PSB Holding Corp. Reports Record Results
PRESTON, Md., July 22, 2021 /PRNewswire/ -- PSB Holding Corp. (OTC:PSBP) (the "Company"), the parent company of Provident State Bank, Inc. ("Provident" or the "Bank"), reported net income of $1.53 million ($1.00 per diluted common share) for the second quarter ended June 30, 2021, representing an increase of 34.6% compared to $1.14 million ($.74 per diluted common share) for the second quarter 2020 and 26.2% compared to $1.21 million ($.79 per diluted common share) for the first quarter 2021. For the six months ended June 30, 2021, net income totaled a record $2.74 million ($1.79 per diluted common share) compared to $2.08 million ($1.36 per diluted common share) for the six months ended June 30, 2020, representing an increase of 32.1%.
Performance Review
Second Quarter 2021 compared to Second Quarter 2020
- Net income increased $393,000 primarily as a result of an increase in net fees (fees net of loan origination costs) earned on loans originated under the Small Business Administration's Payroll Protection Program ("PPP"), which began in April 2020, an increase in interest on investment securities and an increase in gain on sale of loans, offset by pressure on the net interest margin, exclusive of the benefit of PPP income.
- Net fees earned on PPP loans totaled $833,000 during the second quarter 2021 compared to $179,000 during 2020 and represented activity (monthly net fee amortization and accelerated net fee amortization as a result of loan forgiveness) associated with loans originated during both 2021 and 2020 while the second quarter 2020 represented early PPP loan activity (without forgiveness activity).
- Interest on investment securities increased $153,000 as a result of an increase in average invested balances. Quarterly average balances for the investment securities portfolio were $127.1 million during 2021 and $58.1 million during 2020.
- Gain on sale of loans increased $94,000 primarily as a result of increased mortgage banking activity associated with a lower interest rate environment.
- The net interest margin was 3.49% for the second quarter 2021 and was unchanged from that for the 2020 quarter while there was positive benefit of additional net fees earned on PPP loans. Pressure on the net interest margin was primarily the result of the continuation of a low interest rate environment and competitive loan pricing.
Second Quarter 2021 compared to First Quarter 2021
- Net income increased $318,000 primarily as a result of an increase in net fees earned on PPP loans, an increase in interest on investment securities and an increase in gain on sale of loans.
- Net fees earned on PPP loans totaled $833,000 during the second quarter 2021 compared to $667,000 during the first quarter 2021. The increase reflected the start of loan forgiveness for PPP loans originated in 2021.
- Interest on investment securities increased $62,000 as the average balance increased from $111.9 million to $127.1 million.
- Gain on sale of loans increased $77,000 reflecting continuation of a favorable interest rate environment for mortgage banking activity.
Year-to-date 2021 compared to 2020
- Net income increased $667,000 during the six months ended June 30, 2021 compared to the same period in 2020 as a result of increased net fees earned on PPP loans, an increase in interest on investment securities and an increase in gain on sale of loans, offset by pressure on the net interest margin, exclusive of the benefit of PPP income.
- Net fees earned on PPP loans totaled $1.5 million in 2021 compared to $179,000 in 2020. The increase is a function of the timing of the start of the PPP program and the forgiveness process. As of June 30, 2021, PPP loans outstanding total $29.3 million and unearned net fees totaled $1.7 million.
- Interest on investment securities increased $230,000 as the average balance increased from $57.9 million to $119.6 million.
- Gain on sale of loans increased $191,000 primarily as a result of increased mortgage banking activity associated with a lower interest rate environment.
- The net interest margin fell from 3.59% during the first six months of 2020 to 3.46% for the same period in 2021 while net fees earned on PPP loans increased. Pressure on the net interest margin was primarily the result of the continuation of a low interest rate environment and competitive loan pricing.
Balance Sheet and Asset Quality
- Assets totaled $570.4 million at June 30, 2021, increasing $46.8 million or 8.9% compared to June 30, 2020. Growth in assets was driven primarily by growth in deposits as government stimulus increased customer liquidity. Deposits totaled $476.9 million at June 30, 2021 compared to $427.7 million at June 30, 2020, representing growth of 11.5%. Gross loans totaled $376.5 million at June 30, 2021, representing a decrease of $35.2 million or 8.6% compared to June 30, 2020. The decrease in loans was driven primarily by a decline in PPP loans, which fell $26.4 million to $29.3 million outstanding at June 30, 2021 as a result of continuing loan forgiveness.
- Stockholders' Equity totaled $50.6 million at June 30, 2021 compared to $46.3 million at June 30, 2020 representing an increase of 9.1%. The Bank remained well-capitalized at June 30, 2021.
- As of June 30, 2021, non-performing assets and past due loans were .44% of total assets compared to .74% at June 30, 2020 and .44% at December 31, 2020.
President and Chief Executive Officer Melissa Quirk commented on the Company's performance stating, "We are extremely proud of our ability to produce record earnings while helping our customers navigate our Nation's recovery from the pandemic. While it will take time for core loan growth and interest rates to normalize, we are confident of the continued patience and determination of our team members, our customers and our community, and of the return to a more stable environment."
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 | ||||||||||||||||
Jun 30, 2021 | Jun 30, 2020 | Percent Change from | ||||||||||||||
(unaudited) | Dec 31, 2020 | (unaudited) | Dec 31, 2020 | Jun 30, 2020 | ||||||||||||
Assets | ||||||||||||||||
Cash and cash equivalents | $ 35,970,196 | $ 29,162,136 | $ 34,527,127 | 23.3% | 4.2% | |||||||||||
Investment securities | 137,536,932 | 111,930,314 | 57,033,548 | 22.9% | 141.2% | |||||||||||
Loans held for sale | 799,914 | 2,367,448 | 990,096 | -66.2% | -19.2% | |||||||||||
Loans receivable | 375,725,838 | 386,189,190 | 410,749,703 | -2.7% | -8.5% | |||||||||||
Less allowance for loan losses | 3,791,211 | 3,583,204 | 3,455,808 | 5.8% | 9.7% | |||||||||||
Loans, net of allowance for loan losses | 371,934,627 | 382,605,986 | 407,293,895 | -2.8% | -8.7% | |||||||||||
Property and equipment | 7,959,868 | 8,401,637 | 9,428,865 | -5.3% | -15.6% | |||||||||||
Bank-owned life insurance | 10,268,898 | 8,656,454 | 8,535,133 | 18.6% | 20.3% | |||||||||||
Lease assets | 2,349,010 | 2,508,345 | 2,583,640 | -6.4% | -9.1% | |||||||||||
Accrued interest receivable | 1,477,556 | 1,616,775 | 1,853,258 | -8.6% | -20.3% | |||||||||||
Other assets | 2,094,983 | 2,103,866 | 1,312,497 | -0.4% | 59.6% | |||||||||||
Total assets | $ 570,391,984 | $ 549,352,961 | $ 523,558,059 | 3.8% | 8.9% | |||||||||||
Liabilities and Stockholders' Equity | ||||||||||||||||
Deposits: | ||||||||||||||||
Noninterest-bearing | $ 167,856,223 | $ 171,855,568 | $ 150,864,972 | -2.3% | 11.3% | |||||||||||
Interest-bearing | 309,043,012 | 277,526,516 | 276,845,633 | 11.4% | 11.6% | |||||||||||
Total deposits | 476,899,235 | 449,382,084 | 427,710,605 | 6.1% | 11.5% | |||||||||||
Repurchase agreements | 17,843,824 | 15,528,356 | 7,789,761 | 14.9% | 129.1% | |||||||||||
FHLB advances and other borrowing | 21,274,729 | 31,078,123 | 37,381,076 | -31.5% | -43.1% | |||||||||||
Lease liabilities | 2,550,211 | 2,685,641 | 2,753,979 | -5.0% | -7.4% | |||||||||||
Other liabilities | 1,266,407 | 1,934,558 | 1,577,990 | -34.5% | -19.7% | |||||||||||
Total liabilities | 519,834,406 | 500,608,762 | 477,213,411 | 3.8% | 8.9% | |||||||||||
Stockholders' equity | 50,557,578 | 48,744,199 | 46,344,648 | 3.7% | 9.1% | |||||||||||
Total liabilities and equity | $ 570,391,984 | $ 549,352,961 | $ 523,558,059 | 3.8% | 8.9% | |||||||||||
Book value per common share | $ 33.01 | $ 31.82 | $ 30.26 | 3.7% | 9.1% | |||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME | |||||||||||
(unaudited) | |||||||||||
Three Months Ended | Six Months Ended | ||||||||||
June 30, | Percent | June 30, | Percent | ||||||||
2021 | 2020 | Change | 2021 | 2020 | Change | ||||||
Interest income | |||||||||||
Loans, including fee income | $ 4,967,402 | $ 4,758,983 | 4.4% | $ 9,730,514 | $ 9,350,815 | 4.1% | |||||
Investment securities | 485,823 | 332,732 | 46.0% | 909,702 | 679,705 | 33.8% | |||||
Other interest income | 6,688 | 5,014 | 33.4% | 12,832 | 43,482 | -70.5% | |||||
Total interest income | 5,459,913 | 5,096,729 | 7.1% | 10,653,048 | 10,074,002 | 5.7% | |||||
Interest expense | |||||||||||
Deposits | 507,708 | 657,010 | -22.7% | 1,041,988 | 1,364,962 | -23.7% | |||||
Repurchase agreements | 891 | 1,036 | -14.0% | 1,970 | 5,981 | -67.1% | |||||
FHLB advances | 163,552 | 204,654 | -20.1% | 339,024 | 416,548 | -18.6% | |||||
Other borrowings | 34,341 | 39,834 | -13.8% | 69,278 | 80,132 | -13.5% | |||||
Total interest expense | 706,492 | 902,534 | -21.7% | 1,452,260 | 1,867,623 | -22.2% | |||||
Net interest income | 4,753,421 | 4,194,195 | 13.3% | 9,200,788 | 8,206,379 | 12.1% | |||||
Provision for loan losses | 120,000 | 180,000 | -33.3% | 210,000 | 298,500 | -29.6% | |||||
Net interest income after provision | 4,633,421 | 4,014,195 | 15.4% | 8,990,788 | 7,907,879 | 13.7% | |||||
Noninterest income | |||||||||||
Service charges | 445,963 | 374,471 | 19.1% | 863,102 | 797,949 | 8.2% | |||||
Gain on sale of loans | 337,422 | 243,830 | 38.4% | 597,886 | 407,274 | 46.8% | |||||
Gain on sale of securities | 4,310 | 25,470 | -83.1% | 4,310 | 25,470 | -83.1% | |||||
Other noninterest income | 64,069 | 71,046 | -9.8% | 117,333 | 145,655 | -19.4% | |||||
Total noninterest income | 851,764 | 714,817 | 19.2% | 1,582,631 | 1,376,348 | 15.0% | |||||
Noninterest expense | |||||||||||
Salaries and benefits | 1,820,550 | 1,706,479 | 6.7% | 3,628,826 | 3,478,302 | 4.3% | |||||
Occupancy | 508,652 | 492,731 | 3.2% | 1,021,860 | 1,014,281 | 0.7% | |||||
Data processing and software | 308,194 | 268,884 | 14.6% | 620,814 | 503,655 | 23.3% | |||||
Other noninterest expense | 790,844 | 746,696 | 5.9% | 1,630,349 | 1,530,444 | 6.5% | |||||
Total noninterest expense | 3,428,240 | 3,214,790 | 6.6% | 6,901,849 | 6,526,682 | 5.7% | |||||
Net income before tax | 2,056,945 | 1,514,222 | 35.8% | 3,671,570 | 2,757,545 | 33.1% | |||||
Tax expense | 525,953 | 376,544 | 39.7% | 927,328 | 680,038 | 36.4% | |||||
Net income | $ 1,530,992 | $ 1,137,678 | 34.6% | $ 2,744,242 | $ 2,077,507 | 32.1% | |||||
Net income per share | $ 1.00 | $ 0.74 | 34.5% | $ 1.79 | $ 1.36 | 32.0% | |||||
HISTORICAL TRENDS | ||||||||||||||||
QUARTERLY CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||||
(unaudited) | ||||||||||||||||
% Change | ||||||||||||||||
2021 | 2021 | 2020 | ||||||||||||||
Q2 | Q1 | Q2 vs. Q1 | Q4 | Q3 | Q2 | Q1 | ||||||||||
Interest income | ||||||||||||||||
Loans, including fee income | $ 4,967,402 | $ 4,763,112 | 4.3% | $ 4,988,220 | $ 4,796,814 | $ 4,758,983 | $ 4,591,832 | |||||||||
Investment securities | 485,823 | 423,879 | 14.6% | 334,830 | 305,329 | 332,732 | 346,973 | |||||||||
Other interest income | 6,688 | 6,144 | 8.9% | 10,291 | 7,190 | 5,014 | 38,468 | |||||||||
Total interest income | 5,459,913 | 5,193,135 | 5.1% | 5,333,341 | 5,109,333 | 5,096,729 | 4,977,273 | |||||||||
Interest expense | ||||||||||||||||
Deposits | 507,708 | 534,280 | -5.0% | 570,013 | 616,225 | 657,010 | 707,952 | |||||||||
Repurchase agreements | 891 | 1,079 | -17.4% | 1,298 | 782 | 1,036 | 4,945 | |||||||||
FHLB advances | 163,552 | 175,472 | -6.8% | 187,295 | 195,442 | 204,654 | 211,894 | |||||||||
Other borrowings | 34,341 | 34,937 | -1.7% | 36,686 | 38,461 | 39,834 | 40,298 | |||||||||
Total interest expense | 706,492 | 745,768 | -5.3% | 795,292 | 850,910 | 902,534 | 965,089 | |||||||||
Net interest income | 4,753,421 | 4,447,367 | 6.9% | 4,538,049 | 4,258,423 | 4,194,195 | 4,012,184 | |||||||||
Provision for loan losses | 120,000 | 90,000 | 33.3% | 20,000 | 130,000 | 180,000 | 118,500 | |||||||||
Net interest income after provision | 4,633,421 | 4,357,367 | 6.3% | 4,518,049 | 4,128,423 | 4,014,195 | 3,893,684 | |||||||||
Noninterest income | ||||||||||||||||
Service charges | 445,963 | 417,139 | 6.9% | 416,823 | 412,317 | 374,471 | 423,478 | |||||||||
Gain on sale of loans | 337,422 | 260,464 | 29.5% | 502,302 | 397,309 | 243,830 | 163,444 | |||||||||
Gain on sale of securities | 4,310 | - | NM | 18,557 | - | 25,470 | - | |||||||||
Other noninterest income | 64,069 | 53,264 | 20.3% | 66,597 | 69,745 | 71,046 | 74,609 | |||||||||
Total noninterest income | 851,764 | 730,867 | 16.5% | 1,004,279 | 879,371 | 714,817 | 661,531 | |||||||||
Noninterest expense | ||||||||||||||||
Salaries and benefits | 1,820,550 | 1,808,276 | 0.7% | 1,905,737 | 1,843,439 | 1,706,479 | 1,771,823 | |||||||||
Occupancy | 508,652 | 513,208 | -0.9% | 507,121 | 488,246 | 492,731 | 521,550 | |||||||||
Data processing and software | 308,194 | 312,620 | -1.4% | 294,390 | 287,995 | 268,884 | 234,771 | |||||||||
Other noninterest expense | 790,844 | 839,505 | -5.8% | 894,306 | 715,565 | 746,696 | 783,748 | |||||||||
Total noninterest expense | 3,428,240 | 3,473,609 | -1.3% | 3,601,554 | 3,335,245 | 3,214,790 | 3,311,892 | |||||||||
Net income before tax | 2,056,945 | 1,614,625 | 27.4% | 1,920,774 | 1,672,549 | 1,514,222 | 1,243,323 | |||||||||
Tax expense | 525,953 | 401,375 | 31.0% | 478,399 | 420,666 | 376,544 | 303,494 | |||||||||
Net income | $ 1,530,992 | $ 1,213,250 | 26.2% | $ 1,442,375 | $ 1,251,883 | $ 1,137,678 | $ 939,829 | |||||||||
Net income per share | $ 1.00 | $ 0.79 | 26.2% | $ 0.94 | $ 0.82 | $ 0.74 | $ 0.61 | |||||||||
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SOURCE PSB Holding Corp.