FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended SEPTEMBER 30, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file number:
PSB HOLDINGS, INC.
(Exact name of registrant as specified in charter)
WISCONSIN 39-1804877
(State of incorporation) (I.R.S Employer Identification
Number)
1905 WEST STEWART AVENUE
WAUSAU, WISCONSIN 54401
(Address of principal executive office)
Registrant's telephone number, including area code: 715-842-2191
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such report), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
The number of common shares outstanding at September 30, 2001 was 839,705.
PSB HOLDINGS, INC.
FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 2001
PAGE NO.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
September 30, 2001 (unaudited) and December 31,
2000 (derived from audited financial statements) 1
Condensed Consolidated Statements of Income
Three Months Ended and Nine Months Ended
September 30, 2001 and 2000 (unaudited) 2
Condensed Consolidated Statements of Cash Flows
Nine Months Ended September 30, 2001 and 2000 (unaudited) 3
Notes to Condensed Consolidated Financial
Statements 4
Item 2. Management's Discussion and
Analysis of Financial Condition
and Results of Operations 7
Item 3. Quantitative and Qualitative Disclosures About
Market Risk 14
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PSB HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
($ thousands - September 30, 2001 unaudited, December 31, 2000
derived from audited financial statements)
September 30, December 31,
2001 2000
ASSETS
Cash and due from banks $ 9,235 $ 9,226
Federal funds sold 7,808 53
Interest-bearing deposits and money market funds 1,825 88
Investment securities:
Held to maturity (fair values of $19,363 and $14,005, respectively) 18,764 13,975
Available for sale (at fair value) 49,115 48,123
Federal Home Loan Bank stock (at cost) 2,118 2,008
Loans held for sale 203 114
Loans receivable, net of allowance for loan losses of $2,777 at
September 30, 2001 and $2,407 at December 31, 2000 221,808 224,702
Accrued interest receivable 2,119 2,102
Premises and equipment 4,537 4,751
OTHER ASSETS 934 1,097
TOTAL ASSETS $318,466 $306,239
LIABILITIES
Non-interest-bearing deposits $31,800 $35,192
INTEREST-BEARING DEPOSITS 217,677 206,342
Total deposits 249,477 241,534
Short-term borrowings 3,692 11,515
Long-term borrowings 38,000 28,000
OTHER LIABILITIES 1,891 2,915
TOTAL LIABILITIES 293,060 283,964
STOCKHOLDERS' EQUITY
Common stock - No par value with a stated value of $2 per share:
Authorized - 1,000,000 shares
Issued - 902,425 shares 1,805 1,805
Additional paid-in capital 7,159 7,159
Retained earnings 17,901 15,727
Unrealized gain (loss) on securities available for sale, net of tax 832 (125)
Treasury stock, at cost - 62,720 shares at September 30, 2001 and
DECEMBER 31, 2000 (2,291) (2,291)
TOTAL STOCKHOLDERS' EQUITY 25,406 22,275
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $318,466 $306,239
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PSB HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF INCOME
Nine Months Ended Three Months Ended
September 30, September 30,
($ THOUSANDS EXCEPT SHARE DATA - UNAUDITED) 2001 2000 2001 2000
Interest income:
Interest and fees on loans $ 14,739 $ 13,185 $ 4,808 $ 4,752
Interest on investment securities:
Taxable 2,143 2,159 685 726
Tax-exempt 558 447 207 147
OTHER INTEREST AND DIVIDENDS 418 89 133 41
TOTAL INTEREST INCOME 17,858 15,880 5,833 5,666
Interest expense:
Deposits 7,763 7,177 2,273 2,770
Short-term borrowings 379 888 74 297
LONG-TERM BORROWINGS 1,689 913 577 347
TOTAL INTEREST EXPENSE 9,831 8,978 2,924 3,414
Net interest income 8,027 6,902 2,909 2,252
PROVISION FOR LOAN LOSSES 450 450 150 150
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 7,577 6,452 2,759 2,102
Noninterest income:
Service fees 743 609 246 261
Net realized gain on sale of premises and equipment 46 (8)
Gain on Sale of loans 146 35 34 17
Investment product sales commissions 150 149 31 48
OTHER OPERATING INCOME 180 241 54 29
TOTAL NONINTEREST INCOME 1,265 1,034 357 355
Noninterest expenses:
Salaries and employee benefits 3,110 2,984 1,082 1,056
Occupancy 703 698 240 235
Data processing and other office operations 378 332 137 104
OTHER OPERATING 1,118 929 409 311
TOTAL NONINTEREST EXPENSES 5,309 4,943 1,868 1,706
Income before income taxes 3,533 2,543 1,248 751
PROVISION FOR INCOME TAXES 1,040 745 363 206
NET INCOME $ 2,493 $ 1,798 $ 885 $ 545
BASIC AND DILUTED EARNINGS PER SHARE $2.97 $2.08 $1.05 $0.64
WEIGHTED AVERAGE SHARES OUTSTANDING 839,705 864,255 839,705 847,895
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PSB HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOW
Nine Months Ended
September 30,
($ THOUSANDS - UNAUDITED) 2001 2000
Cash flows from operating activities:
Net income $ 2,493 $ 1,798
Adjustments to reconcile net income to net cash provided
by operating activities:
Provision for depreciation and net amortization 462 419
Provision for loan losses 450 450
Gain on sale of loans (146) (35)
Gain on sale of premises and equipment (46)
Changes in operating assets and liabilities:
Other assets (393) (726)
OTHER LIABILITIES (1,024) 33
NET CASH PROVIDED BY OPERATING ACTIVITIES: 1,796 1,939
Cash flows from investing activities:
Proceeds from sale and maturities of:
Held to maturity securities 1,010 929
Available for sale securities 24,148 4,889
Payment for purchase of:
Held to maturity securities (5,805) (585)
Available for sale securities (23,698) (6,247)
Net change in Federal Home Loan Bank stock (110)
Net change in loans 2,749 (37,669)
Net change in interest-bearing deposits (1,737) (543)
Net change in federal funds sold (7,755)
Capital expenditures (431) (1,224)
PROCEEDS FROM SALE OF PREMISES AND EQUIPMENT 41
NET CASH USED IN INVESTING ACTIVITIES (11,588) (40,450)
Cash flows from financing activities:
Net change in deposits 7,943 29,697
Net change in short-term borrowings (7,823) 1,414
Net change in long-term borrowings 10,000 9,000
Dividends paid (319) (326)
PURCHASE OF TREASURY STOCK (1,422)
NET CASH PROVIDED BY FINANCING ACTIVITIES 9,801 38,363
Net increase (decrease) in cash and due from banks 9 (148)
Cash and due from banks at beginning 9,226 11,926
CASH AND DUE FROM BANKS AT END $ 9,235 $11,778
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $10,250 $ 8,612
Income taxes 1,152 733
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PSB HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - GENERAL
In the opinion of management, the accompanying unaudited consolidated
financial statements contain all adjustments necessary to present fairly
PSB Holdings, Inc.'s ("Company") financial position, results of its
operations, and cash flows for the periods presented, and all such
adjustments are of a normal recurring nature. The consolidated financial
statements include the accounts of all subsidiaries. All material
intercompany transactions and balances are eliminated. The results of
operations for the interim periods are not necessarily indicative of the
results to be expected for the full year.
These interim consolidated financial statements have been prepared
according to the rules and regulations of the Securities and Exchange
Commission and, therefore, certain information and footnote disclosures
normally presented in accordance with generally accepted accounting
principles have been omitted or abbreviated. The information contained in
the consolidated financial statements and footnotes in the Company's 2000
annual report on Form 10-K, should be referred to in connection with the
reading of these unaudited interim financial statements.
In preparing the consolidated financial statements, management is required
to make estimates and assumptions that affect the reported amounts of
assets and liabilities as of the date of the balance sheet and revenues
and expenses for the period. Actual results could differ significantly
from those estimates. Estimates that are susceptible to significant
change include the determination of the allowance for credit losses and
the valuations of investments.
NOTE 2 - CHANGES IN ACCOUNTING PRINCIPLE
Effective January 1, 2001, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 133, "Accounting for Derivative
Instruments and Hedging Activities" and SFAS No. 138, "Accounting for
Certain Derivative Instruments and Certain Hedging Activities." Under
these SFAS, the Company must recognize all material derivatives as either
assets or liabilities in the balance sheet and measure those instruments
at fair value. Changes in fair value are generally recognized in earnings
during the period the changes occur. The adoption of SFAS No. 133 and No.
138 did not have a material impact on the Company's financial condition or
results of operations.
Effective April 1, 2001, the Company adopted SFAS No. 140, "Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities." This SFAS revises the standards for accounting for and
reporting securitizations and other transfers of financial assets and
collateral and extinguishments of liabilities originally governed by SFAS
No. 125. The adoption of SFAS No. 140 did not have a material impact on
the Company's financial condition or results of operations.
-4-
NOTE 2 - CHANGES IN ACCOUNTING PRINCIPLE (Continued)
In June 2001, the Financial Accounting Standards Board (FASB) issued SFAS
No. 141, "Business Combinations", and SFAS No. 142, "Goodwill and Other
Intangible Assets." SFAS No. 141 supersedes Accounting Principles Board
(APB) Opinion No. 16, "Business Combinations," and SFAS No. 38,
"Accounting for Preacquisition Contingencies of Purchased Enterprises."
SFAS No. 141 requires the use of the purchase method of accounting for
business combinations initiated after June 30, 2001. SFAS No. 142
supersedes APB Opinion No. 17, "Intangible Assets." SFAS No. 142
addresses how intangible assets acquired outside of a business combination
should be accounted for upon acquisition and how goodwill and other
intangible assets should be accounted for after they have been initially
recognized. SFAS No. 142 eliminates the amortization for goodwill and
other intangible assets with indefinite lives. Other intangible assets
with a finite life will be amortized over their useful life. Goodwill and
other intangible assets with indefinite useful lives shall be tested for
impairment annually or more frequently if events or changes in
circumstances indicate that the asset may be impaired. SFAS No. 142 is
effective for fiscal years beginning after December 15, 2001. The
Corporation's adoption of SFAS No. 142 on January 1, 2002 is not
anticipated to have a material impact on the consolidated financial
statements as of the date of adoption.
NOTE 3 - EARNINGS PER SHARE
Earnings per share of common stock is based on the weighted average number
of common shares outstanding during the period. On April 17, 2001, the
stockholders of the Company approved an incentive stock option plan. The
plan calls for up to 15,000 options to purchase common shares to be issued
to selected officers. No grants have been made as of September 30, 2001.
NOTE 4 - COMPREHENSIVE INCOME
Generally accepted accounting principles require comprehensive income and
its components, as recognized under the accounting standards, to be
displayed in a financial statement with the same prominence as other
financial statements. The disclosure requirements with respect to the
Form 10-Q have been included in the Company's consolidated balance sheets.
Comprehensive income totaled the following for the periods indicated:
Nine Months Ended Three Months Ended
($ THOUSANDS - UNAUDITED) 9/30/01 9/30/00 9/30/01 9/30/00
Net income $2,493 $1,798 $885 $545
Change in net unrealized gain or loss on
SECURITIES AVAILABLE FOR SALE, NET OF TAX 957 323 453 285
COMPREHENSIVE INCOME $3,450 $2,121 $1,338 $830
-5-
NOTE 5 - INVESTMENT SECURITIES
The amortized cost and estimated fair value of investment securities are
as follows:
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
($ THOUSANDS) COST GAINS LOSSES VALUE
SEPTEMBER 30, 2001
Securities held to maturity:
Obligations of states and political
SUBDIVISIONS $18,764 $600 $1 $19,363
Securities available for sale:
U.S. Treasury securities and obligations
of U.S. government corporations and
agencies $47,651 $1,293 $1 $48,943
OTHER EQUITY SECURITIES 172 172
TOTALS $47,823 $1,293 $1 $49,115
DECEMBER 31, 2000
Securities held to maturity:
Obligations of states and political
SUBDIVISIONS $13,975 $101 $71 $14,005
Securities available for sale:
U.S. Treasury securities and obligations
of U.S. government corporations and
agencies $48,279 $195 $399 $48,075
OTHER EQUITY SECURITIES 48 48
TOTALS $48,327 $195 $399 $48,123
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion and analysis is presented to assist in the
understanding and evaluation of the Company's financial condition and
results of operations. It is intended to complement the unaudited
financial statements, footnotes, and supplemental financial data appearing
elsewhere in this Form 10-Q and should be read in conjunction therewith.
Dollar amounts are in thousands, except per share amounts.
Forward-looking statements have been made in this document that are
subject to risks and uncertainties. While the Company believes these
forward-looking statements are based on reasonable assumptions, all such
statements involve risk and uncertainties that could cause actual results
to differ materially from those contemplated in this report. The
assumptions, risks, and uncertainties relating to the forward-looking
statements in this report include those described under the caption
"Cautionary Statements Regarding Forward-Looking Information" in Part I of
the Company's Form 10-K for the year ended December 31, 2000 and, from
time to time, in the Company's other filings with the Securities and
Exchange Commission.
BALANCE SHEET
At September 30, 2001, total assets were $318,466, an increase of $18,060,
or 6.0%, over September 30, 2000, while assets grew $12,227 over December
31, 2000. Gross loans (excluding loans held for sale) were $224,585 at
September 30, 2001, growing $4,370 over third quarter 2000 and decreasing
$2,524 over fourth quarter 2000.
Table 1: Period-End Loan Composition
SEPTEMBER 30 PERCENT DECEMBER 31 PERCENT
2001 OF TOTAL 2000 OF TOTAL
Commercial and financial $ 49,621 22.09% $ 53,421 23.52%
Real estate 158,215 70.45% 157,904 69.53%
CONSUMER INSTALLMENT 16,749 7.46% 15,784 6.95%
TOTAL LOANS $224,585 100.00% $227,109 100.00%
The loan portfolio is the Company's primary asset subject to credit risk.
The Company's process for monitoring credit risks includes weekly analysis
of loan quality, delinquencies, non-performing assets, and potential
problem loans. Loans are placed on a nonaccrual status when they become
contractually past due 90 days or more as to interest or principal
payments. All interest accrued but not collected for loans (including
applicable impaired loans) that are placed on nonaccrual or charged off is
reversed to interest income. The interest on these loans is accounted for
on the cash basis until qualifying for return to accrual status. Loans
are returned to accrual status when all the principal and interest amounts
contractually due have been collected and there is reasonable assurance
that repayment will continue within a reasonable time frame.
-7-
BALANCE SHEET (Continued)
The term "impaired loan" refers to certain commercial loans with respect
to which, based on current information, it is probable that the Company
will not be able to collect all amounts due in accordance with the
contractual terms of the loan agreement. Impairment is based on
discounted cash flows of expected future payments using the loan's
effective interest rate or the fair value of the collateral if the loan is
collateral-dependent.
The aggregate amount of nonperforming assets increased $1,710 to $2,503 at
September 30, 2001 from $793 at September 30, 2000, primarily because of
additional restructured loans. Nonperforming assets include: 1) loans
that are either contractually past due 90 days or more as to interest or
principal payments, on a nonaccrual status, or the terms of which have
been renegotiated to provide a reduction or deferral of interest or
principal and 2) other real estate owned.
Table 2: Allowance for Loan Losses and Nonperforming Assets
NINE MONTHS ENDED
9/30/2001 9/30/2000
Allowance for loan losses at beginning of period $2,407 $2,099
Provision charged to operating expense 450 450
Recoveries on loans 1 23
LOANS CHARGED OFF (81) (135)
ALLOWANCE FOR LOAN LOSSES AT END OF PERIOD $2,777 $2,437
Table 3: Nonperforming Assets
NINE MONTHS ENDED
9/30/2001 9/30/2000
Nonaccrual loans $1,395 $ 759
Loans past due 90 days or more and still accruing interest 333 0
Restructured loans 428 0
Total nonperforming loans 2,156 759
OTHER REAL ESTATE OWNED 347 34
TOTAL NONPERFORMING ASSETS $2,503 $ 793
Management is not aware of any additional loans that represent material
credits or of any information that causes management to have serious
doubts as to the ability of such borrowers to comply with the loan
repayment terms.
-8-
LIQUIDITY
Liquidity refers to the ability of the Company to generate adequate
amounts of cash to meet the Company's need for cash. The Company manages
its liquidity to provide adequate funds to support borrowing needs and
deposit flow of its customers. Management views liquidity as the ability
to raise cash at a reasonable cost or with a minimum of loss and as a
measure of balance sheet flexibility to react to marketplace, regulatory,
and competitive changes. Deposit growth is the primary source of
liquidity. Deposits as a percentage of total funding sources were 85.7%
at September 30, 2001 and 83.9% at September 30, 2000. Wholesale funding
represents the balance of the Company's total funding needs.
As of September 30, 2001, loan principal and investment securities
maturing within one year totaled $104,211, while certificates of deposit
and short-term borrowings maturing within one year totaled $87,292.
Unused credit advances available to the Company at September 30, 2001
totaled approximately $14,000. The primary funding sources utilized are
Federal Home Loan Bank advances, federal funds purchased, repurchase
agreements from a base of individuals, businesses and public entities, and
brokered CDS.
The Company attempts, when possible, to match relative maturities of
assets and liabilities while maintaining the desired net interest margin.
CAPITAL RESOURCES
Stockholders' equity at September 30, 2001 increased $3,986 from $21,420
at September 30, 2000. Stockholders' equity included unrealized gains on
securities available for sale, net of their tax effect, of $832 at
September 30, 2001 compared to unrealized losses of $720 at September 30,
2000.
The adequacy of the Company's capital is regularly reviewed to ensure
sufficient capital is available for current and future needs and is in
compliance with regulatory guidelines. As of September 30, 2001, the
Subsidiary Bank's tier 1 risk-based capital ratio, total risk-based
capital, and tier 1 leverage ratio were well in excess of regulatory
minimums.
Table 4: Capital Ratios - Subsidiary Bank
TIER 1 TOTAL TIER 1
CAPITAL CAPITAL LEVERAGE
September 30, 2001 10.81% 11.96% 7.77%
September 30, 2000 10.42% 11.56% 7.37%
Regulatory requirements to be considered well-capitalized 6.00% 10.00% 5.00%
-9-
RESULTS OF OPERATIONS
Net income for the quarter ended September 30, 2001, totaled $885, or
$1.05 per share for basic and diluted earnings per share. Comparatively,
net income for the quarter ended September 30, 2000 was $545, or $.64 per
share for basic and diluted earnings per share. Operating results for the
third quarter 2001 generated an annualized return on average assets of
1.12% and an annualized return on average equity of 14.31%, compared to
.74% and 10.26% for the comparable period in 2000. The net interest
margin for the third quarter 2001 was 4.03% compared to 3.40% for the
comparable quarter in 2000.
-10-
Table 5: Summary Results of Operations
The following table presents consolidated financial data of PSB Holdings,
Inc. and Subsidiary.
2001 2000
Third Second First Fourth Third
($ THOUSANDS EXCEPT PER SHARE AMOUNTS) QUARTER QUARTER QUARTER QUARTER QUARTER
FINANCIAL HIGHLIGHTS
Earnings and dividends:
Net interest income $2,909 $2,630 $2,487 $2,503 $2,252
Provision for credit losses 150 150 150 150 150
Other noninterest income 357 455 455 408 355
Other noninterest expense 1,868 1,738 1,704 1,533 1,706
Net income 885 839 769 872 545
Per common share:
Basic and diluted earnings 1.05 1.00 0.91 1.04 0.64
Dividends declared 0.00 0.38 0.00 0.65 0.00
Book value 30.25 28.65 27.96 26.53 25.44
Average common shares 839,705 839,705 839,705 840,512 847,895
Dividend payout ratio 0.00% 38.02% 0.00% 62.04% 0.00%
Balance sheet summary:
Loans net of unearned income 221,808 218,300 223,373 224,702 217,778
Assets 318,466 314,717 320,762 306,239 300,406
Deposits 249,477 240,877 247,967 241,534 232,051
Stockholders' equity 25,406 24,068 23,476 22,274 21,420
Average balances:
Loans net of unearned income 219,793 220,837 224,038 221,240 214,773
Assets 316,592 317,740 313,474 303,323 292,743
Deposits 245,177 244,422 244,751 236,793 227,016
Stockholders' equity 24,737 23,772 22,859 21,847 21,244
Performance Ratios:
Return on average assets (1) 1.12% 1.06% 0.98% 1.15% 0.74%
Return on average common equity (1) 14.31% 14.12% 13.46% 15.97% 10.26%
Tangible equity to assets 7.72% 7.53% 7.22% 7.31% 7.37%
Net loan charge-offs as a percentage
of average loans 0.02% 0.01% 0.01% 0.08% 0.01%
Nonperforming assets as a percentage
of average gross loans 1.12% 1.07% 1.06% 1.11% 0.35%
Net interest margin (1) (2) 4.03% 3.64% 3.47% 3.62% 3.40%
Efficiency ratio (2) 55.38% 54.59% 56.35% 51.29% 63.59%
Service fee revenue as a percent of
average assets (1) 0.31% 0.32% 0.31% 0.32% 0.36%
<FN>
(1) Annualized.
(2) Tax-exempt income has been adjusted to its fully taxable equivalent with a
34% tax rate.
-11-
NET INTEREST INCOME
Net interest income is the most significant component of earnings. Net
interest income for the three months ended September 30, 2001 was $2,909.
Comparatively, net interest income for the third quarter 2000 was $2,252.
Fully taxable equivalent net interest income for the third quarter 2001
increased $688 from third quarter 2000 to $3,016. Average earning assets
grew $44,300 from the third quarter 2000. The net interest margin for the
three months ended September 30, 2001 was 4.03% or 63 basis points higher
than the 3.4% margin in the third quarter 2000. Yields on earning assets
decreased to 7.93% compared to 8.38% in 2000. Similarly, the costs for
interest-bearing liabilities decreased to 4.52% from 5.75%. The Company
is trying to position more assets to reprice with the market to maintain
or increase the net interest margin.
PROVISION FOR LOAN LOSSES
Management determines the adequacy of the provision for loan losses based
on past loan experience, current economic conditions, composition of the
loan portfolio, and the potential for future loss. Accordingly, the
amount charged to expense is based on management's evaluation of the loan
portfolio. It is the Company's policy that when available information
confirms that specific loans and leases, or portions thereof, including
impaired loans, are uncollectible, these amounts are promptly charged off
against the allowance. The provision for loan losses was $150 for the
three months ended September 30, 2001 and September 30, 2000. Net charge-
offs as a percentage of average loans outstanding were .02% and .01%
during the three months ended September 30, 2001 and September 30, 2000,
respectively.
Nonperforming loans are reviewed to determine exposure for potential loss
within each loan category. The adequacy of the allowance for loan losses
is assessed based on credit quality and other pertinent loan portfolio
information. The adequacy of the reserve and the provision for loan
losses is consistent with the composition of the loan portfolio and recent
credit quality history.
NONINTEREST INCOME
Noninterest income increased 0.6% to $357 during the three months ended
September 30, 2001, from the comparable third quarter of 2000. There were
no gains or losses on securities during the three months ended September
30, 2001 and 2000. Service fees on deposit accounts decreased $15, or
5.7%, for the three months ended September 30, 2001 from the three months
ended September 30, 2000.
NONINTEREST EXPENSE
Noninterest expense increased 9.5% to $1,868 for the three months ended
September 30, 2001, from $1,706 for the three months ended September 30,
2000.
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Table 6: Key Operating Ratios
Three Months Ended and Nine Months Ended September 30, 2001 and 2000
(unaudited)
NINE-MONTH PERIOD THREE-MONTH PERIOD
2001 2000 2001 2000
Return on assets (net income divided by
average assets) (1) 1.06% 0.86% 1.12% 0.74%
Return on average equity (net income
divided by average equity) (1) 13.94% 11.29% 14.31% 10.26%
Average equity to average assets 7.63% 7.58% 7.81% 7.26%
Interest rate spread (difference between
average yield on interest-earning assets
and average cost of interest-bearing
liabilities) (1) (2) 3.00% 2.88% 3.41% 2.63%
Net interest margin (net interest income
as a percentage of average interest-
earning assets) (1) (2) 3.75% 3.65% 4.03% 3.40%
Noninterest expense to average assets (1) 2.27% 2.35% 2.36% 2.33%
Allowance for loan losses to total loans
at end of period 1.24% 1.11% 1.24% 1.11%
<FN>
(1) Annualized.
(2) Tax-exempt income has been adjusted
to its fully taxable equivalent with a
34% tax rate.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There has been no material change in the information provided in response
to Item 7A of the Company's Form 10-K for the year ended December 31,
2000.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not Applicable
ITEM 2. CHANGES IN SECURITIES
Not Applicable
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITIES HOLDERS
Not Applicable
ITEM 5. OTHER INFORMATION
Not Applicable
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K:
(a) Exhibits.
The following exhibits have been filed with the Securities and Exchange
Commission. Exhibits filed as part of this report, and listed below, are
set forth on the Exhibit Index which follows the signature page.
Exhibit
NUMBER DESCRIPTION
3.1 Restated Articles of Incorporation, as amended (incorporated by
reference to Exhibit 3.1 to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 2000)
3.2 Bylaws (incorporated by reference to Exhibit 3.2 to the
Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 2000)
4.1 Articles of Incorporation and Bylaws (see Exhibits 3.1 and 3.2)
-14-
10.1 Bonus Plan of Directors of the Bank (incorporated by reference
to Exhibit 10.1 to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 2000)
10.2 Non-Qualified Retirement Plan for Directors of the Bank
(incorporated by reference to Exhibit 10.2 to the Company's
Annual Report on Form 10-K for the fiscal year ended December
31, 2000)
10.3 Senior Management Incentive Compensation Plan (incorporated by
reference to Exhibit 10.4 to the Company's Quarterly Report on
Form 10-Q for the period ended June 30, 2000)*
10.4 Consulting Agreement with Chairman of the Board (incorporated by
reference to Exhibit 10.4 to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 2000)*
10.5 2001 Stock Option Plan (incorporated by reference to Exhibit
10.5 to the Company's Quarterly Report on Form 10-Q for the
period ended June 30, 2001)*
21.1 Subsidiaries of the Company (incorporated by reference to
Exhibit 21.1 to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 2000)
*Denotes Executive Compensation Plans and Arrangements.
(b) Reports on Form 8-K:
None.
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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 thereunto duly authorized.
PSB HOLDINGS, INC.
November 13, 2001 TODD R. TOPPEN
Todd R. Toppen
Secretary and Controller
(On behalf of the Registrant and as
Principal Financial Officer)
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EXHIBIT INDEX
TO
FORM 10-Q
OF
PSB HOLDINGS, INC.
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2001
Pursuant to Section 102(d) of Regulation S-T
(17 C.F.R. Section 232.102(d))
The following exhibits are filed as part this report:
NONE
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