Exhibit 99.1
PSB ANNOUNCES 4TH QUARTER EARNINGS OF $.60 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 fourth quarter of 2004 and the twelve months ended December
31, 2004.
"PSB earned $.60 per share this quarter compared to $.74 during the fourth
quarter last year. The most recent quarter earnings per share were reduced
$.06 from closure of PSB's Rhinelander, Wisconsin Trig's grocery store branch
(opened in 1998) as our stand alone full service branch in Rhinelander opened
in the autumn of 2002 continues to grow in market share. In addition, fourth
quarter 2003 earnings increased $.05 per share from a gain on curtailment of
PSB's post-retirement health care benefit plan. Excluding the impact of the
closure of the branch and the prior year curtailment to the post-retirement
plan, PSB earned $.66 per share in the fourth quarter 2004 compared to $.69
per share in the fourth quarter 2003."
"For all of 2004, PSB earned $2.03 per diluted share compared to $2.74 per
diluted share during 2003. 2004 was an unprecedented time of growth and new
initiatives. Special one-time charges during 2004 included a loss on
abandonment of the former home office ($.11 per share), state tax settlement
paid to Wisconsin on certain Nevada investment subsidiary earnings ($.09 per
share), and closure of the Rhinelander grocery store branch ($.06 per share).
In addition, PSB started a new branch location in Minocqua, Wisconsin and
continued investment in Peoples Insurance Services LLC, a commercial property
and casualty insurance agency started during 2003. The mortgage refinancing
boom of 2003 ended during 2004 causing current year mortgage banking net
income to decline $.30 per share. Looking ahead, I am excited about our
anticipated 2005 earnings growth and the ability and capacity PSB now has to
grow and expand in both our existing markets and new growth areas."
PSB Holdings, Inc. (OTCBB:PSBQ.OB), is the parent company of Peoples. Peoples
is headquartered in Wausau, Wisconsin with seven retail locations serving
north central Wisconsin in Marathon, Oneida, and Vilas counties. In addition
to traditional retail and commercial banking products, Peoples provides retail
investments, retirement planning, commercial property and casualty insurance
services, 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 $46.0 million, or 11.3%
since December 2003, to $455.0 million. Most of this growth has been in the
loan portfolio, which increased $39.6 million or 13.0% during the past 12
months. Loan growth was in mortgage lending with both commercial real estate
and on balance sheet residential real estate growing $15.8 million, and $17.7
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, began construction on a branch in
Weston, Wisconsin, purchased vacant land for a potential branch in Stevens
Point, Wisconsin and invested in imaging technology, which increased premises
and equipment by $4.9 million since December 2003.
In addition to growth, credit quality improved and remains strong.
Nonperforming loans (including non-accrual and restructured loans) to gross
loans was .80% at December 2004 compared to .94% at September 2004, and 1.08%
at December 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 .56% at December 2004 compared to .71% at September 2004, and
.63% at December 2003. The allowance for loan losses was 1.19% of gross loans
at December 2004 compared to 1.15% at December 2003.
During 2004, 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 $21.2 million, or 9.3% since
December 2003. In addition, local certificates of deposits greater than
$100,000 increased $15.4 million, or 38.5%. Brokered certificates and
national time deposits increased $5.2 million, or 10.6%, and Federal Home Loan
Bank advances increased $5 million, or 10.6%.
During the past three months however, deposit gains have come primarily from
core deposits, which increased $12.1 million while wholesale certificates
decreased $7.3 million. Retail and local deposits and other local borrowings
continue to comprise the bulk of asset funding and were 68.8% of total assets
at December 2004 compared to 68.0% of total assets at December 2003.
Tax-adjusted net interest income increased $207,000, or 5.9% to $3,723,000 for
the quarter ended December 31, 2004 from $3,516,000 for the quarter ended
December 31, 2003 due to increased earning assets held, although margin on
earning assets for the quarter declined from 3.65% to 3.50%. Earning asset
yields were largely flat and were 5.60% at December 2003 and 5.59% at December
2004. However, the cost of interest-bearing liabilities increased 11 basis
points from 2.36% at December 2003 to 2.47% at December 2004.
During the quarter ended December 2004, net interest margin declined to 3.50%
from 3.51% for the prior September 2004 quarter. However, recent increases in
the prime rate are beginning to be reflected as the yield on earning assets
increased from 5.54% in September 2004 to 5.59% in December 2004, the first
significant increase in yield during the most recent rate cycle. However, the
cost of interest-bearing liabilities increased 10 basis points to 2.47% during
that same period. PSB's ability to increase future net interest margin is
dependant on repricing core accounts in line with earning asset yields in a
rising rate environment. Increases to the prime rate through December 31,
2004 have not yet been reflected in the rate paid on core savings and money
market accounts. PSB's balance sheet remains largely neutral to interest rate
changes with net interest income for the next 12 months projected to decrease
$5,000 (.04%) if rates increase 200 basis points, and decrease $303,000
(2.15%) if interest rates decrease 100 basis points.
Service Fee and Noninterest Income
Quarterly noninterest income decreased $356,000 in the December 2004 quarter
to $764,000 compared to $1,120,000 in 2003. However, $275,000 of the decline
was from sales of securities and SBA loans and a curtailment gain in the post-
retirement benefit plan during the December 2003 quarter which were special
items. The remainder of the decline was largely from fewer service fees and
mortgage banking income in the current quarter.
For the twelve months ending December 2004, noninterest income declined
$988,000 with mortgage banking revenue declining $866,000 as 2002 and 2003's
mortgage refinancing boom came to an end. President Kopperud noted "Despite
the slow down in the residential mortgage market, Peoples continues to be the
leading mortgage lender by volume in Marathon County Wisconsin, our home
market". PSB serviced $160.2 million of mortgage principal for other
investors at December 31, 2004 compared to $152.7 million at December 31,
2003.
Peoples Insurance Services LLC, a commercial property and casualty insurance
agency and brokerage started by Peoples during September 2003, incurred a net
loss after tax benefits during 2004 of $129,000 (excluding inter-company cost
allocations) compared to a net loss of $39,000 during 2003. Initial net
losses have been in excess of original projections due to substantially lower
than expected revenue growth.
Operating Expenses
Noninterest operating expenses increased $147,000 to $2,626,000 in the quarter
ended December 2004 compared to $2,479,000 during the quarter ended December
2003. Of that total, $165,000 was incurred from charges and accelerated
depreciation on closing of PSB's Rhinelander, Wisconsin Trig's grocery store
branch.
For all of 2004, salaries and benefits increased $237,000, or 4.0% over 2003
but declined as a percentage of average assets from 1.56% in 2003 to 1.44% in
2004. A large portion of the decline was from reduced year-end incentive
compensation in 2004 from that paid for 2003. Excluding year-end incentive
compensation, wages and benefits as a percent of average assets was 1.44% in
2003 and 1.40% in 2004. Effective January 1, 2005, employees were granted
inflationary and merit increases averaging 3.4% of base pay.
During the twelve months ending December 2004, a large number of premises and
equipment investments increased occupancy and facilities expenses by 76%, or
$861,000. Of that total, a loss on abandonment of the old home office and the
Rhinelander grocery store branch was $379,000. Separately, accelerated
depreciation expense on the Rhinelander branch totaled $115,000. The
remaining cost increase was due largely to ongoing depreciation of recent
premises and equipment investments. Dave Kopperud indicated "With the
addition of a new and expanded home office, a new location in Minocqua, and
substantial investment in required document imaging technology, the Bank is
supporting a larger fixed cost structure as we go forward. However, these
investments were essential for future asset and profit growth". Excluding the
loss on abandonment of premise and equipment, operating expense as a percent
of average assets was 2.46% during the year ended December 31, 2004, compared
to 2.45% during 2003.
Forward Looking Statements
Certain matters discussed in this news release, including those relating to
the growth of PSB, 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. PSB 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
DEC. 31 Sept. 30, June 30, March 31, Dec. 31
EARNINGS AND DIVIDENDS: 2004 2004 2004 2004 2003
Net income $ 1,043 $ 747 $ 782 $ 954 $ 1,290
Basic earnings per share (3) $ 0.61 $ 0.43 $ 0.45 $ 0.55 $ 0.74
Diluted earnings per share (3) $ 0.60 $ 0.43 $ 0.45 $ 0.55 $ 0.74
Dividends declared per share (3) $ 0.30 $ - $ 0.30 $ - $ 0.29
Net book value per share $ 19.55 $ 19.41 $ 18.68 $ 19.33 $ 18.54
Semi-annual dividend payout ratio 28.82% n/a 29.84% n/a 19.88%
Average common shares outstanding 1,717,394 1,720,436 1,729,322 1,733,531 1,733,398
Loans receivable, net of allowances $ 341,997 $ 331,167 $ 320,471 $ 307,109 $ 302,491
Total assets $ 448,591 $ 439,177 $ 426,826 $ 407,577 $ 399,351
Deposits $ 353,310 $ 347,015 $ 330,337 $ 312,455 $ 312,376
Stockholders' equity $ 34,076 $ 33,010 $ 32,942 $ 32,878 $ 32,095
Return on average assets (1) 0.92% 0.67% 0.73% 0.94% 1.28%
Return on avg. stockholders' equity (1) 12.18% 8.98% 9.52% 11.64% 15.95%
Average tangible stockholders' equity to
average assets 7.49% 7.46% 7.61% 7.83% 7.85%
Net loan charge-offs to average loans 0.04% 0.00% 0.01% 0.02% 0.09%
Nonperforming loans to gross loans 0.80% 0.94% 0.98% 1.17% 1.08%
Allowance for loan loss to gross loans 1.19% 1.22% 1.19% 1.16% 1.15%
Net interest rate margin (1)(2) 3.50% 3.51% 3.64% 3.73% 3.65%
Net interest rate spread (1)(2) 3.12% 3.17% 3.30% 3.38% 3.24%
Service fee revenue as a percent of
average demand deposits (1) 2.22% 2.52% 2.63% 2.60% 2.70%
Noninterest income as a percent
of gross revenue 11.64% 11.93% 13.54% 12.24% 17.56%
Efficiency ratio (2) 58.52% 63.95% 64.54% 59.73% 53.47%
Noninterest expenses to avg. assets (1) 2.33% 2.56% 2.74% 2.56% 2.46%
High $ 33.25 $ 35.25 $ 35.60 $ 35.60 $ 36.19
Low $ 32.00 $ 33.00 $ 34.50 $ 33.50 $ 31.43
Market value at quarter-end $ 32.10 $ 33.00 $ 34.50 $ 35.00 $ 33.62
<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 Twelve Months Ended
(dollars in thousands, December 31, December 31,
except per share data - unaudited) 2004 2003 2004 2003
Interest and dividend income:
Loans, including fees $ 5,057 $ 4,498 $ 19,207 $ 17,964
Securities:
Taxable 430 468 1,798 1,943
Tax-exempt 247 240 982 916
Other interest and dividends 68 52 215 227
Total interest and dividend income 5,802 5,258 22,202 21,050
Interest expense:
Deposits 1,589 1,339 5,783 5,651
FHLB advances 576 469 2,061 1,989
Other borrowings 60 75 269 229
Total interest expense 2,225 1,883 8,113 7,869
Net interest income 3,577 3,375 14,089 13,181
Provision for loan losses 180 130 855 835
Net interest income after provision for loan losses 3,397 3,245 13,234 12,346
Noninterest income:
Service fees 301 331 1,234 1,282
Mortgage banking 246 268 901 1,767
Investment and insurance sales commissions 139 131 484 434
Net gain (loss) on sale of securities (14) 99 97 80
Other noninterest income 92 291 407 548
Total noninterest income 764 1,120 3,123 4,111
Noninterest expense:
Salaries and employee benefits 1,376 1,609 6,189 5,952
Occupancy and facilities 502 268 1,609 1,127
Loss on abandonment of premises and equip. 50 - 379 -
Data processing and other office operations 153 129 655 547
Advertising and promotion 68 39 263 172
Other noninterest expenses 477 434 1,880 1,553
Total noninterest expense 2,626 2,479 10,975 9,351
Income before provision for income taxes 1,535 1,886 5,382 7,106
Provision for income taxes 492 596 1,856 2,300
Net income $ 1,043 $ 1,290 $ 3,526 $ 4,806
Basic earnings per share $ 0.61 $ 0.74 $ 2.04 $ 2.76
Diluted earnings per share $ 0.60 $ 0.74 $ 2.03 $ 2.74
PSB HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
Year Ended December 31,
(dollars in thousands, except per share data) - Unaudited 2004 2003
ASSETS
Cash and due from banks $ 12,680 $ 13,754
Interest-bearing deposits and money market funds 3,265 1,214
Federal funds sold 7,379 3,959
Cash and cash equivalents 23,324 18,927
Securities available for sale (at fair value) 68,894 72,472
Federal Home Loan Bank stock (at cost) 2,874 2,444
Loans held for sale 342 207
Loans receivable, net of allowance for loan losses of $4,157
and $3,536, respectively 343,923 304,339
Accrued interest receivable 1,744 1,617
Foreclosed assets 7 84
Premises and equipment 12,432 7,557
Mortgage servicing rights, net 839 814
Other assets 595 472
TOTAL ASSETS $ 454,974 $ 408,933
LIABILITIES
Non-interest-bearing deposits $ 51,635 $ 50,563
Interest-bearing deposits 306,590 265,851
Total deposits 358,225 316,414
Federal Home Loan Bank advances 52,000 47,000
Other borrowings 8,565 10,475
Accrued expenses and other liabilities 2,568 2,903
Total liabilities 421,358 376,792
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 9,672 9,694
Retained earnings 25,281 22,789
Accumulated other comprehensive income 384 844
Treasury stock, at cost - 167,586 and 153,781 shares, respectively (3,608) (3,073)
Total stockholders' equity 33,616 32,141
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 454,974 $ 408,933