Exhibit 99.1
PSB ANNOUNCES 4TH QUARTER EARNINGS OF $.74 PER SHARE
Wausau, Wisconsin - January 29, 2004
HIGHLIGHTS
o Quarterly 2003 earnings per share of $.74, down from $.76 in 2002. Net
income for the 4th quarter December 2003 was $1.29 million compared to
$1.33 million in December 2002, a decline of 3.2%. The decline was due
in part to the anticipated drop in residential mortgage loan refinancing
nationally compared to the prior year. Quarterly mortgage banking income
in 2003 was down 53% from 2002.
o Calendar year net income of $2.74 per diluted share in 2003 ($2.76 per
basic share) compared to $2.48 in 2002, an increase of 10.5%. Net income
for the year ended December 2003 was $4.81 million compared to $4.37
million in 2002, an increase of 10.1%.
o Semi-annual cash dividend of $.30 per share followed by a special 5%
stock dividend to be paid on January 29 to shareholders of record January
6, 2004.
PSB Holdings, Inc. (OTCBB:PSBQ.OB), parent company of Peoples State Bank of
Wausau, Wisconsin today reported fourth quarter December 2003 earnings of $.74
per share compared to $.76 per share during the fourth quarter of 2002. Net
book value increased to $18.54 per share, compared to $16.75 at December 2002.
A 2 for 1 stock split was effective November 19, 2002 and a special 5% stock
dividend was declared during December 2003. All per share information has been
updated to reflect the split and the stock dividend. 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, Oneida, and Vilas
counties. During December 2003, the Company announced its plans to open full
service branch locations in Minocqua and Weston, Wisconsin during 2004. In
addition to traditional retail and commercial loan and deposit products, the
Bank provides investments, commercial property and casualty insurance services,
retirement planning and long-term fixed rate residential mortgages.
Net income for the quarter ended December 31, 2003 was $1,290 compared to
$1,235 in the third quarter of 2003 and $1,332 in December 2002. Operating
results for the fourth quarter 2003 generated an annualized return on average
assets (ROA) and return on average equity (ROE) of 1.28% and 15.95%,
respectively. Comparable ratios for the same quarter in 2002 were ROA of 1.45%
and ROE of 18.43%.
Year-to-date net income was $4,806 and $4,365 in 2003 and 2002, respectively.
Year-to-date ROA and ROE for 2003 were 1.26% and 15.45%, compared to 2002 ROA
and ROE of 1.25% and 15.97%, respectively.
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Market Expansion and Outlook for 2004 Profits
The Company continues its expansion plan of opening de novo branch locations in
economically vibrant communities adjacent to existing Peoples market areas.
Potential branching locations are identified but not acted upon until a key
person or location (or both) is identified. During 2001 and 2002, branches
were opened in Eagle River (supermarket) and Rhinelander, respectively. During
2003, work began on a new banking and administrative home office (on the
existing site) anticipated to be completed by June 2004. During December 2003,
the Company announced plans to begin new branches in Minocqua (opening date May
2004), and Weston, Wisconsin (opening date October 2004).
Although the new locations will generate net losses during 2004, each is
expected to reach net income on a month-to-month basis within the first two
years of operations. These long-term investments in facilities and quality
local banking professionals combined with the anticipated decline in mortgage
refinancing income are expected to challenge quarter over quarter profits
during 2004, despite management's goal of increasing assets by over 12% during
the year. President David K. Kopperud commented "These market expansions are
consistent with our past successful efforts of reaching nearby communities with
quality and experienced local bank professionals when the right opportunity
presents itself. The Company anticipates that 2004 earnings will be below 2003
and more in line with 2002. Despite the anticipated decline in annual 2004
earnings, management considers each office a long-term investment for the
benefit of our shareholders and the future vibrancy of People State Bank."
Net Interest Income
Net interest income increased $87 from $3,288 for the quarter ended December
31, 2002 to $3,375 for the current quarter ended December 31, 2003 due to
increased earning assets held, although margin on those assets has declined.
Tax-adjusted net interest margin as a percent of average interest earning
assets decreased from the year earlier quarter to 3.65% from 3.89%. Net
interest margin for all of calendar year 2003 was 3.75% compared to 3.95% in
2002. The Company has experienced compressed interest rate margins as existing
prime rate adjustable and other maturing term loans and securities are repriced
at today's significantly lower rates while deposit rates remained near their
floor. Compared to the year earlier quarter, earning assets yields have
decreased 85 basis points from 6.45% at December 2002 to 5.60% at December
2003. However, the cost of liabilities declined only 73 basis points from
3.09% at December 2002 to 2.36% at December 2003.
The Company continues to seek net interest income growth by originating and
funding assets with terms in line with proactive asset-liability management and
capital leveraging as appropriate. The Company's balance sheet remains "asset
sensitive" and therefore margins would improve in a rising interest rate
environment. Management expects the net interest margin to begin 2004 at a
similar level to the past quarter as much of the balance sheet has repriced at
current interest rates.
The Company saw growth in total average loans of $46,900, or 18.3% over the
comparable year-ago quarter. The majority of this growth came from additional
real estate loans, both commercial real estate and residential 15 year fixed
rate first mortgages that fit into the
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Company's asset-liability management plans. Approximately $23 million of this
growth was originated by the Company's new Rhinelander, Wisconsin branch
location which opened during August 2002. Total assets increased to $408,933
at December 31, 2003 compared to $371,468 at December 31, 2002. Regarding
growth, President Kopperud said "Our growth drove 2003 bank profits to an all
time high, up 10% over last year. As the construction of our Stewart Avenue
Financial Center provides for future growth, we reached a new mark for today's
growth - $400 million in total on-balance sheet assets."
Service Fee and Noninterest Income
Noninterest income grew $80 in the fourth quarter 2003 to $1,120 compared to
$1,040 in 2002. However, this growth was due to special income items including
a $131 gain on curtailment of the Company's post-retirement health benefits
plan, and a $144 gain on sale of securities and SBA loans. Separate from these
items, noninterest income declined $195, due primarily to a $313 decline in
mortgage banking income from the prior year's unusually high refinancing
levels. Offsetting the mortgage decline was an increase in investment sales
commissions of $70.
Management expects mortgage banking income to decline during 2004 to a level
similar to the December 2003 quarter, down from a high of $655 during the
quarter ended September 30, 2003. For all of 2004, the Company expects
mortgage banking income to be approximately 2/3 of the level seen during 2003.
The Company serviced $152,718 of mortgage principal for other investors at
December 31, 2003 compared to $95,408 at December 31, 2002.
During September 2003, the Company announced formation of Peoples Insurance
Services LLC, a commercial property and casualty insurance agency and
brokerage. Despite being a start-up enterprise, the agency has obtained direct
placement commitments from a wide range of insurance underwriters. Agency
President Mr. Jeffrey Cole commented "Obtaining direct commitments allows us to
avoid much of the co-broker fees often seen by start-up agencies. Doing so
will significantly increase our retained sales commissions." The agency's net
loss during 2003 was approximately $47.
Operating Expenses
Noninterest operating expenses increased $407 to $2,479 in December 2003
compared to $2,072 during December 2002, an increase of 19.6%. Increases in
employee salaries and benefits totaled $417 during the quarter. Final 2003
year-end incentive compensation funding increased salaries and benefits by $378
as income performance before incentives reached the higher tier levels set at
the beginning of 2003. President Kopperud noted "Company profits rebounded
strongly from the first half of the year for the benefit of both shareholders
and employees. Bank incentive plans reward employees for specific goal
attainment but against a back drop of net income improvement to ensure
shareholders also benefit." Company employees were also granted inflationary
and merit increases effective January 1, 2004 averaging 2.9% of base pay.
Operating expenses as a percent of average assets increased to 2.46% during the
fourth quarter December 2003 compared to 2.26% during December 2002. Operating
expenses as a percent of average assets were 2.45% and 2.36% during all of 2003
and 2002, respectively. Year to date, the expense efficiency ratio increased
to 52.46% during 2003 compared to 50.68% in 2002 due to declining net interest
margin and an increase in salaries and benefits compared to the prior year.
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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 and is able to continue required payments in the future.
Nonperforming loans also include restructured loans until 6 consecutive monthly
payments are received under the new loan terms. Nonperforming loans to gross
loans was 1.08% at December 31, 2003, compared to .94% at December 2002. The
Company also tracks delinquencies on a contractual basis quarter to quarter
since some problem loans currently making payments remain on non-accrual status
until ongoing ability to repay according to the contract is shown. Loans
contractually delinquent 30 days or more as a percentage of gross loans were
..63% at December 2003 compared to 1.02% at September 2003 and .87% at December
2002. The allowance for loan losses was 1.15% of gross loans at December 2003
compared to 1.22% at December 2002.
Average tangible stockholder's equity was 7.85% during the quarter ended
December 2003 compared to 7.71% in the prior year quarter. Management believes
the Company to be well capitalized at December 31, 2003 and to remain well
capitalized during 2004 based on planned asset growth and dividend payments.
During the year ended December 2003, the Company repurchased 17,535 shares at
an average price of $31.52 per share in its annual buyback program of 1% of
outstanding shares. During 2002, the Company repurchased 20,830 shares at an
average price of $18.93 per share. The Company anticipates repurchasing
approximately 17,300 shares during 2004 under the program on the open market at
prices then in effect.
Effective with the dividend declared during June 2003, the Company adopted a
policy to equalize the amount of the semi-annual cash dividend. Accordingly,
the cash dividend declared during December 2003 of $.29 per share (after
adjusting for the subsequent 5% stock dividend) was less than the $.36 per
share (following stock dividend adjustment) declared in December 2002. However
for all of 2003, cash dividends were $.57 per share compared to $.54 per share
in 2002.
Forward Looking Statements
Certain matters discussed in this news release, including those relating to the
growth of the Company, its profits, 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.
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(tables follow)
PSB HOLDINGS, INC.
QUARTERLY FINANCIAL SUMMARY
(dollars in thousands, except per share data)
QUARTER ENDED - UNAUDITED
DEC. 31 SEPT. 30 JUNE 30 MARCH 31 DEC. 31
EARNINGS AND DIVIDENDS: 2003 2003 2003 2003 2002
Net income $1,290 $1,235 $1,057 $1,224 $1,332
Basic earnings per share (3) $0.74 $0.71 $0.61 $0.70 $0.76
Diluted earnings per share (3) $0.74 $0.71 $0.60 $0.70 $0.76
Dividends declared per share (3) $0.29 $- $0.29 $- $0.36
Net book value per share $18.54 $18.11 $17.74 $17.37 $16.75
Dividend payout ratio 38.40% 0.00% 46.88% 0.00% 46.88%
Average common shares outstanding 1,733,398 1,733,828 1,744,199 1,749,015 1,750,708
BALANCE SHEET - AVERAGE BALANCES:
Loans receivable, net of allowances $302,491 $288,448 $265,863 $256,715 $255,591
Assets $399,351 $389,267 $371,537 $365,906 $363,507
Deposits $312,376 $307,752 $292,698 $289,635 $291,049
Stockholders' equity $32,095 $31,085 $30,670 $29,848 $28,677
PERFORMANCE RATIOS:
Return on average assets (1) 1.28% 1.26% 1.14% 1.36% 1.45%
Return on average equity (1) 15.95% 15.76% 13.82% 16.63% 18.43%
Average tangible equity to
average assets 7.85% 7.70% 7.92% 7.84% 7.71%
Net loan charge-offs to average loans 0.09% 0.02% 0.01% 0.03% 0.21%
Nonperforming loans to gross loans 1.08% 1.09% 1.06% 1.13% 0.94%
Allowance for loan loss to gross loans 1.15% 1.23% 1.26% 1.28% 1.22%
Net interest rate margin (1)(2) 3.65% 3.67% 3.83% 3.89% 3.89%
Net interest rate spread (1)(2) 3.24% 3.21% 3.34% 3.42% 3.36%
Service fee revenue as a percent of
average demand deposits (1) 2.70% 2.48% 2.83% 2.99% 2.98%
Noninterest income as a percent
of gross revenue 17.56% 17.90% 12.13% 17.49% 15.81%
Efficiency ratio (2) 53.47% 50.94% 53.86% 51.67% 46.42%
Noninterest expenses to average assets 2.46% 2.38% 2.40% 2.57% 2.26%
STOCK PRICE INFORMATION:
High $36.19 $32.61 $32.38 $25.95 $23.81
Low $31.43 $31.43 $28.57 $22.62 $19.57
Market value at quarter-end $33.62 $31.90 $31.67 $25.95 $23.81
<FN>
(1) Annualized
(2) The yield on tax-exempt loans and securities is computed on a tax-
equivalent basis.
(3) Due to rounding, cumulative quarterly per share performance may not equal
annual per share totals.
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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) 2003 2002 2003 2002
Interest income:
Interest and fees on loans $4,498 $4,556 $17,964 $18,022
Interest on securities:
Taxable 468 691 1,943 2,724
Tax-exempt 240 224 916 898
Other interest and dividends 52 68 227 271
Total interest income 5,258 5,539 21,050 21,915
Interest expense:
Deposits 1,339 1,640 5,651 6,835
FHLB advances 469 577 1,989 2,289
Other borrowings 75 34 229 149
Total interest expense 1,883 2,251 7,869 9,273
Net interest income 3,375 3,288 13,181 12,642
Provision for loan losses 130 300 835 1,110
Net interest income after provision for loan loss 3,245 2,988 12,346 11,532
Noninterest income:
Service fees 331 327 1,282 1,217
Mortgage banking 268 581 1,767 1,223
Investment and insurance sales commissions 131 61 434 250
Net gain on sale of securities 99 - 80 -
Gain on curtailment of post-retirement plan 131 - 131 -
Other noninterest income 160 71 417 358
Total noninterest income 1,120 1,040 4,111 3,048
Noninterest expense:
Salaries and employee benefits 1,609 1,192 5,952 4,927
Occupancy 268 262 1,127 1,094
Data processing and other office operations 129 170 547 583
Advertising and promotion 39 65 172 319
Other noninterest expenses 434 383 1,553 1,304
Total noninterest expense 2,479 2,072 9,351 8,227
Income before provision for income taxes 1,886 1,956 7,106 6,353
Provision for income taxes 596 624 2,300 1,988
Net income $1,290 $1,332 $4,806 $4,365
Basic earnings per share $ 0.74 $ 0.76 $ 2.76 $ 2.48
Diluted earnings per share $ 0.74 $ 0.76 $ 2.74 $ 2.48
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PSB HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
December 31, 2003 unaudited, December 31, 2002 derived from audited financial
statements)
(dollars in thousands, except per share data) DECEMBER 31,
2003 2002
ASSETS
Cash and due from banks $13,754 $15,890
Interest-bearing deposits and money market funds 1,214 5,490
Federal funds sold 3,959 172
Cash and cash equivalents 18,927 21,552
Securities available for sale (at fair value) 72,472 81,057
Federal Home Loan Bank stock (at cost) 2,444 2,264
Loans held for sale 207 949
Loans receivable, net of allowance for loan losses of $3,536
and $3,158, respectively 304,339 256,015
Accrued interest receivable 1,617 1,732
Foreclosed assets, net 84 573
Premises and equipment 7,557 6,158
Mortgage servicing rights, net 814 697
Other assets 472 472
TOTAL ASSETS $408,933 $371,469
LIABILITIES
Non-interest-bearing deposits $ 50,563 $ 45,457
Interest-bearing deposits 265,851 252,373
Total deposits 316,414 297,830
Federal Home Loan Bank advances 47,000 38,000
Other borrowings 10,475 3,302
Accrued expenses and other liabilities 2,903 3,034
Total liabilities 376,792 342,166
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
Common stock dividend distributable - 90,017 shares 90 -
Additional paid-in capital 9,932 7,150
Retained earnings 22,543 21,607
Unrealized gain on securities available for sale, net of tax 844 1,306
Treasury stock, at cost - 161,469 and 138,748 shares, respectively (3,073) (2,565)
Total stockholders' equity 32,141 29,303
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $408,933 $371,469
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