Exhibit 99.1
PSB ANNOUNCES 3RD QUARTER EARNINGS OF $.43 PER SHARE
Wausau, Wisconsin - David K. Kopperud, President of PSB Holdings, Inc. ("PSB")
and Peoples State Bank ("Peoples") today announced the Bank's financial results
for the third quarter of 2004.
"PSB earned $.43 per share this quarter compared to $.71 during the third
quarter last year. However, the mortgage refinancing boom was occurring last
year which increased 2003 net income by $.16 per share compared to 2004
mortgage banking activity. In addition, PSB settled an income tax audit with
the Wisconsin Department of Revenue during 2004 which reduced earnings by $.09
per share. Excluding the impact of prior year mortgage refinancing income over
2004 and the tax settlement, PSB earned $.52 per share in the third quarter
2004 compared to $.55 per share in the third quarter 2003."
"Wisconsin banks, including PSB, came under audit by the Wisconsin Department
of Revenue ("Department") related to tax treatment of earnings by out-of-state
investment subsidiaries. After consideration of the cost to litigate and the
potential risk of a substantial loss in litigation, PSB decided to accept a
standardized settlement offered by the Department to Wisconsin banks with
out-of-state subsidiaries with no admission of wrongdoing. Although the
settlement decreased quarterly net income, the Company retained the ability to
operate the subsidiary providing efficient and tax-effective management of
our portfolio securities."
Kopperud further noted "Along with our substantial investment in facilities, we
are investing in our people and recently added David Johnson as Sr. Vice
President to increase our commercial product line, gain access to larger
businesses, and add depth and experience to PSB. Johnson was formerly the
regional President of north central Wisconsin for U.S. Bank, managing 14
locations and is a great addition to our commercial products team."
PSB Holdings, Inc. (OTCBB:PSBQ.OB), is the parent company of Peoples. Peoples
is headquartered in Wausau, Wisconsin with eight retail locations serving north
central Wisconsin in Marathon, Oneida, and Vilas counties. In addition to
traditional retail and commercial loan and deposit products, the Bank provides
retail investments, commercial property and casualty insurance services,
retirement planning and long-term fixed rate residential mortgages. All per
share information has been restated to reflect the 5% stock dividend paid in
January 2004.
Asset Growth and Net Interest Income
PSB continues to have strong asset growth, increasing $47.6 million, or 12.0%
to $444.6 million since September 2003. Most of this growth has been in the
loan portfolio which increased $35.5 million or 11.9% during the past 12
months. Loan growth was in mortgage lending with both commercial real estate
and on balance sheet residential real estate growing $19.9 million, and $15.2
million, respectively. During the past 12 months, PSB constructed and occupied
a new home office and financial center, purchased real estate for a branch
opened in Minocqua, Wisconsin and invested in imaging technology, which
increased premises and equipment by $5.5 million since September 2003. An
increase in securities available for sale of $4.5 million made up most of the
remaining asset growth.
In addition to growth, credit quality improved and remains strong.
Nonperforming loans (including non-accrual and restructured loans) to gross
loans was .94% at September 2004 compared to .98% at June 2004, and 1.09% at
September 2003. 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 .71% at September 2004 compared to .84% at June 2004, and 1.02% at
September 2003. The allowance for loan losses was 1.22% of gross loans at
September 2004 compared to 1.23% at September 2003.
Asset growth was funded by a mix of wholesale funding and core deposit growth.
Core deposits, including retail time deposits less than $100,000 and money
market deposits increased $22.9 million, or 10.3% since September 2003.
Wholesale borrowings (primarily FHLB advances) increased $10.2 million, or
11.2% since September 2003. Growth in large retail time deposits totaled $16.3
million, or 40.9% since September 2003. During the quarter ended September
2004, wholesale funds decreased $11.0 million (primarily broker and national
time deposits), which were replaced largely by retail time deposits less than
$100,000. Retail deposits and other local borrowings continue to comprise the
bulk of asset funding and were 69.2% of total funding at September 2004
compared to 68.0% of funding at September 2003.
Tax-adjusted net interest income increased $225,000, or 6.5% to $3,666,000 for
the quarter ended September 30, 2004 from $3,441,000 for the quarter ended
September 30, 2003 due to increased earning assets held, although margin on
earning assets for the quarter declined from 3.67% to 3.51%. Earning asset
yields have decreased 19 basis points from 5.73% at September 2003 to 5.54% at
September 2004. However, the cost of liabilities declined only 15 basis points
from 2.52% at September 2003 to 2.37% at September 2004.
During the quarter ended September 2004, net interest margin declined to 3.51%
from 3.64% for the prior June 2004 quarter as increases to the prime rate on
adjustable rate commercial loans has not outweighed increases in time deposit
rates paid to both local and wholesale depositors. Approximately $73 million
of commercial purpose loans, or 22% of gross loans, are tied to prime, short-
term LIBOR or other adjustable rates. The Company's balance sheet remains
largely neutral to interest rate changes with net interest income for the next
12 months projected to increase $115,000 (.83%) if rates increase 200 basis
points, and decrease $342,000 (2.46%) if interest rates decrease 100 basis
points.
Service Fee and Noninterest Income
Noninterest income decreased $379,000 in the September 2004 quarter to $764,000
compared to $1,143,000 in 2003. However, $468,000 of the decline was in
mortgage banking as substantial mortgage refinancing activity in 2003 did not
recur in 2004 due to rising national mortgage rates. The Company serviced
$157.8 million of mortgage principal for other investors at September 30, 2004
compared to $148.7 million at September 30, 2003. Separate from mortgage
banking, noninterest income increased $89,000 during the quarter, in part from
additional retail investment sales and insurance product commissions of
$49,000, up 42% from the 2003 quarter.
Peoples Insurance Services LLC, a commercial property and casualty insurance
agency and brokerage started by Peoples during September 2003, continues to
build relationships in the Wausau area. The agency's net loss during the
quarter and nine months ended September 2004 was $44,000 and $119,000,
respectively (including inter-company cost allocations). Initial net losses
have been in excess of original projections due to lower than expected revenue
growth.
Operating Expenses
Noninterest operating expenses increased $498,000 to $2,833,000 in the quarter
ended September 2004 compared to $2,335,000 during the quarter ended September
2003. Of that total, salaries and benefits increased $210,000, or 13.9% over
2003 from a 9% increase in employees since September 2003. In addition,
occupancy and facilities costs increased $159,000, or 55.6% over 2003 but
included one-time charges for moving into the new home office of $23,000 and
settlement of a sales tax audit related largely to premises and equipment
investment and maintenance of $52,000. Excluding these charges, occupancy and
facilities costs increased $84,000, or 29.4% during the quarter, primarily from
additional depreciation expense.
Operating expense as a percent of average assets was 2.56% during the quarter
ended September 2004 compared to 2.38% for the similar quarter during 2003. In
addition, the September 2004 efficiency ratio was 63.95% compared to 50.94%
during the same quarter in 2003. However, excluding the one-time charges
outlined in the previous paragraph, operating expenses as a percent of average
assets would have been 2.49% and the efficiency ratio would have been 62.26%
during the September 2004 quarter.
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, 2003. The Company
assumes no obligation to update or supplement forward-looking statements that
become untrue because of subsequent events.
(tables follow)
PSB HOLDINGS, INC.
QUARTERLY FINANCIAL SUMMARY
(dollars in thousands, except per share data)
Quarter ended - Unaudited
SEPT. 30, June 30, March 31, Dec. 31 Sept. 30,
EARNINGS AND DIVIDENDS: 2004 2004 2004 2003 2003
Net income $ 747 $ 782 $ 954 $ 1,290 $ 1,235
Basic earnings per share (3) $ 0.43 $ 0.45 $ 0.55 $ 0.74 $ 0.71
Diluted earnings per share (3) $ 0.43 $ 0.45 $ 0.55 $ 0.74 $ 0.71
Dividends declared per share (3) $ - $ 0.30 $ - $ 0.29 $ -
Net book value per share $ 19.41 $ 18.68 $ 19.33 $ 18.54 $ 18.11
Semi-annual dividend payout ratio N/A 29.84% n/a 19.88% n/a
Average common shares outstanding 1,720,436 1,729,322 1,733,531 1,733,398 1,733,828
BALANCE SHEET - AVERAGE BALANCES:
Loans receivable, net of allowances $ 331,167 $ 320,471 $ 307,109 $ 302,491 $ 288,448
Total assets $ 439,177 $ 426,826 $ 407,577 $ 399,351 $ 389,267
Deposits $ 347,015 $ 330,337 $ 312,455 $ 312,376 $ 307,752
Stockholders' equity $ 33,010 $ 32,942 $ 32,878 $ 32,095 $ 31,085
PERFORMANCE RATIOS:
Return on average assets (1) 0.67% 0.73% 0.94% 1.28% 1.26%
Return on avg. stockholders' equity (1) 8.98% 9.52% 11.64% 15.95% 15.76%
Average tangible stockholders' equity to
average assets 7.46% 7.61% 7.83% 7.85% 7.70%
Net loan charge-offs to average loans 0.00% 0.01% 0.02% 0.09% 0.02%
Nonperforming loans to gross loans 0.94% 0.98% 1.17% 1.08% 1.09%
Allowance for loan loss to gross loans 1.22% 1.19% 1.16% 1.15% 1.23%
Net interest rate margin (1)(2) 3.51% 3.64% 3.73% 3.65% 3.67%
Net interest rate spread (1)(2) 3.17% 3.30% 3.38% 3.24% 3.21%
Service fee revenue as a percent of
average demand deposits (1) 2.52% 2.63% 2.60% 2.70% 2.48%
Noninterest income as a percent
of gross revenue 11.93% 13.54% 12.24% 17.56% 17.90%
Efficiency ratio (2) 63.95% 64.54% 59.73% 53.47% 50.94%
Noninterest expenses to avg. assets (1) 2.56% 2.74% 2.56% 2.46% 2.38%
STOCK PRICE INFORMATION:
High $35.25 $35.60 $35.60 $36.19 $32.61
Low $33.00 $34.50 $33.50 $31.43 $31.43
Market value at quarter-end $33.00 $34.50 $35.00 $33.62 $31.90
<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.
PSB HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended Nine Months Ended
(dollars in thousands, September 30, September 30,
except per share data - unaudited) 2004 2003 2004 2003
Interest income:
Interest and fees on loans $ 4,882 $ 4,594 $ 14,150 $ 13,466
Interest on securities:
Taxable 454 359 1,368 1,475
Tax-exempt 247 232 735 676
Other interest and dividends 55 56 147 175
Total interest income 5,638 5,241 16,400 15,792
Interest expense:
Deposits 1,543 1,368 4,194 4,312
FHLB advances 515 506 1,485 1,520
Other borrowings 59 61 209 154
Total interest expense 2,117 1,935 5,888 5,986
Net interest income 3,521 3,306 10,512 9,806
Provision for loan losses 195 240 675 705
Net interest income after provision for loan losses 3,326 3,066 9,837 9,101
Noninterest income:
Service fees 320 323 933 951
Mortgage banking 187 655 655 1,499
Investment and insurance sales commissions 164 115 345 303
Net gain (loss) on sale of securities - (19) 111 (19)
Other noninterest income 93 69 315 257
Total noninterest income 764 1,143 2,359 2,991
Noninterest expense:
Salaries and employee benefits 1,718 1,508 4,813 4,343
Occupancy and facilities 445 286 1,107 859
Loss on abandonment of premises and equip. - - 329 -
Data processing and other office operations 155 131 502 418
Advertising and promotion 97 45 195 133
Other noninterest expenses 418 365 1,403 1,119
Total noninterest expense 2,833 2,335 8,349 6,872
Income before provision for income taxes 1,257 1,874 3,847 5,220
Provision for income taxes 510 639 1,364 1,704
Net income $ 747 $ 1,235 $ 2,483 $ 3,516
Basic earnings per share $ 0.43 $ 0.71 $ 1.44 $ 2.02
Diluted earnings per share $ 0.43 $ 0.71 $ 1.42 $ 2.00
PSB HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
September 30, 2004 unaudited, December 31, 2003 derived from audited financial
statements
SEPT. 30, December 31,
(dollars in thousands, except per share data) 2004 2003
ASSETS
Cash and due from banks $ 10,927 $ 13,754
Interest-bearing deposits and money market funds 2,004 1,214
Federal funds sold 5,617 3,959
Cash and cash equivalents 18,548 18,927
Securities available for sale (at fair value) 74,481 72,472
Federal Home Loan Bank stock (at cost) 2,834 2,444
Loans held for sale 62 207
Loans receivable, net of allowance for loan losses of $4,107
and $3,536, respectively 333,200 304,339
Accrued interest receivable 1,795 1,617
Foreclosed assets 52 84
Premises and equipment 12,028 7,557
Mortgage servicing rights, net 807 814
Other assets 796 472
TOTAL ASSETS $444,603 $408,933
LIABILITIES
Non-interest-bearing deposits $ 52,076 $ 50,563
Interest-bearing deposits 300,432 265,851
Total deposits 352,508 316,414
Federal Home Loan Bank advances 50,000 47,000
Other borrowings 6,807 10,475
Accrued expenses and other liabilities 1,973 2,903
Total liabilities 411,288 376,792
STOCKHOLDERS' EQUITY
Common stock - no par value with a stated value of $1 per share:
Authorized - 3,000,000 shares
Issued - 1,887,179 shares 1,887 1,887
Additional paid-in capital 9,690 9,694
Retained earnings 24,754 22,789
Accumulated other comprehensive income 662 844
Treasury stock, at cost - 170,849 and 153,781 shares, respectively (3,678) (3,073)
Total stockholders' equity 33,315 32,141
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $444,603 $408,933