Le Lézard
Classified in: Business
Subject: ERN

PSB HOLDING CORP. REPORTS 2022 RESULTS


PRESTON, Md., Jan. 27, 2023 /PRNewswire/ -- PSB Holding Corp. (OTCQX:PSBP) (the "Company"), the parent company of Provident State Bank, Inc. ("Provident" or the "Bank"), reported net income of $4.39 million ($2.87 per diluted common share) for the year ended December 31, 2022, compared to $5.28 million ($3.45 per diluted common share) for the same period of 2021.  For the three months ended December 31, 2022, net income totaled $1.16 million ($.76 per diluted common share), compared to $1.02 million ($.66 per diluted common share) for the three months ended December 31, 2021.

Performance Review

Merger Announcement
On December 12, 2022, the Company and Summit Financial Group, Inc. ("Summit") (NASDAQ:SMMF) announced the signing of a definitive merger agreement.  Following consummation of the merger, expected to occur prior to the end of the second quarter of 2023, the Company and the Bank will be merged into Summit and Summit Community Bank, Inc., respectively.  During the fourth quarter of 2022, the Company incurred $435,000 in merger related costs.  Exclusive of merger related costs, net of taxes, net income was $4.73 million ($3.09 per diluted common share) for the year ended December 31, 2022 and $1.50 million ($.98 per diluted common share) for the fourth quarter 2022.

Small Business Administration ("SBA") Payroll Protection Program ("PPP")
The Bank's participation in the SBA's PPP, established in April 2020, contributed more significantly to financial performance during 2021 as compared to 2022. During the year ended December 31, 2021, Provident recognized fee income net of costs (amortized as a loan yield adjustment) of $3.13 million. During the same period of 2022, Provident recognized $49,000 of fee income, net of costs. For the three months ended December 31, 2021, net fee income recognized totaled $418,000. During the same period in 2022, no net fee income was recognized as all outstanding PPP loans had been forgiven or repaid as of March 31, 2022.

Year Ended 2022 compared to 2021
Net interest income declined $516,000 million in 2022 compared to 2021.  The decline was largely attributable to the reduced PPP income and merger related costs referenced above, offset by an increase in the net interest margin ("NIM"), exclusive of the influence of PPP activity, from an estimated 2.99% to 3.33%. Improvement in the NIM resulted from increasing loan rates influenced by actions of the Federal Reserve and a decline in deposit and other borrowing costs of $688,000. While loans rates increased quickly in response to Federal Reserve actions, increases in deposit rates lagged. Net income during 2022 was further affected by lower gain on sale of loans of $904,000, offset by an increase in other noninterest income of $224,000 and a decline in the provision for loan losses of $460,000. 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 lending relationship. The decline in the provision for loan losses reflected continuing strength in asset quality metrics.

Fourth Quarter 2022 Compared to Fourth Quarter 2021
Net interest income increased $580,000 in 2022 compared to 2021. The increase was largely attributable to an increase in the NIM, exclusive of the influence of PPP activity, from an estimated 2.89% to 3.59%, offset by the reduced PPP income referenced above. Improvement in the NIM was driven by increasing loan rates influenced by actions of the Federal Reserve. Net income during the fourth quarter 2022 was further affected by lower gain on sale of loans of $272,000, an increase in other noninterest expense of $450,000 and the recapture of the provision for loan losses of $90,000. Gain on sale of loans declined as rising interest rates slowed residential mortgage origination activity. Other noninterest expense included $435,000 of merger related costs.  The recapture of previously recorded provision for loan losses reflected continuing strength in asset quality metrics.

Balance Sheet and Asset Quality

Assets totaled $579.9 million on December 31, 2022, decreasing $5.1 million or .9% compared to December 31, 2021. Gross loans totaled $380.7 million on December 31, 2022, representing an increase of $24.0 million or 6.7% compared to December 31, 2021, exclusive of PPP loans. Deposits and repurchase agreements totaled $526.9 million on December 31, 2022, compared to $510.6 million on December 31, 2021, representing growth of 3.2%.  Stockholders' Equity totaled $39.7 million on December 31, 2022, compared to $51.6 million on December 31, 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 December 31, 2022, accumulated other comprehensive losses associated with the AFS portfolio totaled $16.8 million compared to $846,000 on December 31, 2021. The significant increase in unrealized losses as of December 31, 2022, was driven by a dramatic jump in market rates during 2022 as the Federal Reserve battled inflationary pressures. These unrealized losses are not included in regulatory capital and the Bank remained well capitalized on December 31, 2022. As of December 31, 2022, non-performing assets and past due loans 30 days or more were .20% of total assets compared to .38% at the end of 2021. 

President and Chief Executive Officer Melissa Quirk commented on the Company's performance and strategic alignment with Summit stating, "We are extremely proud of our performance during 2022, which followed record performance in 2021.  Solid loan growth and an increased net interest margin nearly offset the loss of revenue associated with the Payroll Protection Program.  We are also excited about our pending combination with Summit. Summit's long history of commitment to community, breadth of products and services and growth orientation will serve our customers, communities, team members and shareholders well in the years to come."

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


2022


2021


Change







Assets






Cash and cash equivalents

$    27,224,563


$    36,100,150


-24.6 %

Investment securities

144,517,834


167,167,082


-13.5 %

Loans held for sale

129,790


1,879,591


-93.1 %

Loans receivable

380,675,118


357,800,695


6.4 %

  Less allowance for loan losses

4,095,149


3,892,115


5.2 %

Loans, net of allowance for loan losses

376,579,969


353,908,580


6.4 %

Property and equipment

6,231,507


6,879,131


-8.7 %

Bank-owned life insurance

12,215,923


11,918,526


2.5 %

Lease assets

2,339,774


2,720,578


-14.0 %

Accrued interest receivable

1,590,461


1,344,283


18.3 %

Other assets

9,113,405


3,119,329


190.6 %

    Total assets

$  579,943,226


$  585,037,250


-0.9 %







Liabilities and Stockholders' Equity






Deposits:






    Noninterest-bearing

$  171,183,577


$  191,144,058


-10.4 %

    Interest-bearing

338,529,875


303,379,512


11.6 %

        Total deposits

509,713,452


494,523,570


3.1 %

Repurchase agreements

17,157,020


16,104,671


6.5 %

FHLB advances and other borrowing

8,778,502


18,220,887


-51.8 %

Lease liabilities

2,569,464


2,930,961


-12.3 %

Other liabilities

1,983,493


1,677,656


18.2 %

    Total liabilities

540,201,931


533,457,745


1.3 %

Stockholders' equity:






  Common stock, additional paid-in capital





      and retained earnings

56,586,209


52,425,553


7.9 %

  Accumulated other comprehensive (loss)





      income

(16,844,914)


(846,048)



  Total stockholders' equity

39,741,295


51,579,505


-23.0 %

Total liabilities and equity

$  579,943,226


$  585,037,250


-0.9 %







Book value per common share

$               26.09


$               33.86


-23.0 %

 

CONDENSED CONSOLIDATED STATEMENTS OF INCOME









(unaudited)

























Three Months Ended


Year Ended


December 31,


December 31,


2022


2021


% Change


2022


2021


% Change

Interest income












Loans, including fee income

$       4,604,085


$      4,361,123


5.6 %


$    16,876,491


$    19,292,572


-12.5 %

Investment securities

759,110


566,608


34.0 %


2,915,889


,978,770


47.4 %

Other interest income

177,102


13,907


1173.5 %


314,767


40,279


681.5 %

        Total interest income

5,540,297


4,941,638


12.1 %


20,107,147


21,311,621


-5.7 %

Interest expense












Deposits

509,869


434,397


17.4 %


1,571,138


1,967,103


-20.1 %

Repurchase agreements

1,646


1,375


19.7 %


5,613


4,811


16.7 %

FHLB advances

46,845


101,800


-54.0 %


271,726


550,706


-50.7 %

Other borrowings

28,817


31,250


-7.8 %


119,460


133,495


-10.5 %

        Total interest expense

587,177


568,822


3.2 %


1,967,937


2,656,115


-25.9 %

Net interest income

4,953,120


4,372,816


13.3 %


18,139,210


18,655,506


-2.8 %

Provision for loan losses

(90,000)


230,000


-139.1 %


100,000


560,000


-82.1 %

        Net interest income after provision

5,043,120


4,142,816


21.7 %


18,039,210


18,095,506


-0.3 %

Noninterest income












Service charges

489,079


485,620


0.7 %


1,988,848


1,829,012


8.7 %

Gain on sale of loans

42,898


314,859


-86.4 %


415,934


1,320,073


-68.5 %

Gain on sale of securities

-


-


0.0 %


-


4,310


0.0 %

Other noninterest income

82,172


82,327


-0.2 %


504,683


280,407


80.0 %

        Total noninterest income

614,149


882,806


-30.4 %


2,909,465


3,433,802


-15.3 %

Noninterest expense












Salaries and benefits

1,972,982


1,977,495


-0.2 %


7,770,069


7,669,758


1.3 %

Occupancy and equipment

479,893


590,861


-18.8 %


1,951,072


2,124,876


-8.2 %

Data processing and software

369,853


311,239


18.8 %


1,363,740


1,340,576


1.7 %

Other noninterest expense

1,333,518


883,183


51.0 %


4,147,416


3,407,221


21.7 %

        Total noninterest expense

4,156,246


3,762,778


10.5 %


15,232,297


14,542,431


4.7 %

Net income before tax

1,501,023


1,262,844


18.9 %


5,716,378


6,986,877


-18.2 %

Tax expense

342,278


247,113


38.5 %


1,330,369


1,703,140


-21.9 %

Net income

$       1,158,745


$      1,015,731


14.1 %


$      4,386,009


$      5,283,737


-17.0 %













Net income per diluted share

$                 0.76


$                0.66


14.1 %


$                2.87


$                3.45


-16.9 %

 

HISTORICAL TRENDS - QUARTERLY CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND SUPPLEMENTAL DATA (unaudited)


2022


2022


2021


Q4


Q3


Q2


Q1


Q4 vs. Q3


Q4


Q3


Q2


Q1

Interest income


















Loans, including fee income

$    4,604,085


$    4,320,361


$  4,035,473


$  3,916,572


6.6 %


$  4,361,123


$  5,200,935


$   4,967,402


$  4,763,112

Investment securities

759,110


748,819


748,082


659,878


1.4 %


566,608


502,460


485,823


423,879

Other interest income

177,102


102,959


26,809


7,897


72.0 %


13,907


13,540


6,688


6,144

        Total interest income

5,540,297


5,172,139


4,810,364


4,584,347


7.1 %


4,941,638


5,716,935


5,459,913


5,193,135

Interest expense


















Deposits

509,869


362,435


336,029


362,805


40.7 %


434,397


490,718


507,708


534,280

Repurchase agreements

1,646


1,374


1,300


1,293


19.8 %


1,375


1,466


891


1,079

FHLB advances

46,845


51,666


81,527


91,688


-9.3 %


101,800


109,882


163,552


175,472

Other borrowings

28,817


30,959


30,121


29,563


-6.9 %


31,250


32,967


34,341


34,937

        Total interest expense

587,177


446,434


448,977


485,349


31.5 %


568,823


635,033


706,492


745,768

Net interest income

4,953,120


4,725,705


4,361,387


4,098,998


4.8 %


4,372,815


5,081,902


4,753,421


4,447,367

Provision for loan losses

(90,000)


100,000


65,000


25,000


-190.0 %


230,000


120,000


120,000


90,000

        Net interest income after provision

5,043,120


4,625,705


4,296,387


4,073,998


9.0 %


4,142,815


4,961,902


4,633,421


4,357,367

Noninterest income


















Service charges

489,079


519,203


505,473


475,093


-5.8 %


485,620


480,290


445,963


417,139

Gain on sale of loans

42,898


73,284


105,506


194,246


-41.5 %


314,859


407,328


337,422


260,464

Gain on sale of securities

-


-


-


-


Na


-


-


4,310


-

Other noninterest income

82,172


246,512


93,737


82,262


-66.7 %


82,327


80,747


64,069


53,264

        Total noninterest income

614,149


838,999


704,716


751,601


-26.8 %


882,806


968,365


851,764


730,867

Noninterest expense


















Salaries and benefits

1,972,982


1,944,298


1,892,130


1,960,659


1.5 %


1,977,495


2,063,437


1,820,550


1,808,276

Occupancy and equipment

479,893


500,853


507,800


462,526


-4.2 %


590,861


512,155


508,652


513,208

Data processing and software

369,853


345,447


332,429


316,011


7.1 %


311,239


408,523


308,194


312,620

Other noninterest expense

1,333,518


1,100,503


925,680


787,715


21.2 %


883,183


893,689


790,844


839,505

        Total noninterest expense

4,156,246


3,891,101


3,658,039


3,526,911


6.8 %


3,762,777


3,877,804


3,428,240


3,473,609

Net income before tax

1,501,023


1,573,603


1,343,064


1,298,688


-4.6 %


1,262,844


2,052,463


2,056,945


1,614,625

Tax expense

342,278


373,544


316,794


297,753


-8.4 %


247,113


528,699


525,953


401,375

Net income

$    1,158,745


$    1,200,059


$  1,026,270


$  1,000,935


-3.4 %


$  1,015,731


$  1,523,764


$   1,530,992


$  1,213,250

Net income per diluted share

$   0.76


$   0.79


$   0.67


$   0.65


-3.8 %


$   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

Merger related costs

$        435,150


$                    -


$                   -


$                  -




$                  -


$                  -


$                  -


$                  -

 

SOURCE PSB Holding Corp.


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