PSB Holding Corp. Reports Record Results

PRESTON, Md., July 22, 2021 /PRNewswire/ -- PSB Holding Corp. (OTC-QX: 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.