PSB HOLDINGS, INC. ACQUISITION OF MARATHON STATE BANK

3 Months Ended

Mar. 31, 2012

Psb Holdings Inc. Acquisition Of Marathon State Bank

PSB HOLDINGS, INC. ACQUISITION OF MARATHON STATE BANK

NOTE 11 – PSB HOLDINGS, INC. ACQUISITION OF MARATHON STATE BANK

On March 16, 2012, PSB announced that it had entered into a definitive agreement under which PSB will pay cash to acquire all outstanding shares of common stock of Marathon State Bank, a privately owned bank with $107 million in total assets as of March 31, 2012 located in the Village of Marathon City, Wisconsin (“Marathon”). Under the terms of the agreement, PSB will pay an estimated cash purchase price of $5.6 million, which is equal to 100% of Marathon’s tangible net book value following a special dividend by Marathon to its shareholders to reduce its book equity ratio to 6% of total assets. The transaction is expected to be accretive to PSB’s 2012 earnings excluding estimated one-time merger costs of approximately $220 (including $117 of such costs expensed in the quarter ended March 31, 2012) and pre-tax integration costs of approximately $450 related primarily to data processing system conversion and sale of PSB’s existing branch location in the same community after consolidating operations into the Marathon State Bank facility. The transaction is expected to close during the June 2012 quarter pending regulatory approval. The following table presents key information for PSB Holdings, Inc. estimated on a consolidated pro-forma basis as of the upcoming merger date:

	PSB Holdings, Inc.
	Pro-forma with Marathon State Bank
Total loans receivable, net	$   465,000
Total deposits	554,000
Total assets	695,000
Core deposit intangible asset	440
Regulatory Tier 1 leverage ratio	8.20%
Regulatory Tier 2 total capital ratio	14.20%

PSB does not expect to record a purchased goodwill asset in connection with the Marathon acquisition.