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
|
|
$
-
|
|
$
-
|
|
$
-
|
|
|
|
$
-
|
|
$
-
|
|
$
-
|
|
$
-
|
View original
content:https://www.prnewswire.com/news-releases/psb-holding-corp-reports-2022-results-301732418.html
SOURCE PSB Holding Corp.