EX-99.1 3 psbex998k72904.txt PSB PRESS RELEASE AND FINANCIAL INFORMATION Exhibit 99.1 PSB ANNOUNCES 2ND QUARTER EARNINGS OF $.45 PER SHARE Wausau, Wisconsin - David K. Kopperud, President of PSB Holdings, Inc. ("PSB") and Peoples State Bank ("Peoples") today announced the Bank's financial results for the second quarter of 2004. "PSB earned $.45 per share this quarter compared to $.60 during the second quarter last year. In addition, on June 28, the Bank opened its new home office and financial center on Stewart Avenue in Wausau, Wisconsin," said Kopperud. "However, abandonment of the old main office located on the same property generated a cumulative one-time charge to operations of $199,000 after tax benefits during the quarter. This contributed to a decline in earnings per share. Prior to the abandonment charge, earnings were $.56 per share." "Despite a slow-down in mortgage refinancing in 2004, the Bank continues to be a leader in residential mortgage lending in our principal market of Marathon County, Wisconsin" continued Kopperud. "During May 2004, despite more than 25 active competitors in this market, Peoples originated 1 of every 10 mortgage loans closed. We are also pleased our new Minocqua office is growing ahead of expectations and our new Weston branch on the Ministry/Marshfield Clinic health care campus is under construction to be open later this year." Kopperud further noted "Although Peoples is in transition to accommodate future expansion through further capital and staffing investment, we are optimistic about the prospects of continued strong economic growth in Wausau and our other communities. Our optimism is expressed in a $.30 dividend per share paid today to shareholders of record on July 8. As a result of the January 2004 5% stock dividend, this is, in effect, a 5% increase over the dividend of $.30 per share paid this time last year." PSB Holdings, Inc. (OTCBB:PSBQ.OB), is the parent company of Peoples. Peoples is headquartered in Wausau, Wisconsin with eight retail locations serving north central Wisconsin in Marathon, Oneida, and Vilas counties. In addition to traditional retail and commercial loan and deposit products, the Bank provides retail investments, commercial property and casualty insurance services, retirement planning and long-term fixed rate residential mortgages. All per share information has been restated to reflect the 5% stock dividend paid in January. ASSET GROWTH AND NET INTEREST INCOME PSB continues to have strong asset growth, increasing $51.2 million, or 13.5% to $431.2 million since June 2003. Nearly all of this growth has been in the loan portfolio which increased $50.2 million or 18.0% during the past 12 months. Loan growth was in mortgage lending with both commercial real estate and on balance sheet residential real estate growing $29.4 million, and $19.4 million, respectively. In addition to growth, credit quality improved and remains strong. Nonperforming loans (including non-accrual and restructured loans) to gross loans was .98% at June 2004 compared to 1.17% at March 2004, and 1.06% at June 2003. The Company also tracks delinquencies on a contractual basis quarter to quarter since some problem loans currently making payments remain on non- accrual status until ongoing ability to repay according to the contract is shown. Loans contractually delinquent 30 days or more as a percentage of gross loans were .84% at June 2004 compared to .88% at March 2004, and 1.01% at June 2003. The allowance for loan losses was 1.19% of gross loans at June 2004 compared to 1.26% at June 2003. Asset growth continues to be funded primarily by borrowings and wholesale funds including brokered certificates of deposits, as retail deposit growth has lagged behind loan growth. During the past 12 months, FHLB borrowings and wholesale certificates increased $29.9 million. Retail certificates with balances greater than $100,000 increased $9.3 million, but other core deposits and retail certificates increased just $6.4 million. During the past quarter, wholesale funds increased $17.5 million, partially offset by a reduction in overnight borrowings of $11 million. Retail and local deposits continue to comprise the bulk of asset funding and were 69.3% of total funding at June 2004 compared to 74.7% of funding at June 2003. Tax-adjusted net interest income increased $264,000, or 7.8% from $3,396,000 for the quarter ended June 30, 2003 to $3,660,000 for the current quarter ended June 30, 2004 due to increased earning assets held, although margin on earning assets for the quarter declined from 3.83% to 3.64%. Earning asset yields have decreased 50 basis points from 6.07% at June 2003 to 5.57% at June 2004. However, the cost of liabilities declined only 46 basis points from 2.73% at June 2003 to 2.27% at June 2004. During the quarter ended June 2004, net interest margin declined to 3.64% from 3.73% for the prior March 2004 quarter as overnight funds of approximately $11 million used to fund March 2004 loan growth were converted to long term fixed funding during the June quarter. However, during the past 3 quarters, loan and other asset yields have leveled and favorable repricing of time deposits has slowed indicating net interest margin in the upcoming quarter will be primarily impacted by the ability to control core deposit rate increases while originating higher yielding loans in light of the recent 1/4% increase in the federal funds rate. The Company's balance sheet remains neutral to interest rate changes with net interest income for the next 12 months projected to decrease $62,000 if rates increase 200 basis points, and would decrease $95,000 if interest rates decrease 100 basis points. SERVICE FEE AND NONINTEREST INCOME Noninterest income increased by $129,000 in the June 2004 quarter to $855,000 compared to $726,000 in 2003. However, the prior year June 2003 quarter included a cumulative change in accounting estimate related to mortgage servicing that lowered noninterest income by $236,000. After accounting for the prior year adjustment, the decline in June 2004 income of $107,000 is due primarily to lower mortgage banking income of $144,000. A valuation allowance on mortgage servicing rights continues to be maintained and was $138,000 as of June 30, 2004. As mortgage interest rates increase, this valuation allowance is expected to be taken back into income as customers are less likely to refinance their existing mortgages. During the June 2004 quarter, $12,000 of the valuation allowance was recaptured. For all of 2004, the Company expects mortgage banking income to be approximately 50% to 60% of the level seen during 2003. The Company serviced $156.1 million of mortgage principal for other investors at June 30, 2004 compared to $137.5 million at June 30, 2003. Peoples Insurance Services LLC, a commercial property and casualty insurance agency and brokerage started by Peoples during September 2003, continues to build relationships in the Wausau area. The agency's net loss during the quarter and six months ended June 2004 was $37,000 and $75,000, respectively. Since opening during September 2003, cumulative net losses have been in line with initial projections despite lower than expected revenue growth. OPERATING EXPENSES Noninterest operating expenses increased $694,000 to $2,914,000 in the quarter ended June 2004 compared to $2,220,000 during the quarter ended June 2003, but included a one-time charge for abandonment of premises and equipment (the prior home office on the same property as the new home office and principal banking center was abandoned on June 28) of $329,000 before tax benefits. Excluding this one-time charge operating expenses increased $365,000, or 16.4%. As the new home office and principal customer financial center was occupied on June 28, the 32,000 square foot $4.8 million dollar facility (including furniture and equipment) was placed in service. Depreciation of the investment in the new facility, along with the depreciation costs of the new Minocqua branch and the item processing imaging system increased occupancy expenses for the quarter by approximately $30,000. Annual depreciation expense is estimated to increase $186,000 ($113,000 after income tax benefits) from the new investment in the home office. Excluding the one-time charge for abandonment of premises and equipment, operating expenses as a percent of average assets were 2.43% during the June 2004 quarter compared to 2.40% during the June 2003 quarter. Also excluding this charge, the expense efficiency ratio was 57.25% during June 2004 compared to 53.86% in June 2003. FORWARD LOOKING STATEMENTS Certain matters discussed in this news release, including those relating to the growth of the Company, its profits, 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, 2003. The Company assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events. (tables follow)
PSB HOLDINGS, INC. QUARTERLY FINANCIAL SUMMARY (dollars in thousands, except per share data) Quarter ended - Unaudited JUNE 30, March 31, Dec. 31 Sept. 30, June 30, EARNINGS AND DIVIDENDS: 2004 2004 2003 2003 2003 Net income $ 782 $ 954 $ 1,290 $ 1,235 $ 1,057 Basic earnings per share (3) $ 0.45 $ 0.55 $ 0.74 $ 0.71 $ 0.61 Diluted earnings per share (3) $ 0.45 $ 0.55 $ 0.74 $ 0.71 $ 0.60 Dividends declared per share (3) $ 0.30 $ - $ 0.29 $ - $ 0.29 Net book value per share $ 18.68 $ 19.33 $ 18.54 $ 18.11 $ 17.74 Semi-annual dividend payout ratio 29.84% N/A 19.88% N/A 21.74% Average common shares outstanding 1,729,322 1,733,531 1,733,398 1,733,828 1,744,199 BALANCE SHEET - AVERAGE BALANCES: Loans receivable, net of allowances $320,471 $307,109 $302,491 $288,448 $265,863 Total assets $426,826 $407,577 $399,351 $389,267 $371,537 Deposits $330,337 $312,455 $312,376 $307,752 $292,698 Stockholders' equity $ 32,942 $ 32,878 $ 32,095 $ 31,085 $ 30,670 PERFORMANCE RATIOS: Return on average assets (1) 0.73% 0.94% 1.28% 1.26% 1.14% Return on avg. stockholders' equity (1) 9.52% 11.64% 15.95% 15.76% 13.82% Average tangible stockholders' equity to average assets 7.61% 7.83% 7.85% 7.70% 7.92% Net loan charge-offs to average loans 0.01% 0.02% 0.09% 0.02% 0.01% Nonperforming loans to gross loans 0.98% 1.17% 1.08% 1.09% 1.06% Allowance for loan loss to gross loans 1.19% 1.16% 1.15% 1.23% 1.26% Net interest rate margin (1)(2) 3.64% 3.73% 3.65% 3.67% 3.83% Net interest rate spread (1)(2) 3.30% 3.38% 3.24% 3.21% 3.34% Service fee revenue as a percent of average demand deposits (1) 2.63% 2.60% 2.70% 2.48% 2.83% Noninterest income as a percent of gross revenue 13.54% 12.24% 17.56% 17.90% 12.13% Efficiency ratio (2) 64.54% 59.73% 53.47% 50.94% 53.86% Noninterest expenses to avg. assets (1) 2.74% 2.56% 2.46% 2.38% 2.40% STOCK PRICE INFORMATION: High $ 35.60 $ 35.60 $ 36.19 $ 32.61 $ 32.38 Low $ 34.50 $ 33.50 $ 31.43 $ 31.43 $ 28.57 Market value at quarter-end $ 34.50 $ 35.00 $ 33.62 $ 31.90 $ 31.67 (1) Annualized (2) The yield on tax-exempt loans and securities is computed on a tax equivalent basis. (3) Due to rounding, cumulative quarterly per share performance may not equal annual per share totals.
PSB HOLDINGS, INC. CONSOLIDATED STATEMENTS OF INCOME Three Months Ended Six Months Ended (dollars in thousands, June 30, June 30, except per share data - unaudited) 2004 2003 2004 2003 Interest income: Interest and fees on loans $ 4,714 $ 4,476 $ 9,268 $ 8,872 Interest on securities: Taxable 453 501 914 1,116 Tax-exempt 245 221 488 444 Other interest and dividends 46 60 92 119 Total interest income 5,458 5,258 10,762 10,551 Interest expense: Deposits 1,360 1,432 2,651 2,944 FHLB advances 504 506 970 1,014 Other borrowings 77 52 150 93 Total interest expense 1,941 1,990 3,771 4,051 Net interest income 3,517 3,268 6,991 6,500 Provision for loan losses 240 240 480 465 Net interest income after provision for loan losses 3,277 3,028 6,511 6,035 Noninterest income: Service fees 322 325 613 628 Mortgage banking 308 216 468 844 Investment and insurance sales commissions 90 89 181 188 Net gain on sale of securities - - 111 - Other noninterest income 135 96 222 188 Total noninterest income 855 726 1,595 1,848 Noninterest expense: Salaries and employee benefits 1,547 1,387 3,095 2,835 Occupancy and facilities 361 285 662 573 Loss on abandonment of premises and equip. 329 - 329 - Data processing and other office operations 187 148 347 287 Advertising and promotion 64 51 98 88 Other noninterest expenses 426 349 985 754 Total noninterest expense 2,914 2,220 5,516 4,537 Income before provision for income taxes 1,218 1,534 2,590 3,346 Provision for income taxes 436 477 854 1,065 Net income $ 782 $ 1,057 $ 1,736 $ 2,281 Basic earnings per share $ 0.45 $ 0.61 $ 1.00 $ 1.31 Diluted earnings per share $ 0.45 $ 0.60 $ 0.99 $ 1.30
PSB HOLDINGS, INC. CONSOLIDATED BALANCE SHEETS June 30, 2004 unaudited, December 31, 2003 derived from audited financial statements JUNE 30, December 31, (dollars in thousands, except per share data) 2004 2003 ASSETS Cash and due from banks $ 15,147 $ 13,754 Interest-bearing deposits and money market funds 2,365 1,214 Federal funds sold - 3,959 Cash and cash equivalents 17,512 18,927 Securities available for sale (at fair value) 71,461 72,472 Federal Home Loan Bank stock (at cost) 2,792 2,444 Loans held for sale - 207 Loans receivable, net of allowance for loan losses of $3,906 and $3,536, respectively 325,320 304,339 Accrued interest receivable 1,724 1,617 Foreclosed assets 46 84 Premises and equipment 10,495 7,557 Mortgage servicing rights, net 803 814 Other assets 1,063 472 TOTAL ASSETS $431,216 $408,933 LIABILITIES Non-interest-bearing deposits $ 46,901 $ 50,563 Interest-bearing deposits 293,375 265,851 Total deposits 340,276 316,414 Federal Home Loan Bank advances 47,000 47,000 Other borrowings 9,394 10,475 Accrued expenses and other liabilities 2,307 2,903 Total liabilities 398,977 376,792 STOCKHOLDERS' EQUITY Common stock - no par value with a stated value of $1 per share: Authorized - 3,000,000 shares Issued - 1,887,179 shares 1,887 1,887 Additional paid-in capital 9,694 9,694 Retained earnings 24,007 22,789 Accumulated other comprehensive income (4) 844 Treasury stock, at cost - 161,549 and 153,781 shares, respectively (3,345) (3,073) Total stockholders' equity 32,239 32,141 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $431,216 $408,933