FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended SEPTEMBER 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file number: 0-26480
PSB HOLDINGS, INC.
(Exact name of registrant as specified in charter)
WISCONSIN 39-1804877
(State of incorporation) (I.R.S Employer Identification
Number)
1905 WEST STEWART AVENUE
WAUSAU, WISCONSIN 54401
(Address of principal executive office)
Registrant's telephone number, including area code: 715-842-2191
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such report), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
The number of common shares outstanding at September 30, 1997 was 883,235.
PSB HOLDINGS, INC.
FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 1997
PAGE NO.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statements of
Income, Nine Months and
Three Months Ended
September 30, 1997 (unaudited) and
September 30, 1996 (unaudited) 2
Condensed Consolidated Balance
Sheets September 30, 1997 (unaudited)
and December 31, 1996 (derived from
audited financial statements) 3
Condensed Consolidated Statements
of Cash Flows Nine Months and
Three Months Ended September 30, 1997
(unaudited) and September 30, 1996
(unaudited) 4
Notes to Condensed Consolidated
Financial Statements 5
Item 2. Management's Discussion and
Analysis of Financial Condition
and Results of Operations 6
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to Vote of
Securities Holders 11
Item 5. Other Information
Item 6. Exhibits and Reports on form 8-K 12
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PSB HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF INCOME
($ thousands except share data -unaudited) Nine Months Ended Three Months Ended
September 30, September 30,
1997 1996 1997 1996
Interest income:
Interest and fees on loans $ 9,340 $ 8,687 $ 3,225 $ 2,953
Interest on investment securities
Taxable 1,793 1,730 570 595
Tax-exempt 433 415 146 139
Other interest income 66 158 36 35
Total interest income 11,632 10,990 3,977 3,722
Interest expense:
Deposits 5,832 5,271 2,007 1,792
Short-term borrowings 275 520 81 168
Total interest expense 6,107 5,791 2,088 1,960
Net interest income 5,525 5,199 1,889 1,762
Provision for losses on loans 155 135 65 45
Net interest income after provision
for losses on loans 5,370 5,064 1,824 1,717
Other income:
Service fees 364 378 132 137
Insurance commissions 42 43 7 -0-
Net gains on other real estate -0- 203 -0- 15
Net gains on securities sales 3 -0- 3 -0-
Other operating income 145 121 53 69
Total other income 554 745 195 221
Other expense:
Salaries and related benefits 1,903 1,696 625 550
Net occupancy expense 530 520 175 174
Computer operations 52 184 26 15
Other operating expense 822 801 260 315
Total other expenses 3,307 3,201 1,086 1,054
Income before income taxes 2,617 2,608 933 884
Provision for income taxes 849 840 307 267
Net income $ 1,768 $ 1,768 $ 626 $ 617
Income per share
Basis: Weighted average of 889,549
shares in 1997
Weighted average of 902,246
shares in 1996
Net income per share $ 1.99 $ 1.96 $ .70 $ .68
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PSB HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
($ thousands) September 30, December 31,
ASSETS 1997* 1996*
Cash and cash equivalents $ 10,207 $ 10,152
Federal funds sold -0- -0-
Investment securities -
Held to maturity
(Market value $12,716 & $11,763
at 1997 & 1996 respectively) 12,615 11,714
Available for sale (at fair market
value, cost $35,520 & $39,881
at 1997 & 1996 respectively) 35,640 39,871
Total loans 145,323 138,011
Allowance for loan losses (1,861) (1,925)
Net loans 143,462 136,086
Bank premises and equipment 3,576 3,701
Other assets 3,022 2,634
TOTAL ASSETS $208,522 $ 204,158
LIABILITIES
Noninterest-bearing deposits $ 24,208 $ 28,486
Interest-bearing deposits 156,735 149,643
Total deposits 180,943 178,129
Federal funds purchased 2,494 2,197
Short-term borrowings 4,295 3,569
Notes payable 125 -0-
Other liabilities 1,321 1,974
Total liabilities 189,178 185,869
STOCKHOLDERS' EQUITY
Common stock - no par value with a stated
value of $2 per share
- 1,000,000 shares authorized
- 902,425 shares issued 1,805 1,805
Additional paid in capital 7,159 7,159
Retained earnings 11,107 9,649
Net unrealized gain (loss) on securities
available for sale, net of deferred
income taxes 76 (9)
Treasury stock, at cost - 19,190 shares
in 1997, 7,000 shares in 1996 (803) (315)
Total stockholders' equity 19,344 18,289
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $208,522 $204,158
<FN>
*The consolidated balance sheet at September 30, 1997 is unaudited. The
December 31, 1996 consolidated balance sheet is derived from audited financial
statements.
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PSB HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOW
Nine Months Ended Three Months Ended
September 30, September 30,
($ thousands - unaudited) 1997 1996 1997 1996
Cash flows from operating activities:
Net income $ 1,768 $1,768 $626 $617
Provision for depreciation, and
net amortization 338 268 111 86
Provisions for loan losses 155 135 65 45
Gain on sale of other real estate -0- (203) -0- (203)
Changes in operating assets and
liabilities:
Other assets (52) (575) (58) (27)
Other liabilities (653) (307) (168) 71
Net cash provided by operating
activities 1,556 1,086 576 777
Cash flows from investing activities:
Proceeds from sale and maturities of:
Held to maturity securities 1,130 1,146 150 175
Available for sale securities 7,381 11,738 3,424 1,661
Payment for purchase of:
Held to maturity securities (2,041) (2,609) (624) (818)
Available for sale securities (3,074) (15,495) (601) (3,462)
Net change in loans (7,867) (9,334) (4,015) (5,071)
Net (increase) decrease in
federal funds sold -0- 5,683 -0- 2,506
Proceeds from sale of other real estate -0- 230 -0- 15
Capital expenditures (194) (656) (82) (16)
Net cash used in investing activities (4,665) (9,297) (1,748) (5,010)
Cash flows from financing activities:
Net increase in deposits 2,814 9,468 1,341 5,805
Net increase (decrease) in short-term
borrowings 726 (3,521) 21 (4,686)
Net increase (decrease) in federal
funds purchased 297 3,745 (1,801) 3,745
Dividends paid (310) (328) -0- -0-
Purchase of stock (488) (315) (119) (315)
Note payable 125 -0- 125 -0-
Net cash provided (used) by financing
activities 3,164 9,049 (433) 4,549
Net increase (decrease) in cash and
cash equivalents 55 838 (1,605) 316
Cash and cash equivalents at beginning
of period 10,152 10,868 11,812 11,390
Cash and cash equivalents at end of
period $10,207 $11,706 $10,207 $11,706
Supplemental cash flow information:
Cash paid during the period for:
Interest 6,103 5,791 2,084 1,960
Income taxes 800 825 308 320
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PSB HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The accompanying financial statements in the opinion of management
reflect all adjustments which are normal and recurring in nature and
which are necessary for a fair statement of the results for the
periods presented. In all material respects, the financial statements
have been presented in accordance with generally accepted accounting
principles.
2. Earnings per share of common stock is based on the weighted average
number of common shares outstanding.
3. Refer to notes to the financial statements which appear in the 1996
annual report for the company's accounting policies which are
pertinent to these statements.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(All $ amounts are in thousands, except per share amounts)
RESULTS OF OPERATIONS
TOTAL ASSETS
Total assets have increased by $4,364 from December 31, 1996 to
September 30, 1997. This is an increase of 2.14% due to increases in
deposits of $2,814 and increases in borrowings of $1,023. Average total
assets for the month of September, 1997 were $207,506. Total assets
increased by $120 in the third quarter of 1997, an increase of .06%. In
1996, third quarter assets increased by $5,296 or 2.71%.
LOANS
Net loans have increased by $7,376 from December 31, 1996 to September 30,
1997. This is an increase of 5.42%. Net loans have increased by $3,614
in the third quarter of 1997, an increase of 2.58%. In 1996, third
quarter loans increased by $5,027 or 3.94%.
CASH AND INVESTMENTS
Cash increased by approximately $55 as of September 30, 1997 compared to
December 31, 1996. Investments, on the other hand decreased by $3,330 or
6.45%. Two securities totalling $2,300 were sold without replacement
during the second quarter of 1997. Cash decreased by $1,605 in the third
quarter of 1997. Cash increased by $316 during the third quarter of 1996.
DEPOSITS
Deposits increased by $2,814 from December 31, 1996 to September 30, 1997.
This is an increase of 1.58% Average deposits for September were
$181,961. Deposits increased by $1,341 in the third quarter of 1997.
This is an increase of .75%. In 1996, third quarter deposits increased
$5,805 or 3.54%.
SHORT TERM BORROWINGS
Fed funds purchased increased by $297 from December 31, 1996 to September
30, 1997. Repurchase agreements increased $726. Fed funds purchased
decreased $1,801 in the third quarter of 1997. Repurchase agreements
increased only $21. In the third quarter of 1996 fed funds purchased
increased by $3,745 and repurchase agreements decreased $4,686.
EQUITY
Equity grew by $1,055 or 5.77% due to the following: Net income for the
first nine months of $1,768, an increase in the "Net unrealized gain on
securities available for sale" of $85, dividends paid of $310 and treasury
stock acquired of $488. The increase in the unrealized gain is a result
of the market prices of the investment portfolio increasing as of
September 30, 1997. Equity grew by $602 or 3.21% in the third quarter of
1997. In the third quarter of 1996 equity grew by $390 or 2.20%.
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OPERATING DATA SUMMARY
GENERAL
Net interest income for the first nine months of 1997 is $326 or 6.27%
greater than it was for the same period in 1996. Net interest income for
the third quarter of 1997 is $127 or 7.21% greater than it was for the
same period in 1996.
NON-INTEREST INCOME
Non-interest income decreased by $191 in the period ending September 30,
1997 compared to the period ending September 30, 1996. This decrease is
attributable to the sale of Other Real Estate in January of 1996. Total
proceeds from the sale were $215 with a net gain of $188. Non-interest
income decreased $26 in the third quarter of 1997 compared to the same
period in 1996.
NON-INTEREST EXPENSE
Non-interest expenses increased by 3.31% or $106 for the period ending
September 30, 1997 when compared to the period ending September 30, 1996.
Non-interest expense increased by $32 or 3.04% in the third quarter of
1997 compared to the same period in 1996.
NET INCOME
Net income for the first nine months of 1997 is equal to the same period
in 1996 but earnings per share increased due to the reduced weighted
average number of shares outstanding in the first nine months of 1997.
Net income for the third quarter of 1997 is only $9 more than the third
quarter of 1996. Earnings per share increased due to the reduced weighted
average number of shares.
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KEY OPERATING RATIOS
(unaudited) Ended September 30, 1997
NINE MONTH PERIOD THREE MONTH PERIOD
1997 1996 1997 1996
Return on assets (net income
divided by average assets) (1) 1.16% 1.21% 1.22% 1.24%
Return on Average Equity (net income
divided by average equity) (1) 12.53% 13.18% 13.15% 13.72%
Average Equity to Average Assets 9.22% 9.18% 9.25% 9.05%
Interest Rate Spread (difference
between average yield on interest
earning assets and average cost of
interest bearing liabilities) (1) 3.00% 2.95% 2.97% 2.98%
Net Interest Margin (net interest
income as a percentage of average
interest earning assets) (1) 3.77% 3.73% 3.81% 3.75%
Non-interest Expense to average
assets (1) 2.16% 2.19% 2.11% 2.12%
Allowance for loan losses to total
loans at end of period 1.28% 1.41% 1.28% 1.41%
<FN>
(1) Annualized
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SUMMARY OF LOAN LOSSES EXPERIENCE
The following table summarizes loan balances at the end of each
period, changes in the allowance for loan losses arising from loans
charged off and recoveries on loans previously charged off, by loan
category and additions to the allowance which have been charged to
expense.
Nine Months Ended Three Months Ended Year Ended
SEPTEMBER 30, 1997 SEPTEMBER 30, 1997 DECEMBER 31, 1996
Allowance for loan losses
at beginning of period $1,924,686 $1,797,743 $1,780,893
Loans charged off
Commercial & Industrial 136,672 -0- 47,809
Agricultural -0- -0- -0-
Real Estate - Mortgage 71,011 -0- -0-
Installment & Other
Consumer Loans 49,690 18,812 25,133
Total Charge Offs (257,373) (18,812) (72,942)
Recoveries on loans previously
charged off
Commercial & Industrial 16,968 15,421 33,236
Agricultural -0- -0- -0-
Real Estate - Mortgage 18,582 -0- -0-
Installment & Other
Consumer Loans 2,762 1,273 3,499
Total Recoveries 38,312 16,694 36,735
Net loans charged off (219,061) (2,118) (36,207)
Additions charged to
operations 155,000 65,000 180,000
Allowance for loan losses
at end of period $1,860,625 $1,860,625 $1,924,686
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AGGREGATE AMOUNT OF NON-PERFORMING LOANS
September 30, December 31,
1997 1996
Loans on a non-accrual basis
Real estate - mortgage $ 521,107 $ 187,568
Installment loans 81,197 -0-
Credit cards & related plans -0- -0-
Commercial & all other loans 495,077 59,087
Total non-accrual $1,097,381 $ 246,655
Loans contractually past due
thirty through eighty-nine days
and still accruing
Real estate - mortgage $ 947,787 $ 974,474
Installment loans 429,771 255,458
Credit cards & related plans -0- -0-
Commercial & all other loans 575,755 99,069
Total 30 - 89 days $1,953,313 $1,329,001
Loans contractually past due
ninety days or more as to
interest or principal payments
Real estate - mortgage $ -0- $ -0-
Installment loans -0- -0-
Credit cards & related plans -0- -0-
Commercial & all other loans -0- -0-
Total over 90 days $ -0- $ -0-
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not Applicable
ITEM 2. CHANGES IN SECURITIES
Not Applicable
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITIES HOLDERS
Not Applicable
ITEM 5. OTHER INFORMATION
Not Applicable
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K:
(a) Exhibits required by Item 601 of Regulation S-K.
EXHIBIT (3) - ARTICLES OF INCORPORATION AND BYLAWS
PAGE OR
INCORPORATED
EXHIBIT <dagger>
(i) Restated Articles of Incorporation, as amended .. 4(a)(1)
(ii) Bylaws ......................................... 4(b)(1)
EXHIBIT (4) - INSTRUMENTS DEFINING THE RIGHTS OF
SECURITY HOLDERS
(a) Articles of Incorporation and
Bylaws (see Exhibits 3(a) and (b))
EXHIBIT (10) - MATERIAL CONTRACTS
(a) Bonus Plan of Directors of the Bank* ............ 10(a)(2)
(b) Bonus Plan of Officers and Employees of the
Bank* .......................................... 10(b)(2)
(c) Non-Qualified Retirement Plan for Directors
of the Bank* .................................... 10(c)(2)
EXHIBIT (21) - SUBSIDIARIES OF THE REGISTRANT ........ 22(2)
EXHIBIT (27) - FINANCIAL DATA SCHEDULE
* Denotes Executive Compensation Plans and Arrangements.
<dagger>Where exhibit has been previously filed and is incorporated
herein by reference, exhibit numbers set forth herein correspond to
the exhibit number where such exhibit can be found in the following
reports of the registrant (Commission File No. 0-26480) filed with
the Securities and Exchange Commission:
(1) Registrant's current report on Form 8-K dated May 30, 1995
(2) Registrant's annual report on Form 10-K for the fiscal year ended
December 31, 1995
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(b) Reports on Form 8-K:
None.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PSB HOLDINGS, INC.
November 12, 1997 TODD R. TOPPEN
Todd R. Toppen
Secretary and Controller
(On behalf of the Registrant and as
Principal Financial Officer)
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EXHIBIT INDEX<dagger>
TO
FORM 10-Q
OF
PSB HOLDINGS, INC.
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1997
Pursuant to Section 102(d) of Regulation S-T
(17 C.F.R. <section>232.102(d))
EXHIBIT 27 - FINANCIAL DATA SCHEDULE
<dagger>Exhibits required by Item 601 of Regulation S-K
which have been previously filed and are incorporated by
reference are set forth in Part IV, Item 14(c) of the Form
10-Q to which this Exhibit Index relates.
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