PSB Holdings, Inc. Reports Third Quarter 2023 Earnings of $0.29 Per Share; Loan Growth Up 4.7% From Prior Quarter and 17.2% From Prior Year

Rhea-AI Summary

PSB Holdings, Inc. reports third quarter earnings of $0.29 per common share on net income of $1.2 million, compared to $0.64 per common share on net income of $2.7 million in the previous quarter. The company expects a 6% reduction in effective tax rate on future earnings due to a change in Wisconsin state tax law. Net interest income increased to $9.6 million for the quarter. Total loans receivable increased by $49.7 million to $1.1 billion. Total deposits increased by $29.1 million to $1.17 billion.

Positive

• PSB Holdings, Inc. reports third quarter earnings of $0.29 per common share on net income of $1.2 million, compared to $0.64 per common share on net income of $2.7 million in the previous quarter. The company expects a 6% reduction in effective tax rate on future earnings due to a change in Wisconsin state tax law. Net interest income increased to $9.6 million for the quarter. Total loans receivable increased by $49.7 million to $1.1 billion. Total deposits increased by $29.1 million to $1.17 billion.

Negative

• None.

WAUSAU, Wis., Oct. 25, 2023 (GLOBE NEWSWIRE) -- PSB Holdings, Inc. (“PSB”) (OTCQX: PSBQ), the holding company for Peoples State Bank (“Peoples”) serving Northcentral and Southeastern Wisconsin reported third quarter earnings ending September 30, 2023 of $0.29 per common share on net income of $1.2 million, compared to $0.64 per common share on net income of $2.7 million during the second quarter ending June 30, 2023, and $0.80 per common share on net income of $3.5 million during the third quarter ending September 30, 2022.

On July 5^th, Wisconsin signed into law, and effective January 1, 2023, an interest exemption for financial institutions that lend to Wisconsin commercial borrowers. The change is expected to reduce or eliminate PSB’s state tax expense going forward. However, the current quarter includes cumulative adjustments to deferred tax assets to reflect the new tax law. As a result of this tax regulation change, PSB reversed $1.2 million in income tax expense which had been recorded during the first two quarters of 2023, which increased net income. However, PSB also provided an allowance against Wisconsin deferred tax assets, including those assets related to accumulated other comprehensive income, which increased income tax expense $2.8 million, which lowered net income. Before the cumulative impacts of the Wisconsin income tax regulation change, proforma September 2023 quarterly net income would have been approximately $2.8 million, or $0.66 per common share.

Other impacts to PSB’s third quarter 2023 operating results reflected the following changes from the second quarter of 2023: (1) higher tax expense related to recognition of taxes deferred prior to a change in Wisconsin tax law that eliminated state taxes on certain qualified assets; (2) higher net interest income due to a larger loan balance and rising yields on loans; (3) lower non-interest income due to second quarter income from life insurance death benefit; (4) lower non-interest expense related to lower salary and benefit expenses; (5) higher accumulated other comprehensive loss due to an increase in intermediate interest rates; (6) strong loan growth of $50 million supported by core deposit growth of $24 million; (7) an improved efficiency ratio; and (8) lower non-performing assets.

“Our net interest income continues to grow despite pressures from rising interest rates. Loan growth continued in the third quarter as the economic environment within our markets remains healthy. We have added new commercial borrowers to our portfolio which has helped attract lower costing deposit relationships, thereby reducing the need for higher costing borrowings and brokered deposits. Additionally, we have recently ramped up our internal capacity to deliver SBA 7(a) loans in an efficient manner which will allow us to fully leverage our SBA Preferred Lender status in markets that we serve,” stated Scott Cattanach, President and CEO. “Despite the quarter’s negative impacts related to deferred tax assets, Wisconsin’s state tax changes are expected to eliminate our state income tax, reducing our effective tax rate on future earnings by approximately 6%.”

September 30, 2023, Highlights:

• Net interest income increased to $9.6 million for the quarter ended September 30, 2023, compared to $9.5 million for the quarter ended June 30, 2023, due to a larger loan portfolio with the addition of higher yielding loans and repricing of interest sensitive assets.

• Loans increased $49.7 million in the third quarter ended September 30, 2023 to $1.1 billion. The largest increase in the loan portfolio consisted of growth in non-owner occupied commercial real estate and one-to-four family residential rental loans.
  

• Tangible book value per common share was to $22.25 at September 30, 2023 compared to $22.64 one quarter earlier. For the third quarter ended September 30, 2023, tangible book value was positively influenced by net income and intangible asset amortization, offset by higher accumulated other comprehensive loss. The AOCI loss reflected adjustments on the available for sale securities portfolio due to higher interest rates and a lower tax rate. A lower state tax was associated with a change in Wisconsin state tax law which provides for no state tax on income from commercial loans with original balances less than $5.0 million to Wisconsin borrowers.
  

• Return on tangible common equity was 5.09% for the quarter ended September 30, 2023 compared to 11.14% the prior quarter. The lower return primarily related to higher tax expenses on adoption of Wisconsin state tax law changes.
  

• Provision for loan losses was $150,000 for the quarter ended September 30, 2023. The provision for the third quarter was largely related to new loan growth.
  

• Noninterest income was $1.7 million for the quarter ended September 30, 2023 compared to $2.0 million the prior quarter. The prior quarter included a life insurance benefit of $0.5 million.
  

• Noninterest expenses decreased $479,000 in the third quarter of 2023 to $7.5 million from $7.9 million the prior quarter. The decrease was primarily related to lower salary and benefit expenses.
  

Balance Sheet and Asset Quality Review

Total assets increased slightly to $1.44 billion at September 30, 2023, from $1.42 billion at June 30, 2023. Cash and cash equivalents decreased $23.1 million, to $21.3 million at September 30, 2023 compared to $44.4 million the previous quarter. The lower cash and cash equivalent level reflects the use of funds to fund loan growth and reduce borrowings. Investment securities available for sale decreased $6.5 million from maturities and lower fair values to $160.9 million at September 30, 2023 from $167.4 million one quarter earlier. Total collateralized liquidity available to meet cash demands was approximately $350 million at September 30, 2023 with an additional $300 million that could be raised in a short timeframe from the brokered CDs market.

Total loans receivable increased $49.7 million to $1.10 billion at September 30, 2023, from $1.05 billion at June 30, 2023. Over the past year, total loans increased 17.2%. Non-owner occupied loans were the largest addition to the loan portfolio during the most recent quarter, which included commercial real estate, one-to-four family residential rentals and land loans. Total non-owner occupied commercial real estate loans increased $23.4 million, to $263.4 million at September 30, 2023, from $240.0 million the prior quarter. One-to-four family residential rental loans increased $19.0 million from the prior quarter to $86.8 million, while non-owner occupied land loans increased $10.0 million to $20.4 million. The loan portfolio remains well diversified with non-owner occupied commercial loans totaling 37.5% of gross loans followed by owner occupied commercial loans at 23.1% of gross loans. Residential real estate loans decreased to 21.7% of gross loans at September 30, 2023 from 22.5% one quarter earlier. Currently, the lending pipeline is expected to slow from the third quarter pace through the remainder of 2023.

The allowance for loan losses declined slightly to 1.15% of gross loans at September 30, 2023 from 1.19% the prior quarter. Annualized net charge-offs to average loans were zero for the third quarter ended September 30, 2023 compared to net recoveries of 0.07% the prior quarter. Non-performing assets declined to 0.42% of total assets at September 30, 2023 from 0.45% the previous quarter. For the third consecutive quarter, the Bank did not own any foreclosed real estate.

Total deposits increased $29.1 million, or 2.5%, to $1.17 billion at September 30, 2023. Much of the deposit increase was money market deposits (up $14.8 million) and retail jumbo time deposits (up $11.7 million). Meanwhile, brokered deposits decreased $6.1 million and represented 7.9% of total deposits at September 30, 2023 compared to 8.5% one quarter earlier.

The composition of deposits continued to change during the third quarter of 2023 as customers continue to seek higher deposit rates. At September 30, 2023, money market deposits and retail time deposits increased to 39.2% of deposits, compared to 37.7% at June 30, 2023. Lower-yield demand and savings deposits declined to 52.9% of deposits compared to 53.8% at June 30, 2023. Uninsured and uncollateralized deposits represented 22.2% of total deposits at September 30, 2023 compared to 21.6% at June 30, 2023.

FHLB advances decreased to $128.0 million at September 30, 2023 compared to $133.0 million at June 30, 2023. FHLB advances were reduced as liquidity contingency plans were relaxed from elevated levels surrounding multiple nationally publicized bank failures earlier in the year. Other borrowings remained at $5.7 million at September 30, 2023.

Tangible stockholder equity as a percent of total tangible assets was 6.98% at September 30, 2023, compared to 7.22% at June 30, 2023.

Tangible net book value per common share was $22.25 at September 30, 2023, compared to $22.64 per common share one quarter earlier. Relative to the prior quarter, accumulated other comprehensive loss increased $2.9 million. Higher interest rates decreased the market value on the available for sale securities portfolio.

Operations Review

Net interest income increased to $9.6 million (on a net margin of 2.88%) for the third quarter of 2023, compared to $9.5 million (on a net margin of 2.98%) for the second quarter of 2023, and $10.1 million (on a net margin of 3.24%) for the third quarter of 2022. Earning asset yields increased 20 basis points to 4.78% during the third quarter of 2023 from 4.58% during the second quarter of 2023, while deposit and borrowing costs increased 39 basis points to 2.51% compared to 2.12% during the second quarter of 2023.

The increase in earning asset yields was primarily due to higher yields on loans during the quarter. Taxable security yields were 2.55% for the quarter ended September 30, 2023, compared to 2.71% for the quarter ended June 30, 2023. Loan yields increased during the second quarter to 5.23% from 5.04% for the second quarter of 2023 as new loans were added to the portfolio and existing loans repriced to higher indices from market rate increases. During the third quarter, the average yield of new money loans was 7.14%.

Rising deposit costs for savings and demand deposits, money market deposits, time deposits and FHLB advances were responsible for the rise in the Bank’s cost of funds. The overall cost of deposits was 1.66% for the quarter ended September 30, 2023 compared to 1.33% the prior quarter. FHLB advance costs rose to 3.90% during the third quarter ended September 30, 2023 from 3.78% the prior quarter.

Total noninterest income decreased for the third quarter of 2023 to $1.68 million, from $1.98 million for the second quarter of 2023, due primarily to the payment of a life insurance death benefit realized during the second quarter of $533,000. The Bank is an SBA Preferred Lender. During the third quarter, the Bank realized $138,000 in gains on the sale of SBA 7(a) loans. At September 30, 2023, the Bank serviced $370.1 million in secondary market residential mortgage loans for others which provides fee income. Total mortgage banking income was $345,000 for the quarter ended September 30, 2023 compared to $311,000 for the quarter ended June 30, 2023. During the September 2023 quarter, we changed our Broker/Dealer platform for wealth management and added a senior advisor expected to lift commission revenue over the next several quarters.

Noninterest expenses decreased to $7.5 million for the third quarter of 2023, compared to $7.9 million for the second quarter of 2023. The third quarter of 2023 included lower salary and benefit expenses relative to the prior quarter, impacted by the right sizing of the residential mortgage banking business.

The current Wisconsin state budget, signed by Governor Evers on July 5, 2023, included a provision offering an income tax exclusion on income earned from commercial loans of $5 million or less, originated for business or agricultural purposes to borrowers who reside or are located in the state of Wisconsin. This exclusion is retroactive to January 1, 2023. A one-time tax expense of $1.6 million was realized during the third quarter due to the change in Wisconsin tax.

About PSB Holdings, Inc.

PSB Holdings, Inc. is the parent company of Peoples State Bank. Peoples is a community bank headquartered in Wausau, Wisconsin, serving northcentral and southeastern Wisconsin from eleven full-service banking locations in Marathon, Oneida, Vilas, Portage, Milwaukee and Waukesha counties. 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
September 30, June 30, and March 31, 2023, September 30, 2022, unaudited, December 31, 2022 derived from audited financial statements
	Sep. 30,			Jun. 30,			Mar. 31,			Dec. 31,			Sep. 30,
(dollars in thousands, except per share data)	2023			2023			2023			2022			2022
Assets
Cash and due from banks	$	12,881		$	27,409		$	13,336		$	28,561		$	16,659
Interest-bearing deposits		668			892			538			758			3,267
Federal funds sold		7,764			16,138			25,766			90			20,751
Cash and cash equivalents		21,313			44,439			39,640			29,409			40,677
Securities available for sale (at fair value)		160,883			167,382			190,738			192,197			188,425
Securities held to maturity (fair values of $75,236, $81,489, $82,610, $80,926 and
$77,467 respectively		86,908			87,335			87,889			87,816			87,993
Equity securities		2,273			2,178			2,070			2,032			1,870
Loans held for sale		971			151			-			-			-
Loans receivable, net		1,098,019			1,048,322			973,270			961,865			936,686
Accrued interest receivable		4,716			4,274			4,062			4,006			3,493
Foreclosed assets		-			-			-			160			160
Premises and equipment, net		13,242			13,256			13,406			13,164			13,129
Mortgage servicing rights, net		1,684			1,666			1,682			1,610			1,651
Federal Home Loan Bank stock (at cost)		6,373			6,359			4,620			2,516			2,516
Cash surrender value of bank-owned life insurance		23,931			23,776			25,078			24,922			24,765
Core deposit intangible		297			321			348			382			415
Goodwill		2,541			2,541			2,541			2,541			2,541
Other assets		14,094			14,933			14,444			15,069			15,248
TOTAL ASSETS	$	1,437,245		$	1,416,933		$	1,359,788		$	1,337,689		$	1,319,569
Liabilities
Non-interest-bearing deposits	$	288,765		$	282,153		$	267,836		$	292,338		$	298,335
Interest-bearing deposits		883,474			860,981			839,757			856,417			850,483
Total deposits		1,172,239			1,143,134			1,107,593			1,148,755			1,148,818
Federal Home Loan Bank advances		128,000			133,000			113,000			43,000			40,000
Other borrowings		5,660			5,730			5,033			12,985			10,449
Senior subordinated notes		4,772			4,771			4,769			5,549			2,500
Junior subordinated debentures		12,896			12,870			12,844			12,819			12,793
Accrued expenses and other liabilities		10,770			12,495			11,338			12,639			10,114
Total liabilities		1,334,337			1,312,000			1,254,577			1,235,747			1,224,674
Stockholders' equity
Preferred stock - no par value:
Authorized - 30,000 shares; no shares issued or outstanding
Outstanding - 7,200, 7,200, 7,200, 7,200, and 0 shares, respectively		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 - 4,174,197, 4,190,252, 4,241,501, 4,297,279 and
4,414,651 shares, respectively		1,830			1,830			1,830			1,830			1,830
Additional paid-in capital		8,421			8,382			8,311			8,300			8,294
Retained earnings		131,624			130,396			128,968			126,003			123,559
Accumulated other comprehensive income (loss), net of tax		(26,190	)		(23,240	)		(22,515	)		(24,220	)		(24,200	)
Treasury stock, at cost - 1,316,601, 1,300,546, 1,249,297, 1,193,519 and
1,076,147 shares, respectively		(19,977	)		(19,635	)		(18,583	)		(17,171	)		(14,588	)
Total stockholders' equity		102,908			104,933			105,211			101,942			94,895
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	1,437,245		$	1,416,933		$	1,359,788		$	1,337,689		$	1,319,569

PSB Holdings, Inc.
Consolidated Statements of Income
	Quarter Ended															Nine Months Ended
(dollars in thousands,	Sep. 30,			Jun. 30,			Mar. 31,			Dec. 31,			Sep. 30,			September
except per share data - unaudited)	2023			2023			2023			2022			2022			2023				2022
Interest and dividend income:
Loans, including fees	$	14,263		$	12,709		$	11,773		$	11,251		$	10,225			$	38,745		$	28,574
Securities:
Taxable		1,114			1,327			1,331			1,218			978				3,772			2,599
Tax-exempt		533			535			537			539			540				1,605			1,610
Other interest and dividends		238			145			148			141			163				531			257
Total interest and dividend income		16,148			14,716			13,789			13,149			11,906				44,653			33,040
Interest expense:
Deposits		4,817			3,661			2,989			2,060			1,341				11,467			2,379
FHLB advances		1,321			1,200			547			167			209				3,068			612
Other borrowings		51			48			62			38			14				161			20
Senior subordinated notes		59			58			62			55			28				179			84
Junior subordinated debentures		255			242			234			224			202				731			547
Total interest expense		6,503			5,209			3,894			2,544			1,794				15,606			3,642
Net interest income		9,645			9,507			9,895			10,605			10,112				29,047			29,398
Provision for loan losses		150			100			100			-			-				350			-
Net interest income after provision for loan losses		9,495			9,407			9,795			10,605			10,112				28,697			29,398
Noninterest income:
Service fees		349			378			361			381			409				1,088			1,189
Mortgage banking income		345			311			325			235			228				981			980
Investment and insurance sales commissions		158			287			365			498			357				810			1,217
Net loss on sale of securities		-			(279	)		-			-			-				(279	)		-
Increase in cash surrender value of life insurance		155			149			157			157			157				461			459
Life insurance death benefit		-			533			-			-			-				533			-
Other noninterest income		675			605			742			553			558				2,022			1,775
Total noninterest income		1,682			1,984			1,950			1,824			1,709				5,616			5,620
Noninterest expense:
Salaries and employee benefits		4,514			4,884			5,006			4,700			4,302				14,404			13,240
Occupancy and facilities		689			698			699			641			687				2,086			1,981
Loss (gain) on foreclosed assets		-			4			(50	)		2			4				(46	)		(2	)
Data processing and other office operations		953			951			880			910			906				2,784			2,679
Advertising and promotion		161			166			162			180			185				489			510
Core deposit intangible amortization		24			27			34			34			34				85			119
Other noninterest expenses		1,113			1,202			1,073			1,219			1,069				3,388			3,303
Total noninterest expense		7,454			7,932			7,804			7,686			7,187				23,190			21,830
Income before provision for income taxes		3,723			3,459			3,941			4,743			4,634				11,123			13,188
Provision for income taxes		2,374			652			941			1,143			1,119				3,967			3,151
Net income	$	1,349		$	2,807		$	3,000		$	3,600		$	3,515			$	7,156		$	10,037
Preferred stock dividends declared	$	122		$	122		$	122		$	81		$	-			$	366		$	-
Net income available to common shareholders	$	1,227		$	2,685		$	2,878		$	3,519		$	3,515			$	6,790		$	10,037
Basic earnings per common share	$	0.29		$	0.64		$	0.67		$	0.80		$	0.80			$	1.61		$	2.27
Diluted earnings per common share	$	0.29		$	0.64		$	0.67		$	0.80		$	0.80			$	1.61		$	2.27

PSB Holdings, Inc.
Quarterly Financial Summary
(dollars in thousands, except per share data)	Quarter ended
	Sep. 30,			Jun. 30,			Mar. 31,			Dec. 31,			Sep. 30,
Earnings and dividends:	2023			2023			2023			2022			2022
Interest income	$	16,148		$	14,716		$	13,789		$	13,149		$	11,906
Interest expense	$	6,503		$	5,209		$	3,894		$	2,544		$	1,794
Net interest income	$	9,645		$	9,507		$	9,895		$	10,605		$	10,112
Provision for loan losses	$	150		$	100		$	100		$	-		$	-
Other noninterest income	$	1,682		$	1,984		$	1,950		$	1,824		$	1,709
Other noninterest expense	$	7,454		$	7,932		$	7,804		$	7,686		$	7,187
Net income available to common shareholders	$	1,227		$	2,685		$	2,878		$	3,519		$	3,515
Basic earnings per common share (3)	$	0.29		$	0.64		$	0.67		$	0.80		$	0.80
Diluted earnings per common share (3)	$	0.29		$	0.64		$	0.67		$	0.80		$	0.80
Dividends declared per common share (3)	$	-		$	0.30		$	-		$	0.25		$	-
Tangible net book value per common share (4)	$	22.25		$	22.64		$	22.43		$	21.37		$	20.83
Semi-annual dividend payout ratio	n/a				27.38	%	n/a				15.27	%	n/a
Average common shares outstanding		4,186,940			4,218,226			4,275,160			4,377,330			4,419,421
Balance sheet - average balances:
Loans receivable, net of allowances for loss	$	1,076,158		$	1,000,349		$	964,029		$	945,551		$	931,344
Assets	$	1,425,522		$	1,367,363		$	1,336,511		$	1,321,776		$	1,323,400
Deposits	$	1,149,624		$	1,098,039		$	1,124,091		$	1,146,066		$	1,141,784
Stockholders' equity	$	105,745		$	106,762		$	103,406		$	100,037		$	98,630
Performance ratios:
Return on average assets (1)		0.34	%		0.79	%		0.87	%		1.06	%		1.05	%
Return on average stockholders' equity (1)		4.60	%		10.09	%		11.29	%		13.96	%		14.14	%
Return on average tangible common
stockholders' equity (1)(4)		5.09	%		11.14	%		12.51	%		15.12	%		14.58	%
Net loan charge-offs to average loans (1)		0.00	%		-0.07	%		-0.02	%		0.03	%		0.01	%
Nonperforming loans to gross loans		0.55	%		0.60	%		0.62	%		0.64	%		1.16	%
Nonperforming assets to total assets		0.42	%		0.45	%		0.45	%		0.48	%		0.85	%
Allowance for loan losses to gross loans		1.15	%		1.19	%		1.25	%		1.26	%		1.30	%
Nonperforming assets to tangible equity
plus the allowance for loan losses (4)		5.87	%		5.96	%		5.76	%		6.22	%		10.89	%
Net interest rate margin (1)(2)		2.88	%		2.98	%		3.21	%		3.41	%		3.24	%
Net interest rate spread (1)(2)		2.27	%		2.46	%		2.77	%		3.10	%		3.04	%
Service fee revenue as a percent of
average demand deposits (1)		0.50	%		0.58	%		0.52	%		0.50	%		0.56	%
Noninterest income as a percent
of gross revenue		9.43	%		11.88	%		12.39	%		12.18	%		12.55	%
Efficiency ratio (2)		64.58	%		68.09	%		65.02	%		61.06	%		60.02	%
Noninterest expenses to average assets (1)		2.07	%		2.33	%		2.37	%		2.31	%		2.15	%
Average stockholders' equity less accumulated
other comprehensive income (loss) to
average assets		9.00	%		9.33	%		9.32	%		9.23	%		8.95	%
Tangible equity to tangible assets (4)		6.98	%		7.22	%		7.54	%		7.42	%		6.98	%
Stock price information:
High	$	22.50		$	21.38		$	25.75		$	22.74		$	23.94
Low	$	20.35		$	19.75		$	20.00		$	21.50		$	22.50
Last trade value at quarter-end	$	21.15		$	20.35		$	21.15		$	21.90		$	22.50
(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
	Sep. 30,			Jun. 30,			Mar. 31,			Dec. 31,			Sep. 30,
(dollars in thousands - unaudited)	2023			2023			2023			2022			2022
Net income	$	1,349		$	2,807		$	3,000		$	3,600		$	3,515
Other comprehensive income, net of tax:
Unrealized gain (loss) on securities available
for sale		(3,085	)		(1,168	)		1,601			(116	)		(4,915	)
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		91			107			129			93			92
Unrealized gain (loss) on interest rate swap		79			161			(1	)		11			32
Reclassification adjustment of interest rate
swap settlements included in earnings		(35	)		(27	)		(24	)		(8	)		13
Other comprehensive income (loss)		(2,950	)		(725	)		1,705			(20	)		(4,778	)
Comprehensive income (loss)	$	(1,601	)	$	2,082		$	4,705		$	3,580		$	(1,263	)

PSB Holdings, Inc.
Nonperforming Assets as of:
	Sep 30,			Jun 30,			Mar 31,			Dec 31,			Sep 30,
(dollars in thousands)	2023			2023			2023			2022			2022
Nonaccrual loans (excluding restructured loans)	$	5,807		$	6,000		$	5,773		$	5,879		$	6,048
Nonaccrual restructured loans		42			50			57			62			70
Restructured loans not on nonaccrual		256			261			265			270			4,904
Accruing loans past due 90 days or more		-			-			-			-			-
Total nonperforming loans		6,105			6,311			6,095			6,211			11,022
Other real estate owned		-			-			-			160			160
Total nonperforming assets	$	6,105		$	6,311		$	6,095		$	6,371		$	11,182
Nonperforming loans as a % of gross loans receivable		0.55	%		0.60	%		0.62	%		0.64	%		1.16	%
Total nonperforming assets as a % of total assets		0.42	%		0.45	%		0.45	%		0.48	%		0.85	%
Allowance for loan losses as a % of nonperforming loans		192.55	%		177.63	%		191.63	%		197.92	%		112.28	%

PSB Holdings, Inc.
Nonperforming Assets >= $500,000 net book value before specific reserves
At September 30, 2023
(dollars in thousands)
	Asset Type	Gross Principal			Specific Reserves
Collateral Description
Real estate - Buffet Style Restaurant	Nonaccrual	$	2,742		$	992
Real estate - Independent Auto Repair	Nonaccrual		690			38
Total listed nonperforming assets		$	3,432		$	1,030
Total bank wide nonperforming assets		$	6,105		$	1,420
Listed assets as a % of total nonperforming assets			56	%		73	%

PSB Holding, Inc.
Loan Composition by Purpose
Quarter-ended (dollars in thousands)	Sep 30, 2023			Jun 30, 2023			Mar 31, 2023			Dec 31, 2022			Sep 30, 2022
Residential real estate:
One to four family	$	200,239		$	199,100		$	187,325		$	182,688		$	172,913
HELOC loans		19,127			19,498			18,141			17,625			18,423
Residential construction & development		20,571			18,634			22,014			20,698			22,313
Residential vacant land		1,155			1,111			1,223			1,414			3,069
Total Residential real estate		241,092			238,343			228,703			222,425			216,718
Commercial/Agricultural real estate:
Owner occupied
Commercial real estate		238,706			238,608			237,217			220,375			211,008
SBA commercial real estate		2,307			2,078			2,112			2,514			2,616
Agriculture real estate		3,482			3,563			3,681			3,835			3,902
Construction and land development		4,715			1,691			2,825			22,330			32,158
Commercial vacant land		7,281			7,223			6,712			7,291			5,214
Total Owner occupied		256,491			253,163			252,547			256,345			254,898
Non-owner occupied
Commercial real estate		263,368			240,010			226,280			228,761			225,823
One to four family residential rental		86,838			67,854			65,673			64,764			66,224
Construction and land development		45,533			49,310			41,272			27,253			25,543
Commercial vacant land		20,401			10,424			3,928			3,862			4,010
Total Non-owner occupied		416,140			367,598			337,153			324,640			321,600
Commercial/Agricultural non-real estate:
Municipal non-real estate		27,187			25,223			6,430			9,915			7,133
Commercial line		64,335			73,651			57,727			63,173			56,154
Other commercial non-real estate		95,024			92,519			92,419			87,535			82,430
SBA commercial non-real estate		3,795			3,787			3,997			3,533			3,378
Agricultural non-real estate		1,234			1,204			1,250			1,290			1,491
Total Commercial/Agr. non-real estate		191,575			196,384			161,823			165,446			150,586
Consumer non-real estate:
Consumer installment		3,565			3,483			3,357			4,072			4,005
Consumer line		422			441			529			382			494
Other consumer		118			106			108			115			116
Total Consumer non-real estate		4,105			4,030			3,994			4,569			4,615
Gross loans		1,109,403			1,059,518			984,220			973,425			948,417
Net deferred loan costs (fees)		630			605			542			573			537
Overdrafts		253			121			101			160			107
Allowance for loan losses		(12,267	)		(11,922	)		(11,593	)		(12,293	)		(12,375	)
Total loans receivable	$	1,098,019		$	1,048,322		$	973,270		$	961,865		$	936,686

PSB Holding, Inc.
Selected Commercial Real Estate Loans by Purpose
	Sep 30,					Jun 30,					Mar 31,					Dec 31,					Sep 30,
(dollars in thousands)	2023					2023					2023					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	$	133,466	13.3	%		$	119,573	12.4	%		$	121,559	13.0	%		$	120,232	13.1	%		$	141,414	15.6	%
Industrial and Warehousing		88,906	8.9				84,049	8.7				78,934	8.5				76,536	8.3				83,033	9.1
Retail		35,281	3.5				34,004	3.5				34,427	3.7				32,587	3.5				39,279	4.3
Hotels		31,819	3.2				33,329	3.5				31,069	3.3				32,940	3.6				26,958	3.0
Office		6,746	0.7				8,395	0.9				8,544	0.9				8,652	0.9				8,758	1.0
(1) Percentage of portfolio and commitments.

PSB Holdings, Inc.
Deposit Composition
Insured and Collateralized Deposits	September 30,					June 30,					March 31,					December 31,					September 30,
(dollars in thousands)	2023					2023					2023					2022					2022
	$		%			$		%			$		%			$		%			$		%
Non-interest bearing demand	$	209,133	17.8	%		$	201,351	17.6	%		$	205,350	18.6	%		$	203,115	17.7	%		$	216,116	18.7	%
Interest-bearing demand and savings		307,620	26.3	%			310,006	27.1	%			329,364	29.7	%			345,854	30.1	%			348,989	30.4	%
Money market deposits		135,910	11.6	%			126,851	11.1	%			128,576	11.6	%			131,400	11.4	%			130,126	11.3	%
Retail and local time deposits <= $250		144,733	12.3	%			140,572	12.3	%			136,090	12.3	%			130,205	11.3	%			132,095	11.5	%
Total core deposits		797,396	68.0	%			778,780	68.1	%			799,380	72.2	%			810,574	70.5	%			827,326	71.9	%
Retail and local time deposits > $250		22,750	1.9	%			20,250	1.8	%			17,000	1.5	%			14,500	1.3	%			12,250	1.1	%
Broker & national time deposits <= $250		3,222	0.3	%			3,965	0.3	%			5,953	0.5	%			6,451	0.6	%			6,700	0.6	%
Broker & national time deposits > $250		88,614	7.6	%			93,956	8.2	%			74,485	6.8	%			82,439	7.2	%			82,439	7.2	%
Totals	$	911,982	77.8	%		$	896,951	78.4	%		$	896,818	81.0	%		$	913,964	79.6	%		$	928,715	80.8	%
PSB Holdings, Inc.
Deposit Composition
Uninsured Deposits	September 30,					June 30,					March 31,					December 31,					September 30,
(dollars in thousands)	2023					2023					2023					2022					2022
	$		%			$		%			$		%			$		%			$		%
Non-interest bearing demand	$	79,632	6.8	%		$	80,802	7.1	%		$	62,486	5.6	%		$	89,223	7.7	%		$	82,219	7.2	%
Interest-bearing demand and savings		22,847	1.9	%			22,604	2.0	%			24,854	2.2	%			49,917	4.3	%			28,842	2.5	%
Money market deposits		133,653	11.4	%			127,871	11.2	%			109,894	10.0	%			84,673	7.4	%			98,493	8.6	%
Retail and local time deposits <= $250		-	0.0	%			-	0.0	%			-	0.0	%			-	0.0	%			-	0.0	%
Total core deposits		236,132	20.1	%			231,277	20.3	%			197,234	17.8	%			223,813	19.4	%			209,554	18.3	%
Retail and local time deposits > $250		24,120	2.1	%			14,906	1.3	%			13,541	1.2	%			10,978	1.0	%			10,549	0.9	%
Broker & national time deposits <= $250		-	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	%
Totals	$	260,252	22.2	%		$	246,183	21.6	%		$	210,775	19.0	%		$	234,791	20.4	%		$	220,103	19.2	%
PSB Holdings, Inc.
Deposit Composition
Total Deposits	September 30,					June 30,					March 31,					December 31,					September 30,
(dollars in thousands)	2023					2023					2023					2022					2022
	$		%			$		%			$		%			$		%			$		%
Non-interest bearing demand	$	288,765	24.7	%		$	282,153	24.7	%		$	267,836	24.2	%		$	292,338	25.4	%		$	298,335	26.0	%
Interest-bearing demand and savings		330,467	28.2	%			332,610	29.1	%			354,218	32.0	%			395,771	34.5	%			377,831	32.9	%
Money market deposits		269,563	22.8	%			254,722	22.3	%			238,470	21.5	%			216,073	18.8	%			228,619	19.9	%
Retail and local time deposits <= $250		144,733	12.4	%			140,572	12.3	%			136,090	12.3	%			130,205	11.3	%			132,095	11.4	%
Total core deposits		1,033,533	88.1	%			1,010,057	88.4	%			996,614	90.0	%			1,034,387	90.0	%			1,036,880	90.2	%
Retail and local time deposits > $250		46,870	4.0	%			35,156	3.1	%			30,541	2.8	%			25,478	2.2	%			22,799	2.0	%
Broker & national time deposits <= $250		3,222	0.3	%			3,965	0.3	%			5,953	0.5	%			6,451	0.6	%			6,700	0.6	%
Broker & national time deposits > $250		88,614	7.6	%			93,956	8.2	%			74,485	6.7	%			82,439	7.2	%			82,439	7.2	%
Totals	$	1,172,239	100.0	%		$	1,143,134	100.0	%		$	1,107,593	100.0	%		$	1,148,755	100.0	%		$	1,148,818	100.0	%

PSB Holdings, Inc.
Average Balances ($000) and Interest Rates
(dollars in thousands)
	Quarter ended September 30, 2023										Quarter ended June 30, 2023										Quarter ended September 30, 2022
	Average Balance			Interest			Yield / Rate				Average Balance			Interest			Yield / Rate				Average Balance			Interest			Yield / Rate
Assets
Interest-earning assets:
Loans (1)(2)	$	1,088,137		$	14,337			5.23	%		$	1,012,105		$	12,726			5.04	%		$	943,724		$	10,235			4.30	%
Taxable securities		173,287			1,114			2.55	%			196,048			1,327			2.71	%			199,727			978			1.94	%
Tax-exempt securities (2)		81,327			675			3.29	%			81,758			677			3.32	%			82,242			684			3.30	%
FHLB stock		6,368			127			7.91	%			5,366			51			3.81	%			2,579			32			4.92	%
Other		8,195			111			5.37	%			7,254			94			5.20	%			28,823			131			1.80	%
Total (2)		1,357,314			16,364			4.78	%			1,302,531			14,875			4.58	%			1,257,095			12,060			3.81	%
Non-interest-earning assets:
Cash and due from banks		19,299										15,632										19,400
Premises and equipment,
net		13,266										13,336										13,052
Cash surrender value ins		23,840										24,530										24,666
Other assets		23,802										23,090										21,567
Allowance for loan
losses		(11,979	)									(11,756	)									(12,380	)
Total	$	1,425,542									$	1,367,363									$	1,323,400
Liabilities & stockholders' equity
Interest-bearing liabilities:
Savings and demand
deposits	$	335,214		$	1,198			1.42	%		$	344,435		$	1,035			1.21	%		$	375,617		$	370			0.39	%
Money market deposits		255,823			1,489			2.31	%			243,073			1,189			1.96	%			232,713			399			0.68	%
Time deposits		279,971			2,130			3.02	%			247,007			1,437			2.33	%			245,353			572			0.92	%
FHLB borrowings		134,386			1,321			3.90	%			127,441			1,200			3.78	%			49,924			209			1.66	%
Other borrowings		5,681			51			3.56	%			5,588			48			3.45	%			6,919			14			0.80	%
Senior sub. notes		4,772			59			4.91	%			4,770			58			4.88	%			2,500			28			4.44	%
Junior sub. debentures		12,883			255			7.85	%			12,857			242			7.55	%			12,781			202			6.27	%
Total		1,028,730			6,503			2.51	%			985,171			5,209			2.12	%			925,807			1,794			0.77	%
Non-interest-bearing liabilities:
Demand deposits		278,616										263,524										288,101
Other liabilities		12,438										11,906										10,862
Stockholders' equity		105,758										106,762										98,630
Total	$	1,425,542									$	1,367,363									$	1,323,400
Net interest income				$	9,861									$	9,666									$	10,266
Rate spread								2.27	%									2.46	%									3.04	%
Net yield on interest-earning assets								2.88	%									2.98	%									3.24	%
(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)
	Nine months ended September 30, 2023										Nine months ended September 30, 2022
	Average Balance			Interest			Yield/ Rate				Average Balance			Interest			Yield/ Rate
Assets
Interest-earning assets:
Loans (1)(2)	$	1,025,955		$	38,851			5.06	%		$	917,541		$	28,605			4.17	%
Taxable securities		189,583			3,772			2.66	%			207,179			2,599			1.68	%
Tax-exempt securities (2)		81,670			2,032			3.33	%			83,281			2,038			3.27	%
FHLB stock		4,943			228			6.17	%			2,625			82			4.18	%
Other		8,154			303			4.97	%			23,327			175			1.00	%
Total (2)		1,310,305			45,186			4.61	%			1,233,953			33,499			3.63	%
Non-interest-earning assets:
Cash and due from banks		17,403										18,714
Premises and equipment,
net		13,311										12,942
Cash surrender value ins		24,446										24,513
Other assets		23,352										19,995
Allowance for loan
losses		(12,004	)									(12,338	)
Total	$	1,376,813									$	1,297,779
Liabilities & stockholders' equity
Interest-bearing liabilities:
Savings and demand
deposits	$	350,928		$	3,286			1.25	%		$	383,795		$	561			0.20	%
Money market deposits		241,594			3,508			1.94	%			222,975			609			0.37	%
Time deposits		257,639			4,673			2.43	%			222,946			1,209			0.73	%
FHLB borrowings		110,460			3,068			3.71	%			54,590			612			1.50	%
Other borrowings		7,082			161			3.04	%			6,135			20			0.44	%
Senior sub. notes		4,965			179			4.82	%			2,500			84			4.49	%
Junior sub. debentures		12,857			731			7.60	%			12,755			547			5.73	%
Total		985,525			15,606			2.12	%			905,696			3,642			0.54	%
Non-interest-bearing liabilities:
Demand deposits		273,699										279,135
Other liabilities		12,162										11,093
Stockholders' equity		105,427										101,855
Total	$	1,376,813									$	1,297,779
Net interest income				$	29,580									$	29,857
Rate spread								2.49	%									3.09	%
Net yield on interest-earning assets								3.02	%									3.24	%
(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%.

FAQ

What were PSB Holdings, Inc.'s third quarter earnings?

PSB Holdings, Inc. reported earnings of $0.29 per common share on net income of $1.2 million for the third quarter.

What is the expected reduction in PSB Holdings, Inc.'s effective tax rate?

PSB Holdings, Inc. expects a 6% reduction in effective tax rate on future earnings due to a change in Wisconsin state tax law.

How much did total loans receivable increase by?

Total loans receivable increased by $49.7 million to $1.1 billion.

How much did total deposits increase by?

Total deposits increased by $29.1 million to $1.17 billion.