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 MARCH 31, 1998
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:
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 March 31, 1998 was 883,235.
<PAGE>
PSB HOLDINGS, INC.
FORM 10-Q
QUARTER ENDED MARCH 31, 1998
PAGE NO.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statements of
Income, Three Months Ended
March 31, 1998 (unaudited) and
March 31, 1997 (unaudited) 1
Condensed Consolidated Balance
Sheets March 31, 1998 (unaudited)
and December 31, 1997 (derived from
audited financial statements) 2
Condensed Consolidated Statements
of Cash Flows Three Months
Ended March 31, 1998 (unaudited)
and March 31, 1997 (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. Legal Proceedings 10
Item 2. Changes in Securities 10
Item 3. Defaults Upon Senior Securities 10
Item 4. Submission of Matters to Vote of Securities
Holders 10
Item 5. Other Information 10
Item 6. Exhibits and Reports on form 8-K 11
-i-
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
PSB HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF INCOME
<CAPTION>
($ thousands except share data -unaudited) Three Months Ended
March 31,
1998 1997
<S> <C> <C>
Interest Income
Interest and fees on loans $3,372 $2,994
Interest on investment securities
Taxable 583 611
Tax-exempt 148 142
Other interest income 43 10
Total interest income 4,146 3,757
Interest Expenses:
Deposits 2,036 1,901
Short-term borrowings 128 77
Total interest expense 2,164 1,978
Net interest income 1,982 1,779
Provisions for losses on loans 75 45
Net Interest Income After Provision for Loan Losses 1,907 1,734
Other income:
Service fees 131 117
Insurance commissions 8 26
Net security gains 36 -0-
Net gain on other real estate -0- -0-
Other operating income 89 45
Total other income 264 188
Other Expenses
Salaries and related benefits 1,046 590
Net occupancy expense 194 188
FDIC insurance 6 5
Computer operations 24 8
Other operating expense 354 268
Total other expenses 1,624 1,059
Income before income taxes 547 863
Provision for income taxes 157 282
Net income $ 390 $ 581
Income per share
Basis: Weighted Average of 883,235 shares in 1998
Weighted Average of 895,425 shares in 1997
Net income per share $ .44 $ .65
</TABLE>
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<PAGE>
<TABLE>
PSB HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
<CAPTION>
($ thousands) March 31, December 31,
1998* 1997*
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 9,121 $ 10,623
Interest bearing deposits with banks 581 153
Federal Funds Sold 3,705 -0-
Investment Securities -
Held to Maturity
(Market Value $12,852 & $12,704 12,695 12,549
at 1998 & 1997 respectively)
Available for sale (at fair market
value, cost $34,874 & $37,422 35,025 37,579
at 1998 & 1997 respectively)
Total Loans 151,208 149,317
Allowance for Loan Losses (1,906) (1,845)
Net Loans 149,302 147,472
Bank premises and equipment 3,929 3,746
Other Assets 2,691 2,897
TOTAL ASSETS $217,049 $215,019
LIABILITIES
Noninterest-bearing Deposits $ 25,630 $ 27,564
Interest-bearing Deposits 160,712 159,038
Total Deposits 186,342 186,602
Short-term borrowings 3,631 3,960
Long-term borrowings 6,000 3,000
Other Liabilities 1,472 2,239
Total liabilities 197,445 195,801
STOCKHOLDERS' EQUITY
Common stock - no-par value, with a stated
value of $2 per share
- 1,000,000 shares authorized
- 902,425 shares issued 1,805 1,805
Additional paid-in capital 7,159 7,159
Retained earnings 11,346 10,956
Net unrealized gain (loss) on securities
available for sale, net of tax 97 101
Treasury stock, at cost - 19,190 shares in 1997
7,000 shares in 1996 (803) (803)
Total stockholders' equity 19,604 19,218
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $217,049 $215,019
<FN>
*The consolidated balance sheet at March 31, 1998 is unaudited. The
December 31, 1997 consolidated balance sheet is derived from audited financial
statements.
</TABLE>
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<PAGE>
<TABLE>
PSB HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOW
<CAPTION>
Three Months Ended
March 31,
($ thousands - unaudited) 1998 1997
<S> <C> <C>
Cash flows from operating activities:
Net income $ 390 $ 581
Provision for depreciation, and
net amortization 96 113
Provisions for loan losses 75 45
Changes in operating assets and liabilities:
Gain on sale of securities available for sale (36) 0
Other assets 206 (145)
Other liabitities (767) (739)
Net cash used in operating activities (36) (145)
Cash flows from investing activities:
Proceeds from sale and maturities of:
Held to maturity securities 265 200
Available for sale securities 8,010 2,977
Payment for purchase of:
Held to maturity securities (415) (1,066)
Available for sale securities (5,399) (495)
Net change in loans (1,905) (221)
Net (increase) decrease in interest-bearing
deposits with banks (428) -0-
Net increase in
federal funds sold (3,705) -0-
Proceeds from sale of other real estate -0- -0-
Capital expenditures (300) (79)
Net cash provided by (used in) investing activities (3,877) 1,316
Cash flows from financing activities:
Net increase (decrease) in deposits (260) (126)
Net increase (decrease) in short-term borrowings (329) 463
Net increase (decrease) in long-term borrowings 3,000 (598)
Proceeds from exercise of stock options -0- -0-
Dividends paid -0- -0-
Net cash used in financing activities 2,411 (261)
Net increase (decrease) in cash and cash equivalents (1,502) 910
Cash and cash equivalents at beginning of year 10,623 10,152
Cash and cash equivalents at end of quarter $ 9,121 $11,062
Supplemental Cash Flow Information:
Cash paid during the period for :
Interest 2,164 1,978
Income taxes -0- 46
</TABLE>
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<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 1997
annual report for the company's accounting policies which are
pertinent to these statements.
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<PAGE>
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 $2,030 from December 31, 1997 to March 31,
1998. This is an increase of.94%. In 1997, first quarter assets
decreased $628 or .31%.
LOANS
Net loans have increased by $1,830 from December 31, 1997 to March 31,
1998. This is an increase of 1.24%. Home Equity Loan growth has
contributed mostly to this increase. In 1997, first quarter loans
increased $177 or .13%.
CASH AND INVESTMENTS
Cash decreased by $1,502 as of March 31, 1998 compared to December 31,
1997. Efforts have been made at decreasing this non-earning asset.
Investments also decreased by $2,408. A $1,500 security was sold and not
replaced during the first quarter of 1998. A gain of $36 was realized on
the sale.
DEPOSITS
Deposits decreased slightly by $260 from December 31, 1997 to March 31,
1998. In 1997, first quarter deposits decreased by $127.
SHORT TERM BORROWINGS
There were no Fed funds purchased as of March 31, 1998. Repurchase
agreements decreased by $329 from December 31, 1997 to March 31, 1998.
LONG TERM BORROWINGS
An additional advance of $3,000 was taken out at the FHLB Chicago in the
first quarter of 1998.
EQUITY
Equity grew by $386 or 2.01% due to the following: Net income for the
first three months of $390 and a decrease in the "Net unrealized gain on
securities available for sale" of $4. The decrease in the unrealized gain
is a result of the market prices of the investment portfolio dropping as
of March 31, 1998. In the first quarter of 1997 equity grew by $373 or
2.04%.
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<PAGE>
OPERATING DATA SUMMARY
GENERAL
Net interest income for the first quarter of 1998 is $203 or 11.41%
greater than it was for the same period in 1997. In 1997 Net interest
income for the first quarter was $54 greater than the first quarter of
1996.
NON-INTEREST INCOME
Non-interest income increased by $76 or 40.43% from the period ending
March 31, 1998 compared to the period ending March 31, 1997. This
increase is attributable to the implementation of a profit improvement
project which in many areas increased our service charges and fees for
services.
NON-INTEREST EXPENSE
Non-interest expenses increased 53.35% or $565 for the period ending March
31, 1998 when compared to the period ending March 31, 1997. An additional
Pension Plan expense of $403 from the termination of our DB Pension Plan
and expenses related to the opening of a supermarket branch in March of
1998 contributed to this increase.
NET INCOME
Net income for three months of 1998 is 32.87% lower than the same period
in 1997 and earnings per share decreased from $.65 to $.44, or 32.31%.
Again, the additional expenses outlined above attributed to the lower
first quarter results of operations.
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<PAGE>
<TABLE>
KEY OPERATING RATIOS
(unaudited) Ended March 31, 1998
<CAPTION>
THREE MONTH PERIOD
1998 1997
<S> <C> <C>
Return on assets (net income divided
by average assets) (1) .73% 1.15%
Return on Average Equity (net income
divided by average equity) (1) 8.10% 12.65%
Average Equity to Average Assets 8.96% 9.12%
Interest Rate Spread (difference between
average yield on interest earning assets
and average cost of interest bearing
liabilities) (1) 3.15% 3.01%
Net Interest Margin (net interest income as
a percentage of average interest earning
assets (1) 3.96% 3.78%
Non-interest Expense to average assets (1) 2.58% 2.10%
Allowance for loan losses to total loans
at end of period 1.24% 1.37%
<FN>
(1) Annualized
</TABLE>
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<PAGE>
SUMMARY OF LOAN LOSS EXPERIENCE
The following table summarizes loan balances at the end of each period,
changes in the allowance for loan losses arising from loans charged off
and recoveries on loans previously charged off, by loan category and
additions to the allowance which have been charged to expense.
<TABLE>
<CAPTION>
Three Months Ended Year Ended
MARCH 31, 1998 DECEMBER 31, 1997
<S> <C> <C>
Allowance for loan losses at
beginning of period $1,845,064 $1,924,686
Loans charged off
Commercial & Industrial -0- (155,650)
Agricultural -0- -0-
Real Estate - Mortgage -0- (136,011)
Installment & Other
Consumer Loans (14,254) (58,581)
Total Charge Offs (14,254) (350,242)
Recoveries on loans previously
charged off
Commercial & Industrial 105 17,538
Agricultural -0- -0-
Real Estate - Mortgage -0- 18,582
Installment & Other
Consumer Loans 331 4,500
Total Recoveries 436 40,620
Net loans charged off (13,818) (309,622)
Additions charged to operations 75,000 230,000
Allowance for loan losses
at end of period $1,906,246 $1,845,064
</TABLE>
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<PAGE>
<TABLE>
AGGREGATE AMOUNT OF NON-PERFORMING LOANS
<CAPTION>
March 31, December 31,
1998 1997
<S> <C> <C>
Loans on a non-accrual basis
Real estate - mortgage $ 350,133 $332,655
Installment loans 106,083 54,665
Credit cards & related plans -0- -0-
Commercial & all other loans 681,218 447,554
Total non-accrual $1,137,434 $834,874
Loans contractually past due
thirty through eighty-nine days
and still accruing
Real estate - mortgage $ 913,197 $153,578
Installment loans 337,382 162,243
Credit cards & related plans -0- -0-
Commercial & all other loans 1,601,294 57,268
Total 30 - 89 days $2,851,873 $373,089
Loans contractually past due
ninety days or more as to
interest or principal payments
Real estate - mortgage $ -0- $ 7,117
Installment loans -0- -0-
Credit cards & related plans -0- -0-
Commercial & all other loans -0- -0-
Total over 90 days $ -0- $ 7,117
</TABLE>
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<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not Applicable
ITEM 2. CHANGES IN SECURITIES
Not Applicable
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITIES HOLDERS
Not Applicable
ITEM 5. OTHER INFORMATION
Not Applicable
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<PAGE>
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 BYLAWS
PAGE OR
INCORPORATED
EXHIBIT<dagger>
(i) Restated Articles of Incorporation, as amended.... 4(a)(1)
(ii) Bylaws ........................................... 4(b)(1)
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* ............ 10(a)(2)
(b) Bonus Plan of Officers and Employees of the Bank* 10(b)(2)
(c) Non-Qualified Retirement Plan for Directors of
the Bank* ....................................... 10(c)(2)
EXHIBIT (21) - SUBSIDIARIES OF THE REGISTRANT......... 22(2)
EXHIBIT (27) - FINANCIAL DATA SCHEDULE
*Denotes Executive Compensation Plans and Arrangements.
<dagger>Where exhibit has been previously filed and is
incorporated herein by reference, exhibit numbers set forth
herein correspond to the exhibit number where such exhibit can
be found in the following reports of the registrant (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
-11-
(b) Reports on Form 8-K:
None.
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<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.
May 12, 1998 TODD R. TOPPEN
Todd R. Toppen
Secretary and Controller
(On behalf of the Registrant and as
Principal Financial Officer)
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<PAGE>
EXHIBIT INDEX<dagger>
TO
FORM 10-Q
OF
PSB HOLDINGS, INC.
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1998
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 IV, Item 14(c) of the Form
10-Q to which this Exhibit Index relates.
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 9,121
<INT-BEARING-DEPOSITS> 581
<FED-FUNDS-SOLD> 3,705
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 35,025
<INVESTMENTS-CARRYING> 12,695
<INVESTMENTS-MARKET> 12,852
<LOANS> 151,208
<ALLOWANCE> 1,906
<TOTAL-ASSETS> 217,049
<DEPOSITS> 186,342
<SHORT-TERM> 3,631
<LIABILITIES-OTHER> 1,472
<LONG-TERM> 6,000
0
0
<COMMON> 1,805
<OTHER-SE> 17,799
<TOTAL-LIABILITIES-AND-EQUITY> 217,049
<INTEREST-LOAN> 3,372
<INTEREST-INVEST> 731
<INTEREST-OTHER> 43
<INTEREST-TOTAL> 4,146
<INTEREST-DEPOSIT> 2,036
<INTEREST-EXPENSE> 2,164
<INTEREST-INCOME-NET> 1,982
<LOAN-LOSSES> 75
<SECURITIES-GAINS> 36
<EXPENSE-OTHER> 1,624
<INCOME-PRETAX> 547
<INCOME-PRE-EXTRAORDINARY> 547
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 390
<EPS-PRIMARY> .44
<EPS-DILUTED> .44
<YIELD-ACTUAL> 3.96
<LOANS-NON> 1,137
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 2,852
<ALLOWANCE-OPEN> 1,845
<CHARGE-OFFS> 14
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 1,906
<ALLOWANCE-DOMESTIC> 1,906
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
