WAUSAU, Wis., April 26, 2021 (GLOBE NEWSWIRE) -- PSB Holdings, Inc. (“PSB”) (OTCQX: PSBQ), the holding company for Peoples State Bank serving Northcentral and Southeastern Wisconsin, reported first quarter earnings ending March 31, 2021 of $0.87 per share on net income of $3.9 million, compared to earnings of $0.73 per share on net income of $3.3 million, during the December 31, 2020 quarter, and $0.36 per share on net income of $1.6 million, during the first quarter a year ago. Relative to the prior quarter, first quarter earnings benefitted from stronger net interest income supported by first round SBA Paycheck Protection Program (“PPP”) fee accretion, continued elevated mortgage banking fee income, and lower noninterest expense due to deferred loan origination costs on second round SBA PPP loan originations.  

“Our southeastern Wisconsin growth continued with the closing of our acquisition of Waukesha Bankshares, Inc. on April 16, 2021. The improved economic clarity, vaccine rollout and our further expansion in the Milwaukee market should serve to continue to enhance shareholder value in 2021. To support our expanded presence in Milwaukee, we recently secured a local 20-year commercial banking veteran with deep ties to the business community to lead our Waukesha location,” stated Scott Cattanach, President and CEO. “Before considering loan repayments from ongoing PPP loan forgiveness, we are optimistic annualized loan growth will normalize in the four to five percent range as we leverage our operations in and around Milwaukee and businesses activity returns to pre-pandemic levels.”

Net Interest Margin Impact: PSB’s net interest margin increased to 3.62% for the quarter ended March 31, 2021 from 3.22% the prior quarter due to the accretion of net PPP origination fees of $1.3 million as $45.1 million PPP loans were repaid by the SBA during the quarter. In addition, the cost of time deposits declined 22 basis points, to 1.06% in the March 31, 2021 quarter lowering our cost of interest-bearing funds by 7 bps. Loan yield and net interest margin excluding the PPP loans would have been 4.17% and 3.24%, respectively during the March 2021 quarter compared to 4.26% and 3.26% in the December 2020 quarter. Loan originations in the most recent quarter were below our current loan yield and are expected to trend similarly during the June 2021 quarter.

Capital Management:   At March 31, 2021, PSB’s tangible equity to tangible asset ratio was 9.32% and the bank’s capital was well in-excess of all regulatory requirements. Management expects capital ratios to decline slightly with the closing of the Waukesha Bancshares, Inc. acquisition. PSB did not repurchase any shares during the quarter ending March 31, 2021, although the company announced resumption of its repurchase plan beginning January 2021.

Loan Loss Reserves:   For the quarter ended March 31, 2021, the bank added provisions for loan losses totaling $1.0 million, an increase from $675,000 in the previous quarter and down from $1.8 million in the first quarter of 2020. Allowance for loan losses were $11.8 million at March 31, 2021 which includes $4.9 million of allowances for loans with risk weightings at 5 to 7 (“Watch, Substandard, and Impaired”) and $6.9 million for loans with risk weightings at 1 to 4 (“Acceptable and Average”). At March 31, 2021, allowance for loan losses totaled 1.40% of gross loans, and was 1.59% of proforma gross loans net of PPP loans totaling $87.4 million and purchased USDA guaranteed loans totaling $10.5 million.

Loan Accommodations: Loan modifications decreased from 48 loan accommodations with a balance of $22.3 million at December 31, 2020 to 27 loans with a balance of $21.9 million, or 2.6% of gross loans, at March 31, 2021. In the first quarter, the bank added a grocery store loan with a balance of $2.0 million to modified accommodation loans.

As shown in the table below during the March 2021 quarter, “impaired loans” increased $3.0 million and the “substandard risk” loans increased $10.5 million while “watch risk” loans decreased $5.5 million.   The increase in impaired loans consists of a commercial real estate loan for $3.4 million leased to an operator of a national restaurant chain that has remained closed throughout the pandemic. This loan was moved from watch risk to the impaired loan category during the March 2021 quarter. The increase in substandard risk loans was associated with two borrowers. The first is a group of collateral dependent commercial real estate loans totaling $2.4 million to one borrower that was moved from the watch list to the substandard risk category. These properties are in the process of being sold and are scheduled to close in the second quarter of 2021 with proceeds adequate to repay the debts. The second is a $8.4 million hotel construction loan moved from “acceptable risk” to “substandard risk” during the quarter. A junior lien loan under the SBA 504 program for this project has been approved by the SBA and $3.4 million will be sold to the SBA in the June 2021 quarter.

Commercial, Commercial Real Estate, Construction & Development, Agricultural and Government Loans
($000)
Risk Rating				12/2017		12/2018		12/2019		03/2020		06/2020		09/2020		12/2020		03/2021
Rating 1		"High Quality"	$	-	$	-	$	-	$	71	$	55	$	-	$	-	$	-
Rating 2		"Minimal Risk"		76,710		85,382		57,904		59,101		72,601		56,337		61,223		62,626
Rating 3		"Average Risk"		292,496		323,627		349,002		324,378		374,709		391,195		390,191		348,102
Rating 4		"Acceptable Risk"		65,024		79,271		128,932		123,296		154,302		155,738		175,400		209,407
Rating 5		"Watch Risk"		18,049		15,551		15,933		33,999		54,522		46,603		36,379		30,891
Rating 6		"Substandard Risk"		500		489		2,568		2,732		4,545		2,162		7,617		18,134
Rating 7		"Impaired Loans"		9,952		8,707		5,518		7,811		6,130		10,164		13,153		16,162
			$	462,731	$	513,027	$	559,857	$	551,388	$	666,864	$	662,199	$	683,963	$	685,322
Includes undisbursed Construction & Development lines of credit. PPP loan balances are assigned a risk-weighting of "3".

March 31, 2021 Quarterly Financial Highlights (at or for the periods ended March 31, 2021, compared to December 31, 2020 and / or March 31, 2020, as applicable):

• Record earnings of $3.9 million for the quarter ended March 31, 2021 resulted in strong annualized return on average assets of 1.39% and return on average shareholders’ equity of 14.92%. The record earnings for the quarter were despite continued elevated provision for loan losses related to one impaired loan.
  
  
• Tangible net book value increased to $23.69 per share, a 13.4% over the most recent twelve-month period. Dividends of $0.42 per share were paid to shareholders during 2020, continuing a 5-year, 8.0% cumulative annual growth rate.
  
  
• Total net loans increased $23.6 million, excluding PPP paydowns and originations, during a typically seasonally slow winter period, up 3.2% during the quarter. SBA PPP loans declined $14.6 million to $87.4 million, from $45.1 million in first round forgiveness paydowns but increased $30.5 million from PPP second round new originations.
  

Balance Sheet and Asset Quality Review

Total assets remained mostly unchanged at March 31, 2021 relative to the prior quarter ended December 31, 2020, though there were some minor changes in the composition of assets. At March 31, 2021, and the prior quarter ended December 31, 2020, total assets were $1.13 billion. Total loans receivable increased by $9.0 million, or 1.1%, to $830.0 million at March 31, 2021 from $821.0 million one quarter earlier. Offsetting this growth, net SBA PPP loans decreased $14.6 million to $87.4 million at March 31, 2021, as $45.1 million of borrower loans were forgiven and repaid by the SBA PPP guarantee program and $30.5 million of new second round PPP loans were originated. At March 31, 2021, the bank had net unrealized PPP origination fees totaling $2.1 million of which $1.1 million are related to first round PPP loans and $1.0 million are related to second round PPP loans. The first round deferred origination fees are expected to be recognized as income during the remainder of 2021 when these loans are forgiven or paid off.   Excluding the impact of PPP loan activity, loans grew $24.3 million, or 3.3%, and were driven by residential first mortgages, owner occupied commercial real estate, and non-owner occupied commercial real estate.  

The allowance for loan losses increased to 1.40% of gross loans at March 31, 2021 (1.59% of gross loans net of PPP guaranteed loans and USDA guaranteed loans) compared to 1.30% of gross loans (1.50% of gross loans net of PPP loans and USDA guaranteed loans) one quarter earlier. Annualized net charge-offs to average loans were 0.01% for the quarter ended March 31, 2021. Non-performing assets increased to 1.13% of total assets at March 31, 2021, compared to 0.90% at December 31, 2020, and 0.54% at March 31, 2020. The increase in non-performing assets at March 31, 2021, primarily relates to the addition of a $3.4 million loan on real estate leased to a restaurant that has been closed throughout the pandemic. Though the borrower continues to make regularly scheduled payments, the loan was put on non-accrual status until such time clarity is provided to the operations of the restaurant chain or other building use. At March 31, 2021, non-performing assets consisted of $5.4 million in non-accrual loans, $1.1 million in non-accrual restructured loans, $5.2 million in restructured loans not on non-accrual and $1.1 million in other real estate owned.

At March 31, 2021, cash and cash equivalents totaled $29.9 million compared to $38.5 million at December 31, 2020, and $48.1 million one year earlier. Cash levels were reduced in the current quarter with the funds reinvested into lending products. Investment securities totaled $227.8 million at March 31, 2021, compared to $228.3 million at December 31, 2020, and $171.1 million one year earlier. All investment securities are considered available for sale and carried at market value.  

Foreclosed assets decreased to $1.1 million at March 31, 2021, from $1.6 million at December 31, 2020, due to the sale of a former bank branch office in Rhinelander, WI, made vacant following consolidation into a nearby Peoples State Bank branch. Foreclosed assets were $425,000 one year earlier.   

Total deposits decreased slightly to $925.9 million at March 31, 2021, compared to $932.1 million at December 31, 2020. At March 31, 2021, interest-bearing demand and savings deposits accounted for 35.6% of total deposits, followed by noninterest-bearing demand deposits at 26.2%, money market deposits at 23.3%, and retail and local time deposits at 13.6%. Broker and national time deposits accounted for 1.3% of total deposits at March 31, 2021, versus 1.5% the prior quarter. As a result of the ongoing pandemic, the bank has experienced larger average deposits per account and increased mobile banking enrollment and active mobile deposit product usage.

FHLB advances remained at $62.0 million at March 31, 2021, and other borrowings increased to $18.6 million, from $12.2 million the prior period.

For the quarter ended March 31, 2021, stockholders’ equity increased $1.2 million to $105.6 million, compared to $104.4 million at December 31, 2020. Stockholders’ equity was impacted by earnings, and other comprehensive income adjustments, including a decrease in unrealized gains on securities available for sale of $2.8 million during the current quarter as market interest rates increased. Tangible net book value per share increased to $23.69 per share, at March 31, 2021, compared to $23.43 per share at December 31, 2020. The bank’s tangible equity to total tangible assets was 9.32% at March 31, 2021 compared to 9.22% at December 31, 2020.

Operations Review

Net interest income totaled $9.6 million (on a net margin of 3.62%) for the first quarter of 2021, compared to $8.4 million (on net margin of 3.22%) for the fourth quarter of 2020 and $7.8 million (on a net margin of 3.45%) for the first quarter of 2020. Compared to the preceding quarter, loans and investment yields increased 35 basis points from 3.60% to 3.95% during the first quarter of 2021, while deposit and borrowing costs declined 7 basis points to 0.46% from 0.53% over the same period.

The increase in loan and investment yields was largely due to net accretion of loan fees of $1.6 million related to PPP loans that have been repaid compared to net accretion of $492,000 during the December 2020 quarter. Loan yields increased to 4.57% during the quarter from 4.08% during the fourth quarter of 2020. Loan yields excluding the impacts of PPP loans, were 4.17 % and 4.26% during the March 2021 and December 2020 quarters respectively. Net interest margin excluding the impacts of PPP loans, was 3.24% and 3.26% in the March 2021and December 2020 quarters, respectively. Continued recognition of PPP loan fee income is expected to elevate reported net interest margin for the remainder of 2021 as the first round PPP program fees are recognized throughout 2021 and second round PPP program fees begin to be recognized later in 2021.

The cost of interest-bearing liabilities decreased during the quarter, largely reflecting lower rates associated with time deposits. Deposit costs decreased to $547,000 for the first quarter of 2021, from $657,000 the previous quarter. Interest costs on borrowings declined $15,000 to $339,000 for the first quarter of 2021, from $354,000 the previous quarter.   The prepayment of some FHLB advances, during the fourth quarter of 2020, contributed to lower borrowing cost in the March 2021 quarter. “By successfully lowering our cost of funds during the past year, we have been able to limit the negative impact of lower asset yields on our net interest margin,” said Mark Oldenberg, Chief Financial Officer.

The provision for loan losses totaled $1.0 million during the first quarter of 2021 compared to $675,000 for the prior linked quarter. The provision relates to reserves taken against the previously discussed real estate loan leased to a national chain restaurant loan. Currently, it is uncertain whether the borrower will continue making loan payments and whether an alternative restaurant tenant can be found to operate the building. Loan loss provisions in 2021 are expected to be lower than provisions recorded during 2020 due to an improved economic outlook and expected favorable resolution to several large problem loans.

Total noninterest income for the first quarter of 2021 decreased to $2.7 million from $3.0 million for the fourth quarter of 2020, due in part to lower gains on the sale of mortgage loans and lower security gains. Gains on sale of mortgage loans decreased to $1.2 million for the first quarter from $1.4 million in the fourth quarter of 2020, due in part to management actions to invest significant on balance sheet liquidity into first lien residential mortgage loans rather than purchasing lower yielding investment securities. Adding these mortgages to the balance sheet rather than selling them for a gain into the secondary market reduced March 2021 noninterest income. In addition, slightly higher long-term U.S. Treasury rates slowed mortgage refinance activity by borrowers. However, mortgage origination activity remains high relative to historical levels. Mortgage originations are anticipated to remain at elevated levels in the second quarter of 2021 as the 10-year Treasury Notes remain low and housing demand remains strong.   Mortgage loan servicing income was $79,000 for the first quarter compared to $104,000 the previous quarter.

Deposit and service fee income in the first quarter declined to $332,000 for the three months ended March 31, 2021, compared to $352,000 for the prior three-month period. Net gains on the sale of securities were $21,000 for the first quarter of 2021, compared to $149,000 for the fourth quarter of 2020, and $123,000 for the quarter one year earlier. Commissions on customer investment and insurance sales increased to $595,000, from $391,000 the prior quarter as sales activity increased by adding a sales advisor to the Milwaukee market and advisory fees tied to rising market values. At March 31, 2021, the bank had wealth assets under management totaling $283.6 million compared to $269.0 million at December 31, 2020, and $217.5 million at March 31, 2020. For the first quarter ended March 31, 2021, other noninterest income was $462,000 compared to $488,000 the prior quarter.

Noninterest expense was $6.2 million for the first quarter of 2021, compared to $6.5 million for the fourth quarter of 2020. For the first quarter of 2021, noninterest expense was lower due to lower salaries and employee benefits driven by deferral of $377,000 in second round PPP loan origination costs. Salary and employee benefit expenses were $3.3 million for the first quarter compared to $4.1 million in the fourth quarter of 2020. The fourth quarter of 2020 benefited from a net gain on foreclosed assets of $218,000 compared to a net loss of $130,000 in the first quarter of 2021.   Data processing and other office expenses increased to $694,000 for the quarter ended March 31, 2021 from $568,000 for the prior quarter. Included in other noninterest expense was approximately $73,000 of Waukesha Bankshares, Inc. merger related expenses. Due to closing of the purchase on April 16, 2021, it is expected there will be significant additional noninterest and nonrecurring expenses related to the acquisition of Waukesha Bankshares, Inc. incurred during the second quarter of 2021. Cost savings from efficiencies gained in the merger are expected to be fully realized by the end of 2021.

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 ten full-service banking locations in Marathon, Oneida, Vilas, Milwaukee and Waukesha counties and a loan production office in Stevens Point, Wisconsin. 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

Certain matters discussed in this news release, including without limitation those relating to potential loan and deposit growth, future profits, changes in noninterest income and expenses, pro-forma impacts to income from non-recurring or unusual income and expense items, merger and acquisition activity, and future interest rates, are forward-looking statements and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements involve risks and uncertainties which may cause results to differ materially from those set forth in this release. Among other things, these risks and uncertainties include the strength of the economy, the effects of government policies, including, in particular, interest rate policies, the benefits and risks associated with acquisition activities, and other risks and assumptions. Risk and uncertainties also include the effect of the COVID-19 pandemic, including the bank’s credit quality and business operations, as well as its impact on general economic and financial market conditions. PSB Holdings, Inc. assumes no obligation to update or supplement forward-looking statements that become untrue because of events subsequent to this press release.

PSB Holdings, Inc.
Quarterly Financial Summary
(dollars in thousands, except per share data)				Quarter ended
				Mar. 31,			Dec. 31,			Sep. 30,			Jun. 30,			Mar. 31,
Earnings and dividends:					2021			2020			2020			2020			2020
	Interest income			$	10,482		$	9,442		$	9,155		$	9,291		$	9,726
	Interest expense			$	886		$	1,011		$	1,261		$	1,528		$	1,935
	Net interest income			$	9,596		$	8,431		$	7,894		$	7,763		$	7,791
	Provision for loan losses			$	1,000		$	675		$	1,300		$	1,800		$	1,800
	Other noninterest income			$	2,749		$	2,991		$	2,929		$	3,138		$	2,355
	Other noninterest expense			$	6,200		$	6,461		$	6,074		$	4,879		$	6,330
	Net income			$	3,896		$	3,252		$	2,637		$	3,190		$	1,610
	Basic earnings per share (3)			$	0.88		$	0.73		$	0.59		$	0.72		$	0.36
	Diluted earnings per share (3)			$	0.87		$	0.73		$	0.59		$	0.72		$	0.36
	Dividends declared per share (3)			$	-		$	0.21		$	-		$	0.21		$	-
	Tangible net book value per share (4)			$	23.69		$	23.43		$	22.73		$	21.97		$	20.89
	Semi-annual dividend payout ratio			n/a				15.88	%	n/a				14.50	%	n/a
	Average common shares outstanding				4,454,334			4,452,287			4,452,287			4,453,225			4,464,956
Balance sheet - average balances:
	Loans receivable, net of allowances for loss			$	827,595		$	807,182		$	800,611		$	786,785		$	705,333
	Assets			$	1,132,905		$	1,100,064		$	1,099,402		$	1,067,466		$	963,191
	Deposits			$	925,689		$	896,427		$	882,682		$	855,155		$	761,268
	Stockholders' equity			$	105,868		$	102,790		$	100,436		$	95,909		$	94,735
Performance ratios:
	Return on average assets (1)				1.39	%		1.18	%		0.95	%		1.20	%		0.67	%
	Return on average stockholders' equity (1)				14.92	%		12.59	%		10.45	%		13.38	%		6.84	%
	Average stockholders' equity less accumulated other comprehensive income (loss) to average assets				9.10	%		9.00	%		8.85	%		8.83	%		9.75	%
	Net loan charge-offs to average loans (1)				0.01	%		0.16	%		0.00	%		0.25	%		0.49	%
	Nonperforming loans to gross loans				1.39	%		1.03	%		0.98	%		0.47	%		0.67	%
	Nonperforming assets to total assets				1.13	%		0.90	%		0.85	%		0.49	%		0.54	%
	Allowance for loan losses to gross loans				1.40	%		1.30	%		1.31	%		1.13	%		1.10	%
	Nonperforming assets to tangible equity plus the allowance for loan losses (4)				11.06	%		8.96	%		8.50	%		5.11	%		5.24	%
	Net interest rate margin (1)(2)				3.62	%		3.22	%		3.03	%		3.09	%		3.45	%
	Net interest rate spread (1)(2)				3.49	%		3.07	%		2.84	%		2.85	%		3.20	%
	Service fee revenue as a percent of average demand deposits (1)				0.57	%		0.59	%		0.59	%		0.49	%		1.04	%
	Noninterest income as a percent of gross revenue				20.78	%		24.06	%		24.24	%		25.25	%		19.49	%
	Efficiency ratio (2)				49.64	%		55.87	%		55.41	%		44.23	%		61.59	%
	Noninterest expenses to average assets (1)				2.22	%		2.34	%		2.20	%		1.84	%		2.64	%
	Tangible equity to tangible assets				9.32	%		9.22	%		9.17	%		8.95	%		9.59	%
Stock price information:
	High			$	25.94		$	23.00		$	18.80		$	24.75		$	28.25
	Low			$	20.45		$	17.20		$	17.36		$	18.55		$	19.50
	Last trade value at quarter-end			$	25.25		$	20.57		$	18.00		$	18.55		$	24.75
(1) Annualized
(2) The yield on tax-exempt loans and securities is computed on a tax-equivalent basis using a federal tax rate of 21%.
(3) Due to rounding, cumulative quarterly per share performance may not equal annual per share totals.
(4) Tangible stockholders' equity excludes intangible assets.

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)				2021		2020			2020			2020			2020
Interest and dividend income:
Loans, including fees				$	9,442	$	8,371		$	8,068		$	8,175		$	8,445
Securities:
Taxable					507		542			564			622			733
Tax-exempt					502		489			474			446			431
Other interest and dividends					31		40			49			48			117
Total interest and dividend income					10,482		9,442			9,155			9,291			9,726
Interest expense:
Deposits					547		657			833			1,080			1,482
FHLB advances					215		228			304			323			320
Other borrowings					7		6			5			6			14
Senior subordinated notes					28		29			28			28			28
Junior subordinated debentures					89		91			91			91			91
Total interest expense					886		1,011			1,261			1,528			1,935
Net interest income					9,596		8,431			7,894			7,763			7,791
Provision for loan losses					1,000		675			1,300			1,800			1,800
Net interest income after provision for loan losses					8,596		7,756			6,594			5,963			5,991
Noninterest income:
Service fees					332		352			344			278			391
Gain on sale of mortgage loans					1,152		1,401			1,752			1,747			987
Mortgage loan servicing, net					79		104			(79	)		(165	)		(23	)
Investment and insurance sales commissions					595		391			301			259			349
Net gain on sale of securities					21		149			38			194			123
Increase in cash surrender value of life insurance					108		106			108			104			104
Other noninterest income					462		488			465			721			424
Total noninterest income					2,749		2,991			2,929			3,138			2,355
Noninterest expense:
Salaries and employee benefits					3,310		4,084			3,526			2,583			3,819
Occupancy and facilities					569		511			566			508			544
Loss (gain) on foreclosed assets					130		(218	)		36			23			71
Data processing and other office operations					694		568			743			675			644
Advertising and promotion					79		172			77			94			141
FDIC insurance premiums					83		82			87			23			-
Other noninterest expenses					1,335		1,262			1,039			973			1,111
Total noninterest expense					6,200		6,461			6,074			4,879			6,330
Income before provision for income taxes					5,145		4,286			3,449			4,222			2,016
Provision for income taxes					1,249		1,034			812			1,032			406
Net income				$	3,896	$	3,252		$	2,637		$	3,190		$	1,610
Basic earnings per share				$	0.88	$	0.73		$	0.59		$	0.72		$	0.36
Diluted earnings per share				$	0.87	$	0.73		$	0.59		$	0.72		$	0.36

PSB Holdings, Inc.
Consolidated Balance Sheets
March 31, 2021, September 30, June 30, and March 31, 2020, unaudited, December 31, 2020 derived from audited financial statements
	Mar. 31,			Dec. 31,			Sep. 30,			Jun. 30,			Mar. 31,
(dollars in thousands, except per share data)	2021			2020			2020			2020			2020
Assets
Cash and due from banks	$	12,921		$	15,723		$	13,652		$	13,016		$	9,665
Interest-bearing deposits		985			1,056			1,750			1,483			1,349
Federal funds sold		16,027			21,749			61,383			45,796			37,071
Cash and cash equivalents		29,933			38,528			76,785			60,295			48,085
Securities available for sale (at fair value)		227,824			228,296			193,179			178,635			171,054
Bank certificates of deposit (at cost)		1,231			1,231			496			1,738			3,234
Loans held for sale		622			954			903			3,755			1,394
Loans receivable, net		829,964			820,956			791,951			805,243			706,584
Accrued interest receivable		3,335			3,527			3,629			3,590			2,847
Foreclosed assets		1,105			1,619			1,485			1,525			425
Premises and equipment, net		11,077			10,920			11,061			11,067			11,098
Mortgage servicing rights, net		1,732			1,657			1,638			1,623			1,668
Federal Home Loan Bank stock (at cost)		2,283			2,283			2,283			2,283			2,283
Cash surrender value of bank-owned life insurance		17,902			17,795			17,089			16,981			16,877
Other assets		5,215			4,189			3,784			6,611			4,330
TOTAL ASSETS	$	1,132,223		$	1,131,955		$	1,104,283		$	1,093,346		$	969,879
Liabilities
Non-interest-bearing deposits	$	242,974		$	236,981		$	241,947		$	241,914		$	158,505
Interest-bearing deposits		682,877			695,156			658,667			640,307			606,781
Total deposits		925,851			932,137			900,614			882,221			765,286
Federal Home Loan Bank advances		62,000			62,000			67,000			87,000			88,682
Other borrowings		18,582			12,239			16,216			3,941			3,504
Senior subordinated notes		2,500			2,500			2,500			2,500			2,500
Junior subordinated debentures		7,732			7,732			7,732			7,732			7,732
Accrued expenses and other liabilities		9,918			10,920			8,871			11,998			9,024
Total liabilities		1,026,583			1,027,528			1,002,933			995,392			876,728
Stockholders' equity
Preferred stock - no par value:
Authorized - 30,000 shares; no shares issued or outstanding		-			-			-			-			-
Common stock - no par value with a stated value of $1.00 per share:
Authorized - 6,000,000 shares; Issued - 5,490,798 shares
Outstanding - 4,454,922, 4,452,287, 4,452,287, 4,452,287 and
4,453,472 shares, respectively		1,830			1,830			1,830			1,830			1,830
Additional paid-in capital		7,890			7,818			7,765			7,712			7,632
Retained earnings		107,751			103,855			101,538			98,901			96,646
Accumulated other comprehensive income (loss), net of tax		1,691			4,458			3,751			3,045			550
Treasury stock, at cost - 1,035,876, 1,038,511, 1,038,511, 1,038,511 and
1,037,326 shares, respectively		(13,522	)		(13,534	)		(13,534	)		(13,534	)		(13,507	)
Total stockholders' equity		105,640			104,427			101,350			97,954			93,151
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	1,132,223		$	1,131,955		$	1,104,283		$	1,093,346		$	969,879

PSB Holdings, Inc.
Consolidated Statements of Comprehensive Income
				Three Months Ended
				March 31,
(dollars in thousands - unaudited)					2021			2020
Net income				$	3,896		$	1,610
Other comprehensive income, net of tax:
		Unrealized loss on securities available for sale			(2,803	)		(342	)
		Reclassification adjustment for security gain included in net income			(15	)		(89	)
		Unrealized gain (loss) on interest rate swap			13			(339	)
		Reclassification adjustment of interest rate swap settlements included in earnings			38			18
Other comprehensive loss					(2,767	)		(752	)
Comprehensive income				$	1,129		$	858

PSB Holding, Inc.
Loan Composition by Purpose
Quarter-ended (dollars in thousands)		Mar 31, 2021			Dec 31, 2020			Sep 30, 2020			Jun 30, 2020			Mar 31, 2020
Residential real estate
	One to four family	$	136,242		$	125,530		$	114,226		$	118,049		$	122,276
	HELOC loans		16,908			18,312			19,747			19,550			20,795
	Residential construction & development		25,628			25,519			22,529			23,129			22,963
	Residential vacant land		2,524			3,305			3,147			3,417			3,745
	Total Residential real estate		181,302			172,666			159,649			164,145			169,779
Commercial/Agricultural real estate
	Owner occupied
	Commercial real estate		194,514			187,059			164,073			164,483			164,851
	SBA commercial real estate		1,445			1,483			1,506			1,539			1,571
	Agriculture real estate		4,787			4,429			4,677			4,885			5,041
	Construction and land development		4,121			5,468			13,557			7,294			8,297
	Commercial vacant land		2,998			2,835			2,819			2,241			1,560
	Total Owner occupied		207,865			201,274			186,632			180,442			181,320
	Non-owner occupied
	Commercial real estate		183,365			173,953			170,847			165,099			158,634
	One to four family residential rental		31,914			31,363			30,159			28,451			29,891
	SBA commercial real estate		718			749			771			793			824
	Construction and land development		31,362			29,846			18,600			11,927			16,406
	Commercial vacant land		7,970			8,402			8,907			10,135			13,965
	Total Non-owner occupied		255,329			244,313			229,284			216,405			219,720
Commercial/Agricultural non-real estate
	Municipal non-real estate		7,165			11,422			5,687			7,826			5,933
	Commercial line		46,833			41,619			40,067			55,317			59,266
	Other commercial non-real estate		49,246			52,723			58,718			69,267			70,467
	SBA commercial non-real estate		89,603			103,871			118,668			117,436			1,453
	Agricultural non-real estate		1,730			1,986			2,150			2,148			2,075
	Total Commercial/Agricultural non-real estate		194,577			211,621			225,290			251,994			139,194
Consumer non-real estate
	Consumer installment		3,191			3,400			3,358			3,512			3,344
	Consumer line		498			353			366			243			328
	Other consumer		123			143			163			160			183
	Total Consumer non-real estate		3,812			3,896			3,887			3,915			3,855
Gross loans			842,885			833,770			804,742			816,901			713,868
	Net deferred loan costs (fees)		(1,627	)		(2,140	)		(2,627	)		(2,617	)		388
	Overdrafts		528			161			317			133			199
	Allowance for loan losses		(11,822	)		(10,835	)		(10,481	)		(9,174	)		(7,871	)
Total loans receivable		$	829,964		$	820,956		$	791,951		$	805,243		$	706,584

PSB Holdings, Inc.
Nonperforming Assets as of:
	Mar 31,			Dec 31,			Sept 30,			June 30,			Mar 31,
(dollars in thousands)		2021			2020			2020			2020			2020
Nonaccrual loans (excluding restructured loans)	$	5,346		$	2,071		$	2,129		$	2,964		$	3,868
Nonaccrual restructured loans		1,090			1,064			233			244			232
Restructured loans not on nonaccrual		5,242			5,414			5,508			650			672
Accruing loans past due 90 days or more		-			-			-			-			-
Total nonperforming loans		11,678			8,549			7,870			3,858			4,772
Other real estate owned		1,105			1,619			1,485			1,525			425
Total nonperforming assets	$	12,783		$	10,168		$	9,355		$	5,383		$	5,197
Nonperforming loans as a % of gross loans receivable		1.39	%		1.03	%		0.98	%		0.47	%		0.67	%
Total nonperforming assets as a % of total assets		1.13	%		0.90	%		0.85	%		0.49	%		0.54	%
Allowance for loan losses as a % of nonperforming loans		101.23	%		126.74	%		133.18	%		237.79	%		164.94	%

PSB Holdings, Inc.
Nonperforming Assets >= $500,000 net book value before specific reserves
At March 31, 2021
(dollars in thousands)
		Gross			Specific
Collateral Description	Asset Type	Principal			Reserves
Leased retail sales outlet	ORE	$	1,100		-
Real estate - Hotel	Restructured		4,861		194
Real estate - Buffet Style Restaurant	Restructured/Nonaccrual		876		115
Real estate - Buffet Style Restaurant	Nonaccrual		3,396		1,274
Total listed nonperforming assets			10,233		1,583
Total bank wide nonperforming assets			12,783		1,936
Listed assets as a % of total nonperforming assets			80	%	82	%
Largest Performing, but Impaired Loans at March 31, 2021 ($000s)
		Gross			Specific
Collateral Description	Asset Type	Principal			Reserves
Real estate - 4 Hotel Group	Impaired		4,336		530
Total listed performing, but impaired loans			4,336		530
Total performing, but impaired loans			5,793		628
Listed assets as a % of total performing, but impaired loans			75	%	84	%

PSB Holdings, Inc.
Deposit Composition
			March 31,								December 31,
(dollars in thousands)		2021					2020					2020
	$		%			$		%			$		%
Non-interest bearing demand	$	242,974	26.20	%		$	158,505	20.70	%		$	236,981	25.40	%
Interest-bearing demand and savings		329,100	35.60	%			254,762	33.30	%			332,677	35.70	%
Money market deposits		215,590	23.30	%			192,933	25.20	%			222,156	23.80	%
Retail and local time deposits <= $250		101,866	11.00	%			104,930	13.70	%			103,064	11.10	%
Total core deposits		889,530	96.10	%			711,130	92.90	%			894,878	96.00	%
Retail and local time deposits > $250		23,904	2.60	%			24,423	3.20	%			23,112	2.50	%
Broker & national time deposits <= $250		10,423	1.10	%			7,682	1.00	%			12,153	1.30	%
Broker & national time deposits > $250		1,994	0.20	%			22,051	2.90	%			1,994	0.20	%
Totals	$	925,851	100.00	%		$	765,286	100.00	%		$	932,137	100.00	%

PSB Holdings, Inc.
Average Balances ($000) and Interest Rates
(dollars in thousands)
			Quarter ended March 31, 2021								Quarter ended December 31, 2020								Quarter ended March 31, 2020
			Average					Yield /			Average					Yield /			Average					Yield /
			Balance			Interest		Rate			Balance			Interest		Rate			Balance			Interest		Rate
Assets
Interest-earning assets:
Loans (1)(2)			$	838,781		$	9,454	4.57	%		$	817,875		$	8,383	4.08	%		$	712,402		$	8,461	4.78	%
Taxable securities				142,539			507	1.44	%			129,832			542	1.66	%			110,980			733	2.66	%
Tax-exempt securities (2)				84,219			635	3.06	%			80,619			619	3.05	%			66,958			546	3.28	%
FHLB stock				2,283			21	3.73	%			2,283			27	4.70	%			2,121			26	4.93	%
Other				22,390			10	0.18	%			27,336			13	0.19	%			30,253			91	1.21	%
Total (2)				1,090,212			10,627	3.95	%			1,057,945			9,584	3.60	%			922,714			9,857	4.30	%
Non-interest-earning assets:
Cash and due from banks				14,248								14,011								11,621
Premises and equipment,
net				11,009								11,023								10,779
Cash surrender value ins				17,840								17,206								16,811
Other assets				10,782								10,572								8,335
Allowance for loan
losses				(11,186	)							(10,693	)							(7,069	)
Total			$	1,132,905							$	1,100,064							$	963,191
Liabilities & stockholders' equity
Interest-bearing liabilities:
Savings and demand
deposits			$	333,340		$	65	0.08	%		$	298,696		$	65	0.09	%		$	261,704		$	330	0.51	%
Money market deposits				217,618			118	0.22	%			218,455			128	0.23	%			188,507			373	0.80	%
Time deposits				138,773			364	1.06	%			143,714			464	1.28	%			159,294			779	1.97	%
FHLB borrowings				62,000			215	1.41	%			64,283			228	1.41	%			80,486			320	1.60	%
Other borrowings				18,964			7	0.15	%			16,638			6	0.14	%			6,394			14	0.88	%
Senior sub. notes				2,500			28	4.54	%			2,500			29	4.61	%			2,500			28	4.50	%
Junior sub. debentures				7,732			89	4.67	%			7,732			91	4.68	%			7,732			91	4.73	%
Total				780,927			886	0.46	%			752,018			1,011	0.53	%			706,617			1,935	1.10	%
Non-interest-bearing liabilities:
Demand deposits				235,958								235,562								151,763
Other liabilities				10,152								9,694								10,076
Stockholders' equity				105,868								102,790								94,735
Total			$	1,132,905							$	1,100,064							$	963,191
Net interest income						$	9,741							$	8,573							$	7,922
Rate spread								3.49	%							3.07	%							3.20	%
Net yield on interest-earning assets								3.62	%							3.22	%							3.45	%
(1) Nonaccrual loans are included in the daily average loan balances outstanding.
(2) The yield on tax-exempt loans and securities is computed on a tax-equivalent
basis using a federal tax rate of 21%.

 

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