ANNUAL REPORT 20 23 . s r e d l o h e r a h s d n a s e e y o l p m e , s r e m o t s u c r u o : u o y t u o b a s ’ t I Understanding You to Support You Better. psbholdingsinc.com | bankpeoples.com 2023 Annual Report For more than 60 years, Peoples State Bank has focused on providing the best customer service possible. Satisfed customers return time and again when they need fnancial assistance. Our customers spoke. We listened. In 2023, we began a new method of instant feedback to gauge our customers’ satisfaction. Instant feedback provides opportunities for us to quickly adapt to our customers’ needs. You’ll find quotes from customers about their experience with Peoples throughout the Annual Report. UNDERSTANDING YOU TO SUPPORT YOU BETTER OVERALL CUSTOMER SATISFACTION 90% 2023 customer satisfaction scores from 1,218 Peoples surveys. Message from the President Understanding You to Support You Better Growing banks are rewarded by investors with higher stock prices and lower costs of capital. Our strategy is focused on above-average growth, which we achieved during 2023 with loan growth 23% greater than the average for Wisconsin community banks (those with less than $10 billion in assets). Because growth goes to banks that meet customer needs best, we focused on listening to our customers better in 2023. We responded with consistent delivery and a better customer experience providing solid results for our shareholders. Financial Focus We earned $9.1 million in net income available to common shareholders during 2023, or $2.16 earnings per share, compared to $13.6 million of net income and $3.07 earnings per share during 2022. Earnings per share declined primarily from lower net interest margins, which were 2.98% in 2023 compared to 3.28% last year, and initial impacts of a Wisconsin tax law change. As market interest rates continued to rise during the year, many banks chose to limit growth as their deposit costs rose and balances declined. We chose to continue investment in business owners with solid financial plans when their opportunities arose and experienced record loan growth during 2023. Net loans receivable increased $116.8 million, up 12.1% over last year. Although the banking industry was shaken in March 2023 with the failure of several large banks, our customers continue to trust the strength of Peoples. Scott M. Cattanach President & CEO PSB Holdings, Inc. & Peoples State Bank “I like Peoples State Bank very much because their customer service is very nice and pleasant. I would recommend Peoples State Bank to others as well.” “I have several accounts with them, and they treat me pleasantly and professionally. Overall, I am satisfied with banking at Peoples State Bank.” 1 Understanding You to Support You Better Excluding a paydown of brokered deposits, our local deposits increased during 2023 compared to 2022. Total assets reached a record $1.4 billion on December 31, 2023. During July 2023, the state budget signed by Governor Tony Evers included a provision offering an income tax exclusion on income earned from commercial loans of $5 million or less, originated for business or agricultural purposes to borrowers who reside or are located in the state of Wisconsin. While this change reduced our current year tax payments by $900,000, we did have to write off $2.8 million, representing the value of previously recorded future tax deductions no longer needed. Taken together, 2023 net income was reduced $1.9 million, or $0.45 per share by this tax change. We expect it will reduce or eliminate our state tax expense in future years, which had been approximately 6.4% of pre-tax net income. Return on shareholder average tangible common equity was 9.65% in 2023 compared to 14.08% in 2022. Strong results again permitted the company to increase cash dividends declared to shareholders during 2023, which rose 20% to $0.60 per share. The Company continued to support liquidity for shareholders looking to sell their stock by repurchasing $3 million of stock in 2023, compared to $3.3 million in 2022, at prices that increased book value and earnings per share for our remaining shareholders. Understanding Your Wants In 2023, we initiated a customer survey program designed around individual customer experiences or transactions to help us know what we do well and what we could do better. The initial results are encouragingly strong, and we achieved an overall customer satisfaction score of 90% at year end. We exceed our peers in many categories such as in teller and customer service center interactions, mobile and online banking, and new account openings online and in-person. Guided by the knowledge we’ve obtained from our customers, we are aligning our technology investments with customer preferences. Our customers can open deposit accounts online with our Open Now platform, and in 2023, we added an online option to open certificates of deposit. 2 2023 Annual Report Drive-up customers in Stevens Point new senior advisor Scott Wildman 7a program and our continued (our new branch opened in 2023) and assistant Dana Kolbe, joining origination of SBA 504 loans. and Waukesha can utilize our Smart Connie Higgins and Bryan Nill on ATMs to do more transactions than the Peoples Wealth Management the typical ATM cash withdrawal. team. You can learn more about this Smart ATMs include a video screen transition on page 5 of this report. that customers can use to talk to a Peoples staff member for assistance Banking With a Winner serve customers better based on with their transactions, including When you bank with Peoples, you’re making deposits, transferring funds, banking with a winner. American making Peoples’ loan or credit card Banker Magazine includes Peoples payments, or with questions on their in the Top 200 Community Banks account activity. in the nation, now for the 14th We are wrapping up a remodel of our Stewart Avenue Wausau home office lobby and retail banking area, which is designed to customer feedback and changing preferences. Building our brand in the Milwaukee area, we also plan to open a downtown location in 2024 for increased contact and exposure with local business leaders. To provide more opportunities for personal interaction, we began to install new teller equipment that allows staff to quickly process cash transactions. The technology provides staff members more time to listen to customers needs and discuss possible solutions to fit those needs. year in a row. The honor is based on the above-average return on Lastly, your proxy statement equity results over the most recent includes a request to approve the three-year period. American Banker addition of new bank directors, Tim also honored Peoples as one of Kilgore and Jeff Wickersham, as the nation’s Best Banks to Work director Lee Guenther retires, and For, our fifth year in a row! I’m we add an additional member to the incredibly proud of the honor based Board of Directors. Please refer to on an anonymous survey of our page 5 to learn about our proposed Along with faster and more efficient employees. In our home market, directors and their experience to customer service delivery, these Wausau Daily Herald readers voted help move Peoples forward. Looking Ahead Peoples and our staff provided new technologies allow Peoples to us the Best Bank of Marathon open new, smaller footprint locations County for the 12th year in a row. We more quickly and at lower operating take pride in these honors, affirming cost, such as our new Stevens Point our commitment to providing location. excellent customer service and value for each stakeholder. Peoples Wealth Management In September, we announced two crucial enhancements for Peoples As the economy transitions to a Wealth Management, our financial potential Federal Reserve interest planning and investment services rate “pause,” we expect slower asset division. Peoples Wealth Management growth in the coming year, allowing aligned with Raymond James Financial us to build capital levels after a year Services, member FINRA/SIPC, as our of fast growth. We continue to have broker/dealer through which we offer many tools to meet customer needs financial planning and investment even in a slowing economy, including resources. Concurrently, we added SBA guaranteed loans under their We are listening to our customers, investing in technology to improve our digital and personal interactions, and focusing on products and people that deliver value to retail and commercial customers daily. another outstanding year for our shareholders, customers, and each other. Thank you for your trust and ongoing support. Scott M. Cattanach President and CEO PSB Holdings, Inc. 3 Understanding You to Support You Better From left - Lyn Falk, Corey Vanderpoel, Bill Fish, Karla Kieffer, Scott Cattanach, George Fahr, Kevin Kraft, Lee Guenther, Patty Hanz Board of Directors Our highly qualifed board members ensure Peoples State Bank’s fnancial security and dedication to our customers’ best interests for greater shareholder value. BOARD RETIREMENTS A special “thank you” to Pete Knitt and Lee Guenther on their retirements from the PSB Holdings, Inc. board of directors. Pete served independently on the PSB Holdings, Inc. board of directors from early 2018 until the end of 2023. He was a long-time Peoples employee, joining the bank in 2003 and promoted in 2006 to president and CEO until Pete Knitt Lee Guenther December 2017. Lee served on the PSB holdings, Inc. board of directors for 12 years, retiring in April 2024. Most recently, he served as the chair of the Investment & Asset Liability Management and Compensation committees. His career spanned 55 years, including 25 years at T.A. Solberg Co., Inc. 4 William J. Fish Chairman of PSB Holdings, Inc. & Peoples State Bank Retired President BILCO, Inc. Scott M. Cattanach President & CEO PSB Holdings, Inc. & Peoples State Bank Kevin J. Kraft Managing Director Wisconsin River Partners, LLC Karla M. Kieffer VP Sales & Marketing SUN Printing Corey B. Vanderpoel Managing Director & Owner Taureau Group, LLC Patricia M. Hanz Retired Briggs & Stratton U.S. Consumer Product Safety Commission Lyn M. Falk President & Founder Retailworks, Inc. George E. Fahr President & Owner Digicorp, Inc. 2023 Annual Report Lyn Falk George Fahr Board Additions Welcome new board members Lyn Falk and George Fahr. Lyn joined in April 2023. She is the president and founder of Retailworks, Inc., an award-winning commercial interior design, display, branding, and consulting firm. George was selected in January 2024 to fill the remaining term of Pete Knitt. He is the majority shareholder and president of Digicorp, a Milwaukee-based IT, computer, telephony, and video solutions provider. We also welcome prospective board members Tim Kilgore and Jef Wickersham. Tim Kilgore Jeff Wickersham Tim has been with Greenheck Fan of Schofield for 19 years, currently serving as president of sales. His experience in sales and growth at a large company will be beneficial to PSB Holdings, Inc. Jeff owns Wickersham Jewelers, a family business started in 1959, now with three locations in central Wisconsin. He joined Wickersham in 1994. He also serves as vice president of the Retail Jewelers Organization, a $350 million buying organization with nearly 1,200 nationwide members. Peoples Wealth Management Peoples State Bank announced in 2023 two important enhancements for Peoples Wealth Management, its fnancial planning and investment services division. Peoples Wealth Management aligned with Raymond James Financial Services, member FINRA/SIPC, offering financial planning and investment resources. Additionally, Peoples added new advisor Scott Wildman and assistant Dana Kolbe to join advisor Bryan Nill and assistant Connie Higgins on the Peoples Wealth Management team. “Peoples State Bank is fully committed to our wealth management customers, and these new advisors and platform are providing real benefits to our clients,” said Scott Cattanach, Peoples State Bank president and CEO. “Raymond James is among the world’s largest and most respected investment firms. Together with the addition of Scott and Dana to the team, we have in place an experienced and knowledgeable team to help our wealth management customers on the road to financial success.” Wildman joined Peoples Wealth Management with more than 20 years of experience as a financial advisor and another 15 years of experience in the financial sector. As a financial advisor, he consults with clients to help them determine their financial goals and then provides tailored advice on investments, estate planning, taxation, and retirement. Scott is a certified financial planner. Working closely with Wildman for the past 14 years, Kolbe also joined Peoples at the same time. She is committed to developing client relationships and plays a crucial role in helping clients achieve their financial and personal goals. Securities offered through Raymond James Financial Services, Inc., member FINRA/SIPC, and are not insured by bank insurance, the FDIC or any other government agency, are not deposits or obligations of the bank, are not guaranteed by the bank, and are subject to risks, including the possible loss of principal. Peoples Wealth Management and Peoples State Bank are not registered broker/dealers, and are independent of Raymond James Financial Services. Investment Advisory Services offered through Raymond James Financial Services Advisors, Inc. Scott Wildman Dana Kolbe Bryan Nill Connie Higgins 5 Understanding You to Support You Better From left – Jeffrey Saxton, Jessica Barnes, Robert McPherson, Scott Cattanach, Tina Seidl, Erik Rajek, Katie Tolokken, Pat Heier Executive Management Team Scott Cattanach President | Chief Executive Officer Jessica Barnes Senior Vice President | Chief Financial Officer Pat Heier Senior Vice President | Commercial Group Leader Erik Rajek Senior Vice President | Chief Credit Officer Robert McPherson Vice President | Risk Management Jefrey Saxton Vice President | Retail Group Leader Tina Seidl Vice President | Human Resources Director Katie Tolokken Vice President| Chief Operating Officer 6 Bank Awards Best Banks to Work For American Banker magazine named Peoples one of the Best Banks to Work For in 2023. It’s the fifth year in a row Peoples has been honored. Top 200 Community Banks American Banker magazine ranked PSB Holdings, Inc. as a Top 200 Community Bank for 14 straight years. In 2023, we’re ranked as the 123rd top-performing community bank in the nation. 2023 2023 Best of Marathon County Wausau Daily Herald readers rated Peoples as the “Best Bank” in Marathon County in 2023. The honor marks the 12th year in a row that Peoples has been voted best bank. Retirements Community banking is a people business, and we recognize our long-time colleague, Ingrid, who retired in 2023. Tank you, and we wish you all the best! Ingrid Wenzel – Retail Loan Closing & Funding Specialist Peoples State Bank Waukesha – 20 years of service 2023 Annual Report Giving Back to Our Communities We support the communities and people we serve. Women’s Leadership Conference Employer Support of the Guard & Reserve Peoples State Bank served as the presenting sponsor of the Peoples is proud of Meredith Otte for her work supporting her Greater Wausau Chamber of Commerce’s Women’s Leadership employee, Tou Ger Xiong, and his membership in the Guard. Meredith, Conference. The conference provides attendees with a powerful who is a vice president, commercial banker, and lead of Peoples framework and tools to grow professionally and personally, and private banking team, was honored by the Employee Support of the become more effective leaders and the best version of themselves. Guard & Reserves with a Patriot Award. Volunteer Fundraising Peoples Opens Stevens Point Branch Peoples State Bank employees regularly volunteer in their Peoples opened a full-service branch at 138 McDill Avenue in Stevens communities. Our Eagle River employees held a brat fry at the Point on July 12. Peoples executives, employees, and board members neighboring Trig’s grocery store, providing all funds to the Vilas County were joined by the Portage County Business Council for a ribbon-cutting Foster Care Closet. to celebrate the opening. FROM OUR CUSTOMERS “I am very satisfed with the service, which is convenient and very professional. I have never had a problem with the bank, and I would recommend the bank to my family and friends.” r e t t e B u o Y t r o p p u S o t u o Y g n i d n a t s r e d n U 7 SUMMARY STATEMENTS OF INCOME Years ended December 31 (dollars in thousands, except per share data) 2023 2022 2021 2020 2019 Net interest income Provision for credit losses Net interest income after provision for credit loss Noninterest income Operating expenses Net income before income taxes Provision for income taxes $38,692 450 38,242 6,720 30,548 14,414 4,845 $40,003 $38,601 $31,879 $31,283 - 1,000 5,575 850 40,003 7,444 29,516 17,931 4,294 37,601 9,418 30,110 16,909 4,092 26,304 11,413 23,744 13,973 3,284 30,433 7,661 23,296 14,798 3,551 NET INCOME $9,569 $13,637 $12,817 $10,689 $11,247 Preferred stock dividends declared Net income available to common shareholders Diluted earnings per share Cash dividends per share Return on average assets Return on average tangible common equity $486 $9,083 $2.16 $0.60 0.69% 9.65% $81 - - - $13,556 $12,817 $10,689 $11,247 $3.07 $0.50 1.05% 14.08% $2.88 $0.46 1.03% 11.94% $2.40 $0.42 1.01% 10.85% $2.51 $0.40 1.22% 12.79% We are listening to our customers, investing in technology to improve our digital and personal interactions, and focusing on products and people that deliver value to retail and commercial customers daily. ~ Scott M. Cattanach We are a community bank that’s proud of our legacy and keeping an eye on the future. Bank mobile or in person – we’ll be here for you when you need us. 8 2023 Annual Report SUMMARY BALANCE SHEETS As of December 31 (dollars in thousands, except per share data) ASSETS Cash and cash equivalents Securities and certificates of deposit Loans receivable, net Premises and equipment Other assets 2023 $27,780 252,579 1,078,705 13,098 51,938 2022 $29,409 282,045 961,865 13,164 51,206 2021 2020 2019 $53,543 310,690 876,337 12,695 45,446 $38,528 229,527 820,956 10,920 32,024 $49,028 179,431 707,651 10,457 28,326 TOTAL ASSETS $1,424,100 $1,337,689 $1,298,711 $1,131,955 $974,893 LIABILITIES Deposits Federal Home Loan Bank advances Other borrowings Senior subordinated notes Junior subordinated debentures Other liabilities Stockholders’ equity TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY 2023 2022 2021 2020 2019 $1,141,802 $1,148,755 $1,105,240 $932,137 $781,790 134,000 8,058 4,774 12,921 13,258 43,000 12,985 5,549 12,819 12,639 47,000 6,677 2,500 12,717 13,315 109,287 101,942 111,262 62,000 12,239 2,500 7,732 10,920 104,427 73,496 6,131 2,500 7,732 10,553 92,691 $1,424,100 $1,337,689 $1,298,711 $1,131,955 $974,893 Common shares outstanding at year end $4,164,735 4,297,279 4,440,329 4,452,287 4,467,217 Tangible net book value per share $23.84 $21.37 $24.36 $23.43 $20.72 9 Understanding You to Support You Better ANNUAL REPORT 20 23 Understanding You to Support You Better. psbholdingsinc.com | 888.929.9902 bankpeoples.com