EX-99.1 4 psbex99.txt PSB HOLDINGS, INC. EXHIBIT 99.1 Exhibit 99.1 PSB ANNOUNCES 1ST QUARTER EARNINGS UP 28% OVER PRIOR YEAR Wausau, Wisconsin - April 22, 2003 HIGHLIGHTS o Net income for the first quarter March 2003 was $1.224 million compared to $.958 million in March 2002. o Quarterly 2003 diluted earnings per share of $.73, up from $.57 in 2002. o Quarterly 2003 return on assets of 1.36% compared to 1.14% in 2002. o Quarterly 2003 return on stockholders' equity of 16.63% compared to 14.78% in 2002. PSB Holdings, Inc. (OTCBB:PSBQ.OB), parent company of Peoples State Bank of Wausau, Wisconsin today reported first quarter March 2003 earnings of $.73 per share, compared to $.57 per share during the first quarter of 2002. Net book value increased to $18.24 per share, compared to $15.59 at March 2002. A 2 for 1 stock split was effective November 19, 2002. All per share information has been updated to reflect the split. Financial performance is expressed in thousands, except per share data. Peoples State Bank is headquartered in Wausau, Wisconsin with seven retail locations serving north central Wisconsin in Marathon, Lincoln, Oneida, and Vilas counties. In addition to traditional loan and deposit products, the Bank provides investments and retirement planning and long-term fixed rate residential mortgages. Net income for the quarter ended March 31, 2003 was $1,224 compared to $1,332 in the fourth quarter of 2002 and $958 in March 2002. Operating results for the first quarter 2003 generated an annualized return on average assets (ROA) and return on average equity (ROE) of 1.36% and 16.63%, respectively. Comparable ratios for the same quarter in 2002 were ROA of 1.14% and ROE of 14.78%. ROA and ROE were 1.25% and 15.97% during calendar year 2002, respectively. NET INTEREST INCOME Improved net interest income was a significant contributor to increased earnings over the prior year. Net interest income increased $238 from $2,994 for the quarter ended March 31, 2002 to $3,232 for the current quarter ended March 31, 2003 due primarily to increased earning assets held. Tax-adjusted net interest margin as a percent of average interest earning assets increased slightly over the year earlier quarter to 3.89% from 3.87%. Net interest margin for calendar year 2002 was 3.95%. The Company saw growth in total average loans of $18,431, or 8% over the comparable year-ago quarter. Total assets increased to $367,802 at March 31, 2003 compared to $333,061 at March 31, 2002. The current low interest rate environment is placing downward pressure on net interest income and margins. The Company is looking to continue net interest income growth by minimizing excess overnight funds and originating assets with terms in line with proactive asset-liability management. Management expects the net interest margin to continue to come under pressure and decrease during the second quarter of 2003 by up to 10 basis points primarily as a result of lower reinvestment yields on the investment securities portfolio. SERVICE FEE AND NONINTEREST INCOME Noninterest income grew $557 in the first quarter 2003 to $1,122 compared to $565 in 2002. The majority of this growth ($408) was from an increase of income from the sale of long-term fixed rate mortgage loans. Gain on sale of such loans during the quarter was $606 in March 2003 (net of provision for mortgage servicing right valuation allowance) compared to $198 during March 2002. The majority of loans sold to outside investors continue to be serviced by the Bank directly with the customer. At March 31, 2003, the Bank serviced nearly $119 million of loans for the Federal Home Loan Bank of Chicago compared to $44 million in the prior year period. President and CEO David Kopperud noted, "Even after a strong 2002, Peoples continues to be the leading mortgage lender in Marathon County. Despite competition from several well known community and regional banks in our area, during February 2003, Peoples originated 75% more mortgages than the next closest competitor due to the strength of our residential mortgage team." Management does not expect the current level of mortgage refinancing income to continue during all of 2003. The Company intends to replace this income with ongoing servicing fees of the existing mortgage portfolio and additional investment and insurance sales income. The Bank recently increased the number of commissioned investment sales professionals on staff. Investment and insurance sales commissions were $99 during the first quarter 2003 compared to $61 in the quarter ended December 2002, and $45 in the quarter ended March 2002. OPERATING EXPENSES Noninterest operating expenses increased $305 to $2,317 in March 2003 compared to $2,012 during March 2002, an increase of 15%. Increases in employee salaries and benefits made up $203 of this total increase, as bank employees were granted inflationary and merit increases effective January 1, 2003 averaging 6.1%. In addition, the Company hired additional lenders and investment sales representatives during 2003 who are expected to make a significant impact in our new Rhinelander, Wisconsin full service office and other bank locations. Other expenses contributing to the increase were additional Rhinelander new building and equipment depreciation, an increase in Company director fees, and collection expenses associated with problem loans. During 2003, the Company implemented new expenditure review and approval procedures by location or cost/revenue center which have focused employees on cost control and achieving budgeted net income results. These additional operating costs have been offset by increased revenue, as the expense efficiency ratio has improved from 54.54% in March 2002, to 51.67% in the current quarter. BRANCH MARKET EXPANSION The Company opened a full service brick and mortar location in Rhinelander, Wisconsin during autumn 2002. Management has budgeted for substantial growth in that location during 2003 to offset the additional fixed and operating costs. The Company continues to operate a grocery store branch in the same area. During January 2003, the Company entered into an employment agreement with Mr. Peter Knitt, formerly President of the M&I Bank located in Rhinelander. President Kopperud announced "Mr. Knitt brings valuable contacts and loan relationships to Peoples that will propel that location to profitability as we become the major financial institution in the area." CREDIT QUALITY AND CAPITALIZATION The Company ceases to accrue interest on loans which are 90 days past due and considers them nonperforming loans until the borrower has made up any late payments. Nonperforming loans also includes restructured loans until 6 consecutive monthly payments are received under the new loan terms. The Company continues to aggressively manage past due customers and lowered the level of nonperforming loans to gross loans from 1.62% at March 2002 to 1.13% at March 2003. The Company also tracks delinquencies on a contractual basis quarter to quarter. Loans contractually delinquent 30 days or more as a percentage of gross loans were .85% at March 2003 compared to .87% at December 2002 and 1.65% at March 2002. The allowance for loan losses was 1.28% of gross loans at March 2003 compared to 1.31% at March 2002. Management reviews the activity in identified problem loans weekly and recognizes adequate and reasonable loan loss reserves as required. Average tangible stockholder's equity was 7.84% during the quarter ended March 2003 compared to 7.59% in the prior year quarter. Management believes the Company to be well capitalized at March 31, 2003 and during the remainder of 2003 based on planned asset growth. During the quarter ended March 31, 2003, the Company continued an annual buyback program of purchasing up to 1% of outstanding shares by repurchasing 1,800 shares at an average price of $26.73 per share. During 2003, management anticipates retaining capital to support asset growth while continuing a cash dividend to shareholders. FORWARD LOOKING STATEMENTS Certain matters discussed in this news release, including those relating to the growth of the Company and future interest rates, are forward-looking statements and are made pursuant to the safe harbor provisions of the Securities 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 described under "Cautionary Statement Regarding Forward Looking Information" in Item 1 of the company's Form 10-K for the year ended December 31, 2002. The Company assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events. (tables follow)
PSB HOLDINGS, INC. (Unaudited) (Audited) FINANCIAL HIGHLIGHTS Three months ended Calendar (DOLLARS IN THOUSANDS, March 31, Year EXCEPT PER SHARE DATA) 2003 2002 2002 EARNINGS Net income $1,224 $958 $4,365 Diluted earnings per share 0.73 0.57 2.60 Net book value per share 18.24 15.59 17.59 PERIOD END BALANCE SHEET Gross loans receivable $259,264 $240,342 $259,173 Total assets 367,802 333,061 371,468 Deposits 292,580 264,026 297,831 Borrowings 42,701 41,086 41,302 KEY EARNINGS RATIOS (ANNUALIZED AND TAX ADJUSTED) Return on average assets 1.36% 1.14% 1.25% Return on stockholders' equity 16.63% 14.78% 15.97% Net interest margin 3.89% 3.87% 3.95% Efficiency ratio 51.67% 54.54% 50.68% CREDIT QUALITY AND CAPITALIZATION Allowance for loan losses to gross loans 1.28% 1.31% 1.22% Net loans charge-offs to average loans 0.03% 0.00% 0.37% Average tangible stockholders' equity to average assets 7.84% 7.59% 7.66% SHARE PRICE INFORMATION High $27.25 $18.00 $25.00 Low 23.75 16.63 16.63 Market value at period end 27.25 17.75 25.00
PSB HOLDINGS, INC. CONSOLIDATED STATEMENTS OF INCOME Three Months Ended (dollars in thousands, March 31, except per share data - unaudited) 2003 2002 Interest income: Interest and fees on loans $4,396 $4,391 Interest on securities: Taxable 615 690 Tax-exempt 223 224 Other interest and dividends 59 65 Total interest income 5,293 5,370 Interest expense: Deposits 1,512 1,766 Long-term FHLB advances 508 564 Other borrowings 41 46 Total interest expense 2,061 2,376 Net interest income 3,232 2,994 Provision for loan losses 225 180 Net interest income after provision for loan losses 3,007 2,814 Noninterest income: Service fees 303 235 Gain on sale of loans 701 198 Provision for servicing right valuation allowance (95) 0 Investment and insurance sales commissions 99 45 Other noninterest income 114 87 Total noninterest income 1,122 565 Noninterest expense: Salaries and employee benefits 1,448 1,245 Occupancy 288 240 Data processing and other office operations 139 132 Advertising and promotion 37 76 Other noninterest expenses 405 319 Total noninterest expense 2,317 2,012 Income before provision for income taxes 1,812 1,367 Provision for income taxes 588 409 Net income $1,224 $ 958 Basic earnings per share $ 0.73 $0.57 Diluted earnings per share $ 0.73 $0.57
PSB HOLDINGS, INC. CONSOLIDATED BALANCE SHEETS MARCH 31, 2003 UNAUDITED, DECEMBER 31, 2002 DERIVED FROM AUDITED FINANCIAL STATEMENTS) March 31, December 31, (dollars in thousands, except per share data) 2003 2002 ASSETS Cash and due from banks $13,452 $15,890 Interest-bearing deposits and money market funds 7,763 5,490 Federal funds sold 2,771 172 Cash and cash equivalents 23,986 21,552 Securities available for sale (at fair value) 75,895 81,056 Federal Home Loan Bank stock (at cost) 2,327 2,264 Loans held for sale - 949 Loans receivable, net of allowance for loan losses of $3,315 and $3,158, respectively 255,949 256,015 Accrued interest receivable 1,878 1,732 Foreclosed assets, net 505 573 Premises and equipment 6,133 6,158 Mortgage servicing rights, net 936 697 Other assets 193 472 TOTAL ASSETS $367,802 $371,468 LIABILITIES Non-interest-bearing deposits $46,050 $45,458 Interest-bearing deposits 246,530 252,373 Total deposits 292,580 297,831 Long-term Federal Home Loan Bank advances 38,000 38,000 Other borrowings 4,701 3,302 Accrued expenses and other liabilities 2,151 3,033 Total liabilities 337,432 342,166 STOCKHOLDERS' EQUITY Common stock - no par value with a stated value of $1 per share: Authorized - 3,000,000 shares Issued - 1,804,850 shares 1,805 1,805 Additional paid-in capital 7,150 7,150 Retained earnings 22,831 21,607 Unrealized gain on securities available for sale, net of tax 1,198 1,306 Treasury stock, at cost - 140,548 and 138,748 shares, respectively (2,614) (2,566) Total stockholders' equity 30,370 29,302 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $367,802 $371,468