PSB Holdings Beats Regional Trends with Strong Margin, Asset Quality

WAUSAU, WI – April 27, 2026 – PSB Holdings, Inc. (OTCQX: PSBQ), the parent company of Peoples State Bank, announced robust first-quarter earnings that showcase significant year-over-year growth and a strengthening financial position, setting it apart from some regional peers grappling with credit quality issues.

For the quarter ending March 31, 2026, the company reported net income of $3.3 million, or $0.82 per diluted common share. While this represents a decrease from the $0.97 per share earned in the fourth quarter of 2025, it marks a substantial 37% increase from the $0.60 per share reported in the same period a year ago. The results were bolstered by a notable expansion in net interest margin and strategic management of its balance sheet.

Mastering Margins in a Shifting Rate Climate

A key highlight of PSB Holdings' first-quarter performance was the expansion of its net interest margin (NIM) to 3.45%, an increase from 3.28% in the prior quarter and 3.03% a year ago. This improvement was driven by the bank's ability to effectively increase yields on its loans and securities. Overall earning asset yields climbed 19 basis points to 5.61%, outpacing a modest 3 basis-point rise in the cost of funds.

This performance is particularly noteworthy when viewed against the backdrop of the regional banking sector. While some institutions like Horizon Bancorp have maintained stable margins, others have faced headwinds. For instance, Preferred Bank (PFBC) recently reported a NIM contraction to 3.57% from 3.74% in the previous quarter. PSB's ability to widen its margin demonstrates adept management of its asset and liability mix in the current interest rate environment.

"Net interest margin expansion has continued to support strong profitability while enabling the Bank to continue to pursue strategic initiatives to ensure enhancement of shareholder value," stated Scott Cattanach, President and CEO of PSB Holdings, in the company's press release.

Non-interest income also provided a boost, increasing to $2.3 million from $2.1 million in the prior quarter. This was aided by gains from the sale of Small Business Administration (SBA) loans, which had been delayed from the fourth quarter of 2025 due to a government shutdown. The company also received $489,000 in life insurance benefits, which Cattanach noted provided an "opportunity to restructure a part of the investment portfolio." This restructuring did result in a net loss of $502,000 on the sale of some securities.

Meanwhile, non-interest expenses rose to $9.8 million, an increase of $1.2 million from the previous quarter. The company attributed this to higher salary and benefit expenses tied to incentive accruals, as well as a "non-recurring true-up for historical FDIC insurance premiums" and other one-time legal and professional costs, suggesting these pressures may not persist in future quarters.

A Fortified Balance Sheet and Enhanced Shareholder Returns

PSB Holdings demonstrated considerable strength in its balance sheet, growing total assets by $33.9 million during the quarter to reach $1.50 billion. A core measure of shareholder value, the tangible book value per common share, saw impressive growth, rising 13.40% over the past year to $30.55.

The bank's lending operations remain robust, with net loans increasing by $20.5 million to $1.12 billion. This growth was led by a $26.8 million increase in commercial real estate loans. The company also reported that its loan pipeline continues to be strong heading into the second quarter. On the other side of the ledger, total deposits grew by $10.0 million to $1.19 billion. Significantly, this growth was driven by an $18.5 million increase in core deposits, while the bank strategically reduced its reliance on more expensive brokered deposits, which declined by $8.3 million.

Reflecting its confidence and commitment to shareholders, PSB Holdings announced a regular quarterly cash dividend of $0.18 per share. This follows a semi-annual dividend of $0.34 per share paid in January and marks a transition to a quarterly dividend schedule. This strategy of consistent capital return, which also includes a dividend reinvestment program and a stock buyback program, aligns with the bank's long history of increasing per-share dividends.

Navigating Credit Risk with Proactive Measures

In a period where credit quality has become a focal point for investors in the regional banking sector, PSB Holdings reported an improvement in its asset quality metrics. Non-performing assets (NPAs) decreased by $1.0 million to $16.3 million, representing 1.09% of total assets, down from 1.18% in the previous quarter. The company noted this improvement was primarily due to a partial paydown on a non-owner occupied rental property.

This positive trend contrasts with the experiences of some other regional banks. For example, Community West Bancshares recently reported a significant jump in its non-accrual loans, while Preferred Bank disclosed a major non-performing loan relationship impacting its commercial real estate portfolio. PSB's ability to reduce its NPAs highlights the effectiveness of its credit management. The bank's allowance for credit losses increased slightly to 1.16% of gross loans, indicating a prudent approach to provisioning for potential future losses.

Further bolstering its risk management framework, the company announced the appointment of Rhonda Norrbom as its new Executive Vice President and Chief Credit Officer. Cattanach stated that Norrbom "will oversee credit risk management and the commercial credit administration team, ensuring continued alignment with the Bank’s commitment to sound lending practices that support community growth." This strategic leadership addition signals a continued focus on maintaining a healthy and diversified loan portfolio, which currently consists of commercial real estate (56.7%), residential real estate (28.8%), and commercial non-real estate loans (14.1%).