PSB Group Inc. of Madison Heights, Mich., has increased its loan-loss provision in response to deteriorating credit quality, and it has postponed its plan to go private.
The $502 million-asset parent of Peoples State Bank said last week that it would record a $2.5 million loan-loss provision for the third quarter, because of a continued weakness in the Michigan economy. The plan to go private has been suspended for at least six months while it reconsiders its "capital and earnings situation," the company said.
Three weeks after reporting a second-quarter profit of $651,000, PSB said in August that it had lost $339,000 in the quarter. It revised its earnings after an in-depth loan review found that its housing and construction portfolio had weakened considerably, and that an $1.5 million increase in its loan-loss provision was necessary.
On May 24, the day it announced its plan to go private, PSB's stock shot up 25.8%, to $19 a share. It fell 13% Thursday, to $16.40, and was unchanged at midday Friday.
