PSB Holdings, Inc. Reports Second Quarter 2023 Earnings of $0.64 Per Share; Loan Growth Up 7.7% From Prior Quarter; New Branch in Stevens Point Opened

WAUSAU, Wis., July 24, 2023 (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, 2023 of $0.64 per common share on net income of $2.7 million, compared to $0.67 per common share on net income of $2.9 million during the first quarter ending March 31, 2023, and $0.72 per common share on net income of $3.2 million during the second quarter ending June 30, 2022.

PSB’s second quarter 2023 operating results reflected the following changes from the first quarter of 2023: (1) lower net interest income due to rising deposit and FHLB advance costs; (2) higher non-interest income despite losses on sale of securities; (3) slightly higher non-interest expense related to health care expenses; (4) higher accumulated other comprehensive loss due to an increase in intermediate interest rates; (5) strong loan growth of $75 million; and (6) increased borrowings to fund seasonal business customer and municipal deposit outflows, promote increased on-balance sheet liquidity, and to fund net loan growth.

“We realized strong loan growth in the second quarter which has helped boost yields on the loan portfolio and offset increased interest expense. Additionally, with a gain realized on a life insurance policy, we were able to offset a loss on the sale of securities and right-size our investment portfolio with better asset yields. Towards the end of the quarter, and with the addition of new loans, we began to see the compression on our net interest margin stabilize,” stated Scott Cattanach, President and CEO. “On July 14^th, we converted our loan production office in Stevens Point to a full service branch which should facilitate attracting full deposit relationships with existing and new loan customers in the Stevens Point community.”

June 30, 2023 Highlights:

• Loans increased $75.1 million in the second quarter ended June 30, 2023 to $1.1 billion from $973.3 million at the end of the first quarter March 31, 2023.
  

• Tangible book value per common share increased to $22.64 at June 30, 2023 from $22.43 one quarter earlier. Tangible book value per share benefited from fewer shares outstanding. Return on tangible common equity was 11.14% for the quarter ended June 30, 2023 compared to 12.51% the prior quarter.
  

• Net interest income decreased to $9.5 million for the quarter ended June 30, 2023, compared to $9.9 million for the quarter ended March 31, 2023 due to funding costs rising faster than increases in asset yields.
  

• Provision for loan losses remained at $100,000 for the quarter ended June 30, 2023. The provision for the second quarter was largely related to new loan growth of $75.1 million.
  

• Noninterest income remained at $2.0 million for the quarter ended June 30, 2023 as losses on the sale of securities of $279,000 partially offset a $533,000 life insurance benefit. Investment and insurance sales commissions were also lower in the second quarter relative to the prior quarter.
  

• Net income adjusted for the non-recurring impact of a life insurance benefit and loss on the sale of securities was $2.4 million, or $0.56 per common share.
  

• Noninterest expenses increased $128,000, or 1.6% for the second quarter of 2023 to $7.9 million from $7.8 million the prior quarter. The increase was primarily related to higher data processing and office operations costs.
  

• During the second quarter, PSB repurchased 48,055 shares of its common stock.
  

Balance Sheet and Asset Quality Review

Total assets increased slightly to $1.42 billion at June 30, 2023, from $1.36 billion at March 31, 2023. Cash and cash equivalents totaled $44.4 million at June 30, 2023 compared to $39.6 million the previous quarter. Investment securities available for sale decreased $23.4 million from security sales, maturities and paydowns to $167.4 million at June 30, 2023 from $190.7 million one quarter earlier. Total collateralized liquidity available to meet cash demands was approximately $600 million at June 30, 2023 with an additional $300 million that could be raised in a short timeframe from the brokered CDs market.

Total loans receivable increased $75.1 million to $1.05 billion at June 30, 2023, from $973.3 million at March 31, 2023. Over the past year, loans have increased 13.3%. Commercial loans were the largest addition to the loan portfolio during the most recent quarter, which included municipal non-real estate loans. Total commercial loans increased $34.6 million to $196.4 million from $161.8 million the prior quarter. Non-owner occupied commercial real estate loans were also added to the portfolio, increasing $13.7 million to $240.0 million at June 30, 2023 from $226.3 million at March 31, 2023. Construction and land development loans increased $8.0 million during the second quarter. Owner occupied one-to-four family mortgage loans with variable rate features largely rounded out the loan growth over the quarter increasing $11.8 million to $199.1 million at June 30, 2023. Currently, the lending pipeline is expected to slow from the second quarter pace through the remainder of 2023, but the economic climate in our markets remains vibrant.

The allowance for loan losses declined slightly to 1.19% of gross loans at June 30, 2023 from 1.25% the prior quarter. Annualized net recoveries to average loans were 0.07% for the second quarter ended June 30, 2023. Non-performing assets remained at 0.45% of total assets at June 30, 2023. For the second consecutive quarter, the Bank did not own any foreclosed real estate.

Total deposits increased $35.5 million, or 3.2%, to $1.14 billion at June 30, 2023. Much of the deposit increase was non-interest bearing demand deposits (up $14.3 million) and money market deposits (up $16.3 million). Brokered deposits increased $19.5 million while interest-bearing demand deposits declined $21.6 million.

The composition of deposits continued to change during the June 2023 quarter as customers continue to seek higher deposit rates. At June 30, 2023, money market deposits and time deposits increased to 37.7% of deposits, compared to 36.6% at March 31, 2023. Lower-yield demand and savings deposits declined to 53.8% of deposits compared to 56.2% at March 31, 2023. Broker and national time deposits increased to 8.5% of total deposits at June 30, 2023 from 7.2% one quarter earlier. Uninsured and uncollateralized deposits represented 21.6% of total deposits at June 30, 2023 compared to 19.0% at March 31, 2023.

FHLB advances increased to $133.0 million at June 30, 2023 compared to $113.0 million at March 31, 2023. Other borrowings increased to $5.7 million at June 30, 2023 compared to $5.0 million at March 31, 2023. New FHLB advances were added to support loan growth during the quarter as well as increase cash on hand for liquidity contingency plans.

Tangible stockholder equity as a percent of total tangible assets was 7.22% at June 30, 2023, compared to 7.54% at March 31, 2023.

Tangible net book value per common share increased to $22.64 at June 30, 2023, compared to $22.43 per common share one quarter earlier. Relative to the prior quarter, accumulated other comprehensive loss increased $725,000. At June 30, 2023, the fair value on all securities (available for sale and held to maturity) was 12.0% less than amortized purchase cost, compared to 10.4% of the amortized purchase cost at March 31, 2023.

Operations Review

Net interest income decreased to $9.5 million (on a net margin of 2.98%) for the second quarter of 2023, compared to $9.9 million (on a net margin of 3.21%) for the first quarter of 2023, and $9.7 million (on a net margin of 3.23%) for the second quarter of 2022. Earning asset yields increased 13 basis points to 4.58% during the second quarter of 2023 from 4.45% during the first quarter of 2023, while deposit and borrowing costs increased 44 basis points to 2.12% compared to 1.68% during the first quarter of 2023.

The increase in earning asset yields was partially due to higher yields on loans while yields on investment securities remained relatively flat during the quarter ended June 30, 2023. Taxable security yields were 2.71% for the quarter ended June 30, 2023, compared to 2.70% for the quarter ended March 31, 2023. Loan yields increased during the second quarter to 5.04% from 4.90% for the first quarter of 2023 as new loans were added to the portfolio and existing loans repriced to higher indices from Federal Reserve and market rate increases.

Rising deposit costs for money market deposits, time deposits and FHLB advances were primarily responsible for the rise in the Bank’s cost of funds. The overall cost of deposits was 1.33% for the quarter ended June 30, 2023 compared to 1.06% the prior quarter. FHLB advance costs rose to 3.78% during the second quarter ended June 30, 2023 from 3.22% the prior quarter.

Total noninterest income increased slightly for the second quarter of 2023 to $1.98 million from $1.95 million for the first quarter of 2023, due primarily to the payment of a life insurance benefit. The life insurance benefit was partially offset by the loss realized on the sale of investment securities with the sale proceeds reinvested into higher yielding loans. The increase in noninterest income also reflected larger gains on the sale of mortgage loans as origination activity increased from the prior quarter. At June 30, 2023, the Bank serviced $370.8 million in secondary market residential mortgage loans for others.

Noninterest expenses increased slightly to $7.9 million for the second quarter of 2023, compared to $7.8 million for the first quarter of 2023. The second quarter of 2023 included higher data processing and other operation expenses as well as continued elevated employee benefit expenses. Salary and employee benefit expenses were $4.9 million for the second quarter of 2023, compared to $5.0 million for the first quarter of 2023. Noninterest expense is expected to be a similar amount in the third quarter.

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. 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 relating to the COVID-19 pandemic and its effect on PSB and Peoples, and their customers, and other risks. 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.

Investor Relations Contact
PSB Holdings, Inc.
1905 Stewart Avenue
Wausau, WI 54401
888.929.9902
InvestorRelations@bankpeoples.com

PSB Holdings, Inc.
Consolidated Balance Sheets
June 30, and March 31, 2023, September 30, and June 30, 2022, unaudited, December 31, 2022 derived from audited financial statements
	Jun. 30,			Mar. 31,			Dec. 31,			Sep. 30,			Jun. 30,
(dollars in thousands, except per share data)		2023			2023			2022			2022			2022
Assets
Cash and due from banks	$	27,409		$	13,336		$	28,561		$	16,659		$	19,149
Interest-bearing deposits		892			538			758			3,267			3,545
Federal funds sold		16,138			25,766			90			20,751			16,689
Cash and cash equivalents		44,439			39,640			29,409			40,677			39,383
Securities available for sale (at fair value)		167,382			190,738			192,197			188,425			190,478
Securities held to maturity (fair values of $81,489, $82,610, $80,926,
$77,467 and $82,567 respectively		87,335			87,889			87,816			87,993			88,216
Equity securities		2,178			2,070			2,032			1,870			1,781
Bank certificates of deposit (at cost)		-			-			-			-			245
Loans held for sale		151			-			-			-			270
Loans receivable, net		1,048,322			973,270			961,865			936,686			925,260
Accrued interest receivable		4,274			4,062			4,006			3,493			3,285
Foreclosed assets		-			-			160			160			160
Premises and equipment, net		13,256			13,406			13,164			13,129			12,981
Mortgage servicing rights, net		1,666			1,682			1,610			1,651			1,711
Federal Home Loan Bank stock (at cost)		6,359			4,620			2,516			2,516			2,646
Cash surrender value of bank-owned life insurance		23,776			25,078			24,922			24,765			24,608
Core deposit intangible		321			348			382			415			449
Goodwill		2,541			2,541			2,541			2,541			2,541
Other assets		14,933			14,444			15,069			15,248			13,550
TOTAL ASSETS	$	1,416,933		$	1,359,788		$	1,337,689		$	1,319,569		$	1,307,564
Liabilities
Non-interest-bearing deposits	$	282,153		$	267,836		$	292,338		$	298,335		$	283,592
Interest-bearing deposits		860,981			839,757			856,417			850,483			829,867
Total deposits		1,143,134			1,107,593			1,148,755			1,148,818			1,113,459
Federal Home Loan Bank advances		133,000			113,000			43,000			40,000			67,000
Other borrowings		5,730			5,033			12,985			10,449			4,601
Senior subordinated notes		4,771			4,769			5,549			2,500			2,500
Junior subordinated debentures		12,870			12,844			12,819			12,793			12,768
Accrued expenses and other liabilities		12,495			11,338			12,639			10,114			10,938
Total liabilities		1,312,000			1,254,577			1,235,747			1,224,674			1,211,266
Stockholders’ equity
Preferred stock - no par value:
Authorized - 30,000 shares; no shares issued or outstanding
Outstanding - 7,200, 7,200, 7,200, 0, and 0 shares, respectively		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 - 4,190,252, 4,241,501, 4,297,279, 4,414,651 and
4,423,037 shares, respectively		1,830			1,830			1,830			1,830			1,830
Additional paid-in capital		8,382			8,311			8,300			8,294			8,238
Retained earnings		130,396			128,968			126,003			123,559			120,043
Accumulated other comprehensive income (loss), net of tax		(23,240	)		(22,515	)		(24,220	)		(24,200	)		(19,423	)
Treasury stock, at cost - 1,300,546, 1,249,297, 1,193,519, 1,076,147
and 1,067,761 shares, respectively		(19,635	)		(18,583	)		(17,171	)		(14,588	)		(14,390	)
Total stockholders’ equity		104,933			105,211			101,942			94,895			96,298
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	1,416,933		$	1,359,788		$	1,337,689		$	1,319,569		$	1,307,564

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)				2023			2023			2022		2022		2022					2023			2022
Interest and dividend income:
Loans, including fees				$	12,709		$	11,773		$	11,251	$	10,225	$	9,295			$	24,482		$	18,349
Securities:
Taxable					1,327			1,331			1,218		978		859				2,658			1,621
Tax-exempt					535			537			539		540		537				1,072			1,070
Other interest and dividends					145			148			141		163		52				293			94
Total interest and dividend income					14,716			13,789			13,149		11,906		10,743				28,505			21,134
Interest expense:
Deposits					3,661			2,989			2,060		1,341		595				6,650			1,038
FHLB advances					1,200			547			167		209		234				1,747			403
Other borrowings					48			62			38		14		4				110			6
Senior subordinated notes					58			62			55		28		28				120			56
Junior subordinated debentures					242			234			224		202		179				476			345
Total interest expense					5,209			3,894			2,544		1,794		1,040				9,103			1,848
Net interest income					9,507			9,895			10,605		10,112		9,703				19,402			19,286
Provision for loan losses					100			100			-		-		-				200			-
Net interest income after provision for loan losses					9,407			9,795			10,605		10,112		9,703				19,202			19,286
Noninterest income:
Service fees					378			361			381		409		392				739			780
Mortgage banking income					311			325			235		228		299				636			752
Investment and insurance sales commissions					287			365			498		357		404				652			860
Net loss on sale of securities					(279	)		-			-		-		-				(279	)		-
Increase in cash surrender value of life insurance					149			157			157		157		152				306			302
Life insurance death benefit					533			-			-		-		-				533			-
Other noninterest income					605			742			553		558		686				1,347			1,217
Total noninterest income					1,984			1,950			1,824		1,709		1,933				3,934			3,911
Noninterest expense:
Salaries and employee benefits					4,884			5,006			4,700		4,302		4,548				9,890			8,938
Occupancy and facilities					698			699			641		687		629				1,397			1,294
Loss (gain) on foreclosed assets					4			(50	)		2		4		-				(46	)		(6	)
Data processing and other office operations					951			880			910		906		912				1,831			1,773
Advertising and promotion					166			162			180		185		173				328			325
Core deposit intangible amortization					27			34			34		34		38				61			85
Other noninterest expenses					1,202			1,073			1,219		1,069		1,151				2,275			2,234
Total noninterest expense					7,932			7,804			7,686		7,187		7,451				15,736			14,643
Income before provision for income taxes					3,459			3,941			4,743		4,634		4,185				7,400			8,554
Provision for income taxes					652			941			1,143		1,119		993				1,593			2,032
Net income				$	2,807		$	3,000		$	3,600	$	3,515	$	3,192			$	5,807		$	6,522
Preferred stock dividends declared				$	122		$	122		$	81	$	-	$	-			$	122		$	-
Net income available to common shareholders				$	2,685		$	2,878		$	3,519	$	3,515	$	3,192			$	5,685		$	6,522
Basic earnings per common share				$	0.64		$	0.67		$	0.80	$	0.80	$	0.72			$	1.34		$	1.47
Diluted earnings per common share				$	0.64		$	0.67		$	0.80	$	0.80	$	0.72			$	1.34		$	1.47

PSB Holdings, Inc.
Quarterly Financial Summary
(dollars in thousands, except per share data)				Quarter ended
				Jun. 30,			Mar. 31,			Dec. 31,			Sep. 30,			Jun. 30,
Earnings and dividends:				2023			2023			2022			2022			2022
	Interest income			$	14,716		$	13,789		$	13,149		$	11,906		$	10,743
	Interest expense			$	5,209		$	3,894		$	2,544		$	1,794		$	1,040
	Net interest income			$	9,507		$	9,895		$	10,605		$	10,112		$	9,703
	Provision for loan losses			$	100		$	100		$	-		$	-		$	-
	Other noninterest income			$	1,984		$	1,950		$	1,824		$	1,709		$	1,933
	Other noninterest expense			$	7,932		$	7,804		$	7,686		$	7,187		$	7,451
	Net income available to common shareholders			$	2,685		$	2,878		$	3,519		$	3,515		$	3,192
	Basic earnings per common share (3)			$	0.64		$	0.67		$	0.80		$	0.80		$	0.72
	Diluted earnings per common share (3)			$	0.64		$	0.67		$	0.80		$	0.80		$	0.72
	Dividends declared per common share (3)			$	0.30		$	-		$	0.25		$	-		$	0.25
	Tangible net book value per common share (4)			$	22.64		$	22.43		$	21.37		$	20.83		$	21.10
	Semi-annual dividend payout ratio				27.38	%		n/a			15.27	%		n/a			16.96	%
	Average common shares outstanding				4,218,226			4,275,160			4,377,330			4,419,421			4,428,939
Balance sheet - average balances:
	Loans receivable, net of allowances for loss			$	1,000,349		$	964,029		$	945,551		$	931,344		$	904,710
	Assets			$	1,367,363		$	1,336,511		$	1,321,776		$	1,323,400		$	1,290,906
	Deposits			$	1,098,039		$	1,124,091		$	1,146,066		$	1,141,784		$	1,099,314
	Stockholders’ equity			$	106,762		$	103,406		$	100,037		$	98,630		$	98,261
Performance ratios:
	Return on average assets (1)				0.79	%		0.87	%		1.06	%		1.05	%		0.99	%
	Return on average stockholders’ equity (1)				10.09	%		11.29	%		13.96	%		14.14	%		13.03	%
	Return on average tangible common
	stockholders’ equity (1)(4)				11.14	%		12.51	%		15.12	%		14.58	%		13.29	%
	Net loan charge-offs to average loans (1)				-0.07	%		-0.02	%		0.03	%		0.01	%		-0.02	%
	Nonperforming loans to gross loans				0.60	%		0.62	%		0.64	%		1.16	%		1.21	%
	Nonperforming assets to total assets				0.45	%		0.45	%		0.48	%		0.85	%		0.88	%
	Allowance for loan losses to gross loans				1.19	%		1.25	%		1.26	%		1.30	%		1.32	%
	Nonperforming assets to tangible equity
	plus the allowance for loan losses (4)				5.96	%		5.76	%		6.22	%		10.89	%		11.04	%
	Net interest rate margin (1)(2)				2.98	%		3.21	%		3.41	%		3.24	%		3.23	%
	Net interest rate spread (1)(2)				2.46	%		2.77	%		3.10	%		3.04	%		3.11	%
	Service fee revenue as a percent of
	average demand deposits (1)				0.58	%		0.52	%		0.50	%		0.56	%		0.57	%
	Noninterest income as a percent
	of gross revenue				11.88	%		12.39	%		12.18	%		12.55	%		15.25	%
	Efficiency ratio (2)				68.09	%		65.02	%		61.06	%		60.02	%		63.20	%
	Noninterest expenses to average assets (1)				2.33	%		2.37	%		2.31	%		2.15	%		2.32	%
	Average stockholders’ equity less accumulated
	other comprehensive income (loss) to
	average assets				9.33	%		9.32	%		9.23	%		8.95	%		8.80	%
	Tangible equity to tangible assets (4)				7.22	%		7.54	%		7.42	%		6.98	%		7.15	%
Stock price information:
	High			$	21.38		$	25.75		$	22.74		$	23.94		$	26.35
	Low			$	19.75		$	20.00		$	21.50		$	22.50		$	22.82
	Last trade value at quarter-end			$	20.35		$	21.15		$	21.90		$	22.50		$	23.50
(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 Comprehensive Income
				Quarter Ended
				Jun. 30,			Mar. 31,			Dec. 31,			Sep. 30,			Jun. 30,
(dollars in thousands - unaudited)					2023			2023			2022			2022			2022
Net income				$	2,807		$	3,000		$	3,600		$	3,515		$	3,192
Other comprehensive income, net of tax:
	Unrealized gain (loss) on securities available
		for sale			(1,168	)		1,601			(116	)		(4,915	)		(5,573	)
	Reclassification adjustment for security
		loss included in net income			202			-			-			-			-
	Amortization of unrealized loss included in net
		income on securities available for sale
		transferred to securities held to maturity			107			129			93			92			176
	Unrealized gain (loss) on interest rate swap				161			(1	)		11			32			43
	Reclassification adjustment of interest rate
		swap settlements included in earnings			(27	)		(24	)		(8	)		13			28
Other comprehensive income (loss)					(725	)		1,705			(20	)		(4,778	)		(5,326	)
Comprehensive income (loss)				$	2,082		$	4,705		$	3,580		$	(1,263	)	$	(2,134	)

PSB Holdings, Inc.
Nonperforming Assets as of:
	Jun. 30,			Mar. 31,			Dec. 31,			Sep. 30,			Jun. 30,
(dollars in thousands)	2023			2023			2022			2022			2022
Nonaccrual loans (excluding restructured loans)	$	6,000		$	5,773		$	5,879		$	6,048		$	6,036
Nonaccrual restructured loans		50			57			62			70			146
Restructured loans not on nonaccrual		261			265			270			4,904			5,137
Accruing loans past due 90 days or more		-			-			-			-			-
Total nonperforming loans		6,311			6,095			6,211			11,022			11,319
Other real estate owned		-			-			160			160			160
Total nonperforming assets	$	6,311		$	6,095		$	6,371		$	11,182		$	11,479
Nonperforming loans as a % of gross loans receivable		0.60	%		0.62	%		0.64	%		1.16	%		1.21	%
Total nonperforming assets as a % of total assets		0.45	%		0.45	%		0.48	%		0.85	%		0.88	%
Allowance for loan losses as a % of nonperforming loans		177.63	%		191.63	%		197.92	%		112.28	%		109.48	%

PSB Holdings, Inc.
Nonperforming Assets >= $500,000 net book value before specific reserves
At June 30, 2023
(dollars in thousands)
		Gross			Specific
Collateral Description	Asset Type	Principal			Reserves
Real estate - Buffet Style Restaurant	Nonaccrual	$	2,807		$	1,058
Real estate - Independent Auto Repair	Nonaccrual		726			34
Total listed nonperforming assets		$	3,533		$	1,112
Total bank wide nonperforming assets		$	6,311		$	1,638
Listed assets as a % of total nonperforming assets			56	%		68	%

PSB Holding, Inc.
Loan Composition by Purpose
Quarter-ended (dollars in thousands)	Jun. 30, 2023			Mar. 31, 2023			Dec. 31, 2022			Sep. 30, 2022			Jun. 30, 2022
Residential real estate:
One to four family	$	199,100		$	187,325		$	182,688		$	172,913		$	169,437
HELOC loans		19,498			18,141			17,625			18,423			17,776
Residential construction & development		18,634			22,014			20,698			22,313			22,462
Residential vacant land		1,111			1,223			1,414			3,069			1,599
Total Residential real estate		238,343			228,703			222,425			216,718			211,274
Commercial/Agricultural real estate:
Owner occupied
Commercial real estate		238,608			237,217			220,375			211,008			205,976
SBA commercial real estate		2,078			2,112			2,514			2,616			2,458
Agriculture real estate		3,563			3,681			3,835			3,902			3,583
Construction and land development		1,691			2,825			22,330			32,158			31,465
Commercial vacant land		7,223			6,712			7,291			5,214			5,351
Total Owner occupied		253,163			252,547			256,345			254,898			248,833
Non-owner occupied
Commercial real estate		240,010			226,280			228,761			225,823			227,400
One to four family residential rental		67,854			65,673			64,764			66,224			61,749
Construction and land development		49,310			41,272			27,253			25,543			25,086
Commercial vacant land		10,424			3,928			3,862			4,010			4,287
Total Non-owner occupied		367,598			337,153			324,640			321,600			318,522
Commercial/Agricultural non-real estate:
Municipal non-real estate		25,223			6,430			9,915			7,133			6,352
Commercial line		73,651			57,727			63,173			56,154			65,728
Other commercial non-real estate		92,519			92,419			87,535			82,430			76,065
SBA commercial non-real estate		3,787			3,997			3,533			3,378			3,926
Agricultural non-real estate		1,204			1,250			1,290			1,491			1,409
Total Commercial/Agr. non-real estate		196,384			161,823			165,446			150,586			153,480
Consumer non-real estate:
Consumer installment		3,483			3,357			4,072			4,005			4,305
Consumer line		441			529			382			494			493
Other consumer		106			108			115			116			123
Total Consumer non-real estate		4,030			3,994			4,569			4,615			4,921
Gross loans		1,059,518			984,220			973,425			948,417			937,030
Net deferred loan costs (fees)		605			542			573			537			503
Overdrafts		121			101			160			107			119
Allowance for loan losses		(11,922	)		(11,593	)		(12,293	)		(12,375	)		(12,392	)
Total loans receivable	$	1,048,322		$	973,270		$	961,865		$	936,686		$	925,260

PSB Holding, Inc.
Selected Commercial Real Estate Loans by Purpose
	Jun 30,					Mar 31,					Dec 31,					Sep 30,					Jun 30,
(dollars in thousands)	2023					2023					2022					2022					2022
	$		%			$		%			$		%			$		%			$		%
	Total Exposure		% of Portfolio (1)			Total Exposure		% of Portfolio (1)			Total Exposure		% of Portfolio (1)			Total Exposure		% of Portfolio (1)			Total Exposure		% of Portfolio (1)
Multi Family	$	119,573	12.4	%		$	121,559	13.0	%		$	120,232	13.1	%		$	141,414	15.6	%		$	143,074	15.7	%
Industrial and Warehousing	$	84,049	8.7	%		$	78,934	8.5	%		$	76,536	8.3	%		$	83,033	9.1	%		$	79,073	8.7	%
Retail	$	34,004	3.5	%		$	34,427	3.7	%		$	32,587	3.5	%		$	39,279	4.3	%		$	39,013	4.3	%
Hotels	$	33,329	3.5	%		$	31,069	3.3	%		$	32,940	3.6	%		$	26,958	3.0	%		$	26,948	3.0	%
Office	$	8,395	0.9	%		$	8,544	0.9	%		$	8,652	0.9	%		$	8,758	1.0	%		$	8,862	1.0	%
(1) Percentage of portfolio and commitments.

PSB Holdings, Inc.
Deposit Composition
Insured and Collateralized Deposits	June 30,				March 31,				December 31,				September 30,				June 30,
(dollars in thousands)	2023				2023				2022				2022				2022
	$		%		$		%		$		%		$		%		$		%
Non-interest bearing demand	$	201,351	17.6	%	$	205,350	18.6	%	$	203,115	17.7	%	$	216,116	18.7	%	$	207,852	18.6	%
Interest-bearing demand and savings		310,006	27.1	%		329,364	29.7	%		345,854	30.1	%		348,989	30.4	%		331,034	29.7	%
Money market deposits		126,851	11.1	%		128,576	11.6	%		131,400	11.4	%		130,126	11.3	%		132,374	11.9	%
Retail and local time deposits <= $250		140,572	12.3	%		136,090	12.3	%		130,205	11.3	%		132,095	11.5	%		136,230	12.2	%
Total core deposits		778,780	68.1	%		799,380	72.2	%		810,574	70.5	%		827,326	71.9	%		807,490	72.4	%
Retail and local time deposits > $250		20,250	1.8	%		17,000	1.5	%		14,500	1.3	%		12,250	1.1	%		13,000	1.2	%
Broker & national time deposits <= $250		3,965	0.3	%		5,953	0.5	%		6,451	0.6	%		6,700	0.6	%		7,443	0.7	%
Broker & national time deposits > $250		93,956	8.2	%		74,485	6.8	%		82,439	7.2	%		82,439	7.2	%		56,255	5.1	%
Totals	$	896,951	78.4	%	$	896,818	81.0	%	$	913,964	79.6	%	$	928,715	80.8	%	$	884,188	79.4	%
PSB Holdings, Inc.
Deposit Composition
Uninsured Deposits	June 30,				March 31,				December 31,				September 30,				June 30,
(dollars in thousands)	2023				2023				2022				2022				2022
	$		%		$		%		$		%		$		%		$		%
Non-interest bearing demand	$	80,802	7.1	%	$	62,486	5.6	%	$	89,223	7.7	%	$	82,219	7.2	%	$	75,740	6.8	%
Interest-bearing demand and savings		22,604	2.0	%		24,854	2.2	%		49,917	4.3	%		28,842	2.5	%		45,116	4.1	%
Money market deposits		127,871	11.2	%		109,894	10.0	%		84,673	7.4	%		98,493	8.6	%		94,533	8.5	%
Retail and local time deposits <= $250		0	0.0	%		0	0.0	%		0	0.0	%		-	0.0	%		-	0.0	%
Total core deposits		231,277	20.3	%		197,234	17.8	%		223,813	19.4	%		209,554	18.3	%		215,389	19.4	%
Retail and local time deposits > $250		14,906	1.3	%		13,541	1.2	%		10,978	1.0	%		10,549	0.9	%		13,882	1.2	%
Broker & national time deposits <= $250		0	0.0	%		0	0.0	%		0	0.0	%		-	0.0	%		-	0.0	%
Broker & national time deposits > $250		0	0.0	%		0	0.0	%		0	0.0	%		-	0.0	%		-	0.0	%
Totals	$	246,183	21.6	%	$	210,775	19.0	%	$	234,791	20.4	%	$	220,103	19.2	%	$	229,271	20.6	%
PSB Holdings, Inc.
Deposit Composition
Total Deposits	June 30,				March 31,				December 31,				September 30,				June 30,
(dollars in thousands)		2023				2023				2022				2022				2022
	$		%		$		%		$		%		$		%		$		%
Non-interest bearing demand	$	282,153	24.7	%	$	267,836	24.2	%	$	292,338	25.4	%	$	298,335	26.0	%	$	283,592	25.5	%
Interest-bearing demand and savings		332,610	29.1	%		354,218	32.0	%		395,771	34.5	%		377,831	32.9	%		376,150	33.8	%
Money market deposits		254,722	22.3	%		238,470	21.5	%		216,073	18.8	%		228,619	19.9	%		226,907	20.4	%
Retail and local time deposits <= $250		140,572	12.3	%		136,090	12.3	%		130,205	11.3	%		132,095	11.4	%		136,230	12.1	%
Total core deposits		1,010,057	88.4	%		996,614	90.0	%		1,034,387	90.0	%		1,036,880	90.2	%		1,022,879	91.8	%
Retail and local time deposits > $250		35,156	3.1	%		30,541	2.8	%		25,478	2.2	%		22,799	2.0	%		26,882	2.4	%
Broker & national time deposits <= $250		3,965	0.3	%		5,953	0.5	%		6,451	0.6	%		6,700	0.6	%		7,443	0.7	%
Broker & national time deposits > $250		93,956	8.2	%		74,485	6.7	%		82,439	7.2	%		82,439	7.2	%		56,255	5.1	%
Totals	$	1,143,134	100.0	%	$	1,107,593	100.0	%	$	1,148,755	100.0	%	$	1,148,818	100.0	%	$	1,113,459	100.0	%

PSB Holdings, Inc.
Average Balances ($000) and Interest Rates
(dollars in thousands)
		Quarter ended June 30, 2023								Quarter ended March 31, 2023								Quarter ended June 30, 2022
		Average					Yield /			Average					Yield /			Average					Yield /
		Balance			Interest		Rate			Balance			Interest		Rate			Balance			Interest		Rate
Assets
Interest-earning assets:
Loans (1)(2)		$	1,012,105		$	12,726	5.04	%		$	976,395		$	11,788	4.90	%		$	917,065		$	9,305	4.07	%
Taxable securities			196,048			1,327	2.71	%			199,705			1,331	2.70	%			205,040			859	1.68	%
Tax-exempt securities (2)			81,758			677	3.32	%			81,932			680	3.37	%			79,936			680	3.41	%
FHLB stock			5,366			51	3.81	%			3,059			50	6.63	%			2,650			16	2.42	%
Other			7,254			94	5.20	%			9,024			98	4.40	%			20,651			36	0.70	%
Total (2)			1,302,531			14,875	4.58	%			1,270,115			13,947	4.45	%			1,225,342			10,896	3.57	%
Non-interest-earning assets:
Cash and due from banks			15,632								17,255								18,731
Premises and equipment,
net			13,336								13,332								13,039
Cash surrender value ins			24,530								24,982								24,510
Other assets			23,090								23,193								21,639
Allowance for loan
losses			(11,756	)							(12,366	)							(12,355	)
Total		$	1,367,363							$	1,336,511							$	1,290,906
Liabilities & stockholders’ equity
Interest-bearing liabilities:
Savings and demand
deposits		$	344,435		$	1,035	1.21	%		$	373,557		$	1,053	1.14	%		$	379,734		$	122	0.13	%
Money market deposits			243,073			1,189	1.96	%			225,624			830	1.49	%			217,639			121	0.22	%
Time deposits			247,007			1,437	2.33	%			245,562			1,106	1.83	%			224,539			352	0.63	%
FHLB borrowings			127,441			1,200	3.78	%			68,833			547	3.22	%			62,659			234	1.50	%
Other borrowings			5,588			48	3.45	%			10,025			62	2.51	%			5,028			4	0.32	%
Senior sub. notes			4,770			58	4.88	%			5,159			62	4.87	%			2,500			28	4.49	%
Junior sub. debentures			12,857			242	7.55	%			12,832			234	7.40	%			12,755			179	5.63	%
Total			985,171			5,209	2.12	%			941,592			3,894	1.68	%			904,854			1,040	0.46	%
Non-interest-bearing liabilities:
Demand deposits			263,524								279,348								277,402
Other liabilities			11,906								12,208								10,389
Stockholders’ equity			106,762								103,363								98,261
Total		$	1,367,363							$	1,336,511							$	1,290,906
Net interest income					$	9,666							$	10,053							$	9,856
Rate spread							2.46	%							2.77	%							3.11	%
Net yield on interest-earning assets							2.98	%							3.21	%							3.23	%
(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%.

PSB Holdings, Inc.
Average Balances ($000) and Interest Rates
(dollars in thousands)
			Six months ended June 30, 2023								Six months ended June 30, 2022
			Average					Yield/			Average					Yield/
			Balance			Interest		Rate			Balance			Interest		Rate
Assets
Interest-earning assets:
Loans (1)(2)			$	994,349		$	24,514	4.97	%		$	904,232		$	18,370	4.10	%
Taxable securities				197,866			2,658	2.71	%			210,968			1,621	1.55	%
Tax-exempt securities (2)				81,844			1,357	3.34	%			83,808			1,354	3.26	%
FHLB stock				4,219			101	4.83	%			2,648			50	3.81	%
Other				8,143			192	4.75	%			20,326			44	0.44	%
Total (2)				1,286,421			28,822	4.52	%			1,221,982			21,439	3.54	%
Non-interest-earning assets:
Cash and due from banks				16,439								18,366
Premises and equipment,
net				13,334								12,886
Cash surrender value ins				24,755								24,436
Other assets				23,139								19,192
Allowance for loan
losses				(12,016	)							(12,316	)
Total			$	1,352,072							$	1,284,546
Liabilities & stockholders’ equity
Interest-bearing liabilities:
Savings and demand
deposits			$	358,916		$	2,088	1.17	%		$	387,952		$	191	0.10	%
Money market deposits				234,044			2,019	1.74	%			217,529			210	0.19	%
Time deposits				246,289			2,543	2.08	%			211,557			637	0.61	%
FHLB borrowings				98,299			1,747	3.58	%			56,961			403	1.43	%
Other borrowings				7,794			110	2.85	%			5,736			6	0.21	%
Senior sub. notes				5,030			120	4.81	%			2,500			56	4.52	%
Junior sub. debentures				12,844			476	7.47	%			12,742			345	5.46	%
Total				963,216			9,103	1.91	%			894,977			1,848	0.42	%
Non-interest-bearing liabilities:
Demand deposits				271,310								274,598
Other liabilities				12,231								11,400
Stockholders’ equity				105,315								103,571
Total			$	1,352,072							$	1,284,546
Net interest income						$	19,719							$	19,591
Rate spread								2.61	%							3.12	%
Net yield on interest-earning assets								3.09	%							3.23	%
(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 tax rate of 21%.