EXHIBIT 99.1
PSB GROUP, INC. ANNOUNCES THIRD-QUARTER FINANCIAL RESULTS
Madison Heights, MI. November 4, 2008 - PSB Group, Inc., (OTCBB: PSBG), the
bank holding company for Peoples State Bank, a Michigan state-chartered bank
with offices in Wayne, Oakland, Macomb and Genesee Counties, today announced a
net loss for the third quarter of 2008 of $2,030,000 or ($0.61) per average
outstanding share, compared to a net loss of $1,474,000 or ($0.48) per average
outstanding share in the third quarter of 2007.
Total assets as of September 30, 2008 were $470,550,000 compared to
$480,785,000 on June 30, 2008. Total loans were $382,876,000 as of September 30,
2008 compared to $387,162,000 on June 30, 2008. Deposits were $395,643,000 on
September 30, 2008 compared to $404,380,000 as of June 30, 2008. The modest
decline in deposits is related to our decision to replace higher cost deposits
with lower cost borrowings from the Federal Home Loan Bank, resulting in an
improved interest margin.
Third quarter results were impacted by a $2,350,000 addition to the
provision for loan losses, resulting in a loan loss reserve of 1.78% to total
loans. One credit accounted for most of the increase in the provision for loan
losses from the second quarter 2008 amount of $1,553,000. This compares to a
loan loss reserve of 1.54% in the second quarter. OREO (other real estate owned)
related expenses of $1,779,000 were another major factor impacting earnings for
the quarter, resulting primarily from realized losses or valuation adjustments
attributable to an ongoing decline of Michigan real estate values. OREO write
downs were also concentrated in a small number of credits. Non performing assets
net of troubled restructured debt declined to $20,142,000 from $21,979,000 in
the second quarter of 2008. The largest factor in the decline was the reduction
of $2,384,000 in other real estate owned. Restructured debt increased to
$9,658,000 from $6,330,000 in the second quarter of 2008 due to PSB working with
commercial and retail clients to reset their loans to terms they could succeed
with in this troubled Michigan economy.
Michael J. Tierney, President & CEO, commented, "Peoples State Bank is
continuing to make progress on the road back to profitability. Businesses and
consumers alike have felt the effects of this recession - increasing job losses,
and decreasing real estate values. Our internal credit quality indicators are
steady or improving even though the external environment continues to be a
significant challenge. Although we are not happy with where we are, holding
steady is good progress versus the norm for the industry in Southeast Michigan.
We proactively addressed our credit issues over a year ago and we are seeing the
benefit in the amount of property we have been able to liquidate."
Mr. Tierney went on to say, "We have worked to develop loan payment
arrangements for commercial borrowers and consumers that they can live with.
When we amend a mortgage payment for a client so they can remain in their home,
or a business so it can keep operating, we then have to report the loan as a
restructured debt even though it is performing. We think this is the right thing
to do for hard hit Michigan families and business owners so we are willing to
live
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with some growth in restructured debt. Our delinquency rate on loans greater
than 30 days fell below 4% in the second quarter and has remained there in the
third quarter. We appreciate how hard our clients are working to make their
payments to us in these troubled times. We have built up our loan loss reserve
significantly in the last few quarters and believe the loan loss reserve is well
positioned at 1.78% of loans, given the stabilization of our credit trends and
the limited remaining exposure to residential development lending. We have less
than 3% of our loans in the residential real estate development sector which
continues to be a very difficult business segment for banks."
Mr. Tierney added, "The employees and the board have taken several steps to
improve our baseline profitability. We have maintained the interest margin at
over 4%. We have chosen to borrow funds in the institutional market at rates
well below prevailing retail market certificate of deposit rates. Deposits were
growing significantly at the end of the quarter as consumers and businesses
brought their deposits to PSB seeking a safe harbor in a very stormy market. We
appreciate their confidence in us and we welcome the new business. Non-interest
income is essentially flat with significant improvement in deposit service
charges offset by lower loan related fees. Non-interest expenses when adjusted
for OREO expenses and loan collection costs have been reduced by over 8%. We
have reduced headcount, frozen officer salaries, exited lines of business and
consolidated functions within the company. We merged Universal Mortgage into the
Bank during the quarter and consolidated mortgage lending with consumer and
commercial lending. We also integrated other operations functions. These actions
have reduced our run rate in expenses while maintaining or improving service to
our clients.
"Our people are working hard to deliver great service every day. We
appreciate their hard work and tremendous dedication. Our employees and their
great attitude in these tough times are the reason we were selected as one of
Metropolitan Detroit's 101 Best and Brightest Companies to Work for the fourth
year in a row!"
Mr. Tierney concluded with, "Peoples State Bank is on sound footing and
preparing to celebrate our 100 year anniversary in 2009 with our clients and the
communities we have served for generations. The bank is well capitalized and our
turnaround plan is working. We have many great reasons to gear up to celebrate
our 100 year anniversary!"
PSB Group, Inc. is a registered holding company. Its primary subsidiary,
Peoples State Bank, currently serves the southeastern Michigan area with 11
full-service banking offices in Farmington Hills, Fenton, Grosse Pointe Woods,
Hamtramck, Madison Heights, Southfield, Sterling Heights, Troy and Warren. The
bank has operated continuously under local ownership and management since it
first opened for business in 1909.
Contact: David A. Wilson
Senior Vice President & CFO
(248) 548-2900
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