MADISON HEIGHTS, Mich., March 5, 2010 (GLOBE 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 operating loss for the year ended December 31st, 2009 of $12.9 million or $3.72 per outstanding share compared with a net operating loss of $13.8 million for 2008 or $4.22 per outstanding share.
Balance Sheet
Total Assets at December 31, 2009 were $462.029 million compared to $460.516 million at December 31, 2008. Total loans were $354.263 million as of December 31, 2009 compared to $374.809 at December 31, 2008. Deposits increased 7.35 percent to $442.745 million at December 31, 2009 compared to $412.442 million at December 31, 2008. Deposit growth was due to a combination of new customer acquisition as well as existing clients adding to their accounts over the course of the year.
During the year, the Bank found quality lending opportunities more difficult to uncover, as the Southeast Michigan economy continues to suffer though high unemployment, declining property values and reduced levels of consumer consumption. As a result, the loan portfolio contracted 5.48% on a year-over-year basis. As previously mentioned, deposits grew over 7 percent, as the bank was able to attract significant numbers of new customers. The Bank does not have any brokered deposits.
Income Statement
Net Interest income for the quarter ending December 31st, improved to $3.673 million compared to the third quarter results of $3.540 million. This was largely due to a reduction in interest expense, as deposit costs continued to contract due to maturing CDs being re-priced at current market rates.
For the year, total interest income contracted, from $28.437 million for full year 2008 to $24.022 million for 2009. The factors which contributed to this were the overall low rate environment as well as higher levels of non-accrual loans. Off-setting this contraction were significant improvements in other operating income items, which grew from $4.244 million in 2008 to $6.358 million for fiscal 2009. Factors which contributed to this were improved levels of service charges on deposit accounts, gains on securities sales and improvement on the gain on sale of residential mortgages.
Expenses for the quarter were significantly impacted by a provision for loan losses of $9.791 million. As has been previously documented, the continued economic challenges, combined with continued pressure on asset values placed management in the position of building up our reserve for future loan losses as well as charge off accounts no longer deemed readily collectable. Other expenses were in line with prior quarters and management expectations with the exception of higher Other Real Estate expenses for the quarter. These expenses were $.980 million for the quarter vs. $.231 million for the quarter ending September 30, 2009. For the year ended December 31, 2009, the Bank realized a $1.90 million reduction in Other Real Estate expenses compared to full year 2008.
In comparing total expenses on a full year basis, the Bank experienced a 25% decline in total other operating expenses from $26.3 million in 2008 to $19.7 for 2009. Salary, occupancy, and Other Real Estate expense all saw significant contraction on a year-over-year basis. Legal and Professional Fees did increase from $1.353 million in 2008 to $1.725 million in 2009, primarily related to increased collection efforts.
Michael J. Tierney, President and CEO commented, "The Michigan economy continued to present challenges for all Michigan Banks, and those with a significant presence in Southeast Michigan felt the pressures at an elevated level. We continue to address credit issues proactively. The Bank has enjoyed the role of trusted advisor to many of its customers over the past century. Through this role, we have worked to find mutually beneficial arrangements with many of our clients. We continue to work diligently with clients and provide options as they weather very difficult times. This cooperative spirit can be seen in an elevated level of Troubled Renegotiated Debt where the customers are performing under modified repayment terms. When those efforts do not prove to be successful, we act quickly to protect our stakeholders. The fourth quarter's largest impact was the loan loss provision of $9.791 million dollars. The loan loss reserve now stands at $9.469 million or 2.67% of total loans. This compares with a loan loss reserve of 1.90% or $7.116 million dollars at December 31, 2008. While many expect economic improvement later in 2010, the Bank must adequately prepare should the recovery not materialize as quickly as forecasted by many."
The net interest margin contracted from 4.06% in 2008 to 3.38% for the full year in 2009. As previously mentioned, elevated levels of non-performing assets were the primary cause for this contraction. PSB's margins have improved in the fourth quarter.
Mr. Tierney further commented, "I am encouraged as expenses were tightly controlled through 2009. As previously noted, most expense categories experienced a material reduction in 2009. We effectively utilized the resources available to navigate the difficult economy. Management and staff remain focused on returning the company to consistently profitable operations quickly. Additional resources were allocated to the loan collection and loan management functions, as their success remains critical to the Company's success. Our margins are improving and non-interest income remains steady as we continue to operate more efficiently."
In summary, Mr. Tierney concluded his comments by saying, "Peoples State Bank celebrated 100 years of faithful service to Southeast Michigan during 2009. We remain energized by the spirit and enthusiasm of the Southeast Michigan communities we are so proud to serve. As we address the challenges of today, we prepare for the opportunities of tomorrow and the economic recovery the Michigan economy will eventually enjoy."
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.
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.globenewswire.com/newsroom/prs/?pkgid=5969
| Consolidated Balance Sheet | ||
| (000s omitted, except per share data) | ||
| Assets | 12/31/2009 | 12/31/2008 |
| Cash and due from banks | 8,554 | 12,268 |
| Fed Funds sold | 20,706 | -- |
| Securities - Available for sale | 60,031 | 52,254 |
| Loans | 354,263 | 374,809 |
| Less allowance for possible loan losses | (9,469) | (7,116) |
| Net Loans | 344,794 | 367,693 |
| Loans held for sale | 774 | 1,082 |
| Bank premises and equipment | 15,937 | 14,107 |
| Accrued interest receivable | 2,244 | 2,159 |
| Goodwill | -- | -- |
| Other Real estate owned | 6,235 | 8,459 |
| Other Assets | 2,754 | 2,494 |
| Total Assets | 462,029 | 460,516 |
| Liabilities and Stockholders' Equity | ||
| Liabilities | ||
| Deposits: | ||
| Noninterest bearing | 54,647 | 49,661 |
| Interest Bearing | 388,098 | 362,781 |
| Total Deposits | 442,745 | 412,442 |
| Federal Home Loan Bank advances | -- | 15,000 |
| ESOP Loan debt | 282 | 436 |
| Accrued taxes, interest, and other liabilities | 2,284 | 2,536 |
| Total Liabilities | 445,311 | 430,414 |
| Stockholders' Equity | ||
| Common Stock: | ||
| Authorized -- $5,000,000 shares, no par value | ||
| Issued and outstanding, - 3,480,110 in 2009 and 3,442,060 shares in 2008 | 23,692 | 23,607 |
| Unearned ESOP benefits | (282) | (436) |
| Common stock held in trust | (410) | (410) |
| Deferred Compensation Obligation | 410 | 410 |
| Additional paid in capital - stock option/awards | 1,096 | 707 |
| Unearned Compensation | (1,182) | (976) |
| Undivided Profits | (6,740) | 6,191 |
| Accumulated other comprehensive Income/(Loss) | 134 | 1,009 |
| Total Stockholders' Equity | 16,718 | 30,102 |
| Total Liabilities and Stockholders' Equity | 462,029 | 460,516 |
| Consolidated Statement of Operations | ||||
| (000s omitted, except per share data) | ||||
| Three Months Ended | Twelve Months Ended | |||
| 2009 | 2008 | 2009 | 2008 | |
| Interest Income | ||||
| Loans, including fees | 4,892 | 6,163 | 21,492 | 25,730 |
| Securities: | ||||
| Taxable | 526 | 572 | 2,290 | 2,418 |
| Tax-exempt | 48 | 56 | 211 | 282 |
| Federal Funds sold | 9 | 1 | 29 | 7 |
| Total interest income | 5,475 | 6,792 | 24,022 | 28,437 |
| Interest Expense | ||||
| Deposits | 1,793 | 2,365 | 8,423 | 9,799 |
| Short-term borrowings | 9 | 4 | 9 | 288 |
| Long term debt | 0 | 117 | 287 | 347 |
| Total interest expense | 1,802 | 2,486 | 8,719 | 10,434 |
| Net interest Income - Before provision for loan losses | 3,673 | 4,306 | 15,303 | 18,003 |
| Provision for Loan Losses | 9,791 | 3,990 | 16,169 | 9,956 |
| Net interest Income - After provision for loan losses | (6,118) | 316 | (866) | 8,047 |
| Other Operating Income | ||||
| Service charges on deposit accounts | 659 | 613 | 2,502 | 2,370 |
| Gain on sale of mortgages | 119 | 89 | 582 | 473 |
| Gain (loss) on sale of available-for-sale securities | 173 | 0 | 2,147 | 187 |
| Other income | 393 | 235 | 1,127 | 1,214 |
| Total other operating income | 1,344 | 937 | 6,358 | 4,244 |
| Other operating expenses | ||||
| Salaries and employee benefits | 1,976 | 2,188 | 8,105 | 9,563 |
| Occupancy costs | 831 | 734 | 3,192 | 3,695 |
| Legal and professional | 640 | 300 | 1,725 | 1,353 |
| Other real estate expense | 980 | 328 | 2,083 | 3,983 |
| FDIC Insurance | 360 | 91 | 1,451 | 331 |
| Goodwill impairment expense | 0 | 4,458 | 0 | 4,458 |
| Other operating expenses | 767 | 737 | 3,144 | 2,912 |
| Total other operating expenses | 5,554 | 8,836 | 19,700 | 26,295 |
| Income (loss) - Before federal income tax expense (benefit) | (10,328) | (7,583) | (14,208) | (14,004) |
| Federal Income Tax Expense (Benefit) | (1,300) | 2,036 | (1,277) | (207) |
| Net Income (Loss) | (9,028) | (9,619) | (12,931) | (13,797) |
| Per Share Data | ||||
| Weighted average shares outstanding | 3,476,188 | 3,265,564 | ||
| Basic earnings (loss) | (3.72) | (4.22) | ||