Net Income Up 30% for Puget Sound Bank

First Quarter ROE reaches 10.07% and ROA at 1.01%

BELLEVUE, Wash.--(BUSINESS WIRE)--Puget Sound Bank (OTCQB:PUGB) today reported net income of $979,470 or $0.31 per share for the quarter ending March 31, 2015, an increase of 30% as compared to $752,521 or $0.25 per share for the year earlier period.

For the second consecutive quarter, Puget Sound Bank achieved a return on equity above 10% and return on assets above 1% – primary industry ratios used to measure high-performing banks.

“We continue to grow earnings as we build our loan portfolio, prudently balancing risk and return,” said Jim Mitchell, Puget Sound Bank president and chief executive officer. “At the same time, we are expanding our service team and supporting technology to ensure the customer experience is the best in the marketplace, and we are always seeking new efficiencies to lower operating costs.”

Total loans at the end of the first quarter increased 15% to $318.6 million as compared to $277.8 million a year earlier. Puget Sound Bank’s business-related loans account for approximately 62% of the Bank’s portfolio, placing the Bank near the top of all commercial banks in Washington state for these loans as a percentage of total loans.

Total deposits at quarter-end increased 29% to $341.6 million as compared to $264.1 million a year earlier. With 45% of total deposits in noninterest bearing accounts, the Bank has been able to maintain a net-interest margin of 4.13%, one of the highest among commercial banks in Washington state.

“While this growth illustrates Puget Sound Bank’s commitment to small- and middle-market companies, their owners and nonprofit organizations, it doesn’t tell the whole story of how we achieve these results,” said Sean Brennan, executive vice president and chief lending officer. “And that recognition goes to our clients who entrust us with their banking requirements and referrals, and to our dedicated staff who have defined new service levels in this marketplace ensuring exceptional client retention.”

2015 First Quarter Highlights

• Total assets grew 17% to $395.5 million as compared to $339.0 million a year ago.
• Noninterest demand deposits increased 41% to $153.6 million as compared to $108.8 million a year earlier, or 45% of total deposits (up from 41% a year ago).
• Total loans grew 15% to $318.6 million and total deposits grew 29% to $341.6 million as compared to a year ago.
• Net interest margin was 4.13% for the quarter, down slightly from 4.17% one year ago.
• Tangible book value per share increased to $12.33 from $11.27 a year earlier.
• Return on equity increased to 10.07% from 8.72% a year ago.
• Return on assets increased to 1.01% from 0.90% a year ago.
• Nonperforming assets to total assets increased to 0.69%, up from 0.22% in the year-earlier period.
• Allowance for loan losses and the fair value discount on the acquired loan portfolio, together were 1.30% of loans.
• The efficiency ratio improved to 61.6% for the quarter compared to 67.1% in the year earlier quarter.
• Capital ratios continue to exceed regulatory requirements, with total risk-based capital substantially above well-capitalized regulatory requirements.
• For the 18^th consecutive quarter, Puget Sound Bank was awarded a 5-star rating, the highest available from independent banking rating agency BauerFinancial.

“As we begin to celebrate our 10-year anniversary, the board and I are very proud of our accomplishments,” said Mr. Mitchell, “and our sincere thanks go out to our employees, customers and partners who have made our success possible.”

Common stock for Puget Sound Bank trades on the OTCQB^® electronic marketplace under the symbol PUGB.

About Puget Sound Bank

Puget Sound Bank is one of Washington state’s top commercial banks (as measured by commercial and industrial loans as a percentage of total loans) proudly serving the greater Puget Sound region. Based in Bellevue, Washington, the bank was founded to meet the specialized needs of small- and medium-sized businesses, select commercial real estate projects, professional service providers and high net worth individuals. Puget Sound Bank offers a full range of competitive financial products including an advanced suite of cash management services. Customers can access their accounts in-branch, online, on their smartphones or through Puget Sound Bank's ATM network throughout the continental United States. For more information visit www.PugetSoundBank.com or call [phone].

Puget Sound Bank is consistently rated one of the country’s safest and strongest banks by independent analysts and celebrates its 10-year anniversary this month.

To access investor relations information for Puget Sound Bank, visit www.PugetSoundBank.com/IR or call [phone].

Forward-Looking Statement Safe Harbor: This news release contains comments or information that constitutes forward-looking statements (within the meaning of the Private Securities Litigation Reform Act of 1995) that are based on current expectations that involve a number of risks and uncertainties. Forward-looking statements describe Puget Sound Bank’s projections, estimates, plans and expectations of future results and can be identified by words such as “believe,” “intend,” “estimate,” “likely,” “anticipate,” “expect,” “looking forward,” and other similar expressions. They are not guarantees of future performance. Actual results may differ materially from the results expressed in these forward-looking statements, which because of their forward-looking nature, are difficult to predict. Investors should not place undue reliance on any forward-looking statement, and should consider factors that might cause differences including but not limited to the degree of competition by traditional and nontraditional competitors, declines in real estate markets, an increase in unemployment or sustained high levels of unemployment; changes in interest rates; greater than expected costs to integrate acquisitions, adverse changes in local, national and international economies; changes in the Federal Reserve’s actions that affect monetary and fiscal policies; changes in legislative or regulatory actions or reform, including without limitation, the Dodd-Frank Wall Street Reform and Consumer Protection Act; demand for products and services; changes to the quality of the loan portfolio and our ability to succeed in our problem-asset resolution efforts; the impact of technological advances; changes in tax laws; and other risk factors. Puget Sound Bank undertakes no obligation to publicly update or clarify any forward-looking statement to reflect the impact of events or circumstances that may arise after the date of this release.

Puget Sound Bank First Quarter 2015
CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
		Quarterly
($ in thousands except per share data)		2015 1st Qtr	2014 4th Qtr	2014 1st Qtr
EARNINGS
Net interest income	$	3,729	3,752	3,261
Provision for loan losses	$	29	99	0
Net interest income after provision for loan losses	$	3,700	3,653	3,261
NonInterest income	$	182	206	168
NonInterest expense	$	2,408	2,559	2,302
Pre-tax Net income	$	1,473	1,299	1,127
Provision for income taxes (benefit)	$	493	347	374
Net income	$	979	952	753
Preferred dividends	$	25	25	25
Net income available to common shareholders	$	954	927	728
Earnings per share^1	$	0.31	0.31	0.25
Average shares outstanding		3,060	2,972	2,948
Total revenue	$	3,911	3,958	3,429
PERFORMANCE RATIOS
Return on average assets		1.01%	1.01%	0.90%
Return on average tangible common equity^1		10.07%	10.29%	8.72%
Net interest margin		4.13%	4.17%	4.17%
Efficiency ratio		61.6%	64.7%	67.1%
CAPITAL
Tier 1 leverage ratio			12.36%	13.13%
Tier 1 risk-based capital ratio			13.68%	14.12%
Total risked based capital ratio			14.93%	15.34%
Tangible Common Equity Ratio		10.20%	9.44%	9.88%
ASSET QUALITY
Net loan charge-offs (recoveries)	$	86	0	0
Allowance for loan losses	$	3,956	4,013	3,538
Allowance for losses to total loans		1.24%	1.27%	1.27%
Nonperforming loans	$	2,724	583	738
Other real estate owned	$	0	0	0
Nonperforming assets to total assets		0.69%	0.15%	0.22%
^1Includes preferred stock dividends not included in net income.

Puget Sound Bank First Quarter 2015
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
		Quarterly
($ in thousands except per share data)		2015 1st Qtr	2014 4th Qtr	2014 1st Qtr
BALANCE SHEET
Cash and Due From Banks	$	19,019	18,138	13,966
Investments	$	53,422	49,992	42,336
Commercial and Industrial Loans	$	133,488	132,734	124,867
Owner-Occupied Commercial Real Estate	$	63,217	61,221	54,013
Other Commercial Real Estate	$	91,264	90,283	71,521
Personal Loans	$	28,551	30,894	27,467
Non-accrual Loans	$	2,724	583	738
Acquired Loan Fair Value Adjustment	$	(180)	(193)	(309)
Deferred Loan Fees	$	(492)	(507)	(515)
Total Loans	$	318,571	315,015	277,783
Allowance for Loan Losses	$	(3,956)	(4,013)	(3,538)
Net Loans	$	314,615	311,002	274,245
Goodwill/Core Deposit Intangible	$	2,146	2,155	2,185
Other Assets	$	6,259	6,442	6,227
Total Assets	$	395,461	387,729	338,958
Non-interest bearing Demand	$	153,551	177,441	108,766
Interest Bearing Demand	$	28,071	23,972	22,478
Money Market and Savings	$	133,733	108,327	98,080
Certificates of Deposit	$	26,261	26,852	34,742
Total Deposits	$	341,616	336,592	264,066
Borrowings	$	-	-	28,000
Other Liabilities	$	1,690	2,688	1,565
Total Equity	$	52,155	48,448	45,328
Total Liabilities and Equity	$	395,461	387,729	338,958
Tangible Shareholders' equity	$	40,123	36,407	33,257
Tangible book value per share	$	12.33	12.17	11.27
Book value per share	$	12.99	12.89	12.01