Exhibit 99.1

 

 

PSB HOLDINGS, INC. ANNOUNCES

DECEMBER 2012 QUARTERLY EARNINGS OF $1.01 PER SHARE AND

RECORD ANNUAL EARNINGS OF $3.61 PER SHARE

 

Wausau, WI. – January 25, 2013 – PSB Holdings, Inc. (OTCQB: PSBQ) reported December 2012 quarterly earnings of $1.01 per share on net income of $1,685,000 compared to earnings of $.85 per share on net income of $1,400,000 during the prior year December 2011 quarter. December 2012 quarterly earnings benefited from a $552,000 reduction in loss on foreclosed assets, a $193,000 increase in mortgage refinance income, and a $211,000 reduction to tax expense related to the purchase of Marathon State Bank (“Marathon”) in the June 2012 quarter. The increased quarterly income was partially offset by a $780,000 increase in operating costs, after adding Marathon’s daily operations.

 

For all of 2012, earnings were $3.61 per share on net income of $6,009,000 compared to $3.21 per share on net income of $5,305,000 during 2011. The purchase of Marathon also had a significant impact on full year earnings including a gain on the purchase of $726,000, cumulative data processing conversion costs of $265,000 and professional fee expense of $233,000 (all items shown net of tax). Excluding these items, 2012 net income would have been $5,781,000 ($3.47 per share), up 8.1% per share over 2011.

 

Peter W. Knitt, President and CEO of PSB noted, “2012 was a year of reviewing the past as part of our 50^th anniversary in addition to looking forward by completing our first bank acquisition. Marathon’s net income, including merger and conversion income and expenses, added approximately $463,000 to our 2012 net income, an increase of 8.3%. Marathon’s acquisition added local deposit market share and substantial liquidity to reduce our dependency on wholesale funding and to better manage our cost of deposits. Total assets ended 2012 at $712 million, up $89 million because of the acquisition. Due to the banking industry’s growing regulatory and other fixed costs, we continue to seek growth through acquisitions that could build value for shareholders.”

 

Knitt further added, “We resolved several large problem assets during the December 2012 quarter and saw nonperforming assets decrease $5,429,000, or 30.4%, during the year ended December 31, 2012. Nonperforming assets at December 31, 2012 were 1.75% of total assets, the lowest measure since June 30, 2008. Although the $1,229,000, or 48%, decrease in credit costs during 2012 compared to 2011 was a substantial driver of net income growth, we expect 2013 credit costs to decrease moderately from 2012 and contribute less to 2013 income growth. In general, income growth during 2013 could be challenging in light of lower mortgage banking refinance income and continued downward pressure on loan yields.”

 

Financial Highlights:

 

v

December 2012 quarterly earnings of $1.01 per share and full year 2012 earnings of $3.61 per share. Excluding special items associated with the purchase of Marathon, December 2012 quarterly earnings were $.90 per share and full year 2012 earnings were $3.47 per share, up 6% and 8% over the prior year periods, respectively.

 

v

Tangible net book value of $32.93 per share, up 8% compared to December 31, 2011. Year to date return on average stockholders’ equity during 2012 was 11.33% (10.90% excluding the Marathon purchase gain and related acquisition costs) compared to 10.78% during 2011.

 

v

Lower nonperforming assets totaling $12.5 million at December 31, 2012 (1.75% of total assets), down 30% since December 31, 2011. Nonperforming assets were 20% of stockholders’ equity and loan loss reserves at December 31, 2012 compared to 31% at 2011.

 

Acquisition of Marathon State Bank

 

PSB completed its $5.5 million cash purchase of Marathon on June 14, 2012, and during the year ended December 31, 2012 recorded a gain on bargain purchase of $726,000, or $.44 per share, net of income tax expense. Marathon was a competitor in PSB’s existing market area located in a rural community located 11 miles away from PSB’s home office in Wausau, Wisconsin. On the closing date, Marathon added $107.4 million in total assets to PSB including $20.4 million in cash and cash equivalents, $54.4 million in securities, $31.6 million in loans receivable, and $1.0 million in other assets. Marathon also added $99.3 million in local deposits and $1.6 million in brokered deposits. No core deposit intangible asset was recorded because the amount calculated was insignificant. PSB merged its existing $16.0 million total assets branch into Marathon’s location and fully completed the merger of Marathon into Peoples State Bank on October 13, 2012.

 

Balance Sheet Changes

 

Total assets were $712.0 million at December 31, 2012, up $19.4 million (2.8%) during the December 2012 quarter, and up $89.1 million (14.3%) during the year ended December 31, 2012. The quarterly increase was due primarily to $8.0 million of net growth in fixed rate residential real estate mortgage loans retained on the balance sheet rather than sold on the secondary market, and a $14.7 million increase in cash and overnight investments from core deposit growth which included $14.7 million of growth in municipal deposits from year-end property tax collections.

 

During the year ended December 31, 2012, a $101.4 million increase in core deposits, primarily from the acquisition of Marathon, funded a $20.1 million pay down of maturing brokered certificates of deposit and the majority of the $89.1 million net growth in total assets. 2012 asset growth consisted primarily of $10.6 million in cash and overnight investments, $26.8 million in residential mortgage loans, $13.0 million in commercial related loans, and $36.5 million in investment securities. Marathon’s total assets were $107.4 million on the June 1, 2012 acquisition date, including $62.3 million of securities and short-term investments. Following the purchase date, maturity proceeds from the acquired Marathon investment securities were used to pay down wholesale funding.

 

At December 31, 2012, total wholesale funding, including brokered certificates of deposit, Federal Home Loan Bank (FHLB) advances, and other borrowings were $125.4 million, or 17.6% of total assets, compared to $144.4 million, or 23.2% of total assets at December 31, 2011. The substantial cash and cash equivalents held at December 31, 2012 totaling $48.8 million are expected to be used to fund net new loan growth and to continue pay down of wholesale funding during 2013.

 

Asset Quality, Credit Costs, and the Allowance for Loan Losses

 

PSB recorded a $460,000 provision for loan losses during the December 2012 quarter compared to $240,000 recorded in December 2011. Despite resolution of several large problem loans without loss during the December 2012 quarter, the provision increased from additional specific reserves required on two existing problem relationships due to declining collateral values and specific reserves on six newly indentified problem relationships. Offsetting the increase in the provision was a sharp decline in loss on foreclosed assets which totaled $6,000 during the December 2012 quarter compared to $558,000 during the December 2011 quarter. The prior year quarter included a $448,000 write-down of PSB’s largest foreclosed property. Following another write-down of the property of $280,000 during the September 2012 quarter, it was sold for a $57,000 loss during the December 2012 quarter. Taken together, December 2012 quarterly credit costs were $466,000 compared to $798,000 during 2011, a decline of $332,000, or 42%.

 

PSB recorded a $785,000 provision for loan losses during the year ended December 31, 2012 compared to $1,390,000 recorded during 2011, as the pace of new problem loans added to nonperforming assets has slowed considerably compared to the prior year, while older problem loans are resolved or charged-off. Loss on foreclosed assets totaled $573,000 during 2012 compared to $1,197,000 during 2011. The majority of the losses were partial write-downs of existing properties due to collateral value declines which totaled $485,000 during 2012 and $992,000 during 2011. Taken together, credit costs were $1,358,000 during 2012 compared to $2,587,000 during 2011, a decline of $1,229,000, or 48%. Declining credit costs were an important contributor to increased earnings during 2012. Foreclosed assets totaled $1,774,000 at December 31, 2012 and significant write-downs due to declining collateral values during 2013 are not expected.

 

Total nonperforming assets decreased $4,737,000, or 28%, since September 30, 2012, and decreased $5,429,000, or 30%, since December 31, 2011.  Most of the improvement occurred during the December 2012 quarter when $3,345,000 from two performing restructured loan relationships held at December 31, 2011 repaid without loss, and the largest foreclosed asset with a basis of $1,280,000 at the beginning of the year was sold. These three transactions represented 85% of the decline in nonperforming assets during 2012. At December 31, 2012, the allowance for loan losses was $7,431,000, or 1.53% of total loans (70% of nonperforming loans), compared to $7,941,000, or 1.78% of total loans (56% of nonperforming loans) at December 31, 2011.

 

Nonperforming assets are shown in the following table.

 

Non-Performing Assets as of		December 31,
(dollars in thousands)		2012				2011
Nonaccrual loans (excluding restructured loans)		$	6,491			$	5,893
Nonaccrual restructured loans			1,224				2,081
Restructured loans not on nonaccrual			2,965				6,220
Accruing loans past due 90 days or more			—				—
Total nonperforming loans			10,680				14,194
Nonaccrual trust preferred investment security			—				750
Foreclosed assets			1,774				2,939
Total nonperforming assets		$	12,454			$	17,883
Nonperforming loans as a % of gross loans			2.20%				3.19%
Total nonperforming assets as a % of total assets			1.75%				2.87%

 

Net charge-offs of loan principal were $460,000 and $1,295,000 during the quarter and year ended December 31, 2012, respectively. Net loan charge-offs were $318,000 and $1,409,000 during the quarter and year ended December 31, 2011, respectively. Annualized net loan charge-offs declined during 2012 and were 0.28% and 0.32% of total loans during the years ended December 31, 2012 and 2011, respectively.

 

At December 31, 2012, all nonperforming assets aggregating to $500,000 or more measured by gross principal outstanding per credit relationship (two relationships) totaled $1,416,000 before $269,000 in specific reserves, representing 11% of total nonperforming assets. At December 31, 2011, all nonperforming assets aggregating to $500,000 or more measured by gross principal outstanding per credit relationship (nine relationships) totaled $9.3 million before $694,000 in specific reserves, representing 52% of total nonperforming assets. During 2012, $3,345,000 (beginning of year balances) of nonperforming loans were repaid without loss, $1,280,000 of foreclosed property was written down and sold, a $750,000 trust preferred security issued by Johnson Financial Group, Inc. repaid past due interest and returned to performing status, a loan of $675,000 was foreclosed with a partial charge-off, and $1,827,000 of nonperforming assets were restructured or partially written down to balances less than $500,000.

 

Due to continued slow economic conditions in its markets, a recent announcement by Wausau Paper Corporation of their intent to sell two large underperforming paper mills in our markets affecting nearly 850 manufacturing jobs, and substantial uncertainty regarding ongoing United States federal budget and deficit negotiations, PSB does not expect to experience such a sharp decline in nonperforming assets during 2013 and could experience an increase in restructured loans, which would increase nonperforming assets.

 

Capital and Liquidity

 

During the year ended December 31, 2012, stockholders’ equity increased $4,085,000 primarily from $6,009,000 of net income less $1,247,000 of shareholder dividends declared. Changes to items of comprehensive income also reduced equity $540,000 during 2012 due a decline in fair value of securities and an unrealized loss on fair value of interest rate swaps. During the December 2012 quarter, PSB purchased 10,000 shares of its common stock on the open market which reduced equity $258,000.

 

Net book value increased to $32.93 per share at December 31, 2012 compared to $30.44 per share at December 31, 2011, an increase of 8.2%. PSB’s equity to assets ratio declined during the year ended December 31, 2012 due to the purchase of Marathon in the June 2012 quarter using existing cash on hand without the issuance of new common stock. Common stockholders’ equity was 7.65% of total assets at December 31, 2012 compared to 7.42% of assets at June 30, 2012 (following the Marathon purchase) and 8.09% of assets at December 31, 2011. For regulatory purposes, the $7 million 8% senior subordinated notes maturing July 2019 and $7.7 million junior subordinated debentures maturing September 2035 reflected as debt on the Consolidated Balance Sheet are reclassified as Tier 2 and Tier 1 regulatory equity capital, respectively. PSB was considered “well capitalized” under banking regulations at December 31, 2012.

 

PSB regularly maintains access to wholesale markets to fund loan originations and manage local depositor needs. At December 31, 2012, unused and available wholesale funding was approximately $273 million, or 38% of total assets, compared to $238 million, or 38% of total assets at December 31, 2011. 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. PSB’s ability to borrow funds on a short-term basis from the Federal Reserve Discount Window is an important part of its liquidity analysis and represented 26% and 42% of unused and available liquidity at December 31, 2012 and December 31, 2011, respectively. Unused and available liquidity improved with the acquisition of Marathon, which previously operated with virtually no wholesale funding and whose largest asset class represented cash and marketable investment securities.

 

Net Interest Margin

 

Tax adjusted net interest income totaled $5,535,000 (on net margin of 3.38%) during the December 2012 quarter compared to $5,412,000 (3.37%) in the September 2012 quarter and $5,235,000 (3.64%) in the December 2011 quarter. During the December 2012 quarter, net interest income benefited from resolution of past due interest due PSB on its investment in trust preferred debentures issued by Johnson Financial Group, Inc. December 2012 quarterly net interest income before consideration of the $105,000 interest payment from Johnson would have been $5,430,000 and net margin would have been 3.32%.

 

Although net interest income increased over prior quarterly periods from increased average earning assets, net margin remains under significant pressure from falling loan yields. During the quarter ended December 31, 2012, loan yields declined .20% (to 4.91%) while the average deposit cost declined .09% (to .66%) compared to the linked September 2012 quarter. Although investment security yields continue to be under significant downward pressure as well, tax adjusted securities yield (excluding income received on the Johnson Financial investment) was 3.08% during the December 2012 quarter compared to 3.02% during the September 2012 quarter as certain low yielding agency debentures acquired in the Marathon purchase matured and were used to pay down higher cost wholesale funding. However, PSB expects securities yield to decline during the March 2013 quarter as maturing funds are reinvested into significantly lower market yields.

 

In light of very low market rates and intense competition for high credit quality loan growth, PSB expects loan yields during 2013 to decline as maturities and originations are repriced at rates lower than the current portfolio. In addition, the decline in loan yield may be greater than deposit costs can be reduced with deposit rates already near functional minimums. However, approximately $38 million of existing wholesale funding and senior subordinated notes with a 3.58% average cost are scheduled to mature or be repriced during 2013. Lower wholesale funding costs and increased average earning assets during 2013 compared to 2012 are expected to offset the decline in loan yield and support net interest income growth although net margin is expected to decline from levels seen during the December 2012 quarter.

 

For the year ended December 31, 2012, tax adjusted net interest income totaled $21,028,000 (on net margin of 3.41%) compared to $20,297,000 (3.55%) during 2011. During 2012, loan yields declined .43%, although the cost of interest bearing liabilities also declined .42%. However, maturing investment cash flows were reinvested into significantly lower market rates and a declining yield on investment securities has lowered net interest margin during 2012 compared to 2011. Tax adjusted securities yields were 3.26% during 2012, down .61% from 3.87% during 2011, and securities grew as a percent of total earning assets to 21.7% during 2012 from 19.6% during 2011.

 

Noninterest and Fee Income

 

Total noninterest income for the quarter ended December 31, 2012 was $1,559,000, compared to $1,376,000 earned during the December 2011 quarter, an increase of $183,000, or 13.3%. Customer residential mortgage loan refinance activity led mortgage banking activity higher by $193,000, or 49.6% more than seen during the December 2011 quarter. PSB expects mortgage banking income to decline moderately during the March 2013 quarter and to decline significantly during the remainder of 2013 as most qualifying borrowers will have completed a refinance into the current rate levels. PSB expects that lower mortgage banking fees will have a negative impact on net income in 2013.

 

During the year ended December 31, 2012, noninterest income was $6,568,000 in 2012, up $1,231,000 from $5,337,000 in 2011. Absent the $851,000 Marathon bargain purchase gain recorded in the June 2012 quarter, noninterest income would have increased $380,000, or 7.1%, over 2011, primarily from a $422,000 increase in mortgage banking, up 30.7%. Despite 2011 regulation to limit bank debit card interchange and overdraft fees, net fee income on these products after vendor costs declined a slight 1.1% and totaled $1,644,000 and $1,662,000 during 2012 and 2011, respectively. As card payment systems undergo changes due to regulation and consumer payment habits change, PSB could see debit card and overdraft fee income decline further during 2013, negatively impacting net income.

 

Operating Expenses

 

Noninterest expenses totaled $4,349,000 during the December 2012 quarter compared to $4,121,000 during the December 2011 quarter, up $228,000. Excluding the loss on foreclosed assets for both periods and $55,000 of Marathon 2012 data conversion costs, December 2012 quarterly expenses would have been $4,288,000 compared to $3,563,000 during 2011, an increase of $725,000 or 20.3%.

 

During the December 2012 quarter, salaries and employee benefits increased $434,000 compared to the prior year quarter from a $157,000 increase in wages from the cost of acquired Marathon employees plus an additional $106,000 increase in year-end incentive and profit sharing plan costs and a $208,000 increase in health insurance expense under PSB’s self insured plan. Excluding $55,000 of Marathon data processing conversion expenses, PSB data processing and other office operations increased $136,000, or 35.7% over December 2011 due to a $109,000 increase in service bureau data processing costs including $43,000 of final Marathon monthly processing costs prior to conversion to PSB’s computer system. On a linked quarter basis, PSB’s data processing system and office operations costs (excluding Marathon costs prior to the conversion to PSB’s system) were $474,000 during the December 2012 quarter compared to $441,000 during the September 2012 quarter. Lastly, other noninterest expenses increased $169,000 during December 2012 compared to December 2011 as a $70,000 negotiated vendor credit was recorded during 2011 which reduced licensing fees associated with a discontinued deposit product type.

 

Noninterest expenses totaled $17,392,000 during the year ended December 31, 2012 compared to $15,778,000 during 2011, up $1,614,000. Excluding the loss on foreclosed assets for both periods, $438,000 in Marathon data conversion costs, and $233,000 in Marathon merger professional fees, 2012 expenses would have been $16,148,000 compared to $14,581,000 during 2011, an increase of $1,567,000 or 10.7%. Marathon operating expenses, primarily wages and monthly data processing costs added approximately $535,000 in normal recurring operating expenses following the acquisition by PSB. Separate from Marathon, other increases to wages and benefits included higher health insurance costs, up $212,000, or 27.2%, due to higher claims experience under PSB’s self insured plan, and higher incentive plan and profit sharing costs, up $164,000, or 15.1%. Excluding Marathon related expenses, PSB data processing and other office operations increased $350,000, or 23.6%, over 2011 due to higher costs associated with PSB’s outsourced information processing system as vendor monthly discounts previously in place following the 2010 original data conversion expired during the September 2011 quarter.

 

Forward Looking Statements

 

Certain matters discussed in this news release, including those relating to the growth of PSB Holdings, Inc., 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 outlined under “Forward - Looking Statements” and elsewhere in Item 1A of PSB Holdings, Inc.’s Form 10-K for the year ended December 31, 2011. 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.

 

About PSB Holdings, Inc.

 

PSB Holdings, Inc. is the parent company of Peoples State Bank. Peoples is headquartered in Wausau, Wisconsin, operating eight full service retail and commercial 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. More information concerning the operations and performance of PSB Holdings, Inc. may be found on the PSB investor relations website, www.psbholdingsinc.com. PSB Holdings, Inc stock is traded on the Over the Counter Bulletin Board Exchange and the OTC Markets Exchange under the symbol PSBQ.

 

# # #

 

PSB Holdings, Inc.

Quarterly Financial Summary

(dollars in thousands, except per share data)

 

	Quarter ended – Unaudited
		December 31,				September 30,				June 30,				March 31,				December 31,
Earnings and dividends:		2012				2012				2012				2012				2011
Net income		$	1,685			$	1,226			$	1,918			$	1,180			$	1,400
Basic earnings per share(3)		$	1.01			$	0.74			$	1.15			$	0.70			$	0.85
Diluted earnings per share(3)		$	1.01			$	0.74			$	1.15			$	0.70			$	0.85
Dividends declared per share(3)		$	0.38			$	—			$	0.36			$	—			$	0.35
Net book value per share		$	32.93			$	32.34			$	31.64			$	30.96			$	30.44
Semi-annual dividend payout ratio			21.72%				n/a				19.44%				n/a				20.86%
Average common shares outstanding			1,662,929				1,663,472				1,663,410				1,663,138				1,654,111
Balance sheet - average balances:
Loans receivable, net of allowances		$	472,096			$	460,697			$	447,886			$	436,907			$	440,737
Total assets		$	691,688			$	698,103			$	639,404			$	607,917			$	604,216
Deposits		$	546,371			$	550,564			$	493,349			$	466,121			$	457,916
Stockholders’ equity		$	54,661			$	53,440			$	52,835			$	51,016			$	50,910
Performance ratios:
Return on average assets(1)			0.97%				0.70%				1.21%				0.78%				0.92%
Return on average stockholders’ equity(1)			12.26%				9.13%				14.60%				9.30%				10.91%
Average tangible stockholders’ equity
less accumulated other comprehensive
income (loss) to average assets(4)			7.71%				7.44%				8.01%				8.10%				8.11%
Net loan charge-offs to average loans(1)			0.38%				0.19%				0.24%				0.31%				0.28%
Nonperforming loans to gross loans			2.20%				2.93%				2.95%				3.38%				3.19%
Allowance for loan losses to gross loans			1.53%				1.55%				1.61%				1.75%				1.78%
Nonperforming assets to tangible equity
plus the allowance for loan losses(4)			20.54%				28.59%				29.38%				32.44%				31.32%
Net interest rate margin(1)(2)			3.38%				3.37%				3.42%				3.50%				3.64%
Net interest rate spread(1)(2)			3.19%				3.21%				3.20%				3.27%				3.38%
Service fee revenue as a percent of
average demand deposits(1)			1.94%				2.17%				2.41%				2.66%				2.49%
Noninterest income as a percent
of gross revenue			18.35%				17.24%				25.81%				15.65%				16.31%
Efficiency ratio(2)			61.31%				70.89%				54.85%				66.04%				62.34%
Noninterest expenses to average assets(1)			2.50%				2.77%				2.56%				2.73%				2.71%
Stock price information:
High		$	28.75			$	29.20			$	26.67			$	24.76			$	23.57
Low		$	25.50			$	24.50			$	21.81			$	21.86			$	22.43
Market value at quarter-end		$	26.00			$	28.75			$	25.24			$	24.76			$	22.48

 

⁽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.

PSB Holdings, Inc.

Consolidated Statements of Income

 

		Three Months Ended								Year Ended
(dollars in thousands,		December 31,								December 31,
except per share data – unaudited)		2012				2011				2012				2011
Interest and dividend income:
Loans, including fees		$	5,867			$	6,184			$	23,458			$	24,480
Securities:
Taxable			677				596				2,402				2,637
Tax-exempt			359				267				1,293				1,125
Other interest and dividends			34				16				91				72
Total interest and dividend income			6,937				7,063				27,244				28,314
Interest expense:
Deposits			902				1,228				4,161				5,428
FHLB advances			353				396				1,414				1,776
Other borrowings			149				151				596				645
Senior subordinated notes			153				142				578				567
Junior subordinated debentures			86				86				342				341
Total interest expense			1,643				2,003				7,091				8,757
Net interest income			5,294				5,060				20,153				19,557
Provision for loan losses			460				240				785				1,390
Net interest income after provision for loan losses			4,834				4,820				19,368				18,167
Noninterest income:
Service fees			409				409				1,648				1,632
Mortgage banking			582				389				1,795				1,373
Investment and insurance sales commissions			174				161				736				631
Net gain on sale of securities			—				32				—				32
Increase in cash surrender value of life insurance			103				104				407				415
Gain on bargain purchase			—				—				851				—
Other noninterest income			291				281				1,131				1,254
Total noninterest income			1,559				1,376				6,568				5,337
Noninterest expense:
Salaries and employee benefits			2,460				2,026				9,169				8,337
Occupancy and facilities			412				453				1,622				1,702
Loss on foreclosed assets			6				558				573				1,197
Data processing and other office operations			572				381				2,296				1,382
Advertising and promotion			92				86				327				291
FDIC insurance premiums			129				108				464				505
Other noninterest expenses			678				509				2,941				2,364
Total noninterest expense			4,349				4,121				17,392				15,778
Income before provision for income taxes			2,044				2,075				8,544				7,726
Provision for income taxes			359				675				2,535				2,421
Net income		$	1,685			$	1,400			$	6,009			$	5,305
Basic earnings per share		$	1.01			$	0.85			$	3.61			$	3.21
Diluted earnings per share		$	1.01			$	0.85			$	3.61			$	3.21

PSB Holdings, Inc.

Consolidated Statements of Comprehensive Income

 

	Three Months Ended									Year Ended
	December 31,									December 31,
(dollars in thousands – unaudited)		2012				2011				2012				2011
Net income		$	1,685			$	1,400			$	6,009			$	5,305
Other comprehensive income, net of tax:
Unrealized loss on securities available for sale			(131	)			(152	)			(191	)			109
Reclassification adjustment for security gain included in net income			—				(19	)			—				(19	)
Amortization of unrealized gain on securities available for sale
transferred to securities held to maturity included in net income			(64	)			(73	)			(274	)			(348	)
Unrealized loss on interest rate swap			(2	)			(35	)			(179	)			(447	)
Reclassification adjustment of interest rate swap settlements included in earnings			27				27				104				111
Comprehensive income		$	1,515			$	1,148			$	5,469			$	4,711

PSB Holdings, Inc.

Consolidated Balance Sheets

December 31, 2012 unaudited, December 31, 2011 derived from audited financial statements

 

		December 31,				December 31,
(dollars in thousands, except per share data – unaudited)		2012				2011
Assets
Cash and due from banks		$	20,332			$	14,805
Interest-bearing deposits and money market funds			1,431				1,829
Federal Funds sold			27,084				21,571
Cash and cash equivalents			48,847				38,205
Securities available for sale (at fair value)			75,387				59,383
Securities held to maturity (fair value of $72,364 and $50,571)			69,822				49,294
Bank certificates of deposit			4,465				2,484
Loans held for sale			884				39
Loans receivable, net of allowance for loan losses			477,991				437,557
Accrued interest receivable			2,157				2,068
Foreclosed assets			1,774				2,939
Premises and equipment, net			10,240				9,928
Mortgage servicing rights, net			1,233				1,205
Federal Home Loan Bank stock (at cost)			2,506				3,250
Cash surrender value of bank-owned life insurance			11,813				11,406
Other assets			4,847				5,109
TOTAL ASSETS		$	711,966			$	622,867
Liabilities
Non-interest-bearing deposits		$	89,819			$	75,298
Interest-bearing deposits			475,623				406,211
Total deposits			565,442				481,509
Federal Home Loan Bank advances			50,124				50,124
Other borrowings			20,728				19,691
Senior subordinated notes			7,000				7,000
Junior subordinated debentures			7,732				7,732
Accrued expenses and other liabilities			6,493				6,449
Total liabilities			657,519				572,505
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 – 3,000,000 shares
Issued – 1,830,266 shares; Outstanding – 1,653,472 shares			1,830
Issued – 1,830,266 shares; Outstanding – 1,654,639 shares							1,830
Additional paid-in capital			7,020				7,140
Retained earnings			48,977				44,215
Accumulated other comprehensive income, net of tax			1,394				1,934
Treasury stock, at cost – 176,794 and 175,627 shares, respectively			(4,774	)			(4,757	)
Total stockholders’ equity			54,447				50,362
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		$	711,966			$	622,867

 

PSB Holdings, Inc.

Average Balances and Interest Rates

Quarter ended December 31,

 

		2012												2011
		Avg. Bal				Interest				Yield/Rate				Avg. Bal				Interest				Yield/Rate
Assets
Interest-earning assets:
Loans(1)(2)		$	479,654			$	5,923				4.91%			$	448,872			$	6,221				5.50%
Taxable securities			93,744				677				2.87%				79,719				596				2.97%
Tax-exempt securities(2)			50,316				544				4.30%				31,271				405				5.14%
FHLB stock			2,633				3				0.45%				3,250				1				0.12%
Other			24,317				31				0.51%				7,291				15				0.82%
Total(2)			650,664				7,178				4.39%				570,403				7,238				5.03%
Non-interest-earning assets:
Cash and due from banks			14,961												9,053
Premises and equipment, net			10,303												10,029
Cash surrender value insurance			11,749												11,342
Other assets			11,569												11,524
Allowance for loan losses			(7,558	)											(8,135	)
Total		$	691,688											$	604,216
Liabilities & stockholders’ equity
Interest-bearing liabilities:
Savings and demand deposits		$	168,113			$	151				0.36%			$	128,050			$	232				0.72%
Money market deposits			115,111				134				0.46%				95,248				170				0.71%
Time deposits			179,058				617				1.37%				169,401				826				1.93%
FHLB borrowings			50,124				353				2.80%				54,961				396				2.86%
Other borrowings			19,264				149				3.08%				19,537				151				3.07%
Senior subordinated notes			7,000				153				8.70%				7,000				142				8.05%
Junior subordinated debentures			7,732				86				4.42%				7,732				86				4.41%
Total			546,402				1,643				1.20%				481,929				2,003				1.65%
Non-interest-bearing liabilities:
Demand deposits			84,089												65,217
Other liabilities			6,536												6,160
Stockholders’ equity			54,661												50,910
Total		$	691,688											$	604,216
Net interest income						$	5,535											$	5,235
Rate spread											3.19%												3.38%
Net yield on interest-earning assets											3.38%												3.64%

 

⁽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 as is using a tax rate of 34%.

PSB Holdings, Inc.

Average Balances and Interest Rates

Year ended December 31,

 

		2012												2011
		Avg. Bal				Interest				Yield/Rate				Avg. Bal				Interest				Yield/Rate
Assets
Interest-earning assets:
Loans(1)(2)		$	462,237			$	23,667				5.12%			$	443,709			$	24,640				5.55%
Taxable securities			91,747				2,402				2.62%				79,711				2,637				3.31%
Tax-exempt securities(2)			41,825				1,959				4.68%				32,625				1,705				5.23%
FHLB stock			2,817				9				0.32%				3,250				4				0.12%
Other			17,445				82				0.47%				12,679				68				0.54%
Total(2)			616,071				28,119				4.56%				571,974				29,054				5.08%
Non-interest-earning assets:
Cash and due from banks			17,979												8,532
Premises and equipment, net			10,078												10,216
Cash surrender value insurance			11,597												11,175
Other assets			11,427												12,481
Allowance for loan losses			(7,799	)											(7,884	)
Total		$	659,353											$	606,494
Liabilities & stockholders’ equity
Interest-bearing liabilities:
Savings and demand deposits		$	154,428			$	782				0.51%			$	126,944			$	1,109				0.87%
Money market deposits			110,587				586				0.53%				100,089				810				0.81%
Time deposits			176,187				2,793				1.59%				171,200				3,509				2.05%
FHLB borrowings			50,941				1,414				2.78%				56,730				1,776				3.13%
Other borrowings			19,190				596				3.11%				24,499				645				2.63%
Senior subordinated notes			7,000				578				8.26%				7,000				567				8.10%
Junior subordinated debentures			7,732				342				4.42%				7,732				341				4.41%
Total			526,065				7,091				1.35%				494,194				8,757				1.77%
Non-interest-bearing liabilities:
Demand deposits			73,135												57,942
Other liabilities			7,128												5,150
Stockholders’ equity			53,025												49,208
Total		$	659,353											$	606,494
Net interest income						$	21,028											$	20,297
Rate spread											3.21%												3.31%
Net yield on interest-earning assets											3.41%												3.55%

 

⁽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 as is using a tax rate of 34%.