[Letterhead of PSB Holdings, Inc.]
July 15, 2009
Via EDGAR
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John P. Nolan, CPA
Senior Assistant Chief Accountant
Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549
Re: PSB Holdings, Inc.
Form 10-K for the Fiscal Year Ended June 30, 2008
Form 10-Q for the Quarter Ended September 30, 2008
Form 10-Q for the Quarter Ended December 31, 2008
File No. 000-50-970
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Dear Mr. Nolan:
I am responding to the letter from the Securities and Exchange Commission
(the "SEC") addressed to PSB Holdings, Inc. (the "Company") dated July 2, 2009
relating to the above-referenced annual report. The Company's responses are
named and numbered to correspond with the names and numbers of the comments
contained in the letter from the SEC. For your convenience, we have included a
copy of the text of your comment above each of the responses.
Form 10-K for the fiscal year ended June 30, 2008
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Non-Performing Assets, page 11
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1. We note commercial loans are evaluated for non-accrual status on a
case-by-case basis. Please provide us with the average delinquency of
a commercial loan when placed on non-accrual status.
Loans on non-accrual status as of June 30, 2008 were delinquent an average
of 75.2 days when placed on non-accrual status.
John P. Nolan, CPA
July 15, 2009
Page 2
Form 10-Q for the quarter ended March 31, 2009
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Note 8 - Allowance for Loan Losses, Page 13
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2. We note your response to comment two from our letter dated June 3,
2009. Specifically, you state that a current appraisal on collateral
securing residential and commercial real estate loans is generally
completed within a range of six months to one year of the last
appraisal. Please tell use in further detail the alternative
procedures performed to monitor these loans between the receipt of an
original appraisal and the updated appraisal. Additionally, we note on
page 31 of the Form 10-Q there was one commercial loan charge-off for
$400,000 during 2009. If this loan was collateral dependent please use
it as an example to provide us with a detail discussion and timeline
of the process to determine non-accrual status and appraisal date for
commercial real estate loans. If this loan was not collateral
dependent, please provide us with the following information for your
five largest non-accrual commercial real estate loans:
o Outstanding loan balance and specific allowance for the single
loan at 6/30/08 and 9/30/08;
o Date of the loan origination and loan term;
o Number of days past due when the loan was put on non-accrual
status; and
o Date of the last appraisal and deficiency between the last
appraisal and the original appraisal.
With respect to the alternative procedures performed to monitor delinquent
loans (between the receipt of an original appraisal and the updated appraisal),
a loan officer, or another member of senior management, periodically completes a
physical inspection of the subject property. If there is any visible
deterioration, an updated appraisal is ordered earlier than would be originally
scheduled.
With respect to the $400,000 commercial loan charge-off described in the
Quarterly Report on Form 10-Q for the quarter ended March 31, 2009, such loan
relationship was placed on non-accrual status in September 2008 after the loans
were five (5) days past due for interest payments. This occurred as a result of
a meeting between the borrowers and the Company's management, at which meeting
the borrowers indicated that they may not be able to make their future loan
payments. A Deed-in-Lieu of Foreclosure transaction took place on December 22,
2008. Because this loan was collateral dependent, an updated appraisal was
ordered December 26, 2008 (less than 90 days within the relationship being
placed on non-accrual status, as
John P. Nolan, CPA
July 15, 2009
Page 3
opposed to within 180 days, as permitted by the Company's policies), as a prior
appraisal had not been obtained since January 2006.
* * * *
The Company acknowledges that:
(i) the Company is responsible for the adequacy and accuracy of the
disclosure in the filing,
(ii) Staff comments or changes to disclosure in response to Staff comments
do not foreclose the Commission from taking any action with respect
to the filing, and
(iii) the Company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
We trust that the above information is responsive to the staff's comments.
Please direct any additional comments or questions to the undersigned.
Sincerely,
\s\ Robert J. Halloran, Jr.
Robert J. Halloran, Jr.
President and Treasurer
cc: Thomas Borner, Chairman and Chief Executive Officer
Ned Quint, Esq.