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Section 1: 8-K (PSB HOLDINGS, INC. FORM 8-K)

 

 

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549
     
 
FORM 8-K
 
CURRENT REPORT
 
Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
     
 
Date of Report (date of earliest event reported):  January 26, 2015
 
PSB HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
 
WISCONSIN 0-26480 39-1804877
(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification
incorporation)   Number)

 

1905 STEWART AVENUE
WAUSAU, WI  54401
(Address of principal executive offices, including Zip Code)
 
(715) 842-2191
Registrant’s telephone number, including area code

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

  

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 23.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

  

INFORMATION TO BE INCLUDED IN THE REPORT

 

Section 2 – Financial Information

 

Item 2.02. Results of Operations and Financial Condition

 

On January 26, 2015, PSB Holdings, Inc. issued a news release announcing quarterly net income of $1,805,000, or $1.10 per diluted share, for the quarter ended December 31, 2014, as compared to net income of $1,561,000, or $.95 per diluted share, for the quarter ended December 31, 2013. Earnings during the year ended December 31, 2014, were $3.90 per share on net income of $6,440,000, compared to $2.87 per share on net income of $4,744,000 during 2013. A copy of the news release is furnished as Exhibit 99.1 to this report.*

 

Section 9 – Financial Statements and Exhibits

 

Item 9.01 Financial Statements and Exhibits

 

Exhibit 99.1* News release dated January 26, 2015

 

*This exhibit is furnished pursuant to Item 2.02 and shall not be deemed to have been filed or incorporated by reference into any other filing by the Company under the Securities Act of 1933 or Securities Exchange Act of 1934 unless expressly so provided by specific reference in such filing.

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

  

  PSB HOLDINGS, INC.
Date: January 26, 2015  
  By:  /s/ SCOTT M. CATTANACH
    Scott M. Cattanach
Treasurer

 

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EXHIBIT INDEX

to

FORM 8-K

of

PSB HOLDINGS, INC.

dated January 26, 2015

Pursuant to Section 102(d) of Regulation S-T

(17 C.F.R. Section 232.102(d))

 

 

 

99.1* News release dated January 26, 2015

 

*This exhibit is furnished pursuant to Item 2.02 and shall not be deemed to have been filed or incorporated by reference into any other filing by the Company under the Securities Act of 1933 or Securities Exchange Act of 1934 unless expressly so provided by specific reference in such filing.

 

 

 

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Section 2: EX-99.1 (EXHIBIT 99.1)

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:

 

vQuarterly 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%.

 

vReturn 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.

 

vTotal 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.

 

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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 

 

Balance Sheet Highlights

 

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.

 

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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%

 

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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.

 

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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.

 

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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.

 

 

 

 

 

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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.

 

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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%.

 

 

 

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