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").
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.
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 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.