PSB HOLDING CORP. REPORTS THIRD QUARTER 2022 RESULTS

PRESTON, Md., Oct. 26, 2022 /PRNewswire/ -- PSB Holding Corp. (OTCQX:PSBP) (the "Company"), the parent company of Provident State Bank, Inc. ("Provident" or the "Bank"), reported net income of $1.20 million ($.79 per diluted common share) for the three months ended September 30, 2022, compared to $1.52 million ($1.00 per diluted common share) for the same period of 2021.  For the nine months ended September 30, 2022, net income totaled $3.23 million ($2.12 per diluted common share), compared to $4.27 million ($2.78 per diluted common share) for the nine months ended September 30, 2021. The decline in net income during each comparative period was primarily attributable to a reduction in revenue associated with the Small Business Administration ("SBA") Payroll Protection Program ("PPP").

Performance Review

Small Business Administration's Payroll Protection Program

The Bank's participation in the SBA's PPP, established in April 2020, contributed more significantly to financial performance during the three quarters of 2021 as compared to the same quarters of 2022. During the three months ended September 30, 2021, Provident recognized fee income net of costs (amortized as a loan yield adjustment) of $1.21 million. During the same period of 2022, no net fee income was recognized as all outstanding PPP loans had been forgiven or repaid as of March 31, 2022. For the nine months ended September 30, 2021, and 2022, net fee income recognized totaled $2.71 million and $49,000, respectively, representing a decline of $2.66 million.

Third Quarter 2022 Compared to Third Quarter 2021

Net interest income declined $356,000 in 2022 compared to 2021 because of the reduced PPP income referenced above, offset by an increase in the net interest margin ("NIM") exclusive of the influence of PPP activity from 2.91% to 3.45%. Improvement in the NIM was driven by increasing loan rates and a decline in deposit and other borrowing costs of $189,000. Net income during the third quarter 2022 was further affected by lower gain on sale of loans of $334,000, offset by an increase in other noninterest income of $166,000. Gain on sale of loans declined as rising interest rates slowed residential mortgage origination activity. Other noninterest income included a $150,000 prepayment penalty associated with the early pay-off of a $5.5 million dollar loan.

Year-to-date 2022 compared to 2021

Net interest income declined $1.10 million in 2022 compared to 2021 because of the reduced PPP income referenced above, offset by an increase in the net interest margin ("NIM") exclusive of the influence of PPP activity from 3.03% to 3.22%. Improvement in the NIM was driven by increasing loan rates and a decline in deposit and other borrowing costs of $707,000. Net income during the nine months of 2022 was further affected by lower gain on sale of loans of $632,000, offset by an increase in other noninterest income of $224,000. Gain on sale of loans declined as rising interest rates slowed residential mortgage origination activity. Other noninterest income included a $150,000 prepayment penalty associated with the early pay-off of a $5.5 million dollar loan.

Balance Sheet and Asset Quality

Assets totaled $593.7 million on September 30, 2022, increasing $12.1 million or 2.1% compared to September 30, 2021. Gross loans, exclusive of PPP loans, totaled $383.1 million on September 30, 2022, representing an increase of $43.1 million or 12.7% compared to September 30, 2021.  Deposits and repurchase agreements totaled $542.4 million on September 30, 2022, compared to $506.2 million on September 30, 2021, representing growth of 7.2%.  Stockholders' Equity totaled $37.8 million on September 30, 2022, compared to $51.6 million on December 31, 2021, and $51.8 million on September 30, 2021. The decrease in stockholders' equity was driven by growth in unrealized losses associated with the Bank's investment portfolio held as available for sale ("AFS"). As of September 30, 2022, accumulated other comprehensive losses associated with the AFS portfolio totaled $17.9 million compared to $846,000 on December 31, 2021, and a gain of $95,000 on September 30, 2021. The significant increase in unrealized losses on September 30, 2022, was driven by a dramatic jump in market rates during the three quarters of 2022 as the Federal Reserve positioned to combat inflationary pressures. These unrealized losses are not included in regulatory capital and the Bank remained well capitalized on September 30, 2022. As of September 30, 2022, non-performing assets and past due loans 30 days or more were .38% of total assets compared to .38% at the end of 2021 and .29% on September 30, 2021. 

President and Chief Executive Officer Melissa Quirk commented on the Company's performance stating, "Third quarter performance remained strong with solid loan and deposit growth and an improving net interest margin. While volatile interest rates and uncertain economic conditions in the near term have created challenges, we continue to seek opportunities to expand our business development activities and support our customers and communities."

PSB Holding Corp. is the holding company of Provident State Bank, Inc., a full-service financial institution serving the eastern shore of Maryland since 1904. Provident State Bank, Inc. has ten locations in Preston, Federalsburg, Ridgely, Denton, Easton-Elliot Road, Easton-Harrison Street, Secretary, Cambridge, Salisbury and Lewes (Delaware).  For more information on PSB Holding Corp. and Provident State Bank, Inc., visit www.providentstatebank.com.

Forward-Looking Statements

Forward-looking statements relating to PSB Holding Corp. and its subsidiary, Provident State Bank, Inc. may include plans, strategies, objectives, expectations, intentions and adequacy of resources.  All statements other than statements of historical fact, including, without limitation, statements regarding business strategy, future events, activities, performance, and plans and objectives for future operations, are forward-looking statements.  Therefore, the illustrative value of forward-looking statements made in or pursuant to this press release should not, under any circumstances, be considered a guaranty or promise that such future events, activities, occurrences or performances will take place.

 

CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
	September 30,		December 31,		September 30,		Percent change from
	2022		2021		2021		Dec 31, 2021		Sep 30, 2021
Assets
Cash and cash equivalents	$    35,884,519		$    36,100,150		$    55,440,007		-0.6 %		-35.3 %
Investment securities	146,609,730		167,167,082		151,967,929		-12.3 %		-3.5 %
Loans held for sale	-		1,879,591		486,917		-100.0 %		-100.0 %
Loans receivable	383,078,188		357,800,695		351,521,972		7.1 %		9.0 %
Less allowance for loan losses	4,128,946		3,892,115		3,922,902		6.1 %		5.3 %
Loans, net of allowance for loan losses	378,949,242		353,908,580		347,599,070		7.1 %		9.0 %
Property and equipment	6,458,542		6,879,131		7,803,240		-6.1 %		-17.2 %
Bank-owned life insurance	12,142,816		11,918,526		11,832,335		1.9 %		2.6 %
Lease assets	2,432,149		2,720,578		2,255,565		-10.6 %		7.8 %
Accrued interest receivable	1,482,870		1,344,283		1,478,194		10.3 %		0.3 %
Other assets	9,730,977		3,119,329		2,737,459		212.0 %		255.5 %
Total assets	$  593,690,845		$  585,037,250		$  581,600,716		1.5 %		2.1 %
Liabilities and Stockholders' Equity
Deposits:
Noninterest-bearing	$  178,941,786		$  191,144,058		$  181,613,833		-6.4 %		-1.5 %
Interest-bearing	343,310,269		303,379,512		303,305,903		13.2 %		13.2 %
Total deposits	522,252,055		494,523,570		484,919,736		5.6 %		7.7 %
Repurchase agreements	20,126,232		16,104,671		21,279,283		25.0 %		-5.4 %
FHLB advances and other borrowing	9,472,605		18,220,887		19,747,864		-48.0 %		-52.0 %
Lease liabilities	2,658,168		2,930,961		2,461,594		-9.3 %		8.0 %
Other liabilities	1,370,172		1,677,656		1,435,154		-18.3 %		-4.5 %
Total liabilities	555,879,232		533,457,745		529,843,631		4.2 %		4.9 %
Stockholders' equity:
Common stock, additional paid-in capital
and retained earnings	55,715,440		52,425,553		51,661,922		6.3 %		7.8 %
Accumulated other comprehensive (loss)
income	(17,903,827)		(846,048)		95,163
Total stockholders' equity	37,811,613		51,579,505		51,757,085		-26.7 %		-26.9 %
Total liabilities and equity	$  593,690,845		$  585,037,250		$  581,600,716		1.5 %		2.1 %
Book value per common share	$               24.82		$               33.86		$               33.97		-26.7 %		-26.9 %

 

 

CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2022		2021		% Change		2022		2021		% Change
Interest income
Loans, including fee income	$       4,320,361		$       5,200,935		-16.9 %		$   12,272,406		$   14,931,449		-17.8 %
Investment securities	748,819		502,460		49.0 %		2,156,779		1,412,162		52.7 %
Other interest income	102,959		13,540		660.4 %		137,665		26,372		422.0 %
Total interest income	5,172,139		5,716,935		-9.5 %		14,566,850		16,369,983		-11.0 %
Interest expense
Deposits	362,435		490,718		-26.1 %		1,061,269		1,532,706		-30.8 %
Repurchase agreements	1,374		1,466		-6.3 %		3,967		3,436		15.5 %
FHLB advances	51,666		109,882		-53.0 %		224,881		448,906		-49.9 %
Other borrowings	30,959		32,967		-6.1 %		90,643		102,245		-11.3 %
Total interest expense	446,434		635,033		-29.7 %		1,380,760		2,087,293		-33.8 %
Net interest income	4,725,705		5,081,902		-7.0 %		13,186,090		14,282,690		-7.7 %
Provision for loan losses	100,000		120,000		-16.7 %		190,000		330,000		-42.4 %
Net interest income after provision	4,625,705		4,961,902		-6.8 %		12,996,090		13,952,690		-6.9 %
Noninterest income
Service charges	519,203		480,290		8.1 %		1,499,769		1,343,392		11.6 %
Gain on sale of loans	73,284		407,328		-82.0 %		373,036		1,005,214		-62.9 %
Gain on sale of securities	-		-		0.0 %		-		4,310		0.0 %
Other noninterest income	246,512		80,747		205.3 %		422,511		198,080		113.3 %
Total noninterest income	838,999		968,365		-13.4 %		2,295,316		2,550,996		-10.0 %
Noninterest expense
Salaries and benefits	1,944,298		2,063,437		-5.8 %		5,797,087		5,692,263		1.8 %
Occupancy	500,853		512,155		-2.2 %		1,471,179		1,534,015		-4.1 %
Data processing and software	345,447		408,523		-15.4 %		993,887		1,029,337		-3.4 %
Other noninterest expense	1,100,503		893,689		23.1 %		2,813,898		2,524,038		11.5 %
Total noninterest expense	3,891,101		3,877,804		0.3 %		11,076,051		10,779,653		2.7 %
Net income before tax	1,573,603		2,052,463		-23.3 %		4,215,355		5,724,033		-26.4 %
Tax expense	373,544		528,699		-29.3 %		988,091		1,456,027		-32.1 %
Net income	$       1,200,059		$       1,523,764		-21.2 %		$     3,227,264		$     4,268,006		-24.4 %
Net income per diluted share	$                 0.79		$                 1.00		-21.2 %		$                2.12		$                2.78		-23.7 %

 

HISTORICAL TRENDS
QUARTERLY CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND SUPPLEMENTAL DATA
(unaudited)
	2022						2022		2021
	Q3		Q2		Q1		Q3 vs. Q2		Q4		Q3			Q2		Q1
Interest income
Loans, including fee income	$    4,320,361		$    4,035,473		$    3,916,572		7.1 %		$    4,361,123		$    5,200,935			$    4,967,402		$    4,763,112
Investment securities	748,819		748,082		659,878		0.1 %		566,608		502,460			485,823		423,879
Other interest income	102,959		26,809		7,897		284.0 %		13,907		13,540			6,688		6,144
Total interest income	5,172,139		4,810,364		4,584,347		7.5 %		4,941,638		5,716,935			5,459,913		5,193,135
Interest expense
Deposits	362,435		336,029		362,805		7.9 %		434,397		490,718			507,708		534,280
Repurchase agreements	1,374		1,300		1,293		5.7 %		1,375		1,466			891		1,079
FHLB advances	51,666		81,527		91,688		-36.6 %		101,801		109,882			163,552		175,472
Other borrowings	30,959		30,121		29,563		2.8 %		31,250		32,967			34,341		34,937
Total interest expense	446,434		448,977		485,349		-0.6 %		568,823		635,033			706,492		745,768
Net interest income	4,725,705		4,361,387		4,098,998		8.4 %		4,372,815		5,081,902			4,753,421		4,447,367
Provision for loan losses	100,000		65,000		25,000		53.8 %		230,000		120,000			120,000		90,000
Net interest income after provision	4,625,705		4,296,387		4,073,998		7.7 %		4,142,815		4,961,902			4,633,421		4,357,367
Noninterest income
Service charges	519,203		505,473		475,093		2.7 %		485,620		480,290			445,963		417,139
Gain on sale of loans	73,284		105,506		194,246		-30.5 %		314,859		407,328			337,422		260,464
Gain on sale of securities	-		-		-		0.0 %		-		-			4,310		-
Other noninterest income	246,512		93,737		82,262		163.0 %		82,327		80,747			64,069		53,264
Total noninterest income	838,999		704,716		751,601		19.1 %		882,806		968,365			851,764		730,867
Noninterest expense
Salaries and benefits	1,944,298		1,892,130		1,960,659		2.8 %		1,977,495		2,063,437			1,820,550		1,808,276
Occupancy	500,853		507,800		462,526		-1.4 %		590,861		512,155			508,652		513,208
Data processing and software	345,447		332,429		316,011		3.9 %		311,239		408,523			308,194		312,620
Other noninterest expense	1,100,503		925,680		787,715		18.9 %		883,182		893,689			790,844		839,505
Total noninterest expense	3,891,101		3,658,039		3,526,911		6.4 %		3,762,777		3,877,804			3,428,240		3,473,609
Net income before tax	1,573,603		1,343,064		1,298,688		17.2 %		1,262,844		2,052,463			2,056,945		1,614,625
Tax expense	373,544		316,794		297,753		17.9 %		247,113		528,699			525,953		401,375
Net income	$    1,200,059		$    1,026,270		$    1,000,935		16.9 %		$    1,015,731		$    1,523,764			$    1,530,992		$    1,213,250
Net income per diluted share	$              0.79		$              0.67		$              0.65		17.3 %		$              0.66		$              1.00			$              1.00		$              0.80
Supplemental Data
PPP loans - net fee income	$                     -		$                     -		$          49,492				$       418,004		$    1,207,559			$        832,733		$       667,482
PPP loans - balance at period end	$                     -		$                     -		$                     -				$    1,096,939		$  11,536,310			$   29,298,232		$  48,411,520

 

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SOURCE PSB Holding Corp.