PSB Holding Corp. (OTCQX:PSBP) (the “Company”), the parent company of Provident State Bank, Inc. (“Provident” or the “Bank”), reported net income of $1.20 million ($.79 per diluted common share) for the three months ended September 30, 2022, compared to $1.52 million ($1.00 per diluted common share) for the same period of 2021. For the nine months ended September 30, 2022, net income totaled $3.23 million ($2.12 per diluted common share), compared to $4.27 million ($2.78 per diluted common share) for the nine months ended September 30, 2021. The decline in net income during each comparative period was primarily attributable to a reduction in revenue associated with the Small Business Administration (“SBA”) Payroll Protection Program (“PPP”).
Performance Review
Small Business Administration’s Payroll Protection Program
The Bank’s participation in the SBA’s PPP, established in April 2020, contributed more significantly to financial performance during the three quarters of 2021 as compared to the same quarters of 2022. During the three months ended September 30, 2021, Provident recognized fee income net of costs (amortized as a loan yield adjustment) of $1.21 million. During the same period of 2022, no net fee income was recognized as all outstanding PPP loans had been forgiven or repaid as of March 31, 2022. For the nine months ended September 30, 2021, and 2022, net fee income recognized totaled $2.71 million and $49,000, respectively, representing a decline of $2.66 million.
Third Quarter 2022 Compared to Third Quarter 2021
Net interest income declined $356,000 in 2022 compared to 2021 because of the reduced PPP income referenced above, offset by an increase in the net interest margin (“NIM”) exclusive of the influence of PPP activity from 2.91% to 3.45%. Improvement in the NIM was driven by increasing loan rates and a decline in deposit and other borrowing costs of $189,000. Net income during the third quarter 2022 was further affected by lower gain on sale of loans of $334,000, offset by an increase in other noninterest income of $166,000. 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 dollar loan.
Year-to-date 2022 compared to 2021
Net interest income declined $1.10 million in 2022 compared to 2021 because of the reduced PPP income referenced above, offset by an increase in the net interest margin (“NIM”) exclusive of the influence of PPP activity from 3.03% to 3.22%. Improvement in the NIM was driven by increasing loan rates and a decline in deposit and other borrowing costs of $707,000. Net income during the nine months of 2022 was further affected by lower gain on sale of loans of $632,000, offset by an increase in other noninterest income of $224,000. 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 dollar loan.
Balance Sheet and Asset Quality
Assets totaled $593.7 million on September 30, 2022, increasing $12.1 million or 2.1% compared to September 30, 2021. Gross loans, exclusive of PPP loans, totaled $383.1 million on September 30, 2022, representing an increase of $43.1 million or 12.7% compared to September 30, 2021. Deposits and repurchase agreements totaled $542.4 million on September 30, 2022, compared to $506.2 million on September 30, 2021, representing growth of 7.2%. Stockholders’ Equity totaled $37.8 million on September 30, 2022, compared to $51.6 million on December 31, 2021, and $51.8 million on September 30, 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 September 30, 2022, accumulated other comprehensive losses associated with the AFS portfolio totaled $17.9 million compared to $846,000 on December 31, 2021, and a gain of $95,000 on September 30, 2021. The significant increase in unrealized losses on September 30, 2022, was driven by a dramatic jump in market rates during the three quarters of 2022 as the Federal Reserve positioned to combat inflationary pressures. These unrealized losses are not included in regulatory capital and the Bank remained well capitalized on September 30, 2022. As of September 30, 2022, non-performing assets and past due loans 30 days or more were .38% of total assets compared to .38% at the end of 2021 and .29% on September 30, 2021.
President and Chief Executive Officer Melissa Quirk commented on the Company’s performance stating, “Third quarter performance remained strong with solid loan and deposit growth and an improving net interest margin. While volatile interest rates and uncertain economic conditions in the near term have created challenges, we continue to seek opportunities to expand our business development activities and support our customers and communities.”
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.
Danielle Kwan covers business and finance news. She is the only person we trust to provide breaking news in the finance category. Having already completed an Associates Degree in Psychology, Danielle Kwan is now finishing her Bachelor’s degree in Communications. In preparation for working in the advertisement sector, Danielle is writing financial content and analysis. On a daily basis, she works on articles regarding the following topics: business, top trends, technology, and politics.
Address: 72 Overlook Drive, Richmond, Indiana, USA
Email: [email protected]
Zip Code: 47374
Phone Number: 765-373-2657