EX-99.1 3 psbex99.htm PSB EXHIBIT 99.1 - PRESS RELEASE Exhibit 99.1  (W0170644.DOC;1)

Exhibit 99.1

PSB Announces 1st Quarter Earnings of $.65 Per Share


Wausau, Wisconsin [OTCBB:PSBQ.OB] – Peter W. Knitt, President and CEO of PSB Holdings, Inc. (“PSB”) and Peoples State Bank (“Peoples”) announced March 2008 quarterly earnings of $.65 per share on net income of $1,002,000, up from $.50 per share on net income of $799,000 in the March 2007 quarter, an increase of 30% in earnings per share.  Increased earnings were due to greater net interest income on a larger asset base and growth in mortgage banking income while operating expenses increased slightly.


Return on average assets was .77% and .65% during the quarters ended March 31, 2008 and 2007, respectively.  Return on average stockholders’ equity was 10.71% and 9.34% during the quarters ended March 31, 2008 and 2007, respectively.  Net book value increased from $22.14 per share at March 31, 2007 to $25.02 per share at March 31, 2008, an increase of 13.0%.


Assets at March 31, 2008 were $532.2 million compared to $534.2 million at December 31, 2007 and $493.0 million at March 31, 2007.  Total loans receivable were $386.6 million at March 31, 2008 compared to $387.1 million at December 31, 2007 and $374.3 million at March 31, 2007.  Investment securities grew $4.4 million during the March 2008 quarter to $101.6 million from purchase of U. S. Government agency securities including $1 million of Federal National Mortgage Association (“FNMA”) preferred stock and an increase in unrealized gains on fair value of securities of $1.6 million.


Total deposits of $389.4 million at March 31, 2008 decreased $12.7 million from December 31, 2007 but increased $5.1 million from March 31, 2007.  During the March 2008 quarter, noninterest bearing deposits decreased $7.6 million primarily from normal seasonal run-off for PSB’s customer base.  Such quarterly run-off was $4.4 million during March 2007, and $5.6 million during March 2006.  In addition, $7 million in a municipal customer interest bearing deposit account was withdrawn from PSB due to higher short-term investments rates available from Wisconsin’s public investment pools.  Total wholesale funding at March 31, 2008 was $144.4 million, up $10.3, or 7.7% from wholesale funding of $134.1 million at December 31, 2007 as the decline in local deposits was replaced.


PSB’s provision for loan losses was $135,000 in the March 2008 quarter and $120,000 in the March 2007 quarter.  Annualized net charge-offs (recoveries) were .03% and (.01%) during the quarters ended March 31, 2008 and 2007, respectively.  At March 31, 2008, the allowance for loan losses was 1.27% of total loans ($4,958,000), compared to 1.24% ($4,850,000) at December 31, 2007, and 1.22% ($4,606,000) at March 31, 2007.




-1-


Nonperforming loans increased during the March 2008 quarter compared to such loans at December 31, 2007 and March 31, 2007 as shown in the following table.


Non-Performing Assets as of

March 31,      

 

Dec. 31 

(dollars in thousands)

2008  

2007  

 

2007   

     

Nonaccrual loans

$  4,167

$  3,633

 

$  3,144

Accruing loans past due 90 days or more

–    

–    

 

–    

Restructured loans not on nonaccrual

644

–    

 

653

     

Total nonperforming loans

4,811

3,633

 

3,797

Foreclosed assets

797

356

 

653

     

Total nonperforming assets

$  5,608

$  3,989

 

$  4,450

     

Nonperforming loans as a % of gross loans

1.23%

0.96%

 

0.97%

Total nonperforming assets as a % of total assets

1.05%

0.81%

 

0.83%


PSB maintains a conservative identification and reporting system regarding non-performing loans.  Non-performing loans are spread over many different borrowers and industries and are generally well-collateralized.  Restructured and nonaccrual loans remain classified as nonperforming loans until the uncertainty surrounding the credit is eliminated.  Therefore, some borrowers continue to make substantially all required payments while on non-accrual status.  PSB applies all payments received on nonaccrual loans to principal until the loan is returned to accrual status.  As of March 31, 2008, cumulative borrower payments made while they have been on non-accrual status have reduced nonaccrual loan principal by $263,000, or 5.9%.


Existing nonaccrual loans are spread over unrelated borrowers, with the top five largest nonaccrual relationships totaling $1.5 million principal in the aggregate (35.8% of total nonaccrual balances) as of March 31, 2008.  Information concerning the collateral, remaining principal and nature of these relationships is summarized below:


·

Wisconsin  based, out of local area commercial and equipment collateral  – $497,000

·

Local single family residential real estate collateral  – $339,000

·

Wisconsin based, out of local area equipment fixtures collateral  – $249,000

·

Local non-owner occupied retail multi-tenant real estate collateral  – $206,000

·

Local builder single family condo new construction collateral  – $200,000


Specific reserves on the top five largest nonaccrual relationships total $50,000.  Significant losses beyond the specific reserves already recorded are not anticipated.  While PSB anticipates nonperforming loans to remain elevated during 2008, net loan charge-offs are expected to be manageable with provisions for loan losses to remain similar to prior years.  


Tax adjusted net interest income totaled $3,762,000 in March 2008 compared to $3,608,000 in March 2007, an increase of $154,000, or 4.3%.  Tax adjusted net interest margin was 3.05% during March 2008 compared to 3.11% in the December 2007 quarter and 3.13% during the March 2007 quarter.  As the Federal Reserve’s target federal funds rate was reduced 2.00% during the March 2008 quarter, the yield on PSB’s prime rate adjustable and other short-term adjustable rate loans declined faster than the cost of corresponding deposit and wholesale funding rates.  Approximately 1/3 of PSB’s loan portfolio is adjustable rate.  Pressure on current net interest margin is expected to continue as further short-term rate



-2-


reductions are expected and wholesale funding spreads remain elevated compared to spreads in effect during the March 2008 quarter.


Total noninterest income for the quarter ended March 31, 2008 was $1,024,000 compared to $841,000 earned during the March 2007 quarter, an increase of $183,000 or 21.8%.  As secondary market long-term residential real estate rates fell during 2008, PSB saw heavy refinancing activity by customers which increased mortgage banking income by $106,000, or 54.1%.  Service fee income also increased $61,000 during March 2008 compared to the prior year.  All other increases to noninterest income totaled $16,000.  


Total noninterest expenses increased $34,000, or 1.1% during the March 2008 quarter to $3,118,000 compared to total noninterest expenses of $3,084,000 during March 2007.  However, the prior year March 2007 quarter included several non-recurring special expense items which elevated that quarter’s expenses by $163,000.  If these special items were excluded from March 2007 noninterest expenses, current March 2008 quarter noninterest expense would have increased $197,000, or 6.7% compared to the prior year.  March 2008 expenses included an increase in deposit insurance premiums of $33,000 compared to the prior year as the FDIC increased premiums industry wide.  PSB will incur higher deposit insurance premiums throughout 2008.


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 banking products, Peoples provides retail investments and insurance annuities, retirement planning, commercial treasury management services, and long-term fixed rate residential mortgages.


Forward Looking Statements


Certain matters discussed in this news release, including those relating to the growth of PSB, 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 “Forward - Looking Statements” in Item 1 and “Risk Factors” in Item 1A of PSB’s Form 10-K for the year ended December 31, 2007.  PSB assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events.





-3-



PSB Holdings, Inc.

     

Quarterly Financial Summary

     

(dollars in thousands, except per share data)

     
      
  

Quarter ended – Unaudited

 
 

March 31,

December 31

September 30

June 30,

March 31,

Earnings and dividends:

2008

2007

2007

2007

2007

       
 

Net income

$      1,002

$      1,312

 

$      1,021

 

$      1,008

 

$         799

 

Basic earnings per share(3)

$        0.65

$        0.85

 

$        0.66

 

$        0.64

 

$        0.50

 

Diluted earnings per share(3)

$        0.65

$        0.85

 

$        0.66

 

$        0.64

 

$        0.50

 

Dividends declared per share(3)

$          –   

$        0.33

 

$          –   

 

$        0.33

 

$          –   

 

Net book value per share

$      25.02

$      23.70

 

$      22.90

 

$      21.83

 

$      22.14

 

Semi-annual dividend payout ratio

n/a

21.86%

 

n/a

 

28.48%

 

n/a

 

Average common shares outstanding

1,544,982

1,544,855

 

1,553,952

 

1,572,679

 

1,589,980

         

Balance sheet – average balances:

        
         
 

Loans receivable, net of allowances

$  383,456

$  384,069

 

$  382,474

 

$  379,084

 

$  372,448

 

Total assets

$  525,605

$  520,098

 

$  509,947

 

$  496,952

 

$  497,349

 

Deposits

$  392,616

$  395,148

 

$  395,508

 

$  384,984

 

$  387,803

 

Stockholders’ equity

$    37,627

$    36,044

 

$    34,636

 

$    35,135

 

$    34,692

         

Performance ratios:

        
         
 

Return on average assets(1)

0.77%

1.00%

 

0.79%

 

0.81%

 

0.65%

 

Return on avg. stockholders’ equity(1)

10.71%

14.44%

 

11.70%

 

11.51%

 

9.34%

 

Average tangible stockholders’ equity

        
 

to average assets(4)

7.00%

6.92%

 

6.91%

 

7.11%

 

7.02%

 

Net loan charge-offs to average loans(1)

0.03%

0.10%

 

0.02%

 

0.00%

 

-0.01%

 

Nonperforming loans to gross loans

1.23%

0.97%

 

1.13%

 

0.96%

 

0.96%

 

Allowance for loan loss to gross loans

1.27%

1.24%

 

1.25%

 

1.21%

 

1.22%

 

Net interest rate margin(1)(2)

3.05%

3.11%

 

3.05%

 

3.22%

 

3.13%

 

Net interest rate spread(1)(2)

2.61%

2.60%

 

2.53%

 

2.67%

 

2.62%

 

Service fee revenue as a percent of average

        
 

demand deposits(1)

3.11%

2.89%

 

2.75%

 

2.61%

 

2.57%

 

Noninterest income as a percent of gross revenue

11.73%

10.35%

 

10.37%

 

11.34%

 

9.94%

 

Efficiency ratio(2)

65.15%

62.21%

 

62.27%

 

63.51%

 

69.32%

 

Noninterest expenses to avg. assets(1)

2.39%

2.27%

 

2.24%

 

2.44%

 

2.51%

         

Stock price information:

        
          
 

High

$      26.65

$      27.25

 

$      29.00

 

$      29.25

 

$      30.35

 

Low

$      22.00

$      25.05

 

$      27.10

 

$      27.00

 

$      28.00

 

Market value at quarter-end

$      25.25

$      26.00

 

$      27.10

 

$      27.75

 

$      28.50


(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.

(4) Tangible stockholders' equity excludes the impact of cumulative other comprehensive income (loss).



-4-




PSB Holdings, Inc.

  

Consolidated Statements of Income

  
 

Three Months Ended

 

March 31,

(dollars in thousands, except per share data – unaudited)

2008

2007

   

Interest and dividend income:

  

   Loans, including fees

$   6,492

 

$   6,567

 

   Securities:

    

      Taxable

842

 

616

 

      Tax-exempt

330

 

305

 

   Other interest and dividends

40

 

129

 
     

         Total interest and dividend income

7,704

 

7,617

 
     

Interest expense:

    

   Deposits

3,163

 

3,401

 

   FHLB advances

606

 

614

 

   Other borrowings

259

 

64

 

   Junior subordinated debentures

113

 

113

 
     

         Total interest expense

4,141

 

4,192

 
     

Net interest income

3,563

 

3,425

 

Provision for loan losses

135

 

120

 
     

Net interest income after provision for loan losses

3,428

 

3,305

 
     

Noninterest income:

    

   Service fees

364

 

303

 

   Mortgage banking

302

 

196

 

   Investment and insurance sales commissions

114

 

124

 

   Net loss on sale of securities

–    

 

–    

 

   Increase in cash surrender value of life insurance

89

 

60

 

   Other noninterest income

155

 

158

 
     

         Total noninterest income

1,024

 

841

 
     

Noninterest expense:

    

   Salaries and employee benefits

1,740

 

1,737

 

   Occupancy and facilities

511

 

497

 

   Data processing and other office operations

211

 

217

 

   Advertising and promotion

87

 

58

 

   Other noninterest expenses

569

 

575

 
     

        Total noninterest expense

3,118

 

3,084

 
     

Income before provision for income taxes

1,334

 

1,062

 

Provision for income taxes

332

 

263

 
     

Net income

$   1,002

 

$    799

 

Basic earnings per share

$     0.65

 

$   0.50

 

Diluted earnings per share

$     0.65

 

$   0.50

 




-5-




PSB Holdings, Inc.

  

Consolidated Balance Sheets

  

March 31, 2008 unaudited, December 31, 2007 derived from audited financial statements

   

(dollars in thousands, except per share data) – unaudited

2008

2007

Assets

  
   

Cash and due from banks

$   13,507 

 

$   18,895 

 

Interest-bearing deposits and money market funds

1,627 

 

2,232 

 

Federal funds sold

–    

 

–    

 
     

Cash and cash equivalents

15,134 

 

21,127 

 
     

Securities available for sale (at fair value)

101,641 

 

97,214 

 

Loans held for sale

415 

 

365 

 

Loans receivable, net of allowance for loan losses

386,574 

 

387,130 

 

Accrued interest receivable

2,703 

 

2,383 

 

Foreclosed assets

797 

 

653 

 

Premises and equipment, net

11,050 

 

11,082 

 

Mortgage servicing rights, net

908 

 

889 

 

Federal Home Loan Bank stock (at cost)

3,017 

 

3,017 

 

Cash surrender value of bank-owned life insurance

8,996 

 

8,728 

 

Other assets

994 

 

1,597 

 
     

TOTAL ASSETS

$532,229 

 

$534,185 

 
     

Liabilities

    
     

Non-interest-bearing deposits

$   47,908 

 

$   55,470 

 

Interest-bearing deposits

341,446 

 

346,536 

 
     

Total deposits

389,354 

 

402,006 

 
     

Federal Home Loan Bank advances

60,000 

 

57,000 

 

Other borrowings

32,461 

 

26,407 

 

Junior subordinated debentures

7,732 

 

7,732 

 

Accrued expenses and other liabilities

4,028 

 

4,425 

 
     

Total liabilities

493,575 

 

497,570 

 
     

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

9,390 

 

9,493 

 

Retained earnings

35,082 

 

34,081 

 

Accumulated other comprehensive income

1,458 

 

423 

 

Treasury stock, at cost –338,281 and 342,197 shares, respectively

(9,163)

 

(9,269)

 
     

Total stockholders’ equity

38,654 

 

36,615 

 
     

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$532,229 

 

$534,185 

 



-6-





PSB Holdings, Inc.

       

Average Balances and Interest Rates

     

Quarter Ended March 31,

       
        
  

2008

   

2007

 
 

Avg. Bal

Interest

Yield/Rate

 

Avg. Bal

Interest

Yield/Rate

Assets

       

Interest-earning assets:

       

   Loans(1)(2)

$388,361 

$6,518

 

6.75%

  

$376,981

$6,593

 

7.09%

 

   Taxable securities

65,448 

845

 

5.19%

  

49,242

616

 

5.07%

 

   Tax-exempt securities(2)

34,142 

500

 

5.89%

  

30,875

462

 

6.07%

 

   FHLB stock

3,017 

–    

 

0.00%

  

3,017

23

 

3.09%

 

   Other

4,327 

40

 

3.72%

  

7,781

106

 

5.52%

 
             

   Total(2)

495,295 

7,903

 

6.42%

  

467,896

7,800

 

6.76%

 
             

Non-interest-earning assets:

           

   Cash and due from banks

9,988 

     

10,993

    

   Premises and equipment, net

11,070 

     

11,468

    

   Cash surrender value ins.

8,838 

     

6,370

    

   Other assets

5,319 

     

5,155

    

   Allowance for loan losses

(4,905)

     

(4,533)

    
            

   Total

$525,605 

     

$497,349

    
            

Liabilities & stockholders’ equity

           

Interest-bearing liabilities:

           

   Savings and demand deposits

$  93,636 

$   587

 

2.52%

  

$  83,688

$   636

 

3.08%

 

   Money market deposits

72,809 

497

 

2.75%

  

67,900

564

 

3.37%

 

   Time deposits

179,135 

2,079

 

4.67%

  

188,435

2,201

 

4.74%

 

   FHLB borrowings

57,418 

606

 

4.24%

  

56,656

614

 

4.40%

 

   Other borrowings

26,124 

259

 

3.99%

  

6,449

64

 

4.02%

 

   Junior sub. debentures

7,732 

113

 

5.88%

  

7,732

113

 

5.93%

 
            

   Total

436,854 

4,141

 

3.81%

  

410,860

4,192

 

4.14%

 
            

Non-interest-bearing liabilities:

           

   Demand deposits

47,036 

     

47,780

    

   Other liabilities

4,088 

     

4,017

    

   Stockholders’ equity

37,627 

     

34,692

    
            

   Total

$525,605 

     

$497,349

    
            

Net interest income

 

$3,762

     

$3,608

   

Rate spread

  

2.61%

    

2.62%

 

Net yield on interest-earning assets

  

3.05%

    

3.13%

 


(1) Nonaccrual loans are included in the daily average loan balances outstanding.

(2) The yield on tax-exempt loans and securities is computed on a tax-equivalent basis using a tax rate of 34%



-7-