PSB Holdings, Inc. Reports 2nd Quarter Earnings of $2.1 Million, or $0.48 Per Share; Earnings before Merger Adjustments Totaled $4.2 Million, or $0.93 Per Share

WAUSAU, Wis., July 26, 2021 (GLOBE NEWSWIRE) -- PSB Holdings, Inc. (“PSB”) (OTCQX: PSBQ), the holding company for Peoples State Bank serving Northcentral and Southeastern Wisconsin, reported second quarter earnings ending June 30, 2021 of $0.48 per share on net income of $2.1 million, compared to earnings of $0.87 per share on net income of $3.9 million, during the March 31, 2021 quarter, and $0.72 per share on net income of $3.2 million, during the second quarter a year ago. June 2021 quarterly earnings included $2.7 million of merger related expenses associated with professional fees, data conversions, contract terminations and severance payments before tax benefits of $0.7 million. Excluding merger related expenses, June 2021 quarterly earnings were $0.93 per share on net income of $4.2 million.

“Integration of the Waukesha Bankshares, Inc. acquisition has met expectations while our overall banking platform continues to provide robust core earnings. The local communities we operate in appear to be returning to pre-pandemic levels as unemployment levels decline, businesses are open and consumer spending is strong. Our deposit balances remain elevated as individuals and businesses remain flush with liquidity and lending needs are currently muted,” stated Scott Cattanach, President and CEO. “However, we remain committed to our business community and expect to see organic loan growth expand as we move through the remainder of 2021.”

Net Interest Margin Impact: PSB’s net interest margin decreased to 3.48% for the quarter ended June 30, 2021 from 3.62% the prior quarter. During the quarter, net interest margin was impacted by lower accretion of net PPP origination fee income totaling $1.0 million for the current quarter versus $1.6 million during the prior quarter. In addition, higher yielding loans acquired with the Waukesha Bankshares, Inc. (WBI) acquisition were offset by a larger balance of lower yielding investment securities. Loan yield and net interest margin excluding PPP loans would have been 4.20% and 3.25%, respectively during the June 2021 quarter compared to 4.18% and 3.24% in the March 2021 quarter. “Net interest margin was positively influenced by the acquisition of WBI’s loans and deposits and additional SBA PPP loan forgiveness. Based on current interest rates and the competitive environment of our local markets, we expect continued downward pressure on loans yields and net interest margin in the near term,” said Mark Oldenberg, Chief Financial Officer.

Capital Management: At June 30, 2021, PSB’s tangible equity to tangible asset ratio was 8.38% compared to 9.22% at December 31, 2020. Peoples State Bank capital was well in-excess of all regulatory requirements. Tangible net book value per share decreased $0.16 during the quarter to $23.53 per share at June 30, 2021 from $23.69 per share at March 31, 2021 due to $3.1 million of intangible assets recognized with the acquisition of WBI. PSB did not repurchase any shares during the quarter ending June 30, 2021.

Loan Loss Reserves: For the quarter ended June 30, 2021, the bank did not add any provisions for loan losses compared to $1.0 million in the first quarter of 2021. Allowance for loan losses remained at $11.8 million at June 30, 2021. At June 30, 2021, allowance for loan losses totaled 1.35% of gross loans, but rises to 1.44% of proforma gross loans excluding $41.3 million of PPP loans and $12.7 million of purchased USDA guaranteed loans. Loan loss provisions in 2021 are expected to continue to be lower than provisions recorded during 2020 due to an improved economic outlook and expected favorable resolution to several large problem loans.

Loan Accommodations: Loan modifications related to COVID decreased from 27 loan accommodations with a balance of $21.9 million at March 31, 2021 to 9 loans with a balance of $1.4 million, or 0.2% of gross loans, at June 30, 2021.

As shown in the table below during the June 2021 quarter, “impaired loans” decreased $0.6 million and the “substandard risk” loans decreased $11.8 million while “watch risk” loans increased $8.7 million. The primary increase in “watch risk” loans relates to certain loans added from the acquisition of WBI. Loans acquired with WBI totaling $86.7 million were recorded at fair value at acquisition net of $725,000 of purchase discounts related to potential credit losses and higher than market loan coupon rates that will be accreted to income over the life of the purchased loans.

Commercial, Commercial Real Estate, Construction & Development, Agricultural and Government Loans
($000)
Risk Rating				12/2018			12/2019			03/2020			06/2020			9/2020			12/2020			03/2021			06/2021
Rating 1		"High Quality"	$	-		$	-		$	71		$	55		$	-		$	-		$	-		$	-
Rating 2		"Minimal Risk"		85,382			57,904			59,101			72,601			56,337			61,223			62,626			60,155
Rating 3		"Average Risk"		323,627			349,002			324,378			374,709			391,195			390,191			348,102			345,929
Rating 4		"Acceptable Risk"		79,271			128,932			123,296			154,302			155,738			175,400			209,407			209,728
Rating 5		"Watch Risk"		15,551			15,933			33,999			54,522			46,603			36,379			30,891			39,577
Rating 6		"Substandard Risk"		489			2,568			2,732			4,545			2,162			7,617			18,134			6,377
Rating 7		"Impaired Loans"		8,707			5,518			7,811			6,130			10,164			13,153			16,162			15,522
			$	513,027		$	559,857		$	551,388		$	666,864		$	662,199		$	683,963		$	685,322		$	677,288
Includes undisbursed Construction & Development lines of credit. PPP loan balances are assigned a risk-weighting of "3".

Balance Sheet and Asset Quality Review

Total assets increased to $1.25 billion at June 30, 2021 from $1.13 billion at December 31, 2020 due primarily to the acquisition of WBI. Total loans receivable increased by $42.3 million, or 5.2%, to $863.3 million at June 30, 2021 from $821.0 million as of December 31, 2020. Net loan growth was due primarily to the addition of WBI’s $86.7 million portfolio. Offsetting this growth was the net reduction in SBA Paycheck Protection Program (PPP) loans of $60.7 million as loans were forgiven and repaid by the SBA PPP guarantee program. At June 30, 2021, $41.3 million of PPP loan principal remained and unrealized net PPP origination fees totaled $1.2 million. Year to date loan growth was also impacted by the addition of $10.2 million of residential fixed rate first mortgages traditionally sold into the secondary market and a $8.2 million increase in organic other commercial related loans.

The allowance for loan losses decreased to 1.35% of gross loans at June 30, 2021 (1.44% of gross loans net of PPP guaranteed loans and USDA guaranteed loans) compared to 1.40% of gross loans (1.59% of gross loans net of PPP loans and USDA guaranteed loans) one quarter earlier. Annualized net charge-offs to average loans were zero for the quarter ended June 30, 2021. Non-performing assets were 1.07% of total assets at June 30, 2021, compared to 1.13% at March 31, 2021, and 0.90% at December 31, 2020. At June 30, 2021, non-performing assets consisted of $5.2 million in non-accrual loans, $1.1 million in non-accrual restructured loans, $5.2 million in restructured loans not on non-accrual and $2.0 million in other real estate owned.

At June 30, 2021, cash and cash equivalents were elevated following the merger related addition of cash and sale of securities held by WBI and repayment of forgiveness received on SBA PPP loans and totaled $72.1 million at June 30, 2021 compared to $29.9 million at March 31, 2021, and $38.5 million at the start of the fiscal year. Investment securities totaled $261.7 million at June 30, 2021, compared to $227.8 million at March 31, 2021, and $228.3 million as of December 31, 2020 as cash was deployed to purchase securities with a higher yield than available with overnight cash. All investment securities are considered available for sale and carried at market value.

As a result of the merger, intangible assets including core deposit intangibles and goodwill were recorded and totaled $629,000 and $2.5 million, respectively at June 30, 2021. The initial core deposit intangible of $660,000 represented approximately 0.92% of core deposits and will be amortized on a double-declining basis over 7 years. Amortization of core deposit intangibles of $31,000 was recognized in the June 2021 quarter.

Foreclosed assets increased to $2.0 million at June 30, 2021, from $1.1 million at March 31, 2021, due to including $0.9 million of foreclosed assets held by WBI. Foreclosed assets were $1.6 million at the beginning of the fiscal year.

Total deposits increased to $1.03 billion at June 30, 2021, compared to $932.1 million at December 31, 2020, with the acquisition of WBI adding $121.1 million in deposit growth. Merger related time deposit premiums totaled $352,000, or 0.72% of time deposits, at the acquisition and were $264,000 at June 30, 2021. At June 30, 2021, interest-bearing demand and savings deposits accounted for 35.4% of total deposits, followed by noninterest-bearing demand deposits at 26.5%, money market deposits at 20.6%, and retail and local time deposits at 16.2%. Broker and national time deposits accounted for 1.3% of total deposits at June 30, 2021, versus 1.5% at December 31, 2020. As a result of the pandemic, the bank has continued to experience larger average deposits per account and increased mobile banking enrollment and active mobile deposit product usage.

FHLB advances increased to $67.0 million at June 30, 2021 from $62.0 million at March 31, 2021 and December 31, 2020, while other borrowings increased to $21.8 million compared to $18.6 million the prior period and $12.2 million at December 31, 2020. Junior subordinated debentures increased to $12.7 million at June 30, 2021 from $7.7 million at the beginning of the fiscal year due to addition of WBI’s junior subordinated par notes of $6.2 million before an acquisition discount of $1.3 million to be amortized to expense until the instrument’s September 2033 final maturity.

Operations Review

Net interest income totaled $10.2 million (on a net margin of 3.48%) for the second quarter of 2021, compared to $9.6 million (on net margin of 3.62%) for the first quarter of 2021 and $7.8 million (on a net margin of 3.09%) for the second quarter of 2020. Compared to the preceding quarter, earning asset yields decreased 17 basis points from 3.95% to 3.78% during the second quarter of 2021, while deposit and borrowing costs declined 4 basis points to 0.42% from 0.46% over the same period. The decrease in earning asset yields was largely due to lower net accretion of loan fees of $1.0 million related to PPP loans that have been repaid compared to net accretion of $1.6 million during the March 31, 2021 quarter. Loan yields decreased to 4.42% during the quarter from 4.57% during the first quarter of 2021. Loan yields excluding the impacts of PPP loans, were 4.20 % and 4.18% during the June 2021 and March 2021 quarters respectively. Net interest margin excluding the impacts of PPP loans, was 3.25% and 3.24% in the June 2021 and March 2021 quarters, respectively. Recognition of PPP loan fee income is expected to decline for the remainder of 2021 as balances are forgiven.

The cost of interest-bearing liabilities decreased during the quarter, largely reflecting lower rates associated with time deposits and the impact of mark-to-market premiums related to the merger on WBI’s time deposits. Deposit costs decreased $62,000 despite the addition of deposits acquired in the merger to $485,000 for the second quarter of 2021, from $547,000 the previous quarter. Time deposit purchase premium amortization totaled $88,000 for the quarter ended June 30, 2021, lowering interest expense, with the remaining unamortized balance of $264,000 expected to be fully realized by the end of 2021. Interest costs on borrowings increased $83,000, to $422,000, for the second quarter of 2021, from $339,000 the previous quarter. The increase in borrowing costs largely relate to the additional junior subordinated debentures acquired with WBI.

Total noninterest income for the second quarter of 2021 decreased to $2.3 million from $2.7 million for the first quarter of 2021, due in part to lower gains on the sale of mortgage loans and lower investment and insurance sales commissions. Gains on sale of mortgage loans decreased to $663,000 for the second quarter from $1.2 million in the first quarter of 2021, due in part to management actions to invest significant on-balance sheet liquidity into first lien residential mortgage loans rather than purchasing lower yielding investment securities. Adding these mortgages to the balance sheet rather than selling them for a gain into the secondary market reduced June 2021 noninterest income by approximately $257,000. In addition, slightly higher long-term mortgage rates and rising home prices during the quarter slowed mortgage demand by borrowers.

Deposit and service fee income in the second quarter increased to $347,000 for the three months ended June 30, 2021, compared to $332,000 for the prior three-month period. Net gains on the sale of securities were $113,000 for the second quarter of 2021, compared to $21,000 for the first quarter of 2021, and $194,000 for the quarter one year earlier. Commissions on customer investment and insurance sales decreased to $465,000, from $595,000 the prior quarter as new customer sales activity decreased. At June 30, 2021, the bank had wealth assets under management totaling $300.0 million compared to $283.6 million at March 31, 2021, and $234.4 million at June 30, 2020. For the second quarter ended June 30, 2021, other noninterest income was $554,000 compared to $462,000 the prior quarter.

Noninterest expense was $9.6 million for the second quarter of 2021, compared to $6.2 million for the first quarter of 2021. For the second quarter of 2021, noninterest expense included $2.7 million of non-recurring merger related expenses. In addition, salary and employee benefit expenses were $3.9 million for the second quarter compared to $3.5 million in the first quarter of 2021 as the bank added 15.5 full time equivalent employees associated with the merger. Similarly, occupancy and facilities costs increased due to the merger to $647,000 for the second quarter from $569,000 in the prior quarter.

Data processing and other office operations costs increased to $1.5 million for the quarter ended June 30, 2021 from $694,000 the previous quarter. During the quarter, the bank incurred contract termination costs and data conversion fees of approximately $700,000. Advertising and promotion expenses were $322,000 for the most recent quarter compared to $79,000 last quarter due to a local multi-year sponsorship commitment and merger related communication. Other noninterest expenses increased to $3.1 million for the second quarter ended June 30, 2021 from $1.2 million the previous quarter. Included in other noninterest expense was approximately $1.9 million in non-recurring professional fees and other merger related expenses. Cost savings from efficiencies gained in the merger are expected to be fully realized by the end of 2021.

About PSB Holdings, Inc.

PSB Holdings, Inc. is the parent company of Peoples State Bank. Peoples is a community bank headquartered in Wausau, Wisconsin, serving northcentral and southeastern Wisconsin from ten full-service banking locations in Marathon, Oneida, Vilas, Milwaukee and Waukesha counties and a loan production office in Stevens Point, Wisconsin. Peoples also provides investment and insurance products, along with retirement planning services, through Peoples Wealth Management, a division of Peoples. PSB Holdings, Inc. is traded under the stock symbol PSBQ on the OTCQX Market. More information about PSB, its management, and its financial performance may be found at www.psbholdingsinc.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on current expectations, estimates and projections about PSB Holdings’ business based, in part, on assumptions made by management and include, without limitation, statements with respect to the potential growth of PSB Holdings, its future profits, expected stock repurchase levels, future dividend rates, future interest rates, and the adequacy of its capital position. Forward-looking statements can be affected by known and unknown risks, uncertainties, and other factors, including, but not limited to, strength of the economy, the effects of government policies, including interest rate policies, risks associated with the execution of PSB Holdings’ vision and growth strategy, including with respect to current and future M&A activity, and risks associated with global economic instability relating to the COVID-19 pandemic and its effect on PSB Holdings, and Peoples, and their customers, and other risks. The forward-looking statements in this press release speak only as of the date on which they are made and PSB Holdings does not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of this release.

PSB Holdings, Inc.
Quarterly Financial Summary
(dollars in thousands, except per share data)				Quarter ended
				Jun. 30,			Mar. 31,			Dec. 31,			Sep. 30,			Jun. 30,
Earnings and dividends:				2021			2021			2020			2020			2020
	Interest income			$	11,070		$	10,482		$	9,442		$	9,155		$	9,291
	Interest expense			$	907		$	886		$	1,011		$	1,261		$	1,528
	Net interest income			$	10,163		$	9,596		$	8,431		$	7,894		$	7,763
	Provision for loan losses			$	-		$	1,000		$	675		$	1,300		$	1,800
	Other noninterest income			$	2,299		$	2,749		$	2,991		$	2,929		$	3,138
	Other noninterest expense			$	9,607		$	6,200		$	6,461		$	6,074		$	4,879
	Net income			$	2,137		$	3,896		$	3,252		$	2,637		$	3,190
	Basic earnings per share (3)			$	0.48		$	0.88		$	0.73		$	0.59		$	0.72
	Diluted earnings per share (3)			$	0.48		$	0.87		$	0.73		$	0.59		$	0.72
	Dividends declared per share (3)			$	0.23		$	-		$	0.21		$	-		$	0.21
	Tangible net book value per share (4)			$	23.53		$	23.69		$	23.43		$	22.73		$	21.97
	Semi-annual dividend payout ratio				17.04	%		n/a			15.88	%		n/a			19.48	%
	Average common shares outstanding				4,454,922			4,454,334			4,452,287			4,452,287			4,453,225
Balance sheet - average balances:
	Loans receivable, net of allowances for loss			$	891,886		$	827,595		$	807,182		$	800,611		$	786,785
	Assets			$	1,251,738		$	1,132,905		$	1,100,064		$	1,099,402		$	1,067,466
	Deposits			$	1,023,229		$	925,689		$	896,427		$	882,682		$	855,155
	Stockholders' equity			$	105,932		$	105,868		$	102,790		$	100,436		$	95,909
Performance ratios:
	Return on average assets (1)				0.68	%		1.39	%		1.18	%		0.95	%		1.20	%
	Return on average stockholders' equity (1)				8.09	%		14.92	%		12.59	%		10.45	%		13.38	%
	Average stockholders' equity less accumulated
	other comprehensive income (loss) to
	average assets				8.27	%		9.10	%		9.00	%		8.85	%		8.83	%
	Net loan charge-offs to average loans (1)				0.00	%		0.01	%		0.16	%		0.00	%		0.25	%
	Nonperforming loans to gross loans				1.31	%		1.39	%		1.03	%		0.98	%		0.47	%
	Nonperforming assets to total assets				1.07	%		1.13	%		0.90	%		0.85	%		0.49	%
	Allowance for loan losses to gross loans				1.35	%		1.40	%		1.30	%		1.31	%		1.13	%
	Nonperforming assets to tangible equity
	plus the allowance for loan losses (4)				11.71	%		11.06	%		8.96	%		8.50	%		5.11	%
	Net interest rate margin (1)(2)				3.48	%		3.62	%		3.22	%		3.03	%		3.09	%
	Net interest rate spread (1)(2)				3.37	%		3.49	%		3.07	%		2.84	%		2.85	%
	Service fee revenue as a percent of
	average demand deposits (1)				0.51	%		0.57	%		0.59	%		0.59	%		0.49	%
	Noninterest income as a percent
	of gross revenue				17.20	%		20.78	%		24.06	%		24.24	%		25.25	%
	Efficiency ratio (2)				76.20	%		49.64	%		55.87	%		55.41	%		44.23	%
	Noninterest expenses to average assets (1)				3.08	%		2.22	%		2.34	%		2.20	%		1.84	%
	Tangible equity to tangible assets				8.38	%		9.32	%		9.22	%		9.17	%		8.95	%
Stock price information:
	High			$	26.50		$	25.94		$	23.00		$	18.80		$	24.75
	Low			$	25.00		$	20.45		$	17.20		$	17.36		$	18.55
	Last trade value at quarter-end			$	26.25		$	25.25		$	20.57		$	18.00		$	18.55
(1) Annualized
(2) The yield on tax-exempt loans and securities is computed on a tax-equivalent basis using a federal tax rate of 21%.
(3) Due to rounding, cumulative quarterly per share performance may not equal annual per share totals.
(4) Tangible stockholders' equity excludes intangible assets.

PSB Holdings, Inc.
Consolidated Statements of Income
				Quarter Ended
(dollars in thousands,				Jun. 30,		Mar. 31,		Dec. 31,			Sep. 30,			Jun. 30,
except per share data - unaudited)				2021		2021		2020			2020			2020
Interest and dividend income:
Loans, including fees				$	9,972	$	9,442	$	8,371		$	8,068		$	8,175
Securities:
Taxable					553		507		542			564			622
Tax-exempt					505		502		489			474			446
Other interest and dividends					40		31		40			49			48
Total interest and dividend income					11,070		10,482		9,442			9,155			9,291
Interest expense:
Deposits					485		547		657			833			1,080
FHLB advances					221		215		228			304			323
Other borrowings					8		7		6			5			6
Senior subordinated notes					28		28		29			28			28
Junior subordinated debentures					165		89		91			91			91
Total interest expense					907		886		1,011			1,261			1,528
Net interest income					10,163		9,596		8,431			7,894			7,763
Provision for loan losses					-		1,000		675			1,300			1,800
Net interest income after provision for loan losses					10,163		8,596		7,756			6,594			5,963
Noninterest income:
Service fees					347		332		352			344			278
Gain on sale of mortgage loans					663		1,152		1,401			1,752			1,747
Mortgage loan servicing, net					9		79		104			(79	)		(165	)
Investment and insurance sales commissions					465		595		391			301			259
Net gain on sale of securities					113		21		149			38			194
Increase in cash surrender value of life insurance					148		108		106			108			104
Other noninterest income					554		462		488			465			721
Total noninterest income					2,299		2,749		2,991			2,929			3,138
Noninterest expense:
Salaries and employee benefits					3,915		3,460		4,084			3,526			2,583
Occupancy and facilities					647		569		511			566			508
Loss (gain) on foreclosed assets					23		130		(218	)		36			23
Data processing and other office operations					1,499		694		568			743			675
Advertising and promotion					322		79		172			77			94
FDIC insurance premiums					58		83		82			87			23
Other noninterest expenses					3,143		1,185		1,262			1,039			973
Total noninterest expense					9,607		6,200		6,461			6,074			4,879
Income before provision for income taxes					2,855		5,145		4,286			3,449			4,222
Provision for income taxes					718		1,249		1,034			812			1,032
Net income				$	2,137	$	3,896	$	3,252		$	2,637		$	3,190
Basic earnings per share				$	0.48	$	0.88	$	0.73		$	0.59		$	0.72
Diluted earnings per share				$	0.48	$	0.87	$	0.73		$	0.59		$	0.72

PSB Holdings, Inc.
Consolidated Statements of Income
				Three Months Ended						Six Months Ended
(dollars in thousands,				June						June
except per share data - unaudited)				2021		2020				2021		2020
Interest and dividend income:
Loans, including fees				$	9,972	$	8,175			$	19,414	$	16,620
Securities:
Taxable					553		622				1,060		1,355
Tax-exempt					505		446				1,007		877
Other interest and dividends					40		48				71		165
Total interest and dividend income					11,070		9,291				21,552		19,017
Interest expense:
Deposits					485		1,080				1,032		2,562
FHLB advances					221		323				436		643
Other borrowings					8		6				15		20
Senior subordinated notes					28		28				56		56
Junior subordinated debentures					165		91				254		182
Total interest expense					907		1,528				1,793		3,463
Net interest income					10,163		7,763				19,759		15,554
Provision for loan losses					-		1,800				1,000		3,600
Net interest income after provision for loan losses					10,163		5,963				18,759		11,954
Noninterest income:
Service fees					347		278				679		669
Gain on sale of mortgage loans					663		1,747				1,815		2,734
Mortgage loan servicing, net					9		(165	)			88		(188	)
Investment and insurance sales commissions					465		259				1,060		608
Net gain on sale of securities					113		194				134		317
Increase in cash surrender value of life insurance					148		104				256		208
Other noninterest income					554		721				1,016		1,145
Total noninterest income					2,299		3,138				5,048		5,493
Noninterest expense:
Salaries and employee benefits					3,915		2,583				7,375		6,402
Occupancy and facilities					647		508				1,216		1,052
Loss (gain) on foreclosed assets					23		23				153		94
Data processing and other office operations					1,499		675				2,193		1,319
Advertising and promotion					322		94				401		235
FDIC insurance premiums					58		23				141		23
Other noninterest expenses					3,143		973				4,328		2,084
Total noninterest expense					9,607		4,879				15,807		11,209
Income before provision for income taxes					2,855		4,222				8,000		6,238
Provision for income taxes					718		1,032				1,967		1,438
Net income				$	2,137	$	3,190			$	6,033	$	4,800
Basic earnings per share				$	0.48	$	0.72			$	1.35	$	1.08
Diluted earnings per share				$	0.48	$	0.72			$	1.35	$	1.08

PSB Holdings, Inc.
Consolidated Balance Sheets
June 30, and March 31, 2021, September 30, and June 30, 2020, unaudited, December 31, 2020 derived from audited financial statements
	Jun. 30,			Mar. 31,			Dec. 31,			Sep. 30,			Jun. 30,
(dollars in thousands, except per share data)	2021			2021			2020			2020			2020
Assets
Cash and due from banks	$	18,589		$	12,921		$	15,723		$	13,652		$	13,016
Interest-bearing deposits		906			985			1,056			1,750			1,483
Federal funds sold		52,643			16,027			21,749			61,383			45,796
Cash and cash equivalents		72,138			29,933			38,528			76,785			60,295
Securities available for sale (at fair value)		261,685			227,824			228,296			193,179			178,635
Bank certificates of deposit (at cost)		245			1,231			1,231			496			1,738
Loans held for sale		1,756			622			954			903			3,755
Loans receivable, net		863,254			829,964			820,956			791,951			805,243
Accrued interest receivable		3,299			3,335			3,527			3,629			3,590
Foreclosed assets		1,984			1,105			1,619			1,485			1,525
Premises and equipment, net		13,241			11,077			10,920			11,061			11,067
Mortgage servicing rights, net		1,696			1,732			1,657			1,638			1,623
Federal Home Loan Bank stock (at cost)		2,646			2,283			2,283			2,283			2,283
Cash surrender value of bank-owned life insurance		24,001			17,902			17,795			17,089			16,981
Core deposit intangible		629			-			2			4			7
Goodwill		2,541			113			113			113			113
Other assets		5,523			5,102			4,074			3,667			6,491
TOTAL ASSETS	$	1,254,638		$	1,132,223		$	1,131,955		$	1,104,283		$	1,093,346
Liabilities
Non-interest-bearing deposits	$	273,181		$	242,974		$	236,981		$	241,947		$	241,914
Interest-bearing deposits		758,445			682,877			695,156			658,667			640,307
Total deposits		1,031,626			925,851			932,137			900,614			882,221
Federal Home Loan Bank advances		67,000			62,000			62,000			67,000			87,000
Other borrowings		21,757			18,582			12,239			16,216			3,941
Senior subordinated notes		2,500			2,500			2,500			2,500			2,500
Junior subordinated debentures		12,666			7,732			7,732			7,732			7,732
Accrued expenses and other liabilities		11,103			9,918			10,920			8,871			11,998
Total liabilities		1,146,652			1,026,583			1,027,528			1,002,933			995,392
Stockholders' equity
Preferred stock - no par value:
Authorized - 30,000 shares; no shares issued or outstanding		-			-			-			-			-
Common stock - no par value with a stated value of $1.00 per share:
Authorized - 6,000,000 shares; Issued - 5,490,798 shares
Outstanding - 4,454,922, 4,454,922, 4,452,287, 4,452,287 and
4,452,287 shares, respectively		1,830			1,830			1,830			1,830			1,830
Additional paid-in capital		7,946			7,890			7,818			7,765			7,712
Retained earnings		108,863			107,751			103,855			101,538			98,901
Accumulated other comprehensive income (loss), net of tax		2,869			1,691			4,458			3,751			3,045
Treasury stock, at cost - 1,035,876, 1,035,876, 1,038,511, 1,038,511 and
1,038,511 shares, respectively		(13,522	)		(13,522	)		(13,534	)		(13,534	)		(13,534	)
Total stockholders' equity		107,986			105,640			104,427			101,350			97,954
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	1,254,638		$	1,132,223		$	1,131,955		$	1,104,283		$	1,093,346

PSB Holdings, Inc.
Consolidated Statements of Comprehensive Income
				Three Months Ended							Six Months Ended
				June 30,							June 30,
(dollars in thousands - unaudited)				2021			2020				2021			2020
Net income				$	2,137		$	3,190			$	6,033		$	4,800
Other comprehensive income, net of tax:
	Unrealized gain (loss) on securities available
		for sale			1,224			2,608				(1,580	)		2,266
	Reclassification adjustment for security
		gain included in net income			(83	)		(141	)			(97	)		(230	)
	Unrealized gain (loss) on interest rate swap				(4	)		(3	)			11			(343	)
	Reclassification adjustment of interest rate
		swap settlements included in earnings			39			32				77			50
Other comprehensive income (loss)					1,176			2,496				(1,589	)		1,743
Comprehensive income				$	3,313		$	5,686			$	4,444		$	6,543

PSB Holding, Inc.
Loan Composition by Purpose
Quarter-ended (dollars in thousands)		Jun 30, 2021			Mar 31, 2021			Dec 31, 2020			Sep 30, 2020			Jun 30, 2020
Residential real estate
	One to four family	$	169,456		$	136,242		$	125,530		$	114,226		$	118,049
	HELOC loans		18,263			16,908			18,312			19,747			19,550
	Residential construction & development		24,385			25,628			25,519			22,529			23,129
	Residential vacant land		2,172			2,524			3,305			3,147			3,417
	Total Residential real estate		214,276			181,302			172,666			159,649			164,145
Commercial/Agricultural real estate
	Owner occupied
	Commercial real estate		202,767			194,514			187,059			164,073			164,483
	SBA commercial real estate		1,164			1,445			1,483			1,506			1,539
	Agriculture real estate		4,188			4,787			4,429			4,677			4,885
	Construction and land development		6,460			4,121			5,468			13,557			7,294
	Commercial vacant land		6,490			2,998			2,835			2,819			2,241
	Total Owner occupied		221,069			207,865			201,274			186,632			180,442
	Non-owner occupied
	Commercial real estate		196,011			183,365			173,953			170,847			165,099
	One to four family residential rental		47,097			31,914			31,363			30,159			28,451
	SBA commercial real estate		703			718			749			771			793
	Construction and land development		30,057			31,362			29,846			18,600			11,927
	Commercial vacant land		5,203			7,970			8,402			8,907			10,135
	Total Non-owner occupied		279,071			255,329			244,313			229,284			216,405
Commercial/Agricultural non-real estate
	Municipal non-real estate		7,014			7,165			11,422			5,687			7,826
	Commercial line		45,386			46,833			41,619			40,067			55,317
	Other commercial non-real estate		55,002			49,246			52,723			58,718			69,267
	SBA commercial non-real estate		47,245			89,603			103,871			118,668			117,436
	Agricultural non-real estate		1,656			1,730			1,986			2,150			2,148
	Total Commercial/Agricultural non-real estate		156,303			194,577			211,621			225,290			251,994
Consumer non-real estate
	Consumer installment		4,399			3,191			3,400			3,358			3,512
	Consumer line		436			498			353			366			243
	Other consumer		130			123			143			163			160
	Total Consumer non-real estate		4,965			3,812			3,896			3,887			3,915
Gross loans			875,684			842,885			833,770			804,742			816,901
	Net deferred loan costs (fees)		(738	)		(1,627	)		(2,140	)		(2,627	)		(2,617	)
	Overdrafts		134			528			161			317			133
	Allowance for loan losses		(11,826	)		(11,822	)		(10,835	)		(10,481	)		(9,174	)
Total loans receivable		$	863,254		$	829,964		$	820,956		$	791,951		$	805,243

PSB Holdings, Inc.
Nonperforming Assets as of:
	Jun 30,			Mar 31,			Dec 31,			Sept 30,			June 30,
(dollars in thousands)	2021			2021			2020			2020			2020
Nonaccrual loans (excluding restructured loans)	$	5,208		$	5,346		$	2,071		$	2,129		$	2,964
Nonaccrual restructured loans		1,062			1,090			1,064			233			244
Restructured loans not on nonaccrual		5,205			5,242			5,414			5,508			650
Accruing loans past due 90 days or more		-			-			-			-			-
Total nonperforming loans		11,475			11,678			8,549			7,870			3,858
Other real estate owned		1,984			1,105			1,619			1,485			1,525
Total nonperforming assets	$	13,459		$	12,783		$	10,168		$	9,355		$	5,383
Nonperforming loans as a % of gross loans receivable		1.31	%		1.39	%		1.03	%		0.98	%		0.47	%
Total nonperforming assets as a % of total assets		1.07	%		1.13	%		0.90	%		0.85	%		0.49	%
Allowance for loan losses as a % of nonperforming loans		103.06	%		101.23	%		126.74	%		133.18	%		237.79	%

PSB Holdings, Inc.
Nonperforming Assets >= $500,000 net book value before specific reserves
At June 30, 2021
(dollars in thousands)
		Gross			Specific
Collateral Description	Asset Type	Principal			Reserves
Leased retail sales outlet	ORE	$	1,100		-
Real estate - Hotel	Restructured		4,826		158
Real estate - Buffet Style Restaurant	Restructured/Nonaccrual		860		99
Real estate - Buffet Style Restaurant	Nonaccrual		3,330		1,208
Total listed nonperforming assets			10,116		1,465
Total bank wide nonperforming assets			13,459		1,894
Listed assets as a % of total nonperforming assets			75	%	77	%
Largest Performing, but Impaired Loans at June 30, 2021 ($000s)
		Gross			Specific
Collateral Description	Asset Type	Principal			Reserves
Real estate - 4 Hotel Group	Impaired		4,327		529
Total listed performing, but impaired loans			4,327		529
Total performing, but impaired loans			5,794		665
Listed assets as a % of total performing, but impaired loans			75	%	80	%

PSB Holdings, Inc.
Deposit Composition
	June 30,					March 31,					June 30,
(dollars in thousands)	2021					2021					2020
	$		%			$		%			$		%
Non-interest bearing demand	$	273,181	26.50	%		$	242,974	26.20	%		$	241,914	27.40	%
Interest-bearing demand and savings		366,563	35.40	%			329,100	35.60	%			267,874	30.40	%
Money market deposits		212,285	20.60	%			215,590	23.30	%			202,708	23.00	%
Retail and local time deposits <= $250		140,895	13.70	%			101,866	11.00	%			103,917	11.80	%
Total core deposits		992,924	96.20	%			889,530	96.10	%			816,413	92.60	%
Retail and local time deposits > $250		25,834	2.50	%			23,904	2.60	%			24,399	2.80	%
Broker & national time deposits <= $250		10,874	1.10	%			10,423	1.10	%			15,376	1.70	%
Broker & national time deposits > $250		1,994	0.20	%			1,994	0.20	%			26,033	2.90	%
Totals	$	1,031,626	100.00	%		$	925,851	100.00	%		$	882,221	100.00	%

PSB Holdings, Inc.
Average Balances ($000) and Interest Rates
(dollars in thousands)
			Quarter ended June 30, 2021								Quarter ended March 31, 2021								Quarter ended June 30, 2020
			Average					Yield /			Average					Yield /			Average					Yield /
			Balance			Interest		Rate			Balance			Interest		Rate			Balance			Interest		Rate
Assets
Interest-earning assets:
Loans (1)(2)			$	906,233		$	9,983	4.42	%		$	838,781		$	9,454	4.57	%		$	795,337		$	8,186	4.14	%
Taxable securities				153,960			553	1.44	%			142,539			507	1.44	%			99,621			622	2.51	%
Tax-exempt securities (2)				84,593			639	3.03	%			84,219			635	3.06	%			70,105			565	3.24	%
FHLB stock				2,625			23	3.51	%			2,283			21	3.73	%			2,283			25	4.40	%
Other				42,253			17	0.16	%			22,390			10	0.18	%			58,776			23	0.16	%
Total (2)				1,189,664			11,215	3.78	%			1,090,212			10,627	3.95	%			1,026,122			9,421	3.69	%
Non-interest-earning assets:
Cash and due from banks				25,422								14,248								10,760
Premises and equipment,
net				11,640								11,009								11,116
Cash surrender value ins				23,906								17,840								16,918
Other assets				16,004								10,782								11,102
Allowance for loan
losses				(11,816	)							(11,186	)							(8,552	)
Total			$	1,254,820							$	1,132,905							$	1,067,466
Liabilities & stockholders' equity
Interest-bearing liabilities:
Savings and demand
deposits			$	352,572		$	65	0.07	%		$	333,340		$	65	0.08	%		$	261,942		$	127	0.20	%
Money market deposits				213,122			96	0.18	%			217,618			118	0.22	%			197,571			213	0.43	%
Time deposits				182,758			324	0.71	%			138,773			364	1.06	%			169,398			740	1.76	%
FHLB borrowings				71,846			221	1.23	%			62,000			215	1.41	%			90,623			323	1.43	%
Other borrowings				25,525			8	0.13	%			18,964			7	0.15	%			5,857			6	0.41	%
Senior sub. notes				2,500			28	4.49	%			2,500			28	4.54	%			2,500			28	4.50	%
Junior sub. debentures				11,827			165	5.60	%			7,732			89	4.67	%			7,732			91	4.73	%
Total				860,150			907	0.42	%			780,927			886	0.46	%			735,623			1,528	0.84	%
Non-interest-bearing liabilities:
Demand deposits				274,777								235,958								226,244
Other liabilities				11,430								10,152								9,690
Stockholders' equity				108,463								105,868								95,909
Total			$	1,254,820							$	1,132,905							$	1,067,466
Net interest income						$	10,308							$	9,741							$	7,893
Rate spread								3.36	%							3.49	%							2.85	%
Net yield on interest-earning assets								3.48	%							3.62	%							3.09	%
(1) Nonaccrual loans are included in the daily average loan balances outstanding.
(2) The yield on tax-exempt loans and securities is computed on a tax-equivalent
basis using a federal tax rate of 21%.

PSB Holdings, Inc.
Average Balances ($000) and Interest Rates
(dollars in thousands)
			Six months ended June 30, 2021								Six months ended June 30, 2020
			Average					Yield/			Average					Yield/
			Balance			Interest		Rate			Balance			Interest		Rate
Assets
Interest-earning assets:
Loans (1)(2)			$	872,694		$	19,438	4.49	%		$	753,869		$	16,647	4.44	%
Taxable securities				148,280			1,060	1.44	%			105,300			1,355	2.59	%
Tax-exempt securities (2)				84,407			1,275	3.05	%			68,532			1,110	3.26	%
FHLB stock				2,455			44	3.61	%			2,202			51	4.66	%
Other				32,702			27	0.17	%			45,051			114	0.51	%
Total (2)				1,140,538			21,844	3.86	%			974,954			19,277	3.98	%
Non-interest-earning assets:
Cash and due from banks				19,866								11,190
Premises and equipment,
net				11,338								10,948
Cash surrender value ins				20,890								16,864
Other assets				13,401								9,717
Allowance for loan
losses				(11,507	)							(7,810	)
Total			$	1,194,526							$	1,015,863
Liabilities & stockholders' equity
Interest-bearing liabilities:
Savings and demand
deposits			$	343,009		$	130	0.08	%		$	261,823		$	457	0.35	%
Money market deposits				215,254			214	0.20	%			193,329			586	0.61	%
Time deposits				160,887			688	0.86	%			164,346			1,519	1.86	%
FHLB borrowings				66,950			436	1.31	%			85,555			643	1.51	%
Other borrowings				22,263			15	0.14	%			6,125			20	0.66	%
Senior sub. notes				2,500			56	4.52	%			2,500			56	4.50	%
Junior sub. debentures				10,199			254	5.02	%			7,732			182	4.73	%
Total				821,062			1,793	0.44	%			721,410			3,463	0.97	%
Non-interest-bearing liabilities:
Demand deposits				255,455								189,004
Other liabilities				11,108								10,008
Stockholders' equity				106,901								95,441
Total			$	1,194,526							$	1,015,863
Net interest income						$	20,051							$	15,814
Rate spread								3.42	%							3.01	%
Net yield on interest-earning assets								3.55	%							3.26	%
(1) Nonaccrual loans are included in the daily average loan balances outstanding.
(2) The yield on tax-exempt loans and securities is computed on a tax-equivalent
basis using a tax rate of 21%.

Investor Relations Contact
PSB Holdings, Inc.
1905 Stewart Avenue
Wausau, WI 54401
888.929.9902
InvestorRelations@bankpeoples.com