Exhibit 99.1
PSB Announces 4th Consecutive Year of Record Earnings
Wausau, Wisconsin - January 24, 2002
HIGHLIGHTS
o Calendar 2002 diluted earnings per share (EPS) of $2.60 compared to $2.00
in 2001.
o Quarterly diluted EPS of $.80, up 54% over prior year quarter.
o Asset growth of 8% to $371 million compared to December 2001.
o Calendar 2002 return on average equity of 15.97%, up 2% over 2001.
o Record year-end dividend of $.375 per share to be paid January 27, 2003.
PSB Holdings, Inc. (OTCBB:PSBQ.OB), parent company of Peoples State Bank of
Wausau, Wisconsin today reported fourth quarter December 2002 earnings of $.80
per share, compared to $.52 per share during the fourth quarter of 2001.
Calendar 2002 earnings were $2.61 per share ($2.60 fully diluted) compared to
$2.00 in 2001. Book value increased to $17.59, compared to $15.10 at December
2001. A 2 for 1 stock split was effective November 19, 2002. All per share
information has been updated to reflect the split. Financial performance is
expressed in thousands, except per share data.
Peoples State Bank is headquartered in Wausau, Wisconsin with seven retail
locations serving north central Wisconsin in Marathon, Lincoln, Oneida, and
Vilas counties. In addition to traditional loan and deposit products, the
Bank provides investments and retirement planning and long-term fixed rate
residential mortgages.
Net income for the quarter ended December 31, 2002 was $1,332 compared to
$1,051 in the third quarter of 2002 and $873 in December 2001. Operating
results for the fourth quarter 2002 generated an annualized return on average
assets (ROA) and return on average equity (ROE) of 1.45% and 18.43%,
respectively. Comparable ratios for the same quarter in 2001 were ROA of
1.05% and ROE of 13.60%.
Net income for the year ended December 31, 2002 was $4,365 compared to $3,366
in 2001, an increase of 30% and the 4{th} consecutive year of record earnings.
ROA and ROE were 1.25% and 15.97% in 2002, respectively, compared to 1.05% and
13.96% in 2001.
NET INTEREST INCOME
Improved net interest income was a significant contributor to increased
earnings. Net interest income increased $354 from $2,934 for the quarter
ended December 31, 2001 to $3,288 for the current quarter ended December 31,
2002. Tax-adjusted net interest margin as a percent of average interest
earning assets remained the same as the year earlier quarter at 3.89%. Net
interest margin for calendar 2002 was 3.95% compared to 3.73% during calendar
2001.
Also contributing to the increase in net interest income during 2002 was
growth in total average loans of $25,597, or 11% over the comparable year-ago
quarter. Total assets increased to $371,468 at December 31, 2002, an increase
of 8% over December 31, 2001.
The Company holds a substantial amount of adjustable rate commercial real
estate loans whose yield is based on the prime rate, which decreased during
November 2002. Although the cost of funding sources is closely managed,
management expects the net interest margin to decrease during the first
quarter of 2003 by up to 10 basis points as a result of the downward pricing
of adjustable rate loans. However, net interest income dollars are expected
to increase due to continued loan growth during the first quarter of 2003.
SERVICE FEE AND NONINTEREST INCOME
Noninterest income grew $242 in the fourth quarter 2002 to $1,040 compared to
$798 in 2001. For the year, noninterest income increased 48% from $2,065 in
2001 to $3,048 in 2002. The majority of this growth was from an increase of
income from the sale of long-term fixed rate mortgage loans. Gain on sale of
such loans during the quarter was $850 (before a valuation allowance of $269)
in December 2002 compared to $537 during December 2001. The majority of loans
sold to outside investors continue to be serviced by the Bank directly with
the customer. The valuation allowance was required to recognize a decrease in
the fair value of these servicing rights as long-term mortgage financing rates
fell towards the end of 2002 increasing the likelihood of prepayments.
At December 31, 2002, the Bank serviced over $95 million of loans for the
Federal Home Loan Bank of Chicago compared to $36 million in the prior year
period. For the year 2002, gain on sale of loans, net of provision for
valuation allowances was $1,223 compared to $683 during 2001. President and
CEO David Kopperud remarked, "Peoples was the leading local bank home lender
in Marathon County during 2002 serving the housing finance needs of almost
1,400 families in our communities."
Management does not expect the current level of mortgage refinancing income to
continue in 2003. Therefore, the Company intends to replace this income with
ongoing servicing fees of the existing mortgage portfolio and additional
investment and insurance sales income. The Bank recently increased the number
of commissioned investment sales professionals on staff. Executive Vice
President David Svacina recently announced "Peoples is proud to offer our
customers two additional sales professionals in our Wausau - Eastside and
Rhinelander, Wisconsin locations".
OPERATING EXPENSES
Noninterest operating expenses increased $66 to $2,072 in December 2002
compared to $2,006 during December 2001, an increase of 3.3%. However,
operating costs as a percentage of average assets decreased from 2.42% in
December 2001 to 2.26% in the current quarter. For the quarter, the majority
of the increase in operating expenses was from additional data processing and
operations costs. These additional operating costs have been offset by
increased revenue, as the expense efficiency ratio has improved from 52.20% in
December 2001, to 46.42% in the current quarter.
For the year, operating expenses increased $912, or 12.5%, from $7,315 in 2001
to $8,227 in 2002. However, the annual efficiency ratio improved from 54.50%
in 2001 to 50.68% in 2002. Even if the additional income over 2001 from the
gain on sale of loans is excluded from 2002, the efficiency ratio improved
compared to 2001. Management believes the Company's core operations continue
to operate efficiently and additional operating costs are incurred when
supported by additional revenue.
The Company opened a full service brick and mortar location in Rhinelander,
Wisconsin during autumn 2002. Management has budgeted for substantial growth
in that location during 2003 to offset the additional fixed and operating
costs. Prior to opening the new location, the Company operated a grocery
store branch which held over $22 million in loans receivable after its first 4
years as Bank personnel established strong contacts in the Rhinelander
community. The Company plans to continue to operate the grocery store branch
during the coming year.
Increased loan activity at the Rhinelander location is anticipated to be
funded with cash flow from maturing investment securities, increased deposits
at the Rhinelander locations, and wholesale funds as needed. Executive Vice-
President David Svacina noted "Growth at our Rhinelander location is important
to net income and margin growth during 2003. The Bank experienced strong
growth in this community with limited customer facilities, and we are excited
about the advantages we can provide our customers with the convenient new full
service location."
CREDIT QUALITY AND CAPITALIZATION
The Company ceases to accrue interest on loans which are 90 days past due and
considers them nonperforming loans. Nonperforming loans also includes
restructured loans until 6 consecutive monthly payments are received under
the new loan terms. During 2002, the Company aggressively managed past due
customers and lowered the level of nonperforming loans to gross loans from
1.68% at December 2001 to .94% at December 2002. The Company also tracks
delinquencies on a contractual basis quarter to quarter. Loans contractually
delinquent 30 days or more as a percentage of gross loans were .87% and 1.68%
at December 31, 2002 and 2001, respectively.
The allowance for loan losses was 1.22% of gross loans at December 2002
compared to 1.24% at December 2001. Management reviews the activity in
identified problem loans weekly and recognizes adequate and reasonable loan
loss reserves as required.
Average tangible stockholder's equity was 7.71% during the quarter ended
December 2002 compared to 7.61% in the prior year quarter. Management
believes the Company to be well capitalized at December 31, 2002 and during
2003 based on planned asset growth. Although the Company will continue a
buyback program of purchasing up to 1% of outstanding shares in 2003,
management anticipates retaining capital to support asset growth while
continuing a cash dividend to shareholders.
Forward Looking Statements
Certain matters discussed in this news release, including those relating
to the growth of the Company 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 described under "Cautionary Statement Regarding Forward
Looking Information" in Item 1 of the company's Form 10-K for the year
ended December 31, 2001. The Company assumes no obligation to update or
supplement forward-looking statements that become untrue because of
subsequent events.
(tables follow)
PSB Holdings, Inc. (Unaudited)
Financial Highlights Three Months Ended Twelve Months Ended
(Dollars in Thousands, December 31, December 31,
Except per Share Data) 2002 2001 2002 2001
EARNINGS
Net Income $ 1,332 $ 873 $ 4,365 $ 3,366
Diluted Earnings per Share 0.80 0.52 2.60 2.00
Net Book Value per Share 17.59 15.10 17.59 15.10
PERIOD END BALANCE SHEET
Gross Loans Receivable $259,173 $239,542 $259,173 $239,542
Total Assets 371,468 344,296 371,468 344,296
Deposits 297,831 273,635 297,831 273,635
Borrowings 41,302 42,327 41,302 42,327
KEY EARNINGS RATIOS
(ANNUALIZED AND TAX ADJUSTED)
Return on Average Assets 1.45% 1.05% 1.25% 1.05%
Return on Stockholders' Equity 18.43% 13.60% 15.97% 13.96%
Net Interest Margin 3.89% 3.89% 3.95% 3.73%
Efficiency Ratio 46.42% 52.20% 50.68% 54.50%
CREDIT QUALITY AND CAPITALIZATION
Allowance for Loan Losses
To Gross Loans 1.22% 1.24% 1.22% 1.24%
Net Loans Charge-offs to
Average Loans 0.21% 0.11% 0.33% 0.14%
Average Tangible Stockholders'
Equity to Average Assets 7.71% 7.61% 7.66% 7.53%
SHARE PRICE INFORMATION
High $ 25.00 $ 16.70 $ 25.00 $ 20.00
Low 20.55 15.38 16.63 13.50
Market Value at Period End 25.00 16.70 25.00 16.70
PSB Holdings, Inc.
Consolidated Statements of Income
Three Months Ended Twelve Months Ended
(Dollars in Thousands, December 31, December 31,
Except per Share Data - Unaudited) 2002 2001 2002 2001
Interest Income:
Interest and Fees on Loans $ 4,556 $ 4,524 $ 18,022 $ 19,263
Interest on Securities:
Taxable 691 723 2,724 2,866
Tax-exempt 224 217 898 775
Other Interest and Dividends 68 107 271 523
Total Interest Income 5,539 5,571 21,915 23,427
Interest Expense:
Deposits 1,640 2,007 6,835 9,770
Short-term Borrowings 34 53 149 432
Long-term FHLB Advances 577 577 2,289 2,266
Total Interest Expense 2,251 2,637 9,273 12,468
Net Interest Income 3,288 2,934 12,642 10,959
Provision for Loan Losses 300 440 1,110 890
Net Interest Income after Provision
for Loan Losses 2,988 2,494 11,532 10,069
Noninterest Income:
Service Fees 327 267 1,217 1,010
Gain on Sale of Loans 850 537 1,492 683
Provision for Valuation Allowance (269) - (269) -
Investment and Insurance
Sales Commissions 61 33 250 183
Other Noninterest Income 71 (39) 358 189
Total Noninterest Income 1,040 798 3,048 2,065
Noninterest Expense:
Salaries and Employee Benefits 1,192 1,309 4,927 4,419
Occupancy 262 214 1,094 917
Data Processing and Other
Office Operations 170 145 583 523
Advertising and Promotion 65 55 319 307
Other Noninterest Expenses 383 283 1,304 1,149
Total Noninterest Expense 2,072 2,006 8,227 7,315
Income Before Provision for
Income Taxes 1,956 1,286 6,353 4,819
Provision for Income Taxes 624 413 1,988 1,453
Net Income $ 1,332 $ 873 $ 4,365 $ 3,366
Basic Earnings per Share $ 0.80 $ 0.52 $ 2.61 $ 2.00
Diluted Earnings per Share $ 0.80 $ 0.52 $ 2.60 $ 2.00
PSB Holdings, Inc.
Consolidated Balance Sheets
December 31, 2002 Unaudited, December 31, 2001 Derived from Audit
Financial Statements)
(Dollars in Thousands, Except per Share Data) 2002 2001
Assets
Cash and Due from Banks $ 15,890 $ 16,736
Interest-bearing Deposits and Money Market Funds 5,490 3,539
Federal Funds Sold 172 5,275
Securities:
Held to Maturity (Fair Value of $20,355 in 2001) 20,287
Available for Sale (At Fair Value) 81,056 50,157
Federal Home Loan Bank Stock (At Cost) 2,264 2,151
Loans Held for Sale 949 1,403
Loans Receivable, Net of Allowance for Loan Losses of $3,158
And $2,969, Respectively 256,015 236,574
Accrued Interest Receivable 1,732 1,873
Foreclosed Assets, Net 573 421
Premises and Equipment 6,158 4,755
Mortgage Servicing Rights, Net 697 284
Other Assets 472 841
Total Assets $ 371,468 $ 344,296
Liabilities
Non-interest-bearing Deposits $ 45,458 $ 41,507
Interest-bearing Deposits 252,373 232,128
Total Deposits 297,831 273,635
Short-term Borrowings 3,302 4,327
Long-term Federal Home Loan Bank Advances 38,000 38,000
Accrued Expenses and Other Liabilities 3,033 2,984
Total Liabilities 342,166 318,946
Stockholders' Equity
Common Stock - No Par Value with a Stated Value
of $1 per Share:
Authorized - 3,000,000 Shares
Issued - 1,804,850 Shares 1,805 1,805
Additional Paid-in Capital 7,150 7,159
Retained Earnings 21,607 18,186
Unrealized Gain on Securities Available for Sale, Net of Tax
1,306 491
Treasury Stock, at Cost - 138,748 and 125,440 Shares,
Respectively (2,566) (2,291)
Total Stockholders' Equity 29,302 25,350
Total Liabilities and Stockholders' Equity $ 371,468 $ 344,296