Attached files
| file | filename |
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| 8-K - PSB HOLDINGS, INC. FORM 8-K - PSB HOLDINGS INC /WI/ | f8k012615_psbholdings.htm |
Exhibit 99.1
PSB Holdings, Inc. announces December 2014 quarterly
earnings of $1.10 per share on net income of $1.81 million
Wausau, WI. – January 26, 2015 – PSB Holdings, Inc. (OTCQB: PSBQ) reported December 2014 quarterly earnings of $1.10 per share on net income of $1,805,000 compared to earnings of $.95 per share on net income of $1,561,000 during the December 2013 quarter. Earnings during the year ended December 31 were $3.90 per share on net income of $6,440,000 during 2014 compared to $2.87 per share on net income of $4,744,000 during 2013. Earnings during 2013 were negatively impacted by a $3,340,000 credit write-down following identification of a customer loan fraud impacting several banks.
In addition to the large customer fraud credit loss, there were other non-recurring items that impacted 2014 and 2013, including merger and conversion related costs incurred on PSB’s purchase of the Northwoods National Bank, Rhinelander, Wisconsin branch of The Baraboo National Bank during 2014. These items are outlined in the Pro-forma Statements of Income table shown below. As shown in the table, December 2014 quarterly earnings were $1.10 per share on net income of $1,805,000 compared to 2013 quarterly pro-forma earnings of $.96 per share on net income of $1,588,000. December 2014 quarterly earnings increased 14.6% on a pro-forma basis due to increased net interest income due to asset growth and higher net interest margin.
Excluding the special items as shown in the table below, earnings for the year ended December 31, 2014 would have been $4.04 per share on net income of $6,665,000 compared to 2013 earnings of $3.91 per share on net income of $6,451,000, up 3.3% per share. Compared to the prior year before the special items, an $827,000 increase in net interest income due to asset growth and a $310,000 decline in 2014 credit costs, down 28%, offset an $824,000 increase in operating costs, up 5%.
Peter W. Knitt, President and CEO of PSB Holdings, Inc. noted, “A strong December 2014 quarter closed a year of record earnings as quarterly net interest margin rose to 3.43% compared to 3.32% during the December 2013 quarter. Year over year asset growth was due to the April 2014 purchase of the Northwoods National Bank, Rhinelander branch. While organic loan growth was challenging, deposit growth during 2014 paid down high cost wholesale funding which positions the Bank with liquidity to support potentially higher loan demand as the local economy improves. December 2014 quarterly earnings of $1.10 per share were a record compared to prior quarterly results when non-recurring income or expense items in those periods are excluded.”
Financial Highlights:
| v | Quarterly earnings of $1.10 per share in December 2014 compared to earnings of $1.08 per share during September 2014 and pro-forma earnings of $.96 per share during December 2013. Year to date, pro-forma earnings were $4.04 per share in 2014 and $3.91 per share in 2013, up 3.3%. |
| v | Return on stockholders’ equity was 11.52% during the December 2014 quarter compared to 11.01% during December 2013 before non-recurring items. Year to date pro-forma return on stockholders’ equity was 11.12% during 2014 compared to 11.38% during 2013. |
| v | Total assets increased by $22.9 million, or 3.2%, to $734.4 million at December 31, 2014 compared to December 31, 2013, due to the purchase of the Northwoods branch. |
v PSB declared a December 2014 semi-annual dividend of $.40 per share, payable January 30, 2015, an increase of 2.6% and continuing a 50 year tradition of cash dividends to shareholders.
| 1 |
Summary of Reported and Pro-forma Earnings
The following table reconciles reported net income and earnings per share to pro-forma net income and earnings per share excluding several significant non-recurring items:
| Pro-forma Statements of Income | Three months ended | Year ended | ||||||||||||||
| December 31, | December 31, | |||||||||||||||
| ($000s, net of income tax effects) | 2014 | 2013 | 2014 | 2013 | ||||||||||||
| Net income, as reported | $ | 1,805 | $ | 1,561 | $ | 6,440 | $ | 4,744 | ||||||||
| Add: merger and conversion costs | – | – | 225 | – | ||||||||||||
| Add: Grain customer fraud credit loss | – | – | – | 2,031 | ||||||||||||
| Add: Grain credit loss legal and collection fees | – | 27 | – | 27 | ||||||||||||
| Less: Reduced employee benefits on credit loss | – | – | – | (278 | ) | |||||||||||
| Less: Tax benefit on amended tax returns | – | – | – | (73 | ) | |||||||||||
| Net income on a pro-forma basis | $ | 1,805 | $ | 1,588 | $ | 6,665 | $ | 6,451 | ||||||||
| Three months ended | Year ended | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
| (per diluted share, net of income tax effects) | 2014 | 2013 | 2014 | 2013 | ||||||||||||
| Net income, as reported | $ | 1.10 | $ | 0.95 | $ | 3.90 | $ | 2.87 | ||||||||
| Add: merger and conversion costs | – | – | 0.14 | – | ||||||||||||
| Add: Grain customer fraud credit loss | – | – | – | 1.23 | ||||||||||||
| Add: Grain credit loss legal and collection fees | – | 0.01 | – | 0.02 | ||||||||||||
| Less: Reduced employee benefits on credit loss | – | – | – | (0.17 | ) | |||||||||||
| Less: Tax benefit on amended tax returns | – | – | – | (0.04 | ) | |||||||||||
| Net income on a pro-forma basis | $ | 1.10 | $ | 0.96 | $ | 4.04 | $ | 3.91 | ||||||||
Total assets were $734.4 million at December 31, 2014 compared to $711.5 million at December 31, 2013, up $22.9 million, or 3.2%, due to an increase in net loans receivable of $15.7 million, up 3.1%. The loan increase included $16.6 million of purchased Northwoods branch loans held at December 31, 2014, and a $0.9 million decline in existing market loans year to date. In addition to loan growth, a $10.9 million increase in investment securities was primarily funded by a $6.4 million decline in cash and cash equivalents during the year ended December 31, 2014.
Total local deposits increased $52.7 million during the year ended December 31, 2014 due in part to $33.1 million in purchased Northwoods branch deposits retained at December 31, 2014 (approximately 82% of the original purchased deposits) with other existing market deposits increasing $19.6 million, or 3.8% since December 31, 2013, led by a $14.8 million increase in money market deposits, up 12.2%. In addition to funding loan growth, the increase in total deposits was used to repay $33.0 million of wholesale funding year to date. Wholesale funding (including brokered certificates of deposit, Federal Home Loan Bank advances, and wholesale repurchase agreements) was $75.9 million (10.3% of total assets) at December 31, 2014 compared to $108.9 million (15.3% of total assets) at December 31, 2013.
During the upcoming March 2015 quarter, total loans receivable are expected to remain stable primarily due to low borrower demand and seasonal factors within our markets, while seasonal government tax deposits held at December 31, 2014 will decline significantly. Wholesale funding is expected to replace the withdrawn government tax deposits during the March 2015 quarter.
| 2 |
Asset Quality, Credit Costs, and Allowance for Loan Losses Highlights
Total nonperforming assets increased $2,774,000, or 23.8%, to $14,423,000 during the quarter ended December 2014 compared to $11,649,000 at September 30, 2014, and increased $4,034,000, or 38.8%, compared to $10,389,000 at December 31, 2013. During the December 2014 quarter, a previously performing $2,775, 000 impaired municipal loan was restructured to extend principal payment amortization and was classified as an accruing restructured loan at December 31, 2014. This municipal loan represented 100% and 69% of the increase in nonperforming assets during the quarter and year ended December 31, 2014, respectively. Other increases in nonperforming assets since the beginning of the year were due to placing a $584,000 single family jumbo residential mortgage (net of a $497,000 partial charge-off recorded in the September 2014 quarter) and a $905,000 commercial loan onto nonaccrual status during the year ended December 31, 2014. Net charge-offs of loan principal were $155,000 and $934,000 during the quarter and year ended December 31, 2014, which were .12% and .18% of average loans during the respective periods on an annualized basis.
During the prior year September 2013 quarter, PSB recorded a $3,340,000 provision for loan losses due to the write down of a loan to a grain commodities dealer who was discovered to have misrepresented inventory collateral, financial statements, inventory records, and federal warehouse receipts taken as collateral. The entire loan balance was charged-off at that time, and the borrower and its former operation remain under investigation by the authorities. PSB continues to pursue a recovery of this loss through several channels and remains cautiously optimistic concerning potential outcomes. Net charge-offs of loan principal were $343,000 and $1,323,000 during the quarter and year ended December 31, 2013 excluding the large grain loss, which represented .27% and .26% of average loans during the respective periods on an annualized basis.
A reduction in total credit costs, including the provision for loan losses and loss on foreclosed assets, has been an important driver of increased income during 2014. Total credit costs were $793,000 and $1,103,000 (excluding the large grain loss) during the years ended December 31, 2014 and 2013, respectively, a reduction of $310,000, or 28.1% during 2014. At December 31, 2014, the allowance for loan losses was $6,409,000, or 1.20% of total loans (50% of nonperforming loans), compared to $6,783,000, or 1.31% of total loans (79% of nonperforming loans) at December 31, 2013. Despite recognition in 2014 of the three new nonperforming credits noted previously, credit conditions represented in the loan portfolio as a whole continue to improve, and credit costs are expected to remain in a similar range during the March 2015 quarter compared to the December 2014 quarter.
Nonperforming assets are shown in the following table:
| Non-Performing Assets as of | December 31, | |||||||
| (dollars in thousands) | 2014 | 2013 | ||||||
| Nonaccrual loans (excluding restructured loans) | $ | 3,983 | $ | 3,704 | ||||
| Nonaccrual restructured loans | 4,388 | 3,636 | ||||||
| Restructured loans not on nonaccrual | 4,391 | 1,299 | ||||||
| Accruing loans past due 90 days or more | – | – | ||||||
| Total nonperforming loans | 12,762 | 8,639 | ||||||
| Foreclosed assets | 1,661 | 1,750 | ||||||
| Total nonperforming assets | $ | 14,423 | $ | 10,389 | ||||
| Nonperforming loans as a % of gross loans | 2.40 | % | 1.67 | % | ||||
| Total nonperforming assets as a % of total assets | 1.96 | % | 1.46 | % | ||||
| Allowance for loan losses as a % of nonperforming loans | 50.22 | % | 78.52 | % | ||||
| 3 |
Nonperforming assets aggregating to $500,000 or more, measured by gross principal outstanding per credit relationship, included six relationships at December 31, 2014 totaling $6,227,000, compared to three relationships at December 31, 2013 totaling $2,031,000. The majority of the increase during 2014 in large problem relationships was due to the restructuring of the $2,775,000 municipal loan discussed previously. Specific reserves maintained on these large problem loans were $802,000 at December 31, 2014 and $462,000 at December 31, 2013.
Capital and Liquidity Highlights
During the year ended December 31, 2014, stockholders’ equity increased $4,708,000 primarily from $5,124,000 of retained net income during the period after payment of $1,316,000 in shareholder dividends. During the December 2014 quarter, the company repurchased 17,244 shares of its common stock at an average cost of $33.71 per share, while no shares were repurchased in the December 2013 quarter. Year to date, 27,244 shares of common stock were repurchased at an average cost of $33.54 per share during 2014 while 10,030 shares were repurchased at an average cost of $26.78 per share during the year ended December 31, 2013. PSB intends to continue its quarterly stock buyback plan during the March 2015 quarter with shares purchased directly from shareholders or on the open market at prevailing prices as opportunities arise.
Tangible net book value increased to $37.52 per share at December 31, 2014, compared to $34.36 per share at December 31, 2013, an increase of 9.2%. PSB’s stockholders’ equity to assets ratio increased to 8.37% at December 31, 2014 compared to 7.98% at December 31, 2013 due to increased retained earnings with modest asset growth since the beginning of 2014. For regulatory purposes, the $7.7 million junior subordinated debentures maturing September 2035 reflected as debt on the Consolidated Balance Sheet are reclassified as Tier 1 regulatory equity capital. PSB’s subsidiary, Peoples State Bank, was considered “well capitalized” under banking regulations at December 31, 2014.
New regulatory capital rules applicable to all banks become effective for PSB beginning January 1, 2015. The new rules expand the number of capital measurements and new minimum ratios over which a bank may pay dividends, repurchase common stock, or pay certain executive compensation. Other changes addressed the amount of capital required on a “risk adjusted” basis for certain assets and other obligations. PSB expects regulatory capital ratios to be negatively impacted when the changes are fully implemented, but does not expect to issue additional common stock solely to meet the new requirements or that recurring operations or growth potential will be significantly impacted.
PSB regularly maintains access to wholesale markets to fund loan originations and manage local depositor needs. At December 31, 2014, unused and available wholesale funding was approximately $348 million, or 47% of total assets, compared to $297 million, or 42% of total assets at December 31, 2013. Unused wholesale funding sources include federal funds purchased lines of credit, Federal Reserve Discount Window advances, FHLB advances, brokered and national certificates of deposit, and a holding company correspondent bank line of credit.
Net Interest Income and Margin Highlights
Tax adjusted net interest income totaled $6,005,000 (on net margin of 3.43%) during the December 31, 2014 quarter compared to $5,965,000 (3.43%) in the September 2014 quarter and $5,601,000 (3.32%) in the December 2013 quarter. During the year ended December 31, tax adjusted net interest income totaled $23,057,000 (on net margin of 3.38%) during 2014 and $22,273,000 (3.38%) during 2013, up $784,000, or 3.5%. During 2014, net interest income increased $1,254,000 from higher asset volume, offsetting a $470,000 reduction to net interest income from changes in loan yields and funding costs.
Repayment or refinance of maturing high cost FHLB advances during 2014 was a significant contributor to increased net interest income. Reduced FHLB advance interest expense contributed to 60% of the quarterly increase in tax adjusted net interest income during the December 2014 quarter compared to 2013, and 87% of the increase in net interest income during the year ended December 31, 2014 compared to 2013. Interest expense savings from maturing high cost wholesale funding will decline significantly during 2015 compared to 2014. Therefore, continued declines in loan yields may decrease net interest margin or reduce net interest income during 2015, particularly if loan growth does not materialize.
| 4 |
Noninterest and Fee Income Highlights
Total noninterest income for the quarter ended December 31, 2014 was $1,524,000, compared to $1,274,000 earned during the December 2013 quarter, an increase of $250,000, or 19.6%. Mortgage banking revenue led the increase and was up $155,000, or 61.3% during the December 2014 quarter. Mortgage banking includes the gain on sale of residential mortgage loans to secondary market investors as well as the net loan servicing income associated with those loans. Mortgage origination activity ended the year strong but is expected to decline during the March 2015 quarter due to seasonal factors.
Total noninterest income for the year ended December 31, 2014 was $5,694,000 compared to $5,623,000 during 2013, up $71,000, or 1.3%, despite a decline in residential mortgage banking of $218,000, or 13.7%. Fewer mortgage loan originations led the decline in mortgage banking revenue on significantly lower residential loan refinance activity due to an increase in long term interest rates in response to expected actions by the Federal Reserve. Offsetting the year to date mortgage banking decline were higher service fees, up $76,000, and higher debit and credit card interchange income, up $185,000. During December 2013, PSB sold its credit card loan principal portfolio in exchange for greater interchange fee income on those retained credit card customers, accounting for 62% of the increased interchange income during the year ended December 31, 2014. Prior to the sale of the credit card portfolio, card income was categorized as loan interest income.
Operating Expense Highlights
Noninterest expenses totaled $4,504,000 during the December 2014 quarter compared to $4,391,000 during the December 2013 quarter, up $113,000, or 2.5%. The majority of the 2014 cost increase was due to higher direct operating costs totaling $110,000 allocated to the new Northwoods branch, which was acquired during the June 2014 quarter.
During the year ended December 31, 2014, noninterest expense totaled $17,920,000 compared to $16,506,000 during 2013. However, both periods included special items including $371,000 of nonrecurring Northwoods Rhinelander merger and conversion costs during 2014 and a $458,000 reduction in employee incentive costs during 2013 due to recognition of the large grain loan loss. Excluding the pro-forma impact of these items as well as the loss on foreclosed assets, noninterest expense during the year ended December 31, 2014 would have been $17,316,000 compared to $16,536,000 during 2013, an increase of $780,000, or 4.7%. Approximately $317,000 of the increase was from recurring Northwoods branch wage and other direct operating costs following the acquisition. Separate from Northwoods wage costs, pro-forma salaries and employee benefits increased an additional $244,000, or 2.6%. Data processing and office operations costs increased $130,000 (excluding the Northwoods branch acquisition conversion and operating costs), up 7.0%, and FDIC insurance premiums increased $71,000 related to the grain loan charge-off and increased deposits. All other net operating expense increases totaled $18,000.
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. 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 OTC Markets Exchange. More information about PSB, its management, and its financial performance may be found at www.psbholdingsinc.com.
On November 25, 2014, PSB filed Form 15 with the Securities and Exchange Commission, announcing its termination of registration with the SEC as permitted by the Jumpstart Our Business Startups Act (JOBS) Act of 2012. Following February 23, 2015, PSB will no longer file its current financial reports or other disclosures with the SEC. The Company will continue to provide shareholders quarterly financial information on its investor relations website, www.psbholdingsinc.com.
| 5 |
Forward Looking Statements
Certain matters discussed in this news release, including those relating to the potential growth of PSB Holdings, Inc., its future profits, changes in noninterest income and expenses, pro-forma impacts to income from nonrecurring 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 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 outlined under “Forward - Looking Statements” and elsewhere in Item 1A of PSB Holdings, Inc.’s Form 10-K for the year ended December 31, 2013. PSB Holdings, Inc. assumes no obligation to update or supplement forward-looking statements that become untrue because of events subsequent to the release of this filing.
# # #
| 6 |
| PSB Holdings, Inc. | ||||||||||
| Quarterly Financial Summary | ||||||||||
| (dollars in thousands, except per share data) |
Quarter ended - Unaudited | ||||||||||||||||||||||||
| December 31, | September 30, | June 31, | March 31, | December 31, | ||||||||||||||||||||
| Earnings and dividends: | 2014 | 2014 | 2014 | 2014 | 2013 | |||||||||||||||||||
| Net income | $ | 1,805 | $ | 1,782 | $ | 1,403 | $ | 1,450 | $ | 1,561 | ||||||||||||||
| Basic earnings per share(3) | $ | 1.10 | $ | 1.08 | $ | 0.85 | $ | 0.87 | $ | 0.95 | ||||||||||||||
| Diluted earnings per share(3) | $ | 1.10 | $ | 1.08 | $ | 0.85 | $ | 0.87 | $ | 0.95 | ||||||||||||||
| Dividends declared per share(3) | $ | 0.40 | $ | – | $ | 0.40 | $ | – | $ | 0.39 | ||||||||||||||
| Tangible net book value per share(4) | $ | 37.52 | $ | 36.59 | $ | 35.56 | $ | 35.15 | $ | 34.36 | ||||||||||||||
| Semi-annual dividend payout ratio | 18.19 | % | n/a | 23.34 | % | n/a | 40.91 | % | ||||||||||||||||
| Average common shares outstanding | 1,637,519 | 1,650,716 | 1,658,157 | 1,658,017 | 1,651,518 | |||||||||||||||||||
| Balance sheet - average balances: | ||||||||||||||||||||||||
| Loans receivable, net of allowances | $ | 526,591 | $ | 528,420 | $ | 513,163 | $ | 498,957 | $ | 507,898 | ||||||||||||||
| Total assets | $ | 732,118 | $ | 727,738 | $ | 716,152 | $ | 698,127 | $ | 704,559 | ||||||||||||||
| Deposits | $ | 602,371 | $ | 598,845 | $ | 592,377 | $ | 567,500 | $ | 557,639 | ||||||||||||||
| Stockholders’ equity | $ | 62,162 | $ | 60,080 | $ | 59,424 | $ | 57,710 | $ | 57,243 | ||||||||||||||
| Performance ratios: | ||||||||||||||||||||||||
| Return on average assets(1) | 0.98 | % | 0.97 | % | 0.79 | % | 0.84 | % | 0.88 | % | ||||||||||||||
| Return on average stockholders’ equity(1) | 11.52 | % | 11.77 | % | 9.47 | % | 10.19 | % | 10.82 | % | ||||||||||||||
| Average tangible stockholders’ equity | ||||||||||||||||||||||||
| less accumulated other comprehensive | ||||||||||||||||||||||||
| income (loss) to average assets(4) | 8.43 | % | 8.20 | % | 8.24 | % | 8.22 | % | 8.07 | % | ||||||||||||||
| Net loan charge-offs to average loans(1) | 0.12 | % | 0.48 | % | 0.07 | % | 0.03 | % | 0.27 | % | ||||||||||||||
| Nonperforming loans to gross loans | 2.40 | % | 1.84 | % | 2.06 | % | 1.75 | % | 1.67 | % | ||||||||||||||
| Allowance for loan losses to gross loans | 1.20 | % | 1.19 | % | 1.31 | % | 1.39 | % | 1.31 | % | ||||||||||||||
| Nonperforming assets to tangible equity | ||||||||||||||||||||||||
| plus the allowance for loan losses(4) | 21.90 | % | 17.92 | % | 18.96 | % | 16.27 | % | 16.80 | % | ||||||||||||||
| Net interest rate margin(1)(2) | 3.43 | % | 3.43 | % | 3.34 | % | 3.31 | % | 3.32 | % | ||||||||||||||
| Net interest rate spread(1)(2) | 3.29 | % | 3.28 | % | 3.19 | % | 3.15 | % | 3.14 | % | ||||||||||||||
| Service fee revenue as a percent of | ||||||||||||||||||||||||
| average demand deposits(1) | 1.56 | % | 1.72 | % | 1.83 | % | 1.68 | % | 1.76 | % | ||||||||||||||
| Noninterest income as a percent | ||||||||||||||||||||||||
| of gross revenue | 18.39 | % | 17.81 | % | 17.14 | % | 17.09 | % | 15.92 | % | ||||||||||||||
| Efficiency ratio(2) | 59.82 | % | 59.61 | % | 66.19 | % | 63.75 | % | 63.87 | % | ||||||||||||||
| Noninterest expenses to average assets(1) | 2.44 | % | 2.43 | % | 2.61 | % | 2.49 | % | 2.47 | % | ||||||||||||||
| Stock price information: | ||||||||||||||||||||||||
| High | $ | 36.33 | $ | 34.00 | $ | 33.85 | $ | 34.50 | $ | 31.25 | ||||||||||||||
| Low | $ | 33.60 | $ | 32.25 | $ | 31.75 | $ | 30.10 | $ | 29.75 | ||||||||||||||
| Market value at quarter-end | $ | 35.50 | $ | 33.80 | $ | 32.42 | $ | 32.00 | $ | 31.25 | ||||||||||||||
| (1)Annualized | ||||||||||
| (2)The yield on tax-exempt loans and securities is computed on a tax-equivalent basis using a tax rate of 34%. | ||||||||||
| (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. |
| 7 |
| PSB Holdings, Inc. | ||||||||
| Consolidated Statements of Income | ||||||||
| Three Months Ended | Year Ended | |||||||||||||||
| (dollars in thousands, | December 31, | December 31, | ||||||||||||||
| except per share data - unaudited) | 2014 | 2013 | 2014 | 2013 | ||||||||||||
| Interest and dividend income: | ||||||||||||||||
| Loans, including fees | $ | 5,749 | $ | 5,793 | $ | 22,634 | $ | 23,126 | ||||||||
| Securities: | ||||||||||||||||
| Taxable | 619 | 532 | 2,398 | 2,098 | ||||||||||||
| Tax-exempt | 372 | 378 | 1,504 | 1,511 | ||||||||||||
| Other interest and dividends | 22 | 25 | 82 | 81 | ||||||||||||
| Total interest and dividend income | 6,762 | 6,728 | 26,618 | 26,816 | ||||||||||||
| Interest expense: | ||||||||||||||||
| Deposits | 703 | 772 | 2,835 | 3,051 | ||||||||||||
| FHLB advances | 67 | 308 | 601 | 1,285 | ||||||||||||
| Other borrowings | 96 | 160 | 560 | 650 | ||||||||||||
| Senior subordinated notes | 37 | 37 | 150 | 184 | ||||||||||||
| Junior subordinated debentures | 85 | 86 | 340 | 341 | ||||||||||||
| Total interest expense | 988 | 1,363 | 4,486 | 5,511 | ||||||||||||
| Net interest income | 5,774 | 5,365 | 22,132 | 21,305 | ||||||||||||
| Provision for loan losses | 140 | – | 560 | 4,015 | ||||||||||||
| Net interest income after provision for loan losses | 5,634 | 5,365 | 21,572 | 17,290 | ||||||||||||
| Noninterest income: | ||||||||||||||||
| Service fees | 433 | 410 | 1,656 | 1,580 | ||||||||||||
| Mortgage banking | 408 | 253 | 1,373 | 1,591 | ||||||||||||
| Investment and insurance sales commissions | 228 | 249 | 946 | 944 | ||||||||||||
| Net gain on sale of securities | 3 | - | 3 | 12 | ||||||||||||
| Increase in cash surrender value of life insurance | 102 | 102 | 404 | 402 | ||||||||||||
| Other noninterest income | 350 | 260 | 1,312 | 1,094 | ||||||||||||
| Total noninterest income | 1,524 | 1,274 | 5,694 | 5,623 | ||||||||||||
| Noninterest expense: | ||||||||||||||||
| Salaries and employee benefits | 2,597 | 2,460 | 9,879 | 9,069 | ||||||||||||
| Occupancy and facilities | 467 | 438 | 1,828 | 1,762 | ||||||||||||
| Loss on foreclosed assets | 112 | 134 | 233 | 428 | ||||||||||||
| Data processing and other office operations | 492 | 459 | 2,224 | 1,862 | ||||||||||||
| Advertising and promotion | 119 | 101 | 376 | 335 | ||||||||||||
| FDIC insurance premiums | 99 | 141 | 523 | 452 | ||||||||||||
| Other noninterest expenses | 618 | 658 | 2,857 | 2,598 | ||||||||||||
| Total noninterest expense | 4,504 | 4,391 | 17,920 | 16,506 | ||||||||||||
| Income before provision for income taxes | 2,654 | 2,248 | 9,346 | 6,407 | ||||||||||||
| Provision for income taxes | 849 | 687 | 2,906 | 1,663 | ||||||||||||
| Net income | $ | 1,805 | $ | 1,561 | $ | 6,440 | $ | 4,744 | ||||||||
| Basic earnings per share | $ | 1.10 | $ | 0.95 | $ | 3.90 | $ | 2.87 | ||||||||
| Diluted earnings per share | $ | 1.10 | $ | 0.95 | $ | 3.90 | $ | 2.87 | ||||||||
| 8 |
| PSB Holdings, Inc. | ||||||||||
| Consolidated Statements of Comprehensive Income | ||||||||||
| Three Months Ended | Year Ended | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
| (dollars in thousands - unaudited) | 2014 | 2013 | 2014 | 2013 | ||||||||||||
| Net income | $ | 1,805 | $ | 1,561 | $ | 6,440 | $ | 4,744 | ||||||||
| Other comprehensive income (loss), net of tax: | ||||||||||||||||
| Unrealized gain (loss) on securities available for sale | 288 | (181 | ) | 420 | (961 | ) | ||||||||||
| Reclassification adjustment for security gain included in net income | (2 | ) | – | (2 | ) | (7 | ) | |||||||||
| Amortization of unrealized gain on securities available for sale transferred to securities held to maturity included in net income | (48 | ) | (61 | ) | (200 | ) | (236 | ) | ||||||||
| Unrealized gain (loss) on interest rate swap | (27 | ) | 1 | (44 | ) | 46 | ||||||||||
| Reclassification adjustment of interest rate swap settlements included in earnings | 29 | 29 | 114 | 113 | ||||||||||||
| Other comprehensive income (loss) | 240 | (212 | ) | 288 | (1,045 | ) | ||||||||||
| Comprehensive income | $ | 2,045 | $ | 1,349 | $ | 6,728 | $ | 3,699 | ||||||||
| 9 |
| PSB Holdings, Inc. | ||||
| Consolidated Balance Sheets | ||||
| December 31, 2014 unaudited, December 31, 2013 derived from audited financial statements |
| December 31, | December 31, | |||||||
| (dollars in thousands, except per share data) | 2014 | 2013 | ||||||
| Assets | ||||||||
| Cash and due from banks | $ | 18,073 | $ | 13,800 | ||||
| Interest-bearing deposits and money market funds | 652 | 977 | ||||||
| Federal Funds sold | 6,381 | 16,745 | ||||||
| Cash and cash equivalents | 25,106 | 31,522 | ||||||
| Securities available for sale (at fair value) | 74,378 | 61,650 | ||||||
| Securities held to maturity (fair value of $71,009 and $71,672) | 69,779 | 71,629 | ||||||
| Bank certificates of deposit | 3,424 | 2,236 | ||||||
| Loans held for sale | 100 | 150 | ||||||
| Loans receivable, net of allowance for loan losses | 525,583 | 509,880 | ||||||
| Accrued interest receivable | 2,074 | 2,076 | ||||||
| Foreclosed assets | 1,661 | 1,750 | ||||||
| Premises and equipment, net | 10,841 | 9,669 | ||||||
| Mortgage servicing rights, net | 1,738 | 1,696 | ||||||
| Federal Home Loan Bank stock (at cost) | 2,556 | 2,556 | ||||||
| Cash surrender value of bank-owned life insurance | 13,230 | 12,826 | ||||||
| Other assets | 3,897 | 3,901 | ||||||
| TOTAL ASSETS | $ | 734,367 | $ | 711,541 | ||||
| Liabilities | ||||||||
| Non-interest-bearing deposits | $ | 114,803 | $ | 102,644 | ||||
| Interest-bearing deposits | 508,148 | 474,870 | ||||||
| Total deposits | 622,951 | 577,514 | ||||||
| Federal Home Loan Bank advances | 20,271 | 38,049 | ||||||
| Other borrowings | 10,324 | 20,441 | ||||||
| Senior subordinated notes | 4,000 | 4,000 | ||||||
| Junior subordinated debentures | 7,732 | 7,732 | ||||||
| Accrued expenses and other liabilities | 7,628 | 7,052 | ||||||
| Total liabilities | 672,906 | 654,788 | ||||||
| Stockholders’ equity | ||||||||
| Preferred stock - no par value: Authorized - 30,000 shares | – | – | ||||||
| Common stock - no par value with a stated value of $1 per share: | ||||||||
| Authorized - 6,000,000 shares | ||||||||
| Issued - 1,830,266 shares; Outstanding - 1,630,913 shares | 1,830 | |||||||
| Issued - 1,830,266 shares; Outstanding - 1,651,518 shares | 1,830 | |||||||
| Additional paid-in capital | 6,997 | 6,967 | ||||||
| Retained earnings | 57,556 | 52,432 | ||||||
| Accumulated other comprehensive income, net of tax | 637 | 349 | ||||||
| Treasury stock, at cost – 199,353 and 178,748 shares, respectively | (5,559 | ) | (4,825 | ) | ||||
| Total stockholders’ equity | 61,461 | 56,753 | ||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 734,367 | $ | 711,541 | ||||
| 10 |
| PSB Holdings, Inc. | |||||||||||
| Average Balances ($000s) and Interest Rates | |||||||||||
| Quarter Ended December 31, |
| 2014 | 2013 | |||||||||||||||||||||||
Avg. Bal | Interest | Yield/Rate | Avg. Bal | Interest | Yield/Rate | |||||||||||||||||||
| Assets | ||||||||||||||||||||||||
| Interest-earning assets: | ||||||||||||||||||||||||
| Loans(1)(2) | $ | 533,076 | $ | 5,788 | 4.31 | % | $ | 515,017 | $ | 5,834 | 4.49 | % | ||||||||||||
| Taxable securities | 90,623 | 619 | 2.71 | % | 78,964 | 532 | 2.67 | % | ||||||||||||||||
| Tax-exempt securities(2) | 53,332 | 564 | 4.20 | % | 54,248 | 573 | 4.19 | % | ||||||||||||||||
| FHLB stock | 2,556 | 3 | 0.47 | % | 2,985 | 8 | 1.06 | % | ||||||||||||||||
| Other | 14,444 | 19 | 0.52 | % | 17,179 | 17 | 0.39 | % | ||||||||||||||||
| Total(2) | 694,031 | 6,993 | 4.00 | % | 668,393 | 6,964 | 4.13 | % | ||||||||||||||||
| Non-interest-earning assets: | ||||||||||||||||||||||||
| Cash and due from banks | 11,025 | 11.452 | ||||||||||||||||||||||
| Premises and equipment, net | 10,925 | 9,714 | ||||||||||||||||||||||
| Cash surrender value insurance | 13,164 | 12,760 | ||||||||||||||||||||||
| Other assets | 9,458 | 9,359 | ||||||||||||||||||||||
| Allowance for loan losses | (6,485 | ) | (7,119 | ) | ||||||||||||||||||||
| Total | 732,118 | 704,559 | ||||||||||||||||||||||
| Liabilities and stockholders’ equity | ||||||||||||||||||||||||
| Interest-bearing liabilities: | ||||||||||||||||||||||||
| Savings and demand deposits | $ | 178,161 | $ | 71 | 0.16 | % | $ | 167,257 | $ | 88 | 0.21 | % | ||||||||||||
| Money market deposits | 140,695 | 86 | 0.24 | % | 127,354 | 107 | 0.33 | % | ||||||||||||||||
| Time deposits | 173,578 | 546 | 1.25 | % | 170,555 | 577 | 1.34 | % | ||||||||||||||||
| FHLB borrowings | 35,248 | 67 | 0.75 | % | 51,434 | 308 | 2.38 | % | ||||||||||||||||
| Other borrowings | 13,503 | 96 | 2.82 | % | 20,385 | 160 | 3.11 | % | ||||||||||||||||
| Senior subordinated notes | 4,000 | 37 | 3.67 | % | 4,000 | 37 | 3.67 | % | ||||||||||||||||
| Junior subordinated debentures | 7,732 | 85 | 4.36 | % | 7,732 | 86 | 4.41 | % | ||||||||||||||||
| Total | 552,917 | 988 | 0.71 | % | 548,717 | 1,363 | 0.99 | % | ||||||||||||||||
| Non-interest-bearing liabilities: | ||||||||||||||||||||||||
| Demand deposits | 109,937 | 92,473 | ||||||||||||||||||||||
| Other liabilities | 7,102 | 6,126 | ||||||||||||||||||||||
| Stockholders’ equity | 62,162 | 57,243 | ||||||||||||||||||||||
| Total | $ | 732,118 | $ | 704,559 | ||||||||||||||||||||
| Net interest income | $ | 6,005 | $ | 5,601 | ||||||||||||||||||||
| Rate spread | 3.29 | % | 3.14 | % | ||||||||||||||||||||
| Net yield on interest-earning assets | 3.43 | % | 3.32 | % | ||||||||||||||||||||
| (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%. |
| 11 |
| PSB Holdings, Inc. | |||||||||||
| Average Balances ($000s) and Interest Rates | |||||||||||
| Year Ended December 31, |
| 2014 | 2013 | |||||||||||||||||||||||
Avg. Bal | Interest | Yield/Rate | Avg. Bal | Interest | Yield/Rate | |||||||||||||||||||
| Assets | ||||||||||||||||||||||||
| Interest-earning assets: | ||||||||||||||||||||||||
| Loans(1)(2) | $ | 523,712 | $ | 22,784 | 4.35 | % | $ | 508,454 | $ | 23,316 | 4.59 | % | ||||||||||||
| Taxable securities | 87,930 | 2,398 | 2.73 | % | 83,049 | 2,098 | 2.53 | % | ||||||||||||||||
| Tax-exempt securities(2) | 53,822 | 2,279 | 4.23 | % | 53,549 | 2,289 | 4.27 | % | ||||||||||||||||
| FHLB stock | 2,556 | 13 | 0.51 | % | 3,138 | 14 | 0.45 | % | ||||||||||||||||
| Other | 14,208 | 69 | 0.49 | % | 11,542 | 67 | 0.58 | % | ||||||||||||||||
| Total(2) | 682,228 | 27,543 | 4.04 | % | 659,732 | 27,784 | 4.21 | % | ||||||||||||||||
| Non-interest-earning assets: | ||||||||||||||||||||||||
| Cash and due from banks | 10,410 | 10,476 | ||||||||||||||||||||||
| Premises and equipment, net | 10,579 | 9,935 | ||||||||||||||||||||||
| Cash surrender value insurance | 13,014 | 12,257 | ||||||||||||||||||||||
| Other assets | 9,434 | 9,557 | ||||||||||||||||||||||
| Allowance for loan losses | (6,821 | ) | (7,426 | ) | ||||||||||||||||||||
| Total | $ | 718,844 | $ | 694,531 | ||||||||||||||||||||
| Liabilities and stockholders’ equity | ||||||||||||||||||||||||
| Interest-bearing liabilities: | ||||||||||||||||||||||||
| Savings and demand deposits | $ | 179,449 | $ | 296 | 0.16 | % | $ | 172,249 | $ | 383 | 0.22 | % | ||||||||||||
| Money market deposits | 140,248 | 368 | 0.26 | % | 121,351 | 406 | 0.33 | % | ||||||||||||||||
| Time deposits | 172,784 | 2,171 | 1.26 | % | 164,392 | 2,262 | 1.38 | % | ||||||||||||||||
| FHLB borrowings | 31,591 | 601 | 1.90 | % | 57,035 | 1,285 | 2.25 | % | ||||||||||||||||
| Other borrowings | 18,649 | 560 | 3.00 | % | 21,862 | 650 | 2.97 | % | ||||||||||||||||
| Senior subordinated notes | 4,000 | 150 | 3.75 | % | 4,600 | 184 | 4.00 | % | ||||||||||||||||
| Junior subordinated debentures | 7,732 | 340 | 4.40 | % | 7,732 | 341 | 4.41 | % | ||||||||||||||||
| Total | 554,453 | 4,486 | 0.81 | % | 549,221 | 5,511 | 1.00 | % | ||||||||||||||||
| Non-interest-bearing liabilities: | ||||||||||||||||||||||||
| Demand deposits | 97,884 | 82,506 | ||||||||||||||||||||||
| Other liabilities | 6,583 | 6,117 | ||||||||||||||||||||||
| Stockholders’ equity | 59,924 | 56,687 | ||||||||||||||||||||||
| Total | $ | 718,844 | $ | 694,531 | ||||||||||||||||||||
| Net interest income | $ | 23,057 | $ | 22,273 | ||||||||||||||||||||
| Rate spread | 3.23 | % | 3.21 | % | ||||||||||||||||||||
| Net yield on interest-earning assets | 3.38 | % | 3.38 | % | ||||||||||||||||||||
| (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%. |
12