417||7,248||7,249||6,784|
|Gain on sale of mortgage loans||175||227||286||258||284|
|Mortgage loan servicing, net||125||129||115||131||98|
|Investment and insurance sales commissions||333||430||299||274||304|
|Net gain on sale of securities||18||-||-||-||-|
|Increase in cash surrender value of life insurance||98||96||95||93||89|
|Other noninterest income||987||417||405||408||427|
|Total noninterest income||2,117||1,718||1,615||1,553||1,590|
|Salaries and employee benefits||3,428||3,566||3,244||3,101||3,283|
|Occupancy and facilities||601||526||499||534||556|
|Loss (gain) on foreclosed assets||4||(17||)||(7||)||(18||)||8|
|Data processing and other office operations||577||654||649||625||635|
|Advertising and promotion||100||163||98||74||85|
|FDIC insurance premiums||59||61||63||65||58|
|Other noninterest expenses||976||876||827||764||741|
|Total noninterest expense||5,745||5,829||5,373||5,145||5,366|
|Income before provision for income taxes||3,544||3,306||3,490||3,657||3,008|
|Provision for income taxes||813||777||829||890||653|
|Basic earnings per share||$||0.61||$||0.56||$||0.59||$||0.62||$||0.52|
|Diluted earnings per share||$||0.61||$||0.56||$||0.59||$||0.62||$||0.52|
|PSB Holdings, Inc.|
|Consolidated Statements of Comprehensive Income|
|Three Months Ended|
|(dollars in thousands - unaudited)||2019||2018|
|Other comprehensive income, net of tax:|
|Unrealized gain (loss) on securities available|
|Reclassification adjustment for security|
|gain included in net income||(13||)||-|
|Amortization of unrealized gain included in net|
|income on securities available for sale|
|transferred to securities held to maturity||(4||)||(14||)|
|Unrealized gain (loss) on interest rate swap||(77||)||-|
|Reclassification adjustment of interest rate|
|swap settlements included in earnings||3||-|
|Other comprehensive income (loss)||1,424||(1,062||)|
|PSB Holdings, Inc.|
|Consolidated Balance Sheets|
|March 31, 2019, September 30, June 30, and March 31, 2018 unaudited, |
December 31, 2018 derived from audited financial statements
|Mar. 31,||Dec. 31,||Sep. 30,||Jun. 30,||Mar. 31,|
|(dollars in thousands, except per share data)||2019||2018||2018||2018||2018|
|Cash and due from banks||$||8,917||$||18,923||$||15,348||$||11,876||$||8,854|
|Federal funds sold||12,989||24,554||14,246||19,493||21,050|
|Cash and cash equivalents||22,255||43,978||30,524||31,822||30,068|
|Securities available for sale (at fair value)||127,368||113,821||114,997||114,939||102,865|
|Securities held to maturity (fair values of $43,338, $57,607, $59,341, $61,487 and|
|Bank certificates of deposit (at cost)||2,976||2,976||2,976||2,976||3,472|
|Loans held for sale||245||358||-||405||156|
|Loans receivable, net||660,756||658,481||636,712||631,620||606,764|
|Accrued interest receivable||2,826||2,777||2,709||2,544||2,372|
|Premises and equipment, net||10,426||10,209||10,339||10,524||10,582|
|Mortgage servicing rights, net||1,781||1,805||1,805||1,817||1,817|
|Federal Home Loan Bank stock (at cost)||1,657||2,330||2,011||2,297||1,672|
|Cash surrender value of bank-owned life insurance||16,463||16,365||15,407||15,312||15,219|
|Federal Home Loan Bank advances||51,165||81,071||64,660||71,523||48,831|
|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||9,047||9,650||8,144||13,412||8,302|
|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 - 4,495,110, 4,487,895, 4,488,720, 4,491,789 and||1,830||1,830||1,830||1,830||1,830|
|4,486,245 shares, respectively|
|Additional paid-in capital||7,497||7,430||7,384||...|