PSB HOLDING CORP. REPORTS SECOND QUARTER 2022 RESULTS
PRESTON, Md., July 27, 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 $1.03 million ($.67 per diluted common share) for the three months ended June 30, 2022, compared to $1.53 million ($1.00 per diluted common share) for the same period of 2021. For the six months ended June 30, 2022, net income totaled $2.03 million ($1.33 per diluted common share), compared to $2.74 million ($1.79 per diluted common share) for the six months ended June 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 first and second quarters of 2021 as compared to the same quarters of 2022. During the three months ended June 30, 2021, Provident recognized fee income net of costs (amortized as a loan yield adjustment) of $833,000. 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 six months ended June 30, 2021 and 2022, net fee income recognized totaled $1.50 million and $49,000, respectively, representing a decline of $1.45 million.
Second Quarter 2022 Compared to Second Quarter 2021
In addition to the reduced revenue associated with PPP lending activities previously noted, net income during the second quarter 2022 compared to the same period in 2021 was impacted by lower gain on sale of loans of $231,000, and higher other noninterest expenses of $135,000, offset by an increase in interest income on investment securities of $262,000 and lower interest expense of $258,000. Gain on sale of loans totaled $106,000 during the three months ended June 30, 2022, compared to $337,000 during the same period in 2021. The decline in mortgage banking activity was largely driven by rising interest rates. The increase in other noninterest expenses included an increase in employee recruiting fees of $50,000. The increase in interest income on investment securities reflected a larger average balance in 2022 compared to 2021. Lower interest expense reflected the continued benefit of the repricing of the Bank's time deposit portfolio to lower interest rates while not yet having to increase overall deposit rates in response to moves by the Federal Reserve. Exclusive of the influence of PPP, Management estimates the net interest margin (on a fully tax equivalent basis) increased from 3.09% in 2021 to 3.20% in 2022, reflecting the increase in the prime rate of interest and loan origination activity at higher interest rates.
Year-to-date 2022 compared to 2021
In addition to the reduced revenue associated with PPP lending activities previously noted, net income during the first half of 2022 compared to the same period in 2021 was impacted by lower gain on sale of loans of $298,000 and higher salaries and benefits expense of $224,000, offset by an increase in interest income on investment securities of $498,000, lower interest expense of $518,000 and lower loan loss provision expense of $120,000. The decline in mortgage banking income reflected increased interest rates. The increase in salaries and benefits was largely driven by a reduction in salary deferrals associated with loan origination activity totaling $179,000, reflecting lower origination activity associated with PPP loans, and an increase in core salaries of $168,000, offset by a reduction in mortgage commissions of $148,000. The increase in interest income on investment securities reflected a larger average balance in 2022 compared to 2021. Lower interest expense reflected the continued benefit of the repricing of the Bank's time deposit portfolio to lower interest rates while not yet having to increase overall deposit rates in response to moves by the Federal Reserve. Exclusive of the influence of PPP, Management estimates the net interest margin (on a fully tax equivalent basis) increased from 3.09% in 2021 to 3.12% in 2022.
Balance Sheet and Asset Quality
Assets totaled $580.4 million at June 30, 2022, increasing $10.0 million or 1.8% compared to June 30, 2021. Deposits and repurchase agreements totaled $525.2 million at June 30, 2022 compared to $494.7 million at June 30, 2021, representing growth of 6.2%. Gross loans, exclusive of PPP loans, totaled $371.0 million at June 30, 2022, representing an increase of $24.6 million or 7.1% compared to June 30, 2021. Stockholders' Equity totaled $41.6 million at June 30, 2022 compared to $51.6 million at December 31, 2021 and $50.6 million at June 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 June 20, 2022, accumulated other comprehensive losses associated with the AFS portfolio totaled $12.9 million compared to $846,000 at December 31, 2021 and a gain of $419,000 at June 30, 2021. The significant increase in unrealized losses at June 30, 2022 was driven by a dramatic jump in market rates during the first half 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 at June 30, 2022. As of June 30, 2022, non-performing assets and past due loans 30 days or more were .47% of total assets compared to .38% at the end of 2021 and .44% at June 30, 2021.
President and Chief Executive Officer Melissa Quirk commented on the Company's performance stating, "Second quarter performance was strong with solid loan and deposit growth and an improving net interest margin. We continue to seek opportunities to grow our business development activities in southern Delaware and central Maryland; and, while interest rate volatility is challenging and the threat of a recession is real, we remain committed to supporting our communities and the financial needs of our customers."
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) | |||||||||
December 31, | Percent change from | ||||||||
June 30, 2022 | 2021 | June 30, 2021 | Dec 31, 2021 | Jun 30, 2021 | |||||
Assets | |||||||||
Cash and cash equivalents | $ 24,147,492 | $ 36,100,150 | $ 35,970,196 | -33.1 % | -32.9 % | ||||
Investment securities | 158,037,743 | 167,167,082 | 137,536,932 | -5.5 % | 14.9 % | ||||
Loans held for sale | 980,426 | 1,879,591 | 799,914 | -47.8 % | 22.6 % | ||||
Loans receivable | 371,034,493 | 357,800,695 | 375,725,838 | 3.7 % | -1.2 % | ||||
Less allowance for loan losses | 3,972,790 | 3,892,115 | 3,791,211 | 2.1 % | 4.8 % | ||||
Loans, net of allowance for loan losses | 367,061,703 | 353,908,580 | 371,934,627 | 3.7 % | -1.3 % | ||||
Property and equipment | 6,595,420 | 6,879,131 | 7,959,868 | -4.1 % | -17.1 % | ||||
Bank-owned life insurance | 12,068,182 | 11,918,526 | 10,268,898 | 1.3 % | 17.5 % | ||||
Lease assets | 2,525,238 | 2,720,578 | 2,349,010 | -7.2 % | 7.5 % | ||||
Accrued interest receivable | 1,533,321 | 1,344,283 | 1,477,556 | 14.1 % | 3.8 % | ||||
Other assets | 7,487,227 | 3,119,329 | 2,094,983 | 140.0 % | 257.4 % | ||||
Total assets | $580,436,752 | $585,037,250 | $570,391,984 | -0.8 % | 1.8 % | ||||
Liabilities and Stockholders' Equity | |||||||||
Deposits: | |||||||||
Noninterest-bearing | $175,159,883 | $191,144,058 | $167,856,223 | -8.4 % | 4.4 % | ||||
Interest-bearing | 332,015,392 | 303,379,512 | 309,043,012 | 9.4 % | 7.4 % | ||||
Total deposits | 507,175,275 | 494,523,570 | 476,899,235 | 2.6 % | 6.3 % | ||||
Repurchase agreements | 17,999,557 | 16,104,671 | 17,843,824 | 11.8 % | 0.9 % | ||||
FHLB advances and other borrowing | 10,166,591 | 18,220,887 | 21,274,729 | -44.2 % | -52.2 % | ||||
Lease liabilities | 2,746,574 | 2,930,961 | 2,550,211 | -6.3 % | 7.7 % | ||||
Other liabilities | 711,489 | 1,677,656 | 1,266,407 | -57.6 % | -43.8 % | ||||
Total liabilities | 538,799,486 | 533,457,745 | 519,834,406 | 1.0 % | 3.6 % | ||||
Stockholders' equity: | |||||||||
Common stock, additional paid-in capital | |||||||||
and retained earnings | 54,495,908 | 52,425,553 | 50,138,157 | 3.9 % | 8.7 % | ||||
Accumulated other comprehensive (loss) | |||||||||
income | (12,858,642) | (846,048) | 419,421 | ||||||
Total stockholders' equity | 41,637,266 | 51,579,505 | 50,557,578 | -19.3 % | -17.6 % | ||||
Total liabilities and equity | $580,436,752 | $585,037,250 | $570,391,984 | -0.8 % | 1.8 % | ||||
Book value per common share | $ 27.33 | $ 33.86 | $ 33.19 | -19.3 % | -17.6 % | ||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME | |||||||||||
(unaudited) | |||||||||||
Three Months Ended | Six Months Ended | ||||||||||
June 30, | June 30, | ||||||||||
2022 | 2021 | % Change | 2022 | 2021 | % Change | ||||||
Interest income | |||||||||||
Loans, including fee income | $ 4,035,473 | $ 4,967,402 | -18.8 % | $ 7,952,045 | $ 9,730,514 | -18.3 % | |||||
Investment securities | 748,082 | 485,823 | 54.0 % | 1,407,960 | 909,702 | 54.8 % | |||||
Other interest income | 26,809 | 6,688 | 300.9 % | 34,706 | 12,832 | 170.5 % | |||||
Total interest income | 4,810,364 | 5,459,913 | -11.9 % | 9,394,711 | 10,653,048 | -11.8 % | |||||
Interest expense | |||||||||||
Deposits | 336,029 | 507,708 | -33.8 % | 698,834 | 1,041,988 | -32.9 % | |||||
Repurchase agreements | 1,300 | 891 | 45.9 % | 2,593 | 1,970 | 31.6 % | |||||
FHLB advances | 81,527 | 163,552 | -50.2 % | 173,215 | 339,024 | -48.9 % | |||||
Other borrowings | 30,121 | 34,341 | -12.3 % | 59,684 | 69,278 | -13.8 % | |||||
Total interest expense | 448,977 | 706,492 | -36.4 % | 934,326 | 1,452,260 | -35.7 % | |||||
Net interest income | 4,361,387 | 4,753,421 | -8.2 % | 8,460,385 | 9,200,788 | -8.0 % | |||||
Provision for loan losses | 65,000 | 120,000 | -45.8 % | 90,000 | 210,000 | -57.1 % | |||||
Net interest income after provision | 4,296,387 | 4,633,421 | -7.3 % | 8,370,385 | 8,990,788 | -6.9 % | |||||
Noninterest income | |||||||||||
Service charges | 505,473 | 445,963 | 13.3 % | 980,566 | 863,102 | 13.6 % | |||||
Gain on sale of loans | 105,506 | 337,422 | -68.7 % | 299,752 | 597,886 | -49.9 % | |||||
Gain on sale of securities | - | 4,310 | 0.0 % | - | 4,310 | 0.0 % | |||||
Other noninterest income | 93,737 | 64,069 | 46.3 % | 175,999 | 117,333 | 50.0 % | |||||
Total noninterest income | 704,716 | 851,764 | -17.3 % | 1,456,317 | 1,582,631 | -8.0 % | |||||
Noninterest expense | |||||||||||
Salaries and benefits | 1,892,130 | 1,820,550 | 3.9 % | 3,852,789 | 3,628,826 | 6.2 % | |||||
Occupancy | 507,800 | 508,652 | -0.2 % | 970,326 | 1,021,860 | -5.0 % | |||||
Data processing and software | 332,429 | 308,194 | 7.9 % | 648,440 | 620,814 | 4.4 % | |||||
Other noninterest expense | 925,680 | 790,844 | 17.0 % | 1,713,395 | 1,630,349 | 5.1 % | |||||
Total noninterest expense | 3,658,039 | 3,428,240 | 6.7 % | 7,184,950 | 6,901,849 | 4.1 % | |||||
Net income before tax | 1,343,064 | 2,056,945 | -34.7 % | 2,641,752 | 3,671,570 | -28.0 % | |||||
Tax expense | 316,794 | 525,953 | -39.8 % | 614,547 | 927,328 | -33.7 % | |||||
Net income | $ 1,026,270 | $ 1,530,992 | -33.0 % | $ 2,027,205 | $ 2,744,242 | -26.1 % | |||||
Net income per diluted share | $ 0.67 | $ 1.00 | -32.8 % | $ 1.33 | $ 1.79 | -26.0 % | |||||
HISTORICAL TRENDS | |||||||||||||
QUARTERLY CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND SUPPLEMENTAL DATA (unaudited) | |||||||||||||
2022 | 2022 | 2021 | |||||||||||
Q2 | Q1 | Q2 vs. Q1 | Q4 | Q3 | Q2 | Q1 | |||||||
Interest income | |||||||||||||
Loans, including fee income | $ 4,035,473 | $ 3,916,572 | 3.0 % | $ 4,361,123 | $ 5,200,935 | $ 4,967,402 | $ 4,763,112 | ||||||
Investment securities | 748,082 | 659,878 | 13.4 % | 566,608 | 502,460 | 485,823 | 423,879 | ||||||
Other interest income | 26,809 | 7,897 | 239.5 % | 13,907 | 13,540 | 6,688 | 6,144 | ||||||
Total interest income | 4,810,364 | 4,584,347 | 4.9 % | 4,941,638 | 5,716,935 | 5,459,913 | 5,193,135 | ||||||
Interest expense | |||||||||||||
Deposits | 336,029 | 362,805 | -7.4 % | 434,397 | 490,718 | 507,708 | 534,280 | ||||||
Repurchase agreements | 1,300 | 1,293 | 0.5 % | 1,375 | 1,466 | 891 | 1,079 | ||||||
FHLB advances | 81,527 | 91,688 | -11.1 % | 101,801 | 109,882 | 163,552 | 175,472 | ||||||
Other borrowings | 30,121 | 29,563 | 1.9 % | 31,250 | 32,967 | 34,341 | 34,937 | ||||||
Total interest expense | 448,977 | 485,349 | -7.5 % | 568,823 | 635,033 | 706,492 | 745,768 | ||||||
Net interest income | 4,361,387 | 4,098,998 | 6.4 % | 4,372,815 | 5,081,902 | 4,753,421 | 4,447,367 | ||||||
Provision for loan losses | 65,000 | 25,000 | 160.0 % | 230,000 | 120,000 | 120,000 | 90,000 | ||||||
Net interest income after provision | 4,296,387 | 4,073,998 | 5.5 % | 4,142,815 | 4,961,902 | 4,633,421 | 4,357,367 | ||||||
Noninterest income | |||||||||||||
Service charges | 505,473 | 475,093 | 6.4 % | 485,620 | 480,290 | 445,963 | 417,139 | ||||||
Gain on sale of loans | 105,506 | 194,246 | -45.7 % | 314,859 | 407,328 | 337,422 | 260,464 | ||||||
Gain on sale of securities | - | - | NM | - | - | 4,310 | - | ||||||
Other noninterest income | 93,737 | 82,262 | 13.9 % | 82,327 | 80,747 | 64,069 | 53,264 | ||||||
Total noninterest income | 704,716 | 751,601 | -6.2 % | 882,806 | 968,365 | 851,764 | 730,867 | ||||||
Noninterest expense | |||||||||||||
Salaries and benefits | 1,892,130 | 1,960,659 | -3.5 % | 1,977,495 | 2,063,437 | 1,820,550 | 1,808,276 | ||||||
Occupancy | 507,800 | 462,526 | 9.8 % | 590,861 | 512,155 | 508,652 | 513,208 | ||||||
Data processing and software | 332,429 | 316,011 | 5.2 % | 311,239 | 408,523 | 308,194 | 312,620 | ||||||
Other noninterest expense | 925,680 | 787,715 | 17.5 % | 883,182 | 893,689 | 790,844 | 839,505 | ||||||
Total noninterest expense | 3,658,039 | 3,526,911 | 3.7 % | 3,762,777 | 3,877,804 | 3,428,240 | 3,473,609 | ||||||
Net income before tax | 1,343,064 | 1,298,688 | 3.4 % | 1,262,844 | 2,052,463 | 2,056,945 | 1,614,625 | ||||||
Tax expense | 316,794 | 297,753 | 6.4 % | 247,113 | 528,699 | 525,953 | 401,375 | ||||||
Net income | $ 1,026,270 | $ 1,000,935 | 2.5 % | $ 1,015,731 | $ 1,523,764 | $ 1,530,992 | $ 1,213,250 | ||||||
Net income per diluted share | $ 0.67 | $ 0.65 | 2.7 % | $ 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.