PSB HOLDING CORP. REPORTS FIRST QUARTER 2022 RESULTS

PRESTON, Md., April 27, 2022 /PRNewswire/ -- PSB Holding Corp. (OTCQX:PSBP) (the "Company"), the parent company of Provident State Bank, Inc. ("Provident" or the "Bank"), reported net income of $1.00 million ($.65 per diluted common share) for the three months ended March 31, 2022 compared to $1.21 million ($.80 per diluted common share) for the three months ended March 31, 2021, representing a decline of 17.5%.  The decline in net income 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 first quarter of 2021 as compared to the first quarter of 2022.  During the three months ended March 31, 2021, Provident originated PPP loans totaling $29.27 million and recognized fee income net of costs (amortized as a loan yield adjustment) of $667,000.  PPP loan principal forgiven by the SBA and principal payments received totaled $17.35 million during the first quarter 2021.  During the same period of 2022, no PPP loans were originated as the program was closed, $1.08 million in loans were forgiven and net fee income totaling $49,000 was recognized.  As of March 31, 2022, all PPP loans had been forgiven or repaid in full and all related fee income had been recognized. 

Net Interest Margin

The net interest margin ("NIM") was 3.05% during the first quarter 2022 compared to 3.45% during the same period in 2021.  The NIM benefited from higher PPP revenue as noted above during the first quarter 2021.

First Quarter 2022 Compared to First Quarter 2021

In addition to the reduced revenue associated with PPP lending activities previously noted, net income during the first quarter 2022 compared to the same period in 2021 was impacted by lower gain on sale of loans of $66,000 and higher salaries and benefits expense of $152,000, offset by lower interest expense of $260,000, lower loan loss provision expense of $65,000, higher deposit service charge income of $58,000 and lower occupancy expense of $51,000.   Gain on sale of loans totaled $194,000 during the three months ended March 31, 2022 compared to $260,000 during the same period in 2021.  The decline in mortgage banking activity was largely driven by rising interest rates.  The increase in salaries and benefits was largely driven by a reduction in salary deferrals associated with loan origination activity totaling $80,000 and an increase in deferred compensation expense of $33,000.  Lower interest expense reflected the continued benefit of the repricing of the Bank's time deposit portfolio to lower interest rates.  Higher deposit service charge income reflected increased transaction-based fee income including overdraft fees and ATM transaction fees.

Balance Sheet and Asset Quality

Assets totaled $576.1 million at March 31, 2022, increasing $4.4 million or .8% compared to March 31, 2021. Deposits and repurchase agreements totaled $510.5 million at March 31, 2022 compared to $485.6 million at March 31, 2021, representing growth of 5.1%.  Gross loans, exclusive of PPP loans, totaled $361.8 million at March 31, 2022, representing an increase of $27.1 million or 8.1% compared to March 31, 2021.   Stockholders' Equity totaled $44.9 million at March 31, 2022 compared to $51.6 million at December 31, 2021 and $48.6 million at March 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 March 31, 2022, accumulated other comprehensive losses associated with the AFS portfolio totaled $8.5 million compared to $846,000 at December 31, 2021 and a gain of $39,000 at March 31, 2021.  The significant increase in unrealized losses at March 31, 2022 was largely driven by a dramatic jump in market rates during the month of March 2022 as the market attempted to digest commentary from the Federal Reserve regarding its plan to combat inflationary pressures.  These unrealized losses are not included in regulatory capital and the Bank remained well capitalized at March 31, 2022.  As of March 31, 2022, non-performing assets and past due loans 30 days or more were .54% of total assets compared to .38% at the end of 2021 and .34% at March 31, 2021. 

President and Chief Executive Officer Melissa Quirk commented on the Company's performance stating, "We are pleased with our performance during the first quarter of 2022 given the loss of revenue associated with PPP lending activities. While challenges lie ahead as inflation and increasing interest rates pressure the economy, our team will continue to work to grow the bank in a prudent and efficient manner."

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.

SOURCE PSB Holding Corp.

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