WAUSAU, Wis., July 22, 2024 (GLOBE NEWSWIRE) -- PSB Holdings, Inc. ("PSB") (OTCQX:PSBQ), the holding company for Peoples State Bank ("Peoples") serving Northcentral and Southeastern Wisconsin reported second quarter earnings ending June 30, 2024 of $0.56 per common share on net income of $2.3 million, compared to $0.39 per common share on net income of $1.6 million during the first quarter ending March 31, 2024, and $0.64 per common share on net income of $2.7 million during the second quarter ending June 30, 2023. PSB's second quarter 2024 operating results reflected the following changes from the first quarter of 2024: (1) higher net interest income as asset yields increased 9 basis points while funding costs increased only 6 basis points; (2) higher non-interest income due primarily to no losses on the sale of investment securities during the current quarter and higher mortgage banking income; and (3) an increase in the effective tax rate to 14.4% from 8.9% the previous quarter. "During the second quarter of 2024, we started seeing some positive developments in our operation that should translate to improved profitability in future quarters. Our net interest margin has started to expand, operating expenses excluding severance charges declined, and we are hopeful to return some non-performing assets to performing assets by the end of 2024. Should interest rates remain stable or decline through the remainder of 2024, we expect to see continued growth in our tangible book value and increased earnings," stated Scott Cattanach, President and CEO. June 30, 2024, Highlights: Net interest income increased to $9.4 million for the quarter ended June 30, 2024, from $9.3 million for the quarter ended March 31, 2024, as increases in asset and loan yields outpaced the increases in funding costs. Noninterest income increased to $1.9 million for the quarter ended June 30, 2024, compared to $1.0 million the prior quarter. The prior quarter reflected a loss on the sale of investment securities as the Company repositioned the investment portfolio into higher yielding investments. The increase in non-interest income also reflected an increase in mortgage banking income and investment and insurance sales commissions. Noninterest expenses increased nominally during the quarter ended June 30, 2024, reflecting slight increases in salary and benefit expenses. Included in salary and benefit expenses for the second quarter were severance expenses totaling approximately $404,000. Tangible book value per common share increased to $24.55 at June 30, 2024, compared to $24.21 one quarter earlier and $22.64 at June 30, 2023. During the second quarter ended June 30, 2024, tangible book value per share was positively influenced by net income, intangible asset amortization, and stock repurchase activity offset by dividend payments. Loans decreased $6.6 million in the second quarter ended June 30, 2024, to $1.07 billion largely due to the repayment of a $17 million, low yielding municipal loan. Allowance for credit losses increased to 1.16% of gross loans. Total deposits increased $39.0 million during the quarter ended June 30, 2024, to $1.15 billion, though a large portion of the increase was attributable to an overnight deposit at June 30, 2024 by one depositor that has since drawn down the balance. Meanwhile, deposit expenses decreased $244,000 as the Bank increased the level of non-interest bearing deposits and replaced higher costing brokered deposits with money market deposits. Return on tangible common equity was 9.34% for the quarter ended June 30, 2024, compared to 6.57% the prior quarter and 11.23% one year earlier. Balance Sheet and Asset Quality Review Total assets increased $67.1 million to $1.49 billion at June 30, 2024. Cash and cash equivalents increased $70.1 million, to $86.0 million at June 30, 2024, compared to $15.9 million the previous quarter. The higher cash and cash equivalent level primarily reflects a large customer overnight deposit of approximately $49 million at June 30, 2024, since withdrawn. Investment securities available for sale decreased $389,000 to $165.2 million at June 30, 2024, from $165.6 million one quarter earlier. Total collateralized liquidity available to meet cash demands was approximately $352 million at June 30, 2024, with an additional $328 million that could be raised in a short time frame from the brokered CDs market. Total loans receivable decreased $6.6 million to $1.07 billion at June 30, 2024, due primarily to the repayment of a low yielding municipal commercial loan of approximately $17 million. Commercial non-real estate loans decreased $11.6 million to $148.2 million at June 30, 2024, from $159.7 million one quarter earlier. Meanwhile, commercial real estate loans increased $5.1 million to $614.7 million at June 30, 2024, from $609.6 million the prior quarter. Residential real estate loans increased slightly from the prior quarter to $340.9 million from $339.8 million. The loan portfolio remains well diversified with commercial real estate loans totaling 55.5% of gross loans followed by residential real estate loans at 30.7% of gross loans, commercial non-real estate loans at 13.4% and consumer loans at 0.4%. The allowance for credit losses increased slightly to 1.16% of gross loans at June 30, 2024, from 1.14% the prior quarter. Annualized net charge-offs to average loans were zero for the last four quarters ending June 30, 2024, compared to net recoveries of 0.07% one year earlier. Non-performing assets totaled 0.84% of total assets at June 30, 2024, compared to 0.83% at March 31, 2024. For the sixth consecutive quarter, the Bank did not own any foreclosed real estate. Total deposits increased $39.0 million to $1.15 billion at June 30, 2024, from $1.11 billion at March 31, 2024. The increase in deposits reflects a $47.7 million increase in money market deposits and a $2.8 million increase in non-interest bearing deposits partially offset by a $3.2 million decrease in retail and local time deposits, a $2.1 million decrease in interest bearing demand and savings deposits and a $6.2 million reduction in broker and national time deposits. The increase in money market deposits reflected a deposit of approximately $49 million towards the end of the second quarter of 2024 by an existing business customer. These deposits were drawn down in the third quarter of 2024. The composition of funding sources changed during the second quarter of 2024 as management relied less on brokered and national time deposits. At June 30, 2024, money market deposits and retail time deposits increased to 44.1% of deposits, compared to 41.6% at March 31, 2024. Uninsured and uncollateralized deposits increased to 24.0% of total deposits at June 30, 2024, from 19.3% of total deposits at March 31, 2024. FHLB advances increased to $184.9 million at June 30, 2024, compared to $158.3 million at March 31, 2024. 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 7.32% at June 30, 2024, compared to 7.60% at March 31, 2024, and 7.22% at June 30, 2023. Tangible net book value per common share increased $1.91, to $24.55, at June 30, 2024, compared to $22.64 one year earlier, an increase of 8.4%. Additionally, total dividends of $0.62 were paid to shareholders. Relative to the prior quarter, tangible net book value per common share increased $0.24 due to continued earnings. The accumulated other comprehensive loss on the investment portfolio was $20.5 million at June 30, 2024, compared to $20.8 million one quarter earlier. Operations Review Net interest income increased to $9.4 million (on a net margin of 2.84%) for the second quarter of 2024, from $9.3 million (on a net margin of 2.80%) for the first quarter of 2024, and decreased from $9.5 million (on a net margin of 2.98%) for the second quarter of 2023. Earning asset yields increased 9 basis points to 5.21% during the second quarter of 2024 from 5.12% during the first quarter of 2024, while interest bearing deposit and borrowing costs increased only 6 basis points to 3.06% compared to 3.00% during the first quarter of 2024. The increase in earning asset yields was primarily due to higher yields on loan originations, renewals and the repayment of a low yielding municipal loan during the quarter. Loan yields increased during the second quarter of 2024 to 5.67% from 5.59% for the first quarter of 2024, up 8 basis points. Taxable security yields were 3.02% for the quarter ended June 30, 2024, compared to 2.80% for the quarter ended March 31, 2024, up 22 basis points. The cost of all deposits was 2.11% for the quarter ended June 30, 2024, compared to 2.15% the prior quarter, down 4 basis points while the overall cost of funds increased 6 basis points from 3.00% to 3.06% during the same time period. Deposit costs for savings and demand deposits decreased during the quarter ended June 30, 2024, to 1.78% from 1.92% the prior quarter. During the prior quarter, the Company accepted seasonally high yield municipal deposits which have now been drawn down. The cost of money market deposits also declined during the second quarter to 2.72% from 2.78% the prior quarter. The cost of time deposits and FHLB advances continued to increase and were primarily responsible for the rise in the Bank's cost of funds in the current quarter. The cost of time deposits increased to 3.97% for the second quarter ended June 30, 2024 from 3.82% the prior quarter. FHLB advance costs rose to 4.28% during the second quarter ended June 30, 2024, from 4.08% the prior quarter. Total noninterest income increased for the second quarter of 2024 to $1.91 million, from $1.04 million for the first quarter of 2024. The first quarter reflected investment restructuring activity resulting in a loss on the sale of investment securities of $495,000. There were no restructuring activities in the second quarter that resulted in security losses. Mortgage banking income increased by $125,000 to $433,000 in the June 30, 2024 quarter. At June 30, 2024, the Bank serviced $369.4 million in secondary market residential mortgage loans for others which provides fee income. Noninterest expenses increased slightly to $8.4 million for the second quarter of 2024, compared to $8.3 million for the first quarter of 2024. The second quarter ended June 30, 2024, reflected slightly higher salary and benefit expenses and higher advertising and promotion expenses. The salary and benefit expenses included approximately $404,000 in severance costs. Taxes increased $241,000 during the second quarter to $410,000, from $169,000 one quarter earlier. The increase generally reflects higher pre-tax income. The effective tax rate for the quarter ended June 30, 2024, was 14.3% compared to 8.9% for the first quarter ended March 31, 2024, and 18.8% for the second quarter ended June 30, 2023. 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 twelve 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           June 30, and March 31, 2024, September 30, and June 30, 2023, unaudited, December 31, 2023 derived from audited financial statements               Jun. 30, Mar. 31, Dec. 31, Sep. 30, Jun. 30, (dollars in thousands, except per share data)   2024     2024     2023     2023     2023               Assets                       Cash and due from banks $ 16,475   $ 13,340   $ 20,887   $ 12,881   $ 27,409   Interest-bearing deposits   251     105     1,431     668     892   Federal funds sold   69,249     2,439     5,462     7,764     16,138               Cash and cash equivalents   85,975     15,884     27,780     21,313     44,439   Securities available for sale (at fair value)   165,177     165,566     164,024     160,883     167,382   Securities held to maturity (fair values of $79,993, $81,234, $82,514, $75,236 and  $81,489  respectively)   86,825     87,104     87,081     86,908     87,335   Equity securities   1,661     1,474     1,474     2,273     2,178   Loans held for sale   2,268     865     230     971     151   Loans receivable, net (allowance for credit losses of $12,597, $12,494, $12,302, $12,267 and $11,922 respectively)   1,074,844     1,081,394     1,078,475     1,098,019     1,048,322   Accrued interest receivable   5,046     5,467     5,136     4,716     4,274   Foreclosed assets   -     -     -     -     -   Premises and equipment, net   14,048     13,427     13,098     13,242     13,256   Mortgage servicing rights, net   1,688     1,657     1,664     1,684     1,666   Federal Home Loan Bank stock (at cost)   8,825     7,006     6,373     6,373     6,359   Cash surrender value of bank-owned life insurance   24,401     24,242     24,085     23,931     23,776   Core deposit intangible   229     249     273     297     321   Goodwill   2,541     2,541     2,541     2,541     2,541   Other assets   12,111     11,682     11,866     14,094     14,933               TOTAL ASSETS $ 1,485,639   $ 1,418,558   $ 1,424,100   $ 1,437,245   $ 1,416,933               Liabilities                       Non-interest-bearing deposits $ 250,435   $ 247,608   $ 266,829   $ 288,765   $ 282,153   Interest-bearing deposits   901,886     865,744     874,973     883,474     860,981               Total deposits   1,152,321     1,113,352     1,141,802     1,172,239     1,143,134               Federal Home Loan Bank advances   184,900     158,250     134,000     128,000     133,000   Other borrowings   5,775     8,096     8,058     5,660     5,730   Senior subordinated notes   4,778     4,776     4,774     4,772     4,771   Junior subordinated debentures   12,972     12,947     12,921     12,896     12,870   Allowance for credit losses on unfunded commitments   477     477     577     512     712   Accrued expenses and other liabilities   13,069     10,247     12,681     10,258     11,783               Total liabilities   1,374,292     1,308,145     1,314,813     1,334,337     1,312,000               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 - 4,128,382, 4,147,649, 4,164,735, 4,174,197 and 4,190,252 shares, respectively   1,830     1,830     1,830     1,830     1,830   Additional paid-in capital   8,527     8,466     8,460     8,421     8,382   Retained earnings   135,276     134,271     132,666     131,624     130,396   Accumulated other comprehensive income (loss), net of tax   (20,503 )   (20,775 )   (20,689 )   (26,190 )   (23,240 ) Treasury stock, at cost - 1,362,416, 1,343,149, 1,326,063, 1,316,601 and 1,300,546 shares, respectively   (20,983 )   (20,579 )   (20,180 )   (19,977 )   (19,635 )             Total stockholders' equity   111,347     110,413     109,287     102,908     104,933               TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,485,639   $ 1,418,558   $ 1,424,100   $ 1,437,245   $ 1,416,933               PSB Holdings, Inc.                 Consolidated Statements of Income                                       Quarter Ended     Six Months Ended (dollars in thousands, Jun. 30, Mar. 31, Dec. 31, Sep. 30, Jun. 30,   June except per share data - unaudited)   2024   2024     2023     2023   2023       2024     2023                     Interest and dividend income:                    Loans, including fees $ 15,433 $ 15,109   $ 14,888   $ 14,263 $ 12,709     $ 30,542   $ 24,482      Securities:                       Taxable   1,295   1,197     1,147     1,114   1,327       2,492     2,658         Tax-exempt   521   526     532     533   535       1,047     1,072      Other interest and dividends   265   343     320     238   145       608     293                              Total interest and dividend income   17,514   17,175     16,887     16,148   14,716       34,689     28,505                     Interest expense:                    Deposits   5,838   6,082     5,526     4,817   3,661       11,920     6,650      FHLB advances   1,860   1,450     1,349     1,321   1,200       3,310     1,747      Other borrowings   58   60     54     51   48       118     110      Senior subordinated notes   58   59     59     59   58       117     120      Junior subordinated debentures   255   251     254     255   242       506     476                              Total interest expense   8,069   7,902     7,242     6,503   5,209       15,971     9,103                     Net interest income   9,445   9,273     9,645     9,645   9,507       18,718     19,402   Provision for credit losses   100   95     100     150   100       195     200                     Net interest income after provision for credit losses   9,345   9,178     9,545     9,495   9,407       18,523     19,202                     Noninterest income:                    Service fees   350   336     360     349   378       686     739      Mortgage banking income   433   308     247     345   311       741     636      Investment and insurance sales commissions   222   121     100     158   287       343     652      Net loss on sale of securities   -   (495 )   (297 )   -   (279 )     (495 )   (279 )    Increase in cash surrender value of life insurance   159   157     154     155   149       316     306      Life insurance death benefit   -   -     -     -   533       -     533      Other noninterest income   742   617     540     675   605       1,359     1,347                              Total noninterest income   1,906   1,044     1,104     1,682   1,984       2,950     3,934                     Noninterest expense:                    Salaries and employee benefits   5,167   5,123     4,244     4,514   4,884       10,290     9,890      Occupancy and facilities   733   721     675     689   698       1,454     1,397      Loss (gain) on foreclosed assets   -   -     1     -   4       -     (46 )    Data processing and other office operations   1,047   1,022     1,001     953   951       2,069     1,831      Advertising and promotion   171   129     244     161   166       300     328      Core deposit intangible amortization   20   24     24     24   27       44     61      Other noninterest expenses   1,257   1,306     1,169     1,113   1,202       2,563     2,275                             Total noninterest expense   8,395   8,325     7,358     7,454   7,932       16,720     15,736                     Income before provision for income taxes   2,856   1,897     3,291     3,723   3,459       4,753     7,400   Provision for income taxes   410   169     878