MADISON HEIGHTS, Mich., Aug. 1, 2008 (PRIME NEWSWIRE) -- PSB Group, Inc., (OTCBB:PSBG), the bank holding company for Peoples State Bank, a Michigan state-chartered bank with offices in Wayne, Oakland, Macomb and Genesee Counties, today reported a net loss of $645,000, or $.20 per average outstanding share, for the second quarter of 2008 compared to the first quarter 2008 net loss of $1,503,000. The company reported a net loss of $339,000 or $.11 per average outstanding share, in the second quarter of 2007.
As of June 30, 2008 total assets were $480,785,000 compared to $507,456,000 on June 30, 2007. The lending portfolio totaled $387,162,000 as of June 30, 2008 compared to $417,296,000 at June 30, 2007 (the company sold $14,000,000 in mortgage loans in the fourth quarter of 2007 to reduce exposure to residential real estate). Deposits were $404,380,000 on June 30, 2008 compared to $453,399,000 at the same time in 2007. The decline in deposits is related to our decision to replace higher cost deposits with lower cost borrowings from the Federal Home Loan Bank and others.
Second quarter results were impacted by a $1,553,000 addition to the provision for loan losses compared to the first quarter provision of $2,063,248 giving us a loan loss reserve of 1.54% to total loans. OREO (other real estate owned) related expenses of $616,000 were another major factor impacting earnings for the quarter resulting primarily from realized losses or valuation adjustments attributable to rapidly declining real estate values in Michigan. Nonperforming assets were $25.7 million (5.35% of assets) on June 30, 2008 versus $26.9 million (5.46% of assets) on December 31 2007.
Michael J. Tierney, President & CEO, commented, "Peoples State Bank is making steady progress in a tough economic environment. Businesses and consumers alike have felt the effects of a stagnant economy, increasing job losses, and decreasing real estate values. Our internal credit quality indicators are steady or improving even though the external environment continues to be a challenge. We proactively addressed our credit issues a year ago and we are now showing solid progress on credit quality improvement."
Breakdown of Non-Performing Loans and Assets is as follows:
12/31/2007 6/30/2008
(Dollars in Thousands)
Non-accrual Loans (NPL) $18,245 $13,210
Loans Past Due 90+ days 1,280 532
Restructured Debt 1,347 3,885
Total Non-Performing Loans $20,872 $17,627
Other Real Estate Owned 5,996 8,025
Total Non-Performing Assets (NPA) $26,868 $25,652
NPL to Total Loans 5.36% 4.55%
NPA to Total Assets 5.46% 5.32%
Mr. Tierney went on to say, "We have a good handle on our non-performing loans and we have been successful disposing of other real estate. We sold a number of properties in the second quarter for $1.8 million. Our delinquency rate on loans greater than 30 days is below 4% for the first time in over a year. Our 90+ day delinquency rate declined six months ago and has remained essentially flat. Our non-performing assets have declined from the fourth quarter of 2007. We believe our loan loss reserve is sufficient at 1.54% of loans given our credit trends and our limited remaining exposure to residential development lending. We have less than 3% of our loans in the residential real estate development sector which has proven to be a very difficult business segment for banks. Our trends for delinquency, non-accruals, and loans in foreclosure improved over the first quarter and charge-offs were significantly less than each of the last four quarters."
Mr. Tierney added, "The management team and the board have taken several steps to improve our baseline profitability. We have improved the interest margin to over 4% by addressing loan pricing and letting high rate CD's run off. We have chosen to borrow funds in the institutional market at rates significantly below prevailing retail market Certificate of Deposit rates. Non-interest income is essentially flat with significant improvement in investment fees offset by lower loan fees. Non-interest expenses when adjusted for OREO expenses and loan collection costs have been reduced. We have reduced headcount, frozen all officer salaries, exited lines of business and consolidated functions within the company. These actions will reduce expenses in future quarters while maintaining or improving service to our clients."
Mr. Tierney concluded with, "Peoples State Bank is on sound footing and preparing to celebrate our 100 year anniversary in 2009 with our clients and the communities we have served for so long. The bank is well capitalized and our turnaround plan is showing progress. We will indeed have much to celebrate in 2009!"
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.primenewswire.com/newsroom/prs/?pkgid=3556
Universal Mortgage Corporation, a wholly-owned subsidiary of Peoples State Bank, originates residential mortgage loans in the southeastern Michigan area.
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 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.