WAUSAU, Wis., April 22, 2024 (GLOBE NEWSWIRE) --  PSB Holdings, Inc. ("PSB") (OTCQX:PSBQ), the holding company for Peoples State Bank ("Peoples") serving Northcentral and Southeastern Wisconsin reported first quarter earnings ending March 31, 2024 of $0.39 per common share on net income of $1.6 million, compared to $0.55 per common share on net income of $2.3 million during the fourth quarter ending December 31, 2023, and $0.67 per common share on net income of $2.9 million during the first quarter ending March 31, 2023. PSB's first quarter 2024 operating results reflected the following changes from the fourth quarter of 2023: (1) lower net interest income as deposit and FHLB borrowing costs rose faster than interest income on loans; (2) lower non-interest income due primarily to the sale of investment securities at a loss with the proceeds reinvested into higher yielding investments; (3) higher non-interest expense related to annual salary increases in the first quarter and a reduction in vesting of incentives and benefits recorded in the prior quarter; (4) stronger capital ratios supported by additional earnings and slightly lower total assets; and (6) an increase in non-performing assets related to one borrower in the timber industry impacted by weather conditions and economic stress in that industry. "We continue to focus on building shareholder value in a challenging environment, with common tangible book value increasing to $24.21 per share and stronger than expected loan growth prospects looking forward. However, rising funding costs remain a challenge. While new loan origination coupons have risen in the first quarter, the cost of new FHLB borrowings and continued rate increases in our existing deposits rose faster than asset yields as a whole," stated Scott Cattanach, President and CEO. March 31, 2024, Highlights: Net interest income declined to $9.3 million for the quarter ended March 31, 2024, from $9.6 million for the quarter ended December 31, 2023, as increases in asset and loan yields were offset by increases in funding costs. Tangible book value per common share increased to $24.21 at March 31, 2024, compared to $23.84 one quarter earlier and $22.43 at March 31, 2023. During the first quarter ended March 31, 2024, tangible book value per share was positively influenced by net income, intangible asset amortization, and stock repurchase activity. Loans increased $2.9 million in the first quarter ended March 31, 2024, to $1.08 billion. Allowance for credit losses increased to 1.14% of gross loans. Return on tangible common equity was 6.57% for the quarter ended March 31, 2024, compared to 9.64% the prior quarter and 12.63% one year earlier. Noninterest income was $1.0 million for the quarter ended March 31, 2024, compared to $1.1 million the prior quarter. The current quarter reflected a slightly larger loss on the sale of investment securities as the Company continues to reposition the investment portfolio into higher yielding investments. Noninterest expenses increased $967,000 in the first quarter of 2024, to $8.3 million from $7.4 million the prior quarter. The increase reflected scheduled salary increases and costs associated with vesting of other benefits. December 2023 quarterly salary costs were lowered by adjustments to post retirement and incentive accruals.   March 2024 quarterly salaries and employee benefits expense was 2.3% greater than March 2023 quarterly salaries and employee benefits. Balance Sheet and Asset Quality Review Total assets decreased $5.5 million to $1.42 billion at March 31, 2024. Cash and cash equivalents decreased $11.9 million, to $15.9 million at March 31, 2024, compared to $27.8 million the previous quarter. The lower cash and cash equivalent level primarily reflects proceeds used to fund higher yielding loans and investments. Investment securities available for sale increased $1.5 million to $165.6 million at March 31, 2024, from $164.0 million one quarter earlier. During the first quarter, $6.3 million available for sale securities were sold with the proceeds reinvested into higher yielding investments. Total collateralized liquidity available to meet cash demands was approximately $396 million at March 31, 2024, with an additional $317 million that could be raised in a short time frame from the brokered CDs market. Total loans receivable increased $2.9 million to $1.08 billion at March 31, 2024 due primarily to draw downs of prior quarter loans in process, although gross loans outstanding declined $7.4 million. Commercial real estate loans decreased $8.2 million to $609.6 million at March 31, 2024, from $617.9 million the prior quarter. Commercial non-real estate loans decreased $1.3 million to $159.7 million at March 31, 2024, from $161.0 million one quarter earlier. Residential real estate loans increased $1.6 million from the prior quarter to $339.8 million from $338.2 million. The loan portfolio remains well diversified with commercial real estate loans totaling 54.7% of gross loans followed by residential real estate loans at 30.5% of gross loans, commercial non-real estate loans at 14.3% and consumer loans at 0.4%. The allowance for credit losses increased slightly to 1.14% of gross loans at March 31, 2024, from 1.13% the prior quarter. Annualized net charge-offs to average loans were zero for the last three quarters ending March 31, 2024, compared to net recoveries of 0.02% one year earlier. Non-performing assets increased to 0.83% of total assets at March 31, 2024, due primarily to the addition of a $5.1 million loan to a borrower in the timber industry. Specific reserves have been established on the loan relationship for potential losses. For the fifth consecutive quarter, the Bank did not own any foreclosed real estate. Total deposits decreased $28.5 million to $1.11 billion at March 31, 2024, from $1.14 billion at December 31, 2023. The decline in deposits reflects a pay down of $9.5 million in maturing brokered deposits and national CDs and a $22.2 million decline in uninsured deposits. Insured core and time deposits increased $3.2 million during the first quarter. The composition of deposits continued to change during the first quarter of 2024 as customers seek higher deposit rates. At March 31, 2024, money market deposits and retail time deposits increased to 41.6% of deposits, compared to 40.6% at December 31, 2023. Uninsured and uncollateralized deposits declined to 19.3% of total deposits at March 31, 2024, from 20.9% of total deposits at December 31, 2023.FHLB advances increased to $158.3 million at March 31, 2024, compared to $134.0 million at December 31, 2023. FHLB advances were used to fund repayment of certain brokered deposit maturities and supplement local deposit changes. Tangible stockholder equity as a percent of total tangible assets was 7.60% at March 31, 2024, compared to 7.49% at December 31, 2023, and 7.54% at March 31, 2023. Tangible net book value per common share increased $1.78, to $24.21, at March 31, 2024, compared to $22.43 one year earlier, an increase of 7.9%. Relative to the prior quarter, tangible net book value per common share increased $0.37 due to continued earnings. New security purchases with higher yields helped offset an increase in national market interest rates that lowered the value of the securities portfolio during the first quarter. The accumulated other comprehensive loss on the investment portfolio was $20.8 million at March 31, 2024, compared to $20.7 million one quarter earlier. Operations Review Net interest income declined to $9.3 million (on a net margin of 2.80%) for the first quarter of 2024 from $9.6 million (on a net margin of 2.88%) for the fourth quarter of 2023, and $9.9 million (on a net margin of 3.21%) for the first quarter of 2023. Earning asset yields increased 13 basis points to 5.12% during the first quarter of 2024 from 4.99% during the fourth quarter of 2023, while interest bearing deposit and borrowing costs increased 21 basis points to 3.00% compared to 2.79% during the fourth quarter of 2023. The increase in earning asset yields was primarily due to higher yields on loan originations and renewals during the quarter. Partially offsetting the increased yield on earning assets during the quarter was the loss of interest income of approximately $114,000 on a newly classified non-performing loan. Taxable security yields were 2.80% for the quarter ended March 31, 2024, compared to 2.72% for the quarter ended December 31, 2023, up 8 basis points. Loan yields increased during the first quarter to 5.59% from 5.43% for the fourth quarter of 2023, up 16 basis points as loans repriced to higher market rates and increased credit spreads. Rising deposit costs for savings and demand deposits, money market deposits, time deposits and FHLB advances were responsible for the rise in the Bank's cost of funds. Additionally, the Company accepted an increase in $26.0 million of additional seasonal high yield municipal average deposits during the first quarter, which accelerated the overall rising cost of deposits during the quarter. The municipal deposits are expected to be drawn down during the second quarter. The overall cost of all deposits was 2.14% for the quarter ended March 31, 2024, compared to 1.91% the prior quarter, up 23 basis points. FHLB advance costs rose to 4.08% during the first quarter ended March 31, 2024, from 4.01% the prior quarter, and greater use of FHLB advance funding lowered net interest margin. Total noninterest income decreased slightly for the first quarter of 2024 to $1.04 million, from $1.10 million for the fourth quarter of 2023, due primarily to investment restructuring activity with a loss on the sale of investment securities during the first quarter of $495,000 compared to a loss of $297,000 in the fourth quarter of 2023. Mortgage banking income increased by $61,000, or 24.6%, to $308,000 in the March 2024 quarter. At March 31, 2024, the Bank serviced $366.6 million in secondary market residential mortgage loans for others which provides fee income. Noninterest expenses increased to $8.3 million for the first quarter of 2024, compared to $7.4 million for the fourth quarter of 2023. The fourth quarter of 2023 included lower salary and benefit expenses due to a recovery of post-retirement benefits and incentive accruals. The first quarter ended March 31, 2024, also reflected higher salary and benefit expenses due to annual salary increases and costs associated with various benefits. Taxes decreased $709,000 during the first quarter to $169,000 from $878,000 one quarter earlier. The decrease reflects lower pre-tax income, the relative value of tax exempt income assets, and the benefit related to a Wisconsin state tax change that exempts certain loan interest income effectively eliminating Wisconsin tax expense. About PSB Holdings, Inc. PSB Holdings, Inc. is the parent company of Peoples State Bank. Peoples is a community bank headquartered in Wausau, Wisconsin, serving northcentral and southeastern Wisconsin from eleven full-service banking locations in Marathon, Oneida, Vilas, Portage, Milwaukee and Waukesha counties and a loan production office in Dane County. Peoples also provides investment and insurance products, along with retirement planning services, through Peoples Wealth Management, a division of Peoples. PSB Holdings, Inc. is traded under the stock symbol PSBQ on the OTCQX Market. More information about PSB, its management, and its financial performance may be found at www.psbholdingsinc.com. Forward-Looking Statements This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on current expectations, estimates and projections about PSB's business based, in part, on assumptions made by management and include, without limitation, statements with respect to the potential growth of PSB, its future profits, expected stock repurchase levels, future dividend rates, future interest rates, and the adequacy of its capital position. Forward-looking statements can be affected by known and unknown risks, uncertainties, and other factors, including, but not limited to, strength of the economy, the effects of government policies, including interest rate policies, risks associated with the execution of PSB's vision and growth strategy, including with respect to current and future M&A activity, and risks associated with global economic instability. The forward-looking statements in this press release speak only as of the date on which they are made and PSB does not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of this release.     PSB Holdings, Inc.           Consolidated Balance Sheets           March 31, 2024, September 30, June 30, and March 31, 2023, unaudited, December 31, 2023 derived from audited financial statements               Mar. 31, Dec. 31, Sep. 30, Jun. 30, Mar. 31, (dollars in thousands, except per share data)   2024     2023     2023     2023     2023               Assets                       Cash and due from banks $ 13,340   $ 20,887   $ 12,881   $ 27,409   $ 13,336   Interest-bearing deposits   105     1,431     668     892     538   Federal funds sold   2,439     5,462     7,764     16,138     25,766               Cash and cash equivalents   15,884     27,780     21,313     44,439     39,640   Securities available for sale (at fair value)   165,566     164,024     160,883     167,382     190,738   Securities held to maturity (fair values of $81,234, $82,514, $75,236, $81,489 and           $82,610, respectively   87,104     87,081     86,908     87,335     87,889   Equity securities   1,474     1,474     2,273     2,178     2,070   Loans held for sale   865     230     971     151     -   Loans receivable, net (allowance for credit losses of $12,494, $12,302, $12,267,           $11,922 and $11,593, respectively   1,081,394     1,078,475     1,098,019     1,048,322     973,270   Accrued interest receivable   5,467     5,136     4,716     4,274     4,062   Foreclosed assets   -     -     -     -     -   Premises and equipment, net   13,427     13,098     13,242     13,256     13,406   Mortgage servicing rights, net   1,657     1,664     1,684     1,666     1,682   Federal Home Loan Bank stock (at cost)   7,006     6,373     6,373     6,359     4,620   Cash surrender value of bank-owned life insurance   24,242     24,085     23,931     23,776     25,078   Core deposit intangible   249     273     297     321     348   Goodwill   2,541     2,541     2,541     2,541     2,541   Other assets   11,682     11,866     14,094     14,933     14,444               TOTAL ASSETS $ 1,418,558   $ 1,424,100   $ 1,437,245   $ 1,416,933   $ 1,359,788               Liabilities                       Non-interest-bearing deposits $ 247,608   $ 266,829   $ 288,765   $ 282,153   $ 267,836   Interest-bearing deposits   865,744     874,973     883,474     860,981     839,757                  Total deposits   1,113,352     1,141,802     1,172,239     1,143,134     1,107,593               Federal Home Loan Bank advances   158,250     134,000     128,000     133,000     113,000   Other borrowings   8,096     8,058     5,660     5,730     5,033   Senior subordinated notes   4,776     4,774     4,772     4,771     4,769   Junior subordinated debentures   12,947     12,921     12,896     12,870     12,844   Allowance for credit losses on unfunded commitments   477     577     512     712     762   Accrued expenses and other liabilities   10,247     12,681     10,258     11,783     10,576                  Total liabilities   1,308,145     1,314,813     1,334,337     1,312,000     1,254,577               Stockholders' equity                       Preferred stock - no par value:              Authorized - 30,000 shares; no shares issued or outstanding              Outstanding - 7,200 shares, respectively   7,200     7,200     7,200     7,200     7,200   Common stock - no par value with a stated value of $1.00 per share:              Authorized - 18,000,000 shares; Issued - 5,490,798 shares              Outstanding - 4,147,649, 4,164,735, 4,174,197, 4,190,252 and                4,241,501 shares, respectively   1,830     1,830     1,830     1,830     1,830   Additional paid-in capital   8,466     8,460     8,421     8,382     8,311   Retained earnings   134,271     132,666     131,624     130,396     128,968   Accumulated other comprehensive income (loss), net of tax   (20,775 )   (20,689 )   (26,190 )   (23,240 )   (22,515 ) Treasury stock, at cost - 1,343,149, 1,326,063, 1,316,601, 1,300,546 and             1,249,297 shares, respectively   (20,579 )   (20,180 )   (19,977 )   (19,635 )   (18,583 )                Total stockholders' equity   110,413     109,287     102,908     104,933     105,211               TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,418,558   $ 1,424,100   $ 1,437,245   $ 1,416,933   $ 1,359,788               PSB Holdings, Inc.             Consolidated Statements of Income                                         Quarter Ended     (dollars in thousands, Mar. 31, Dec. 31, Sep. 30, Jun. 30, Mar. 31,   except per share data - unaudited)   2024     2023     2023   2023     2023                         Interest and dividend income:                Loans, including fees $ 15,109   $ 14,888   $ 14,263 $ 12,709   $ 11,773        Securities:                   Taxable   1,197     1,147     1,114   1,327     1,331           Tax-exempt   526     532     533   535     537        Other interest and dividends   343     320     238   145     148                                  Total interest and dividend income   17,175     16,887     16,148   14,716     13,789                         Interest expense:                Deposits   6,082     5,526     4,817   3,661     2,989        FHLB advances   1,450     1,349     1,321   1,200     547        Other borrowings   60     54     51   48     62        Senior subordinated notes   59     59     59   58     62        Junior subordinated debentures   251     254     255   242     234                                  Total interest expense   7,902     7,242     6,503   5,209     3,894                         Net interest income   9,273     9,645     9,645   9,507     9,895     Provision for credit losses   95     100     150   100     100                         Net interest income after provision for credit losses         9,178     9,545     9,495   9,407     9,795                         Noninterest income:                Service fees   336     360     349   378     361        Mortgage banking income   308     247     345   311     325        Investment and insurance sales commissions   121     100     158   287     365        Net loss on sale of securities   (495 )   (297 )   -   (279 )   -        Increase in cash surrender value of life insurance         157     154     155   149     157        Life insurance death benefit   -     -     -   533     -        Other noninterest income   617     540     675   605     742                                  Total noninterest income   1,044     1,104     1,682   1,984     1,950                         Noninterest expense:                Salaries and employee benefits   5,123     4,244     4,514   4,884     5,006        Occupancy and facilities   721     675     689   698     699        Loss (gain) on foreclosed assets   -     1     -   4     (50 )      Data processing and other office operations   1,022     1,001     953   951     880        Advertising and promotion   129     244     161   166     162        Core deposit intangible amortization   24     24     24   27     34        Other noninterest expenses   1,306     1,169     1,113   1,202     1,073                                 Total noninterest expense   8,325     7,358     7,454   7,932     7,804                         Income before provision for income taxes   1,897     3,291     3,723   3,459     3,941     Provision for income taxes   169     878     2,374   652     941