FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended SEPTEMBER 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file number: 0-26480
PSB HOLDINGS, INC.
(Exact name of registrant as specified in charter)
WISCONSIN 39-1804877
(State of incorporation) (I.R.S Employer Identification
Number)
1905 WEST STEWART AVENUE
WAUSAU, WISCONSIN 54401
(Address of principal executive office)
Registrant's telephone number, including area code: 715-842-2191
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such report), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
The number of common shares outstanding at September 30, 1996 was 895,425.
<PAGE>
PSB HOLDINGS, INC.
FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 1996
PAGE NO.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statements of
Income, Nine Months and Three Months
Ended September 30, 1996 (unaudited)
and September 30, 1995 (unaudited) 1
Condensed Consolidated Balance
Sheets September 30, 1996 (unaudited)
and December 31, 1995 (derived from
audited financial statements) 2
Condensed Consolidated Statements
of Cash Flows Nine Months and Three
Months Ended September 30, 1996
(unaudited) and September 30, 1995
(unaudited) 3
Notes to Condensed Consolidated
Financial Statements 4
Item 2. Management's Discussion and
Analysis of Financial Condition
and Results of Operations 5
PART II. OTHER INFORMATION
Item 1. Exhibits and Reports on form 8-K 9
<PAGE>
PART I. FINANCIAL INFORMATION
<TABLE>
ITEM 1. FINANCIAL STATEMENTS
PSB HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF INCOME
<CAPTION>
($ thousands except share data -unaudited) Nine Months Ended Three Months Ended
September 30, September 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Interest income
Interest and fees on loans $ 8,687 $ 7,937 $ 2,953 $ 2,772
Interest on investment securities
Taxable 1,730 1,607 595 532
Tax-exempt 415 432 139 144
Other interest income 158 77 35 29
Total interest income 10,990 10,053 3,722 3,477
Interest expenses:
Deposits 5,271 4,669 1,792 1,666
Short-term borrowings 520 477 168 173
Total interest expense 5,791 5,146 1,960 1,839
Net interest income before provision
for losses on loans 5,199 4,907 1,762 1,638
Provisions for losses on loans 135 165 45 15
Net interest income 5,064 4,742 1,717 1,623
Other income:
Service fees 378 352 137 120
Insurance commissions 43 61 -0- 7
Net gains on other real estate 203 26 15 -0-
Net gains on securities sales -0- -0- -0- -0-
Other operating income 121 64 69 21
Total other income 745 503 221 148
Other expenses
Salaries and related benefits 1,696 1,535 550 498
Net occupancy expense 520 399 174 130
FDIC insurance 1 146 -0- (8)
Computer operations 184 142 15 47
Other operating expense 800 685 315 206
Total other expenses 3,201 2,907 1,054 873
Income before income taxes 2,608 2,338 884 898
Provision for income taxes 840 751 267 292
Net income $ 1,768 $ 1,587 $ 617 $ 606
Income per share
Basis: Weighted average of 902,375
shares in 1996
Weighted average of 902,425
shares in 1995
Net income per share $ 1.96 $ 1.76 $ .68 $ .67
</TABLE>
<PAGE>
<TABLE>
PSB HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
<CAPTION>
($ thousands) September 30, December 31,
1996* 1995*
ASSETS
<S> <C> <C>
Cash and cash equivalents $ 11,706 $ 10,868
Federal funds sold -0- 5,683
Investment securities -
Held to maturity
(Market value $11,784 & 10,429 11,784 10,333
at 1996 & 1995 respectively)
Available for sale (at fair market
value, cost $38,296 & 34,273 37,937 34,643
at 1996 & 1995 respectively)
Total loans 134,645 125,325
Allowance for loan losses (1,902) (1,781)
Net Loans 132,743 123,544
Bank premises and equipment 3,852 3,445
Other assets 2,787 2,265
TOTAL ASSETS $ 200,809 $ 190,781
LIABILITIES
Noninterest-bearing deposits $ 26,762 $ 26,560
Interest-bearing deposits 143,150 133,885
Total deposits 169,912 160,445
Federal funds purchased 3,745 -0-
Short-term borrowings 7,579 11,099
Other borrowed money 315 -0-
Other liabilities 1,138 1,785
Total liabilities 182,689 173,329
STOCKHOLDERS' EQUITY
Common stock - no par value with a stated
value of $2.00 per share
- 1,000,000 shares authorized
- 902,425 shares issued 1,805 1,805
Additional paid in capital 7,159 5,927
Retained earnings 9,695 9,488
Net unrealized gain (loss) on securities
available for sale (224) 232
Less: Treasury stock - 7,000 shares
at 9/30/96 (315) -0-
Total stockholders' equity 18,120 17,452
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 200,809 $ 190,781
<FN>
*The consolidated balance sheet at September 30, 1996 is unaudited. The
December 31, 1995 consolidated balance sheet is derived from audited financial
statements.
</TABLE>
<PAGE>
<TABLE>
PSB HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOW
<CAPTION>
Nine Months Ended Three Months Ended
September 30, September 30,
($ thousands - unaudited) 1996 1995 1996 1995
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income $ 1,768 $ 1,587 617 606
Provision for depreciation, and
net amortization 268 216 86 78
Provisions for loan losses 135 165 45 15
Gain on sale of other real estate (203) -0- (15) -0-
Changes in operating assets and
liabilities:
Other assets (575) 307 (27) (26)
Other liabilities (307) (493) 71 (212)
Net cash provided by operating activities 1,086 1,782 777 461
Cash flows from investing activities:
Proceeds from sale and maturities of:
Held to maturity securities 1,146 953 175 200
Available for sale securities 11,738 9,188 1,661 1,941
Payment for purchase of:
Held to maturity securities ( 2,609) ( 2,584) (818) ( 1,102)
Available for sale secruities (15,495) ( 6,514) (3,462) ( 1,003)
Net change in loans ( 9,334) (10,132) (5,071) ( 2,836)
Net decrease in
federal funds sold 5,683 -0- 2,506 1,248
Proceeds from sale of other real estate 230 35 15 12
Capital expenditures (656) (954) (16) (615)
Net cash used in investing activities ( 9,297) (10,008) (5,010) ( 2,155)
Cash flows from financing activities:
Net increase in deposits 9,468 11,300 5,805 2,374
Net increase (decrease) in short-term
borrowings ( 3,521) 1,807 (4,686) ( 513)
Net increase (decrease) federal funds
purchased 3,745 ( 4,810) 3,745 189
Proceeds from exercise of stock options -0- -0- -0- -0-
Dividends paid ( 328) ( 378) -0- ( 17)
Purchase of treasury stock ( 315) -0- ( 315) -0-
Net cash provided by financing activities 9,049 7,919 4,549 2,033
Net increase (decrease) in cash and
cash equivalents 838 ( 307) 316 339
Cash and cash equivalents at beginning
of period 10,868 9,018 11,390 8,372
Cash and cash equivalents at end of
period $11,706 $ 8,711 $ 11,706 $ 8,711
Supplemental cash flow Information:
Cash paid during the period for :
Interest 5,791 5,146 1,960 1,839
Income taxes 825 710 320 216
</TABLE>
<PAGE>
PSB HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The accompanying financial statements in the opinion of management
reflect all adjustments which are normal and recurring in nature and
which are necessary for a fair statement of the results for the
periods presented. In all regards, the financial statements have been
presented in accordance with generally accepted accounting principles.
2. Earnings per share of common stock is based on the weighted average
number of common shares outstanding.
3. Refer to notes to the financial statements which appear in the 1995
annual report for the company's accounting policies which are
pertinent to these statements.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(All $ amounts are in thousands, except per share amounts)
RESULTS OF OPERATIONS
TOTAL ASSETS
Total assets have increased by over $10,000 from December 31, 1995 to
September 30, 1996. This is an increase of 5.3%. Loan growth is
primarily responsible for the increase in
assets.
LOANS
Net loans have increased by $9,200 from December 31, 1995 to September 30,
1996. This is an increase of 7.4%.
CASH AND INVESTMENTS
Investments & Fed Funds Sold have decreased $938 as a whole in the first
nine months of 1996. Fed Funds Sold as of year end have been reinvested
in U.S. Government securities.
DEPOSITS
Deposit growth from December 31, 1995 to September 30, 1996 was $9,500.
This is an increase of 5.9%. Deposit growth was used to fund loan growth.
SHORT TERM BORROWINGS
Short term borrowings increased $225 as of September 30, 1996, an increase
of 2.0%. Repurchase agreements decreased $3,500 or 31.7% but were
replaced by Fed Funds Purchased of $3,745 at September 30, 1996. Funds
totalling $315 were used to purchase Treasury Stock.
EQUITY
Equity grew by $668 or 3.8% due to 1996 Net Income of $1,768 less an
increase in the "Unrealized loss on securities available for Sale" of
$456, cash dividends declared, and the acquisition of $315 in Treasury
Stock. The increase in the unrealized loss on securities available for
sale is a result of the market prices of the investment portfolio
experiencing some losses as of September 30, 1996.
<PAGE>
OPERATING DATA SUMMARY
GENERAL
Net interest income for the first three quarters of 1996 is 6.8% higher
than it was for the
same period in 1995. This increase occurred despite the overall increase
in deposit rates. Net interest income for the third quarter of 1996 is
5.8% higher than the same period in 1995.
NON-INTEREST INCOME
Non-interest income increased by 48.1% from the period ending September
30, 1996 compared to the period ending September 30, 1995. Part of this
increase is attributed to the net gain on sale of Other Real Estate. Non-
interest income has also increased for 1996 compared to 1995 with the
implementation of our investment center and the commissions generated by
it.
NON-INTEREST EXPENSE
Non-interest expenses increased 10.1% for the period ending September 30,
1996 when
compared to the period ending September 30, 1995. The primary reasons for
the change are an increase in overhead costs from adding a new branch
office and the operating costs attributed to growth. Computer operation
expense increased as a result of our conversion to an in-house processing
system. These expenses were offset by a significant decrease in FDIC
Insurance premiums.
NET INCOME
Net income for nine months of 1996 is 11.4% higher than the same period in
1995 and earnings per share increased from $1.76 to $1.96, or 11.4%. Net
income for the third quarter of 1996 was 1.8% higher than the same period
of 1995 and Earnings per share was 1.5% higher in 1996 compared to 1995.
<PAGE>
<TABLE>
<CAPTION>
KEY OPERATING RATIOS
(unaudited) Ended September 30, 1996
NINE MONTH PERIOD THREE MONTH PERIOD
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Return on assets (net income divided
by average assets) (1) 1.21% 1.20% 1.24% 1.34%
Return on Average Equity (net income
divided by average equity) (1) 13.18% 14.44% 13.72% 14.93%
Average Equity to Average Assets 9.18% 9.25% 9.05% 8.98%
Interest Rate Spread (difference
between average yield on interest
earning assets and average cost of
interest bearing liabilities) (1) 2.95% 3.11% 2.98% 2.90%
Net Interest Margin (net interest
income as a percentage of average
interest earning assets (1) 3.73% 3.83% 3.75% 3.84%
Non-interest Expense to average
assets (1) 2.19% 2.19% 2.12% 1.93%
Allowance for loan losses to total
loan at end of period 1.41% 1.46% 1.41% 1.46%
<FN>
(1) Annualized
</TABLE>
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K:
(a) Exhibits required by Item 601 of Regulation S-K.
EXHIBIT (3) - ARTICLES OF INCORPORATION AND PAGE<dagger>
BYLAWS
(a) Restated Articles of Incorporation,
as amended ................................... 9(1)
(b) Bylaws ....................................... 11(2)
EXHIBIT (4) - INSTRUMENTS DEFINING THE RIGHTS OF
SECURITY HOLDERS
(a) Articles of Incorporation and
Bylaws (see Exhibits 3(a) and (b))
EXHIBIT (10) - MATERIAL CONTRACTS
(a) Bonus Plan of Directors of the Bank .......... 54(2)
(b) Bonus Plan of Officers and Employees of the
Bank ......................................... 55(2)
(c) Non-Qualified Retirement Plan for Directors
of the Bank .................................. 56(2)
EXHIBIT (21) - SUBSIDIARIES OF THE REGISTRANT ..... 57(2)
EXHIBIT (27) - FINANCIAL DATA SCHEDULE
<dagger>Page numbers set forth herein correspond to the
page numbers using the sequential numbering system for
documents filed on paper or the page numbers as filed via
EDGAR in electronic format where such exhibit can be found
in the following reports of the company (Commission File
No. 0-26480) filed with the Securities and Exchange
Commission:
(1) Registrant's current report on Form 8-K dated
May 30, 1995.
(2) Registrant's annual report on Form 10-K for
the fiscal year ended December 31, 1995
(b) Reports on Form 8-K:
None
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PSB HOLDINGS, INC.
November 12, 1996 TODD R. TOPPEN
Todd R. Toppen
Secretary and Controller
(On behalf of the Registrant and as
Principal Financial Officer)
<PAGE>
EXHIBIT INDEX<dagger>
TO
FORM 10-Q
OF
PSB HOLDINGS, INC.
FOR THE PERIOD ENDED SEPTEMBER 30, 1996
Pursuant to section 102(d) of Regulation S-T
(17 C.F.R. <section>232.102(d))
EXHIBIT 27 - FINANCIAL DATA SCHEDULE
<dagger> Exhibits required by Item 601 of Regulation S-K which
have been previously filed and are incorporated by reference
are set forth in Part II, Item 6(a) of the Form 10-Q to which
this Exhibit Index relates.
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 11,706
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 37,937
<INVESTMENTS-CARRYING> 11,784
<INVESTMENTS-MARKET> 11,784
<LOANS> 134,645
<ALLOWANCE> 1,902
<TOTAL-ASSETS> 200,809
<DEPOSITS> 169,934
<SHORT-TERM> 11,324
<LIABILITIES-OTHER> 1,197
<LONG-TERM> 0
0
0
<COMMON> 1,805
<OTHER-SE> 16,630
<TOTAL-LIABILITIES-AND-EQUITY> 200,809
<INTEREST-LOAN> 8,687
<INTEREST-INVEST> 2,145
<INTEREST-OTHER> 158
<INTEREST-TOTAL> 10,990
<INTEREST-DEPOSIT> 5,271
<INTEREST-EXPENSE> 5,791
<INTEREST-INCOME-NET> 5,199
<LOAN-LOSSES> 135
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 3,201
<INCOME-PRETAX> 2,608
<INCOME-PRE-EXTRAORDINARY> 2,608
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,741
<EPS-PRIMARY> 1.93
<EPS-DILUTED> 1.93
<YIELD-ACTUAL> 3.82
<LOANS-NON> 335
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 1,564
<ALLOWANCE-OPEN> 1,781
<CHARGE-OFFS> 44
<RECOVERIES> 30
<ALLOWANCE-CLOSE> 1,902
<ALLOWANCE-DOMESTIC> 1,902
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
