PSB Reports Fourth Quarter 2019 Earnings of $2.8 Million or $0.63 Per Share; Net Income Increased 9% to Record $11.2 Million in 2019
WAUSAU, Wis., Jan. 27, 2020 (GLOBE NEWSWIRE) — PSB Holdings, Inc. (“PSB”) (OTCQX: PSBQ), the holding company for Peoples State Bank serving North Central Wisconsin, reported fourth quarter earnings ending December 31, 2019 of $0.63 per share on net income of $2.81 million, compared to earnings of $0.70 per share on net income of $3.13 million during the September 2019 quarter, and $0.56 per share one year earlier on earnings of $2.53 million. The fourth quarter earnings reflected slightly higher net interest income and higher levels of non-interest expense. Loan production remained strong, with net loans receivable expanding 2.3% from the previous quarter and 7.5% relative to one year earlier.
For the year ended December 31, 2019, earnings increased 9.1% to $11.2 million, or $2.51 per share compared to $10.3 million, or $2.29 per share for the year ended December 31, 2018. “PSB achieved record earnings in 2019 as strong lending activity has fueled asset growth and a streamlined branch network added efficiencies. As we begin 2020, we will convert our loan production office in Milwaukee into a full-service branch office in the first quarter. We anticipate the move into this economically vibrant market will continue to fuel loan and deposit growth in years ahead,” stated Scott Cattanach, President and CEO.Financial Highlights (at or for the periods ended December 31, 2019, compared to September 30, 2019 and /or December 31, 2018, as applicable):Return on shareholders’ equity was 11.98% for the quarter compared to 13.94% one quarter earlier and 12.62% for the fourth quarter one year earlier. Return on average assets was 1.17% for the fourth quarter of 2019, compared to 1.34% the previous quarter and 1.14% for the fourth quarter one year earlier. For the year ended December 31, 2019, the return on shareholders’ equity was 12.77% and the return on average assets was 1.22%.
Total assets grew 2.7% to $974.9 million at December 31, 2019 from $949.7 million one quarter earlier and 6.4% from $916.0 million one year earlier. Net loan growth of $49.2 million and core deposit growth of $74.0 million supported balance expansion over the past year.
The net interest margin decreased to 3.53% for the quarter ended December 31, 2019, compared to 3.60% the previous quarter and 3.58% for the fourth quarter one year earlier. The net interest margin for the fourth quarter was affected by a larger balance of investments relative to prior periods.
The efficiency ratio was 59.90% for the fourth quarter compared to 55.14% one quarter earlier and 62.54% in the year ago quarter.
Tangible net book value was $20.72 per share at December 31, 2019, compared to $20.24 per share as of September 30, 2019 and $17.98 per share at December 31, 2018. Over the past year, tangible book value has grown 15.24%.Balance Sheet and Asset Quality ReviewTotal assets were $974.9 million as of December 31, 2019, compared to $949.7 million as of September 30, 2019, an increase of $25.2 million, or 2.7%. Total loans receivable increased $16.4 million with much of the new loans consisting of loans secured by commercial real estate. The commercial/agricultural real estate loan portfolio increased to $401.4 million at December 31, 2019 from $385.5 million three months earlier. Non-owner occupied commercial real estate loans represented the largest component of the loan portfolio at 31.4% of gross loans at December 31, 2019, followed by owner occupied commercial real estate loans at 24.8%, residential real estate at 23.9%, commercial/agricultural loans at 19.0% and consumer loans at 0.7%. Total agricultural related loans represent 1.16% of the total loan portfolio. The non-owner occupied commercial real estate portfolio represents the largest portion of loan growth over the past year as the balance grew 14.0% from $196.8 million at December 31, 2018 to $224.3 million at December 31, 2019. Meanwhile, over the past year, the commercial/agricultural non-real estate loans decreased 7.6% from $147.2 million at December 31, 2018 to $136.0 million at December 31, 2019. The allowance for loan losses remained at 0.97% of gross loans at December 31, 2019. The annualized net charge-offs to average loans was unchanged at 0.01% for the quarter ended December 31, 2019, compared to the previous quarter and 0.07% one year earlier. Non-performing assets decreased to 0.55% of total assets at December 31, 2019, compared to 0.57% at September 30, 2019, and 0.67% at December 31, 2018. At December 31, 2019, non-performing assets consisted of $3.7 million in non-accrual loans, $499,000 in non-accrual restructured loans, $676,000 in restructured loans not on non-accrual, and $460,000 in other real estate owned. At December 31, 2019, cash and investments totaled $228.5 million compared to $219.8 million at September 30, 2019. During the course of the quarter, cash and investments increased due to deposit growth, a portion of which was used to support loan origination activity. Total deposits increased 6.2% to $781.8 million at December 31, 2019 compared to $736.2 million at September 30, 2019. At December 31, 2019, interest-bearing demand and savings deposits accounted for 32.9% of total deposits, followed by money market deposits at 23.5%, noninterest-bearing demand deposits at 22.6% and retail and local time deposits at 16.7%. Broker and national time deposits accounted for 4.3% of total deposits at December 31, 2019 versus 4.9% the prior quarter and 7.6% one year earlier.FHLB advances decreased to $73.5 million at December 31, 2019 compared to $85.5 million at September 30, 2019 and other borrowings decreased to $6.1 million from $17.4 million over the same time period. For the quarter ended December 31, 2019, stockholders’ equity increased $2.1 million, or 2.28%, to $92.7 million, compared to $90.6 million at September 30, 2019. Tangible net book value per share increased 2.37%, to $20.72 per share, at December 31, 2019, compared to $20.24 per share at September 30, 2019. PSB’s tangible equity to total assets was 9.50% at December 31, 2019, compared to 9.53% at September 30, 2019. Operations ReviewNet interest income totaled $8.0 million (on a net margin of 3.53%) for the fourth quarter of 2019, compared to $7.9 million (on net margin of 3.60%) for the third quarter of 2019 and $7.5 million (on a net margin of 3.58%) for the fourth quarter of 2018. Compared to the preceding quarter, loans and investment yields decreased 16 basis points to 4.41% during the fourth quarter of 2019 from 4.57% one quarter earlier while deposit and borrowing costs declined 9 basis points to 1.17% from 1.26% over the same time period. The decline in loan and investment yields were partially due to a larger average balance of cash and cash equivalents held during the quarter and a decrease in the prime lending rate due to actions by the Federal Reserve. Loan yields decreased to 4.88% from 5.04% during the fourth quarter of 2019, as many loans repriced lower as the prime rate declined, and market competition intensified. The cost of interest-bearing liabilities decreased during the quarter, reflecting lower rates associated with savings and demand deposits partially offset by higher rates on money market accounts. Towards the end of the quarter, the bank received a large balance of public funds deposited into money market accounts. Additionally, the bank offered attractive rates on money market accounts to customers who met specific criteria designed to enhance the customers’ banking relationship with the bank. These funds were used to replace higher costing certificates of deposit and borrowed funds. Deposit costs decreased to $1.54 million for the fourth quarter of 2019 from $1.65 million the previous quarter. Interest costs on borrowings declined $25,000 for the fourth quarter of 2019 to $475,000 from $500,000 the previous quarter.“Our deposit costs declined less than the yield on earning assets during the fourth quarter, as we have sought to attract new deposits in anticipation of repaying higher costing brokered deposits of approximately $8.5 million and continue to fund anticipated balance sheet growth in the first quarter of 2020,” said Mark C. Oldenberg, Chief Financial Officer.For the year ended December 31, 2019, net interest income increased 8.5% to $31.3 million compared to $28.8 million for the previous fiscal year.The provision for loan losses totaled $150,000 during the fourth quarter of 2019 compared to the same provision level for the prior linked quarter. The provision primarily relates to new loan originations and an expanding loan portfolio. Total noninterest income for the fourth quarter of 2019 compared similarly to the prior quarter at $1.8 million and higher than the $1.7 million for the fourth quarter of 2018. Service fees in the fourth quarter were $411,000 compared to $348,000 during the third quarter of 2019. Gains on sale of mortgage loans decreased slightly to $452,000 for the fourth quarter from $463,000 in the third quarter of 2019 but remained strong as falling long-term U.S. Treasury rates have spurred mortgage refinance activity. Commissions on investment and insurance sales increased to $301,000 from $276,000 the prior quarter. At December 31, 2019, the bank had wealth assets under management totaling $248.5 million compared to $240.6 million at September 30, 2019 and $211.9 million at December 31, 2018. The year over year growth of assets under management was 17.3%.For the year ended December 31, 2019, total noninterest income increased 18.3% to $7.7 million from $6.5 million one year earlier.Noninterest expense was $5.9 million for the fourth quarter of 2019, compared to $5.4 million for the third quarter. For the fourth quarter of 2019, noninterest expense increased due to a slight increase in health insurance claims, software charges related to upgrades to product and operational features, an increase in advertising and promotion, losses on the sale of foreclosed property and professional fees largely related to audits of deposit and loan operation processes, to identify cost efficiencies. Similar to the prior quarter, the fourth quarter 2019 results reflect the elimination of FDIC insurance premiums as the FDIC insurance fund reached its targeted level.For the year ended December 31, 2019, total noninterest expense increased 4.7% to $22.7 million from $21.7 million one year earlier, adjusted for our Rhinelander branch write down, recorded in the June 2019 quarter. In the first quarter of 2020, we anticipate higher personnel expenses, office expenses, depreciation and advertising costs associated with the opening of our new branch in Milwaukee.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 eight full-service banking locations in Marathon, Oneida, and Vilas counties and loan production offices in Milwaukee and Stevens Point, Wisconsin. 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 OTCQX Market. More information about PSB, its management, and its financial performance may be found at www.psbholdingsinc.com.Forward-Looking StatementsCertain matters discussed in this news release, including without limitation those relating to potential loan and deposit growth, future profits, changes in noninterest income and expenses, pro-forma impacts to income from non-recurring 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 Private Securities Litigation 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. PSB Holdings, Inc. assumes no obligation to update or supplement forward-looking statements that become untrue because of events subsequent to this press release.Investor Relations Contact
PSB Holdings, Inc.
1905 Stewart Avenue
Wausau, WI 54401
888.929.9902
InvestorRelations@bankpeoples.com
For the year ended December 31, 2019, earnings increased 9.1% to $11.2 million, or $2.51 per share compared to $10.3 million, or $2.29 per share for the year ended December 31, 2018. “PSB achieved record earnings in 2019 as strong lending activity has fueled asset growth and a streamlined branch network added efficiencies. As we begin 2020, we will convert our loan production office in Milwaukee into a full-service branch office in the first quarter. We anticipate the move into this economically vibrant market will continue to fuel loan and deposit growth in years ahead,” stated Scott Cattanach, President and CEO.Financial Highlights (at or for the periods ended December 31, 2019, compared to September 30, 2019 and /or December 31, 2018, as applicable):Return on shareholders’ equity was 11.98% for the quarter compared to 13.94% one quarter earlier and 12.62% for the fourth quarter one year earlier. Return on average assets was 1.17% for the fourth quarter of 2019, compared to 1.34% the previous quarter and 1.14% for the fourth quarter one year earlier. For the year ended December 31, 2019, the return on shareholders’ equity was 12.77% and the return on average assets was 1.22%.
Total assets grew 2.7% to $974.9 million at December 31, 2019 from $949.7 million one quarter earlier and 6.4% from $916.0 million one year earlier. Net loan growth of $49.2 million and core deposit growth of $74.0 million supported balance expansion over the past year.
The net interest margin decreased to 3.53% for the quarter ended December 31, 2019, compared to 3.60% the previous quarter and 3.58% for the fourth quarter one year earlier. The net interest margin for the fourth quarter was affected by a larger balance of investments relative to prior periods.
The efficiency ratio was 59.90% for the fourth quarter compared to 55.14% one quarter earlier and 62.54% in the year ago quarter.
Tangible net book value was $20.72 per share at December 31, 2019, compared to $20.24 per share as of September 30, 2019 and $17.98 per share at December 31, 2018. Over the past year, tangible book value has grown 15.24%.Balance Sheet and Asset Quality ReviewTotal assets were $974.9 million as of December 31, 2019, compared to $949.7 million as of September 30, 2019, an increase of $25.2 million, or 2.7%. Total loans receivable increased $16.4 million with much of the new loans consisting of loans secured by commercial real estate. The commercial/agricultural real estate loan portfolio increased to $401.4 million at December 31, 2019 from $385.5 million three months earlier. Non-owner occupied commercial real estate loans represented the largest component of the loan portfolio at 31.4% of gross loans at December 31, 2019, followed by owner occupied commercial real estate loans at 24.8%, residential real estate at 23.9%, commercial/agricultural loans at 19.0% and consumer loans at 0.7%. Total agricultural related loans represent 1.16% of the total loan portfolio. The non-owner occupied commercial real estate portfolio represents the largest portion of loan growth over the past year as the balance grew 14.0% from $196.8 million at December 31, 2018 to $224.3 million at December 31, 2019. Meanwhile, over the past year, the commercial/agricultural non-real estate loans decreased 7.6% from $147.2 million at December 31, 2018 to $136.0 million at December 31, 2019. The allowance for loan losses remained at 0.97% of gross loans at December 31, 2019. The annualized net charge-offs to average loans was unchanged at 0.01% for the quarter ended December 31, 2019, compared to the previous quarter and 0.07% one year earlier. Non-performing assets decreased to 0.55% of total assets at December 31, 2019, compared to 0.57% at September 30, 2019, and 0.67% at December 31, 2018. At December 31, 2019, non-performing assets consisted of $3.7 million in non-accrual loans, $499,000 in non-accrual restructured loans, $676,000 in restructured loans not on non-accrual, and $460,000 in other real estate owned. At December 31, 2019, cash and investments totaled $228.5 million compared to $219.8 million at September 30, 2019. During the course of the quarter, cash and investments increased due to deposit growth, a portion of which was used to support loan origination activity. Total deposits increased 6.2% to $781.8 million at December 31, 2019 compared to $736.2 million at September 30, 2019. At December 31, 2019, interest-bearing demand and savings deposits accounted for 32.9% of total deposits, followed by money market deposits at 23.5%, noninterest-bearing demand deposits at 22.6% and retail and local time deposits at 16.7%. Broker and national time deposits accounted for 4.3% of total deposits at December 31, 2019 versus 4.9% the prior quarter and 7.6% one year earlier.FHLB advances decreased to $73.5 million at December 31, 2019 compared to $85.5 million at September 30, 2019 and other borrowings decreased to $6.1 million from $17.4 million over the same time period. For the quarter ended December 31, 2019, stockholders’ equity increased $2.1 million, or 2.28%, to $92.7 million, compared to $90.6 million at September 30, 2019. Tangible net book value per share increased 2.37%, to $20.72 per share, at December 31, 2019, compared to $20.24 per share at September 30, 2019. PSB’s tangible equity to total assets was 9.50% at December 31, 2019, compared to 9.53% at September 30, 2019. Operations ReviewNet interest income totaled $8.0 million (on a net margin of 3.53%) for the fourth quarter of 2019, compared to $7.9 million (on net margin of 3.60%) for the third quarter of 2019 and $7.5 million (on a net margin of 3.58%) for the fourth quarter of 2018. Compared to the preceding quarter, loans and investment yields decreased 16 basis points to 4.41% during the fourth quarter of 2019 from 4.57% one quarter earlier while deposit and borrowing costs declined 9 basis points to 1.17% from 1.26% over the same time period. The decline in loan and investment yields were partially due to a larger average balance of cash and cash equivalents held during the quarter and a decrease in the prime lending rate due to actions by the Federal Reserve. Loan yields decreased to 4.88% from 5.04% during the fourth quarter of 2019, as many loans repriced lower as the prime rate declined, and market competition intensified. The cost of interest-bearing liabilities decreased during the quarter, reflecting lower rates associated with savings and demand deposits partially offset by higher rates on money market accounts. Towards the end of the quarter, the bank received a large balance of public funds deposited into money market accounts. Additionally, the bank offered attractive rates on money market accounts to customers who met specific criteria designed to enhance the customers’ banking relationship with the bank. These funds were used to replace higher costing certificates of deposit and borrowed funds. Deposit costs decreased to $1.54 million for the fourth quarter of 2019 from $1.65 million the previous quarter. Interest costs on borrowings declined $25,000 for the fourth quarter of 2019 to $475,000 from $500,000 the previous quarter.“Our deposit costs declined less than the yield on earning assets during the fourth quarter, as we have sought to attract new deposits in anticipation of repaying higher costing brokered deposits of approximately $8.5 million and continue to fund anticipated balance sheet growth in the first quarter of 2020,” said Mark C. Oldenberg, Chief Financial Officer.For the year ended December 31, 2019, net interest income increased 8.5% to $31.3 million compared to $28.8 million for the previous fiscal year.The provision for loan losses totaled $150,000 during the fourth quarter of 2019 compared to the same provision level for the prior linked quarter. The provision primarily relates to new loan originations and an expanding loan portfolio. Total noninterest income for the fourth quarter of 2019 compared similarly to the prior quarter at $1.8 million and higher than the $1.7 million for the fourth quarter of 2018. Service fees in the fourth quarter were $411,000 compared to $348,000 during the third quarter of 2019. Gains on sale of mortgage loans decreased slightly to $452,000 for the fourth quarter from $463,000 in the third quarter of 2019 but remained strong as falling long-term U.S. Treasury rates have spurred mortgage refinance activity. Commissions on investment and insurance sales increased to $301,000 from $276,000 the prior quarter. At December 31, 2019, the bank had wealth assets under management totaling $248.5 million compared to $240.6 million at September 30, 2019 and $211.9 million at December 31, 2018. The year over year growth of assets under management was 17.3%.For the year ended December 31, 2019, total noninterest income increased 18.3% to $7.7 million from $6.5 million one year earlier.Noninterest expense was $5.9 million for the fourth quarter of 2019, compared to $5.4 million for the third quarter. For the fourth quarter of 2019, noninterest expense increased due to a slight increase in health insurance claims, software charges related to upgrades to product and operational features, an increase in advertising and promotion, losses on the sale of foreclosed property and professional fees largely related to audits of deposit and loan operation processes, to identify cost efficiencies. Similar to the prior quarter, the fourth quarter 2019 results reflect the elimination of FDIC insurance premiums as the FDIC insurance fund reached its targeted level.For the year ended December 31, 2019, total noninterest expense increased 4.7% to $22.7 million from $21.7 million one year earlier, adjusted for our Rhinelander branch write down, recorded in the June 2019 quarter. In the first quarter of 2020, we anticipate higher personnel expenses, office expenses, depreciation and advertising costs associated with the opening of our new branch in Milwaukee.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 eight full-service banking locations in Marathon, Oneida, and Vilas counties and loan production offices in Milwaukee and Stevens Point, Wisconsin. 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 OTCQX Market. More information about PSB, its management, and its financial performance may be found at www.psbholdingsinc.com.Forward-Looking StatementsCertain matters discussed in this news release, including without limitation those relating to potential loan and deposit growth, future profits, changes in noninterest income and expenses, pro-forma impacts to income from non-recurring 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 Private Securities Litigation 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. PSB Holdings, Inc. assumes no obligation to update or supplement forward-looking statements that become untrue because of events subsequent to this press release.Investor Relations Contact
PSB Holdings, Inc.
1905 Stewart Avenue
Wausau, WI 54401
888.929.9902
InvestorRelations@bankpeoples.com
