PSB Group, Inc. Announces Second-Quarter Financial Results
MADISON HEIGHTS, Mich., Jul 30, 2010 (GlobeNewswire via COMTEX News Network) -- PSB Group, Inc., (OTCBB:PSBG), the bank holding company for Peoples State Bank (PSB), a Michigan state-chartered bank with offices in Wayne, Oakland, Macomb and Genesee Counties, today reported net operating loss of $824 thousand or $0.24 per average outstanding share for the three months ended June 30, 2010 compared with net operating income of $83 thousand or $.02 per average outstanding share for the first quarter of 2010, and a net operating loss of $1.452 million or $0.42 per average outstanding share for the second quarter of 2009.
Balance Sheet
Total assets at June 30, 2010 were $445.6 million compared to $458.2 million at March 31, 2010, and $489.7 million at June 30, 2009. Total loans were $343.5 million as of June 30, 2010 compared to $352.4 million at March 31, 2010, and $369.6 million at June 30, 2009. Total deposits were $426.7 million as of June 30, 2010 compared to $438.6 million at March 31, 2010, and $445.3 million at June 30, 2009. The Bank's Tier 1 capital to total assets ratio was 3.62% at June 30, 2010 versus the 8% required by the FDIC and the Michigan Office of Financial and Insurance Regulation as a result of the September 2009 stipulation and consent to the issuance of an order to cease and desist.
Peoples State Bank continues to benefit from a dedicated process for deposit acquisition as evidenced by the growth in non-interest bearing deposits. During the quarter, the Bank did allow some higher priced deposits to leave the institution, as this action strategically supported the Bank's goal to contract the size of the institution. PSB remains fully funded through the use of local deposits. The Bank did not borrow any funds during the quarter and does not utilize brokered deposits. The Bank continues to look for scarce, prudent lending opportunities which fit the risk tolerance in the fragile Michigan economy. As a result, relative to the size of the Balance Sheet, Investments and Cash continue to comprise about 19% of Total Assets at June 30, 2010. Peoples State Bank remains firmly committed to serving Southeast Michigan and its surrounding communities.
Income Statement
Net interest income before provision for loan losses for the quarter was $4.2 million compared to $4.1 million for the first quarter of 2010, and $4.0 for the second quarter of 2009. The improvement can be attributed to continued pricing discipline related to funding costs and improvements to the mix of non-interest bearing and interest bearing deposits.
Non-interest income for the quarter was $1.3 million, up 13.95% from the prior quarter. Service charges on deposit accounts were $596 thousand compared to $608 thousand for the first quarter of 2010, and $604 thousand for the second quarter of 2009. These results were in line with expectations. The Bank is closely monitoring the impact of new financial regulation and its effect on fee income.
The net interest margin for the quarter ending June 30, 2010 improved to 3.87%. This compares to a net interest margin of 3.78% for the first quarter of 2010, and 3.47% for the second quarter of 2009. The improvements in the margin from the prior quarter were again due largely to improvements in funding costs. The margin remains impacted by elevated levels of non-performing loans as well as lower yields on some earning assets.
Total non-interest expenses also improved during the quarter. Total non-interest expenses were $4.3 million for the quarter compared to $4.8 million for the first quarter of 2010, and $4.8 million in second quarter of 2009. This represents a 10% improvement from the first quarter and a 10% improvement from the second quarter of 2009. The Bank continues to improve efficiencies and procedures as well as review and improve third party supplier agreements which have helped to reduce operating costs. The Bank also concluded the sale of its Southfield branch office building at the end of the quarter. This will help to further control operating costs in subsequent quarters.
The total number of staff full time equivalents (FTE) was 118.5 at June 30, 2010 down from 124.0 at March 31, 2010 and 130.0 at June 30, 2009. The primary reason for the decrease from the prior quarter was a reduction in force within the residential mortgage department. As the mortgage activity remains soft in Southeast Michigan, it was prudent to scale back until such time that a consistent pattern in purchase and refinance volumes would support the expansion of the department.
Management remains very pleased by the drive and dedication exhibited by our associates, who continue a tradition of professional service which was first established in 1909.
Finally, other real estate owned expenses of $201 thousand reflect a 31% reduction versus first quarter 2010. This was largely due to property liquidations where sales prices accurately reflected our valuations.
Asset Quality
Total non-performing loans, including Trouble Debt Restructured (TDR), at quarter end were $74.5 million vs. $72.5 million in the first quarter of 2010. Other real estate owned was $7.1 million at June 30, 2010 vs. $6.3 million at March 31, 2010. For the quarter ending June 30, 2010, total non-performing assets stood at 18.3% of Total Assets. Troubled Renegotiated Debt increased $1.6 million during the second quarter. Troubled Renegotiated Debt represents 44% of the non-performing loans. These loans are performing as agreed under their renegotiated terms with the Bank. The rate of growth in non-performing assets slowed significantly during the quarter to only 3%. This compares to an average quarterly growth of better than 15% in the prior two quarters.
The provision for loan losses for the quarter was $2.0 million compared to $386 thousand in the first quarter of 2010, and $2.5 million for the second quarter of 2009. The loan loss reserve of $8.1 million represented 2.35% of total loans at June 30, 2010. This compares with a reserve of 2.56% or $9.0 million dollars at March 31, 2010. The Loan Loss Reserve is reviewed regularly and the reserve level is adjusted as appropriate given the quality and composition of the loan portfolio.
Hank Thiemann, President and Chief Executive Officer, commented, "This organization has made significant internal progress over the past several quarters. The management team and staff are fully committed to success and to continuing the Bank's proud history of serving its many communities. Our economy in Southeastern Michigan is just beginning to show some initial signs of recovery. Our communities, along with our banking industry, need much more time to stabilize, renew and reestablish."
Mr. Thiemann concluded his comments by saying, "Future challenges require a careful process of regular and ongoing testing of the balance sheet, prudent problem loan management, continuous review of operational efficiencies and objective analyses of strategic alternatives. Peoples State Bank is in its 101st year and the entire staff is working diligently to confront those challenges."
Except for the historical information contained herein, the matters discussed in the Release may be deemed forward-looking statements that involve risk and uncertainties. Words or phrases "will likely result", "are expected to", "expect", "is anticipated", "estimate", "project", or similar expressions are intended to identify "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Factors which could cause actual results to differ, include, but are not limited to, fluctuations in interest rates, changes in economic conditions of the bank's market area, changes in policies by regulatory agencies, the failure of assumptions and estimates underlying the establishment of reserves for possible loan losses, the failure of assumptions and estimates used in our reviews of our loan portfolio, changes in the values of residential and commercial real estate, the acceptance of new products, the impact of competitive products and pricing and the other risks detailed from time to time in the Bank's and Corporation's reports. These forward-looking statements represent the Corporation's judgment as of the date of this report. The Corporation disclaims, however, any intent or obligation to update these forward-looking statements.
PSB Group, Inc. is a registered holding company. Its primary subsidiary, Peoples State Bank, currently serves the southeastern Michigan area with 11 full-service banking offices in Farmington Hills, Fenton, Grosse Pointe Woods, Hamtramck, Madison Heights, Southfield, Sterling Heights, Troy and Warren. The Bank has operated continuously under local ownership and management since it first opened for business in 1909.
The Peoples State Bank logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=5969
PSB Group, Inc.
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QUARTERLY STATEMENT OF
INCOME
6/30/2010 3/31/2010 12/31/2009 9/30/2009 6/30/2009
--------- --------- ---------- --------- ----------
Interest Income
Loans, including fees $ 4,789 $ 4,968 $ 4,892 $ 5,122 $ 5,632
Securities:
Taxable 580 527 526 580 589
Tax-exempt 11 26 48 54 54
Federal Funds Sold 9 15 9 10 3
--------- --------- ---------- --------- ----------
Total interest income 5,389 5,536 5,475 5,766 6,278
Interest Expense
Deposits 1,223 1,389 1,793 2,148 2,192
Short-term borrowings 0 0 9 0 0
Long term debt 0 0 0 78 106
--------- --------- ---------- --------- ----------
Total interest expense 1,223 1,389 1,802 2,226 2,298
Net Interest Income -
before provision for loan
losses 4,166 4,147 3,673 3,540 3,980
Provision for Loan Losses 1,955 386 9,791 1,620 2,541
--------- --------- ---------- --------- ----------
Net Interest Income -
after provision for loan
losses 2,211 3,761 (6,118) 1,920 1,439
Other Operating Income
Service charges on
deposit accounts 596 608 659 670 604
Gain on sale of mortgages 94 116 119 119 175
Gain (loss) on sale of
available-for-sale
securities 222 4 173 866 847
Other income 386 411 393 240 296
--------- --------- ---------- --------- ----------
Total other operating
income 1,298 1,139 1,344 1,895 1,922
Other Expenses
Salaries and employee
benefits 1,934 1,782 1,976 1,933 2,025
Occupancy Costs 521 752 831 792 798
Legal and professional 430 566 640 340 312
ORE Expenses 201 292 980 231 352
FDIC Insurance 509 662 360 294 602
Other 738 763 767 898 724
--------- --------- ---------- --------- ----------
Total other operating
expenses 4,333 4,817 5,554 4,488 4,813
Income (loss) -- before
federal income tax
expense (benefit) (824) 83 (10,328) (673) (1,452)
Federal Income Tax Expense
(benefit) 0 0 (1,300) 0 0
--------- --------- ---------- --------- ----------
Net Income (Loss) $ (824) $ 83 $ (9,028) $ (673) $ (1,452)
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PSB Group, Inc.
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ASSETS
---------------------------
06/30/10 03/31/10 12/31/09 09/30/09 06/30/09
---------- ---------- ---------- ---------- ----------
Cash and Due from Banks 8,718 7,768 8,554 7,696 8,249
Federal Funds Sold 33,849 11,541 20,706 12,002 7,763
Investment Securities -
available for sale at
market 39,927 68,047 60,031 69,618 79,545
Loans 343,480 352,369 354,263 363,708 369,580
Less: Allowance for Loan
Losses (8,061) (9,037) (9,469) (7,327) (7,044)
---------- ---------- ---------- ---------- ----------
Net Loans 335,419 343,332 344,794 356,381 362,536
---------- ---------- ---------- ---------- ----------
Loans Held for Sale 794 428 774 1,733 2,525
Premises and Equipment 15,253 15,768 15,937 16,148 16,395
Accrued Interest Receivable 2,108 2,423 2,244 2,473 2,770
Other Real Estate Owned 7,148 6,329 6,235 6,993 8,042
Other Assets 2,336 2,545 2,754 1,255 1,856
---------- ---------- ---------- ---------- ----------
Total Assets $ 445,552 $ 458,181 $ 462,029 $ 474,299 $ 489,681
========== ========== ========== ========== ==========
LIABILITIES & STOCKHOLDERS'
EQUITY
---------------------------
Deposits:
Non - Interest Bearing 57,490 56,972 54,647 54,330 55,450
Interest Bearing 369,165 381,636 388,098 385,721 389,822
---------- ---------- ---------- ---------- ----------
Total Deposits 426,655 438,608 442,745 440,051 445,272
---------- ---------- ---------- ---------- ----------
FHLB Advances -- -- -- 5,500 15,000
Long Term Debt 128 128 282 282 282
Accrued Interest Payable
and
Other Liabilities 2,335 2,285 2,284 2,351 2,985
---------- ---------- ---------- ---------- ----------
Total Liabilities 429,118 441,021 445,311 448,184 463,539
---------- ---------- ---------- ---------- ----------
Stockholders' Equity:
Common Stock (no par
value) 23,604 23,667 23,692 23,693 23,693
Unearned ESOP Benefits (128) (128) (282) (282) (282)
Common Stock Held in Trust (410) (410) (410) (410) (410)
Deferred Compensation
Obligation 410 410 410 410 410
Add'l Paid in
Capital-stock
options/awards 1,350 1,250 1,096 1,015 923
Unearned Compensation (1,287) (1,287) (1,182) (1,168) (1,168)
Undivided Profits (7,481) (6,657) (6,740) 2,288 2,961
Unrealized gain/(loss) on
securities available for
sale 376 315 134 569 15
---------- ---------- ---------- ---------- ----------
Total Stockholders' Equity 16,434 17,160 16,718 26,115 26,142
---------- ---------- ---------- ---------- ----------
Total Liabilities &
Stockholders' Equity $ 445,552 $ 458,181 $ 462,029 $ 474,299 $ 489,681
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This news release was distributed by GlobeNewswire, www.globenewswire.com
SOURCE: Peoples State Bank
CONTACT: Peoples State Bank David A. Wilson, Senior Vice President & CFO (248) 548-2900
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