PSB HOLDING CORP. REPORTS RECORD 2021 RESULTS

PRESTON, Md., Feb. 2, 2022 /PRNewswire/ -- PSB Holding Corp. (OTC-QX: PSBP) (the "Company"), the parent company of Provident State Bank, Inc. ("Provident" or the "Bank"), reported record net income of $5.28 million ($3.45 per diluted common share) for the year ended December 31, 2021, representing an increase of 10.7% compared to $4.77 million ($3.13 per diluted common share) for the year ended December 31, 2020.  Return on average assets for the year ended December 31, 2021 remained consistent with 2020 at .93%.  Return on average equity increased to 10.52% in 2021.

Performance Review

Small Business Administration's Payroll Protection Program

The Bank's participation in the Small Business Administration's Payroll Protection Program ("PPP"), established in April 2020, significantly influenced financial performance during both 2020 and 2021.  During 2021, Provident originated PPP loans totaling $34.9 million and recognized fee income net of costs (amortized as a loan yield adjustment) of $3.13 million.  PPP loan principal forgiven by the SBA and principal payments received totaled $70.6 million in 2021.  During 2020, Provident originated PPP loans totaling $56.9 million and recognized net fee income totaling $1.02 million.  PPP loan principal forgiven and principal payments received in 2020 totaled $20.1 million.  As of December 31, 2021, PPP loans outstanding were $1.1 million and remaining net fees totaled $49,000. 

Net Interest Margin

The net interest margin ("NIM") was 3.44% during 2021 compared to 3.52% during 2020 despite higher net fee income recognized under the PPP.  Pressure on the NIM resulted from continuing economic challenges presented by the 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.

Data Processing and software

Data processing and software expense increased $255,000 in 2021 compared to 2020.  The increase reflected one-time costs of approximately $60,000 associated with the Bank's transition to a more robust network communication infrastructure and added costs associated with increased volumes and additional products and services, including upgraded anti-money laundering data monitoring capabilities and an on-line account opening solution.

Fourth Quarter 2021 Compared to Fourth Quarter 2020

Net income totaled $1.02 million during the three months ended December 31, 2021 compared to $1.44 million during the same period of 2020.  The decline was attributable to a decline in fees recognized from PPP lending activities, a decline in gain on sale of loans and an increase in the provision for loan losses.  Net fee income recognized from PPP lending activities declined from $600,000 during the fourth quarter 2020 to $418,000 during the same period in 2021.  Gain on sale of loans totaled $315,000 during the three months ended December 31, 2021 compared to $502,000 during the same period in 2020.  The decline in mortgage banking activity was largely driven by movement of interest rates higher.  The provision for loan losses increased $210,000, from $20,000 in the fourth quarter 2020 to $230,000 in the fourth quarter 2021.  The provision for loan losses recorded during the fourth quarter 2021 primarily reflected growth in loans, net of PPP loan forgiveness, of $16.7 million during the quarter.

Fourth Quarter 2021 Compared to Third Quarter 2021

Net income declined $508,000 when compared to the third quarter of 2021.  The decline was primarily attributable to a decline of $790,000 in net fee income recognized from PPP lending activities.

Balance Sheet and Asset Quality

Assets totaled $585.0 million at December 31, 2021, increasing $35.7 million or 6.5% compared to December 31, 2020. Growth in assets was driven primarily by growth in deposits as government stimulus increased customer liquidity.  Deposits and repurchase agreements totaled $510.6 million at December 31, 2021 compared to $464.9 million at December 31, 2020, representing growth of 9.8%.  Gross loans totaled $357.8 million at December 31, 2021, representing a decrease of $28.4 million or 7.4% compared to December 31, 2020.  The decrease in loans was driven primarily by a decline in PPP loans, which fell $35.7 million to $1.1 million outstanding at December 31, 2021 as a result of continuing loan forgiveness.  Stockholders' Equity totaled $51.6 million at December 31, 2021 compared to $48.7 million at December 31, 2020, representing an increase of 5.8%.  As of December 31, 2021, non-performing assets and past due loans 30 days or more were .38% of total assets compared to .44% at the end of 2020.  The Bank remained well-capitalized at December 31, 2021.

President and Chief Executive Officer Melissa Quirk commented on the Company's performance stating, "We are grateful for the patience of our customers and communities and for the hard-work and commitment of our team members as we continue to navigate the pandemic and the challenges it presents.  With the positive influence of PPP lending activity on our financial performance nearly ended, we look forward to traditional growth opportunities associated with more normalized economic and interest rate environments."

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
	December 31,
	2021		2020		% Change
	(unaudited)
Assets
Cash and cash equivalents	$    36,100,150		$    29,162,136		23.8%
Investment securities	167,167,082		111,930,314		49.3%
Loans held for sale	1,879,591		2,367,448		-20.6%
Loans receivable	357,800,695		386,189,190		-7.4%
Less allowance for loan losses	3,892,115		3,583,204		8.6%
Loans, net of allowance for loan losses	353,908,580		382,605,986		-7.5%
Property and equipment	6,879,131		8,401,637		-18.1%
Bank-owned life insurance	11,918,526		8,656,454		37.7%
Lease assets	2,720,578		2,508,345		8.5%
Accrued interest receivable	1,344,283		1,616,775		-16.9%
Other assets	3,119,329		2,103,866		48.3%
Total assets	$  585,037,250		$  549,352,961		6.5%
Liabilities and Stockholders' Equity
Deposits:
Noninterest-bearing	$  191,144,058		$  171,855,568		11.2%
Interest-bearing	303,379,512		277,526,516		9.3%
Total deposits	494,523,570		449,382,084		10.0%
Repurchase agreements	16,104,671		15,528,356		3.7%
FHLB advances and other borrowing	18,220,887		31,078,123		-41.4%
Lease liabilities	2,930,961		2,685,641		9.1%
Other liabilities	1,677,656		1,934,558		-13.3%
Total liabilities	533,457,745		500,608,762		6.6%
Stockholders' equity	51,579,505		48,744,199		5.8%
Total liabilities and equity	$  585,037,250		$  549,352,961		6.5%
Book value per common share	$               33.86		$               32.00		5.8%

                  

CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
	Years Ended						Three Months Ended
	December 31,						December 31,
	2021		2020		% Change		2021		2020		% Change
Interest income
Loans, including fee income	$    19,292,572		$    19,135,849		0.8%		$       4,361,123		$       4,988,220		-12.6%
Investment securities	1,978,770		1,319,864		49.9%		566,608		334,830		69.2%
Other interest income	40,279		60,963		-33.9%		13,907		10,291		35.1%
Total interest income	21,311,621		20,516,676		3.9%		4,941,638		5,333,341		-7.3%
Interest expense
Deposits	1,967,103		2,551,200		-22.9%		434,397		570,013		-23.8%
Repurchase agreements	4,811		8,061		-40.3%		1,375		1,298		5.9%
FHLB advances	550,707		799,285		-31.1%		101,801		187,295		-45.6%
Other borrowings	133,495		155,279		-14.0%		31,250		36,686		-14.8%
Total interest expense	2,656,116		3,513,825		-24.4%		568,823		795,292		-28.5%
Net interest income	18,655,505		17,002,851		9.7%		4,372,815		4,538,049		-3.6%
Provision for loan losses	560,000		448,500		24.9%		230,000		20,000		1050.0%
Net interest income after provision	18,095,505		16,554,351		9.3%		4,142,815		4,518,049		-8.3%
Noninterest income
Service charges	1,829,012		1,627,089		12.4%		485,620		416,823		16.5%
Gain on sale of loans	1,320,073		1,306,885		1.0%		314,859		502,302		-37.3%
Gain on sale of securities	4,310		44,027		-90.2%		-		18,557		-100.0%
Other noninterest income	280,407		281,997		-0.6%		82,327		66,597		23.6%
Total noninterest income	3,433,802		3,259,998		5.3%		882,806		1,004,279		-12.1%
Noninterest expense
Salaries and benefits	7,669,758		7,227,478		6.1%		1,977,495		1,905,737		3.8%
Occupancy	2,124,876		2,009,648		5.7%		590,861		507,121		16.5%
Data processing and software	1,340,576		1,086,040		23.4%		311,239		294,390		5.7%
Other noninterest expense	3,407,220		3,140,315		8.5%		883,182		894,306		-1.2%
Total noninterest expense	14,542,430		13,463,481		8.0%		3,762,777		3,601,554		4.5%
Net income before tax	6,986,877		6,350,868		10.0%		1,262,844		1,920,774		-34.3%
Tax expense	1,703,140		1,579,103		7.9%		247,113		478,399		-48.3%
Net income	$       5,283,737		$       4,771,765		10.7%		$       1,015,731		$       1,442,375		-29.6%
Net income per diluted share	$                 3.45		$                 3.13		10.3%		$                 0.66		$                 0.95		-29.9%

 

HISTORICAL TRENDS
QUARTERLY CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND SUPPLEMENTAL DATA
(unaudited)
									2021
	2021								Q4 vs. Q3		2020
	Q4		Q3		Q2		Q1		% Change		Q4		Q3		Q2		Q1
Interest income
Loans, including fee income	$       4,361,123		$       5,200,935		$       4,967,402		$       4,763,112		-16.1%		$       4,988,220		$   4,796,814		$   4,758,983		$   4,591,832
Investment securities	566,608		502,460		485,823		423,879		12.8%		334,830		305,329		332,732		346,973
Other interest income	13,907		13,540		6,688		6,144		2.7%		10,291		7,190		5,014		38,468
Total interest income	4,941,638		5,716,935		5,459,913		5,193,135		-13.6%		5,333,341		5,109,333		5,096,729		4,977,273
Interest expense
Deposits	434,397		490,718		507,708		534,280		-11.5%		570,013		616,225		657,010		707,952
Repurchase agreements	1,375		1,466		891		1,079		-6.2%		1,298		782		1,036		4,945
FHLB advances	101,801		109,882		163,552		175,472		-7.4%		187,295		195,442		204,654		211,894
Other borrowings	31,250		32,967		34,341		34,937		-5.2%		36,686		38,461		39,834		40,298
Total interest expense	568,823		635,033		706,492		745,768		-10.4%		795,292		850,910		902,534		965,089
Net interest income	4,372,815		5,081,902		4,753,421		4,447,367		-14.0%		4,538,049		4,258,423		4,194,195		4,012,184
Provision for loan losses	230,000		120,000		120,000		90,000		91.7%		20,000		130,000		180,000		118,500
Net interest income after provision	4,142,815		4,961,902		4,633,421		4,357,367		-16.5%		4,518,049		4,128,423		4,014,195		3,893,684
Noninterest income
Service charges	485,620		480,290		445,963		417,139		1.1%		416,823		412,317		374,471		423,478
Gain on sale of loans	314,859		407,328		337,422		260,464		-22.7%		502,302		397,309		243,830		163,444
Gain on sale of securities	-		-		4,310		-		NM		18,557		-		25,470		-
Other noninterest income	82,327		80,747		64,069		53,264		2.0%		66,597		69,745		71,046		74,609
Total noninterest income	882,806		968,365		851,764		730,867		-8.8%		1,004,279		879,371		714,817		661,531
Noninterest expense
Salaries and benefits	1,977,495		2,063,437		1,820,550		1,808,276		-4.2%		1,905,737		1,843,439		1,706,479		1,771,823
Occupancy	590,861		512,155		508,652		513,208		15.4%		507,121		488,246		492,731		521,550
Data processing and software	311,239		408,523		308,194		312,620		-23.8%		294,390		287,995		268,884		234,771
Other noninterest expense	883,182		893,689		790,844		839,505		-1.2%		894,306		715,565		746,696		783,748
Total noninterest expense	3,762,777		3,877,804		3,428,240		3,473,609		-3.0%		3,601,554		3,335,245		3,214,790		3,311,892
Net income before tax	1,262,844		2,052,463		2,056,945		1,614,625		-38.5%		1,920,774		1,672,549		1,514,222		1,243,323
Tax expense	247,113		528,699		525,953		401,375		-53.3%		478,399		420,666		376,544		303,494
Net income	$       1,015,731		$       1,523,764		$       1,530,992		$       1,213,250		-33.3%		$       1,442,375		$    1,251,883		$    1,137,678		$       939,829
Net income per diluted share	$                 0.66		$                 1.00		$                 1.00		$                 0.80		-33.5%		$                 0.95		$              0.82		$              0.75		$              0.62
Supplemental Data
PPP loans - net fee income	$          418,004		$       1,207,559		$          832,733		$          667,482				$          600,105		$       237,633		$       178,801		$                    -

 

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SOURCE PSB Holding Corp.