Exhibit 99.1
PSB ANNOUNCES 1ST QUARTER EARNINGS UP 28% OVER PRIOR YEAR
Wausau, Wisconsin - April 22, 2003
HIGHLIGHTS
o Net income for the first quarter March 2003 was $1.224 million compared
to $.958 million in March 2002.
o Quarterly 2003 diluted earnings per share of $.73, up from $.57 in 2002.
o Quarterly 2003 return on assets of 1.36% compared to 1.14% in 2002.
o Quarterly 2003 return on stockholders' equity of 16.63% compared to
14.78% in 2002.
PSB Holdings, Inc. (OTCBB:PSBQ.OB), parent company of Peoples State Bank
of Wausau, Wisconsin today reported first quarter March 2003 earnings of
$.73 per share, compared to $.57 per share during the first quarter of
2002. Net book value increased to $18.24 per share, compared to $15.59 at
March 2002. 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 March 31, 2003 was $1,224 compared to
$1,332 in the fourth quarter of 2002 and $958 in March 2002. Operating
results for the first quarter 2003 generated an annualized return on
average assets (ROA) and return on average equity (ROE) of 1.36% and
16.63%, respectively. Comparable ratios for the same quarter in 2002 were
ROA of 1.14% and ROE of 14.78%. ROA and ROE were 1.25% and 15.97% during
calendar year 2002, respectively.
NET INTEREST INCOME
Improved net interest income was a significant contributor to increased
earnings over the prior year. Net interest income increased $238 from
$2,994 for the quarter ended March 31, 2002 to $3,232 for the current
quarter ended March 31, 2003 due primarily to increased earning assets
held. Tax-adjusted net interest margin as a percent of average interest
earning assets increased slightly over the year earlier quarter to 3.89%
from 3.87%. Net interest margin for calendar year 2002 was 3.95%.
The Company saw growth in total average loans of $18,431, or 8% over the
comparable year-ago quarter. Total assets increased to $367,802 at March
31, 2003 compared to $333,061 at March 31, 2002.
The current low interest rate environment is placing downward pressure on
net interest income and margins. The Company is looking to continue net
interest income growth by minimizing excess overnight funds and
originating assets with terms in line with proactive asset-liability
management. Management expects the net interest margin to continue to
come under pressure and decrease during the second quarter of 2003 by up
to 10 basis points primarily as a result of lower reinvestment yields on
the investment securities portfolio.
SERVICE FEE AND NONINTEREST INCOME
Noninterest income grew $557 in the first quarter 2003 to $1,122 compared
to $565 in 2002. The majority of this growth ($408) 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 $606 in March 2003 (net of
provision for mortgage servicing right valuation allowance) compared to
$198 during March 2002. The majority of loans sold to outside investors
continue to be serviced by the Bank directly with the customer. At March
31, 2003, the Bank serviced nearly $119 million of loans for the Federal
Home Loan Bank of Chicago compared to $44 million in the prior year
period. President and CEO David Kopperud noted, "Even after a strong
2002, Peoples continues to be the leading mortgage lender in Marathon
County. Despite competition from several well known community and
regional banks in our area, during February 2003, Peoples originated 75%
more mortgages than the next closest competitor due to the strength of our
residential mortgage team."
Management does not expect the current level of mortgage refinancing
income to continue during all of 2003. 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. Investment and insurance sales commissions were $99 during the
first quarter 2003 compared to $61 in the quarter ended December 2002, and
$45 in the quarter ended March 2002.
OPERATING EXPENSES
Noninterest operating expenses increased $305 to $2,317 in March 2003
compared to $2,012 during March 2002, an increase of 15%. Increases in
employee salaries and benefits made up $203 of this total increase, as
bank employees were granted inflationary and merit increases effective
January 1, 2003 averaging 6.1%. In addition, the Company hired additional
lenders and investment sales representatives during 2003 who are expected
to make a significant impact in our new Rhinelander, Wisconsin full
service office and other bank locations.
Other expenses contributing to the increase were additional Rhinelander
new building and equipment depreciation, an increase in Company director
fees, and collection expenses associated with problem loans. During 2003,
the Company implemented new expenditure review and approval procedures by
location or cost/revenue center which have focused employees on cost
control and achieving budgeted net income results. These additional
operating costs have been offset by increased revenue, as the expense
efficiency ratio has improved from 54.54% in March 2002, to 51.67% in the
current quarter.
BRANCH MARKET EXPANSION
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. The Company continues to operate a grocery
store branch in the same area. During January 2003, the Company entered
into an employment agreement with Mr. Peter Knitt, formerly President of
the M&I Bank located in Rhinelander. President Kopperud announced "Mr.
Knitt brings valuable contacts and loan relationships to Peoples that will
propel that location to profitability as we become the major financial
institution in the area."
CREDIT QUALITY AND CAPITALIZATION
The Company ceases to accrue interest on loans which are 90 days past due
and considers them nonperforming loans until the borrower has made up any
late payments. Nonperforming loans also includes restructured loans until
6 consecutive monthly payments are received under the new loan terms. The
Company continues to aggressively manage past due customers and lowered
the level of nonperforming loans to gross loans from 1.62% at March 2002
to 1.13% at March 2003. 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 .85% at March 2003
compared to .87% at December 2002 and 1.65% at March 2002.
The allowance for loan losses was 1.28% of gross loans at March 2003
compared to 1.31% at March 2002. 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
7.84% during the quarter ended March 2003 compared to 7.59% in the prior
year quarter. Management believes the Company to be well capitalized at
March 31, 2003 and during the remainder of 2003 based on planned asset
growth. During the quarter ended March 31, 2003, the Company continued an
annual buyback program of purchasing up to 1% of outstanding shares by
repurchasing 1,800 shares at an average price of $26.73 per share. During
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, 2002. 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) (Audited)
FINANCIAL HIGHLIGHTS Three months ended Calendar
(DOLLARS IN THOUSANDS, March 31, Year
EXCEPT PER SHARE DATA) 2003 2002 2002
EARNINGS
Net income $1,224 $958 $4,365
Diluted earnings per share 0.73 0.57 2.60
Net book value per share 18.24 15.59 17.59
PERIOD END BALANCE SHEET
Gross loans receivable $259,264 $240,342 $259,173
Total assets 367,802 333,061 371,468
Deposits 292,580 264,026 297,831
Borrowings 42,701 41,086 41,302
KEY EARNINGS RATIOS (ANNUALIZED AND TAX ADJUSTED)
Return on average assets 1.36% 1.14% 1.25%
Return on stockholders' equity 16.63% 14.78% 15.97%
Net interest margin 3.89% 3.87% 3.95%
Efficiency ratio 51.67% 54.54% 50.68%
CREDIT QUALITY AND CAPITALIZATION
Allowance for loan losses
to gross loans 1.28% 1.31% 1.22%
Net loans charge-offs to
average loans 0.03% 0.00% 0.37%
Average tangible stockholders'
equity to average assets 7.84% 7.59% 7.66%
SHARE PRICE INFORMATION
High $27.25 $18.00 $25.00
Low 23.75 16.63 16.63
Market value at period end 27.25 17.75 25.00
PSB HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended
(dollars in thousands, March 31,
except per share data - unaudited) 2003 2002
Interest income:
Interest and fees on loans $4,396 $4,391
Interest on securities:
Taxable 615 690
Tax-exempt 223 224
Other interest and dividends 59 65
Total interest income 5,293 5,370
Interest expense:
Deposits 1,512 1,766
Long-term FHLB advances 508 564
Other borrowings 41 46
Total interest expense 2,061 2,376
Net interest income 3,232 2,994
Provision for loan losses 225 180
Net interest income after provision for loan losses 3,007 2,814
Noninterest income:
Service fees 303 235
Gain on sale of loans 701 198
Provision for servicing right valuation
allowance (95) 0
Investment and insurance sales commissions 99 45
Other noninterest income 114 87
Total noninterest income 1,122 565
Noninterest expense:
Salaries and employee benefits 1,448 1,245
Occupancy 288 240
Data processing and other office operations 139 132
Advertising and promotion 37 76
Other noninterest expenses 405 319
Total noninterest expense 2,317 2,012
Income before provision for income taxes 1,812 1,367
Provision for income taxes 588 409
Net income $1,224 $ 958
Basic earnings per share $ 0.73 $0.57
Diluted earnings per share $ 0.73 $0.57
PSB HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
MARCH 31, 2003 UNAUDITED, DECEMBER 31, 2002 DERIVED FROM AUDITED FINANCIAL
STATEMENTS)
March 31, December 31,
(dollars in thousands, except per share data) 2003 2002
ASSETS
Cash and due from banks $13,452 $15,890
Interest-bearing deposits and money market funds 7,763 5,490
Federal funds sold 2,771 172
Cash and cash equivalents 23,986 21,552
Securities available for sale (at fair value) 75,895 81,056
Federal Home Loan Bank stock (at cost) 2,327 2,264
Loans held for sale - 949
Loans receivable, net of allowance for loan
losses of $3,315 and $3,158, respectively 255,949 256,015
Accrued interest receivable 1,878 1,732
Foreclosed assets, net 505 573
Premises and equipment 6,133 6,158
Mortgage servicing rights, net 936 697
Other assets 193 472
TOTAL ASSETS $367,802 $371,468
LIABILITIES
Non-interest-bearing deposits $46,050 $45,458
Interest-bearing deposits 246,530 252,373
Total deposits 292,580 297,831
Long-term Federal Home Loan Bank advances 38,000 38,000
Other borrowings 4,701 3,302
Accrued expenses and other liabilities 2,151 3,033
Total liabilities 337,432 342,166
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 7,150
Retained earnings 22,831 21,607
Unrealized gain on securities available
for sale, net of tax 1,198 1,306
Treasury stock, at cost - 140,548 and 138,748
shares, respectively (2,614) (2,566)
Total stockholders' equity 30,370 29,302
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $367,802 $371,468