PSB Holding Corp. Reports Third Quarter Results
PRESTON, Md., Oct. 21, 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 $1.52 million ($.99 per diluted common share) for the third quarter ended September 30, 2021, representing an increase of 21.7% compared to $1.25 million ($.82 per diluted common share) for the third quarter 2020 and a decrease of 0.5% compared to $1.53 million ($1.00 per diluted common share) for the second quarter 2021. For the nine months ended September 30, 2021, net income totaled $4.27 million ($2.78 per diluted common share) compared to $3.33 million ($2.17 per diluted common share) for the nine months ended September 30, 2020, representing an increase of 28.2%.
Performance Review
Third Quarter 2021 compared to Third Quarter 2020
- Net income increased $272,000 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, offset by pressure on the net interest margin (the "NIM"), exclusive of the benefit of PPP income.
- Net fees earned on PPP loans totaled $1.21 million during the third quarter 2021 compared to $238,000 during 2020 and represented monthly net fee amortization and accelerated net fee amortization associated with the forgiveness of $18.0 million in PPP loans while the third quarter 2020 represented only monthly net fee amortization as PPP loans did not begin the forgiveness process until the fourth quarter. As a result, the NIM increased from 3.40% during the third quarter 2020 to 3.69% during the third quarter 2021.
Third Quarter 2021 compared to Second Quarter 2021
- Net income was essentially flat at $1.5 million as an increase in net interest income was offset by increases in salaries and benefits expense and other noninterest expense.
- Net fees earned on PPP loans totaled $1.21 million during the third quarter 2021 compared to $833,000 during the second quarter 2021. PPP loans forgiven in the third quarter were primarily those originated in 2021 while those forgiven in the second quarter were primarily those originated in 2020. Average net fees associated with 2021 originations were higher than those associated with 2020 originations.
- Salaries and benefits expense increased $243,000 primarily as a result of the end of PPP loan origination activity and the associated deferral of salary costs, and increased commissions associated with mortgage banking activity.
- Other noninterest expense increased $103,000 primarily as a result of a $91,000 write down of property held for sale.
Year-to-date 2021 compared to 2020
- Net income increased $939,000 during the nine months ended September 30, 2021 compared to the same period in 2020 as a result of increased net fees earned on PPP loans 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 $2.71 million in 2021 compared to $416,000 in 2020. As a result, the NIM increased from 3.52% during 2020 to 3.53% during 2021. The increase in net fees amortized and the NIM is the function of the timing of the start of the PPP program and the forgiveness process. As of September 30, 2021, PPP loans outstanding total $11.5 million and unearned net fees totaled $466,000.
- Gain on sale of loans increased $201,000 as a result of increased mortgage banking activity associated with a low interest rate environment.
Net Interest Margin Performance
- As noted above, the NIM improved both during the third quarter 2021 compared to the second quarter 2020 and during the nine months ended September 30, 2021 compared to the same period in 2020. Improved performance was driven by income associated with PPP lending activities. Without the influence of PPP lending activities, the underlying NIM has been under pressure. Pressure on the NIM is the result of an economic environment challenged by a pandemic and the federal government's fiscal and monetary response to such. Specifically, the NIM has been challenged by (i) low interest rates, (ii) a change in the mix of earning assets, with larger than normal levels of excess liquidity invested in lower yielding investment securities and interest-earning cash, and (iii) highly competitive loan pricing.
Balance Sheet and Asset Quality
- Assets totaled $581.6 million at September 30, 2021, increasing $39.6 million or 7.3% compared to September 30, 2020. Growth in assets was driven primarily by growth in deposits as government stimulus increased customer liquidity. Deposits and repurchase agreements totaled $506.2 million at September 30, 2021 compared to $454.3 million at September 30, 2020, representing growth of 11.4%. Gross loans totaled $351.5 million at September 30, 2021, representing a decrease of $56.3 million or 13.8% compared to September 30, 2020. The decrease in loans was driven primarily by a decline in PPP loans, which fell $45.4 million to $11.5 million outstanding at September 30, 2021 as a result of continuing loan forgiveness.
- Stockholders' Equity totaled $51.8 million at September 30, 2021 compared to $47.7 million at September 30, 2020 representing an increase of 8.5%. The Bank remained well-capitalized at September 30, 2021.
- As of September 30, 2021, non-performing assets and past due loans 30 days or more were .29% of total assets compared to .49% at September 30, 2020 and .44% at December 31, 2020.
President and Chief Executive Officer Melissa Quirk commented on the Company's performance stating, "Our strong financial performance continues to be positively influenced by PPP loan forgiveness activity, which will begin to wane in the fourth quarter and likely end during the first quarter 2022. Future financial performance will be determined by our ability to reposition our balance sheet through core loan growth. We are confident a more stable economic environment will provide ample opportunity to do so."
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 | ||||||||||
Sep 30, 2021 | Sep 30, 2020 | Percent Change from | ||||||||
(unaudited) | Dec 31, 2020 | (unaudited) | Dec 31, 2020 | Sep 30, 2020 | ||||||
Assets | ||||||||||
Cash and cash equivalents | $ 55,440,007 | $ 29,162,136 | $ 49,787,272 | 90.1% | 11.4% | |||||
Investment securities | 151,967,929 | 111,930,314 | 60,255,717 | 35.8% | 152.2% | |||||
Loans held for sale | 486,917 | 2,367,448 | 4,165,011 | -79.4% | -88.3% | |||||
Loans receivable | 351,521,972 | 386,189,190 | 407,839,192 | -9.0% | -13.8% | |||||
Less allowance for loan losses | 3,922,902 | 3,583,204 | 3,560,334 | 9.5% | 10.2% | |||||
Loans, net of allowance for loan losses | 347,599,070 | 382,605,986 | 404,278,858 | -9.1% | -14.0% | |||||
Property and equipment | 7,803,240 | 8,401,637 | 9,247,116 | -7.1% | -15.6% | |||||
Bank-owned life insurance | 11,832,335 | 8,656,454 | 8,597,456 | 36.7% | 37.6% | |||||
Lease assets | 2,255,565 | 2,508,345 | 2,510,384 | -10.1% | -10.2% | |||||
Accrued interest receivable | 1,478,194 | 1,616,775 | 1,802,412 | -8.6% | -18.0% | |||||
Other assets | 2,737,459 | 2,103,866 | 1,392,579 | 30.1% | 96.6% | |||||
Total assets | $581,600,716 | $549,352,961 | $542,036,805 | 5.9% | 7.3% | |||||
Liabilities and Stockholders' Equity | ||||||||||
Deposits: | ||||||||||
Noninterest-bearing | $181,613,833 | $171,855,568 | $166,851,015 | 5.7% | 8.8% | |||||
Interest-bearing | 303,305,903 | 277,526,516 | 280,316,111 | 9.3% | 8.2% | |||||
Total deposits | 484,919,736 | 449,382,084 | 447,167,126 | 7.9% | 8.4% | |||||
Repurchase agreements | 21,279,283 | 15,528,356 | 7,113,626 | 37.0% | 199.1% | |||||
FHLB advances and other borrowing | 19,747,864 | 31,078,123 | 35,854,654 | -36.5% | -44.9% | |||||
Lease liabilities | 2,461,594 | 2,685,641 | 2,686,251 | -8.3% | -8.4% | |||||
Other liabilities | 1,435,154 | 1,934,558 | 1,526,699 | -25.8% | -6.0% | |||||
Total liabilities | 529,843,631 | 500,608,762 | 494,348,356 | 5.8% | 7.2% | |||||
Stockholders' equity | 51,757,085 | 48,744,199 | 47,688,449 | 6.2% | 8.5% | |||||
Total liabilities and equity | $581,600,716 | $549,352,961 | $542,036,805 | 5.9% | 7.3% | |||||
Book value per common share | $ 33.79 | $ 31.82 | $ 31.14 | 6.2% | 8.5% | |||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME | |||||||||||
(unaudited) | |||||||||||
Three Months Ended | Nine Months Ended | ||||||||||
Sep 30, | Percent | Sep 30, | Percent | ||||||||
2021 | 2020 | Change | 2021 | 2020 | Change | ||||||
Interest income | |||||||||||
Loans, including fee income | $ 5,200,935 | $ 4,796,814 | 8.4% | $ 14,931,449 | $ 14,147,629 | 5.5% | |||||
Investment securities | 502,460 | 305,329 | 64.6% | 1,412,162 | 985,034 | 43.4% | |||||
Other interest income | 13,540 | 7,190 | 88.3% | 26,372 | 50,672 | -48.0% | |||||
Total interest income | 5,716,935 | 5,109,333 | 11.9% | 16,369,983 | 15,183,335 | 7.8% | |||||
Interest expense | |||||||||||
Deposits | 490,718 | 616,225 | -20.4% | 1,532,706 | 1,981,187 | -22.6% | |||||
Repurchase agreements | 1,466 | 782 | 87.5% | 3,436 | 6,763 | -49.2% | |||||
FHLB advances | 109,882 | 195,442 | -43.8% | 448,906 | 611,990 | -26.6% | |||||
Other borrowings | 32,967 | 38,461 | -14.3% | 102,245 | 118,593 | -13.8% | |||||
Total interest expense | 635,033 | 850,910 | -25.4% | 2,087,293 | 2,718,533 | -23.2% | |||||
Net interest income | 5,081,902 | 4,258,423 | 19.3% | 14,282,690 | 12,464,802 | 14.6% | |||||
Provision for loan losses | 120,000 | 130,000 | -7.7% | 330,000 | 428,500 | -23.0% | |||||
Net interest income after provision | 4,961,902 | 4,128,423 | 20.2% | 13,952,690 | 12,036,302 | 15.9% | |||||
Noninterest income | |||||||||||
Service charges | 480,290 | 412,317 | 16.5% | 1,343,392 | 1,210,266 | 11.0% | |||||
Gain on sale of loans | 407,328 | 397,309 | 2.5% | 1,005,214 | 804,583 | 24.9% | |||||
Gain on sale of securities | - | - | NM | 4,310 | 25,470 | -83.1% | |||||
Other noninterest income | 80,747 | 69,745 | 15.8% | 198,080 | 215,400 | -8.0% | |||||
Total noninterest income | 968,365 | 879,371 | 10.1% | 2,550,996 | 2,255,719 | 13.1% | |||||
Noninterest expense | |||||||||||
Salaries and benefits | 2,063,437 | 1,843,439 | 11.9% | 5,692,263 | 5,321,741 | 7.0% | |||||
Occupancy | 512,155 | 488,246 | 4.9% | 1,534,015 | 1,502,527 | 2.1% | |||||
Data processing and software | 408,523 | 287,995 | 41.9% | 1,029,337 | 791,650 | 30.0% | |||||
Other noninterest expense | 893,689 | 715,565 | 24.9% | 2,524,038 | 2,246,009 | 12.4% | |||||
Total noninterest expense | 3,877,804 | 3,335,245 | 16.3% | 10,779,653 | 9,861,927 | 9.3% | |||||
Net income before tax | 2,052,463 | 1,672,549 | 22.7% | 5,724,033 | 4,430,094 | 29.2% | |||||
Tax expense | 528,699 | 420,666 | 25.7% | 1,456,027 | 1,100,704 | 32.3% | |||||
Net income | $ 1,523,764 | $ 1,251,883 | 21.7% | $ 4,268,006 | $ 3,329,390 | 28.2% | |||||
Net income per diluted share | $ 0.99 | $ 0.82 | 21.5% | $ 2.78 | $ 2.17 | 28.0% | |||||
HISTORICAL TRENDS | |||||||||||||||||||||
QUARTERLY CONDENSED CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||||||||||
(unaudited) | |||||||||||||||||||||
2021 | 2021 | 2020 | |||||||||||||||||||
Q3 | Q2 | Q1 | Q3 vs. Q2 | Q4 | Q3 | Q2 | Q1 | ||||||||||||||
Interest income | |||||||||||||||||||||
Loans, including fee income | $ 5,200,935 | $ 4,967,402 | $ 4,763,112 | 4.7% | $ 4,988,220 | $ 4,796,814 | $ 4,758,983 | $ 4,591,832 | |||||||||||||
Investment securities | 502,460 | 485,823 | 423,879 | 3.4% | 334,830 | 305,329 | 332,732 | 346,973 | |||||||||||||
Other interest income | 13,540 | 6,688 | 6,144 | 102.5% | 10,291 | 7,190 | 5,014 | 38,468 | |||||||||||||
Total interest income | 5,716,935 | 5,459,913 | 5,193,135 | 4.7% | 5,333,341 | 5,109,333 | 5,096,729 | 4,977,273 | |||||||||||||
Interest expense | |||||||||||||||||||||
Deposits | 490,718 | 507,708 | 534,280 | -3.3% | 570,013 | 616,225 | 657,010 | 707,952 | |||||||||||||
Repurchase agreements | 1,466 | 891 | 1,079 | 64.5% | 1,298 | 782 | 1,036 | 4,945 | |||||||||||||
FHLB advances | 109,882 | 163,552 | 175,472 | -32.8% | 187,295 | 195,442 | 204,654 | 211,894 | |||||||||||||
Other borrowings | 32,967 | 34,341 | 34,937 | -4.0% | 36,686 | 38,461 | 39,834 | 40,298 | |||||||||||||
Total interest expense | 635,033 | 706,492 | 745,768 | -10.1% | 795,292 | 850,910 | 902,534 | 965,089 | |||||||||||||
Net interest income | 5,081,902 | 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 | 120,000 | 90,000 | 0.0% | 20,000 | 130,000 | 180,000 | 118,500 | |||||||||||||
Net interest income after provision | 4,961,902 | 4,633,421 | 4,357,367 | 7.1% | 4,518,049 | 4,128,423 | 4,014,195 | 3,893,684 | |||||||||||||
Noninterest income | |||||||||||||||||||||
Service charges | 480,290 | 445,963 | 417,139 | 7.7% | 416,823 | 412,317 | 374,471 | 423,478 | |||||||||||||
Gain on sale of loans | 407,328 | 337,422 | 260,464 | 20.7% | 502,302 | 397,309 | 243,830 | 163,444 | |||||||||||||
Gain on sale of securities | - | 4,310 | - | -100.0% | 18,557 | - | 25,470 | - | |||||||||||||
Other noninterest income | 80,747 | 64,069 | 53,264 | 26.0% | 66,597 | 69,745 | 71,046 | 74,609 | |||||||||||||
Total noninterest income | 968,365 | 851,764 | 730,867 | 13.7% | 1,004,279 | 879,371 | 714,817 | 661,531 | |||||||||||||
Noninterest expense | |||||||||||||||||||||
Salaries and benefits | 2,063,437 | 1,820,550 | 1,808,276 | 13.3% | 1,905,737 | 1,843,439 | 1,706,479 | 1,771,823 | |||||||||||||
Occupancy | 512,155 | 508,652 | 513,208 | 0.7% | 507,121 | 488,246 | 492,731 | 521,550 | |||||||||||||
Data processing and software | 408,523 | 308,194 | 312,620 | 32.6% | 294,390 | 287,995 | 268,884 | 234,771 | |||||||||||||
Other noninterest expense | 893,689 | 790,844 | 839,505 | 13.0% | 894,306 | 715,565 | 746,696 | 783,748 | |||||||||||||
Total noninterest expense | 3,877,804 | 3,428,240 | 3,473,609 | 13.1% | 3,601,554 | 3,335,245 | 3,214,790 | 3,311,892 | |||||||||||||
Net income before tax | 2,052,463 | 2,056,945 | 1,614,625 | -0.2% | 1,920,774 | 1,672,549 | 1,514,222 | 1,243,323 | |||||||||||||
Tax expense | 528,699 | 525,953 | 401,375 | 0.5% | 478,399 | 420,666 | 376,544 | 303,494 | |||||||||||||
Net income | $ 1,523,764 | $ 1,530,992 | $ 1,213,250 | -0.5% | $ 1,442,375 | $ 1,251,883 | $ 1,137,678 | $ 939,829 | |||||||||||||
Net income per diluted share | $ 0.99 | $ 1.00 | $ 0.79 | -0.6% | $ 0.94 | $ 0.82 | $ 0.74 | $ 0.61 | |||||||||||||
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SOURCE PSB Holding Corp.