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Puget Sound Bank Profits Increase 40% in Second Quarter

Results Driven by Acquisition, Organic Growth and Excellent Credit Quality

BELLEVUE, Wash.--(BUSINESS WIRE)--Puget Sound Bank (OTCQB:PUGB) reported net income for the second quarter 2014 of $668,798 or $.22 per share, a 40% increase as compared to $476,416 or $.18 per share for the second quarter of 2013.

“While our net-interest margin is down slightly from a year ago, at 4.19% it remains one of the highest among our peers.”

“As the board and I look back on the past year we are pleased with how well the acquisition delivered growth and profitability to our shareholders, and how the employees of the combined organization worked so diligently to ensure a smooth transition for our customers,” said Jim Mitchell, president and chief executive officer. “Ensuring our new customers would have a seamless experience has resulted in almost 100% customer retention.”

Puget Sound Bank’s loan portfolio increased 21% compared to a year ago to $300.7 million as the Bank continues to focus on relationships with small- and medium-sized businesses. Commercial and industrial (C&I) loans account for approximately 63% of the Bank’s portfolio, placing the Bank in the top 15% of all commercial banks in Washington state as a percentage of total loans.

Recognizing the Bank’s first reporting period with outstanding loans above $300 million, Sean Brennan, executive vice president and chief lending officer, commented, “It is a tribute to our staff that they once again provided shareholders with double-digit loan growth and earnings growth in a single-digit market. The quality of our employees, the culture of the Bank and execution of our business model continues to serve shareholders well.”

“As our loan portfolio grows we continue to uphold our strong credit standards while maintaining our net-interest margin,” said Mr. Mitchell. “While our net-interest margin is down slightly from a year ago, at 4.19% it remains one of the highest among our peers.” In addition the Bank reported that nonperforming assets were 0.21% of total assets, down from 0.54% one year ago. This represents a Texas ratio of 1.6%, one of the best in Washington state.

Second Quarter 2014 Highlights:

• Total assets grew 12% to $357.3 million as compared to $318.5 million a year ago.

• Noninterest demand deposits increased 12% to $132.1 million as compared to $117.5 million a year earlier, or 43% of total deposits.

• Total loans grew 21% to $300.7 million and total deposits grew 12% to $305.6 million as compared to a year ago.

• Net interest margin was 4.19% for the quarter, down slightly from 4.26% one year ago.

• Tangible book value per share increased to $11.59 from $10.74 a year earlier.

• Return on equity increased to 7.54% from 6.55% a year ago.

• Return on assets increased to 0.78% from 0.69% a year ago.

• Nonperforming assets to total assets decreased to 0.21%, down from 0.54% in the year-earlier period.

• Allowance for loan losses and the fair value discount on the acquired loan portfolio, together were 1.36% of loans.

• The efficiency ratio improved to 64.1% for the quarter compared to 73.5% 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 15th consecutive quarter, Puget Sound Bank was awarded a 5-star rating, the highest available from independent banking rating agency BauerFinancial.

“At 64% for the quarter, our efficiency ratio is in line with where we had hoped it would be a year ago, and we will continue to efficiently balance our expenses while delivering the service and new products, such as mobile banking, that our customers expect in this marketplace,” Mr. Mitchell said.

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) and proudly serves the greater Puget Sound region of Washington state. 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 banking relationships offering branch and ATM deposit access throughout the continental United States. For more information visit www.PugetSoundBank.com or call (425) 455-2400.

Puget Sound Bank trades on the OTCQB® electronic marketplace under the symbol PUGB. To access investor relations information for Puget Sound Bank, visit www.PugetSoundBank.com/IR or call (425) 467-2037.

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
Second Quarter 2014
 
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
  Quarterly        
($ in thousands except per share data) 2014
2nd Qtr
  2014
1st Qtr
  2013
2nd Qtr
  2014
YTD
  2013
YTD
       
EARNINGS
Net interest income $ 3,435 3,261 2,793 6,696 5,422
Provision for loan losses $ 283     0   68   283     114  
Net interest income after provision for loan losses

$

3,152 3,261 2,725 6,413 5,308
NonInterest income $ 145 168 138 313 276
NonInterest expense $ 2,294     2,302   2,153   4,596     4,081  
Pre-tax Net income $ 1,003 1,127 710 2,130 1,504
Provision for income taxes (benefit) $ 334     374   233   708     494  
Net income $ 669 753 476 1,421 1,010
Preferred dividends $ 25     25   25   49     49  
Net income available to common shareholders $ 644 728 451 1,372 960

Earnings per share1

$ 0.22 0.25 0.18 0.46 0.40
Average shares outstanding 2,959 2,948 2,477 2,953 2,423
Total revenue $ 3,580 3,429 2,930 7,009 5,698
 
PERFORMANCE RATIOS
Return on average assets 0.78 % 0.90 % 0.69 % 0.84 % 0.75 %

Return on average tangible common equity1

7.54 % 8.72 % 6.55 % 8.12 % 7.13 %
Net interest margin 4.19 % 4.17 % 4.26 % 4.18 % 4.23 %
Efficiency ratio 64.1 % 67.1 % 73.5 % 65.6 % 71.6 %
 
CAPITAL
Tier 1 leverage ratio 13.13 % 15.04 %
Tier 1 risk-based capital ratio 14.12 % 15.32 %
Total risked based capital ratio 15.34 % 16.52 %
Tangible Common Equity Ratio 9.66 % 9.98 % 9.90 %
 
ASSET QUALITY
Net loan charge-offs (recoveries) $ 0 0 78
Allowance for loan losses $ 3,821 3,538 3,085
Allowance for losses to total loans 1.27 % 1.27 % 1.24 %
Nonperforming loans $ 738 738 1,722
Other real estate owned $ 0 0 0
Nonperforming assets to total assets 0.21 % 0.22 % 0.54 %
 

1Includes preferred stock dividends not included in net income.

 
 
Puget Sound Bank
Second Quarter 2014
 
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Unaudited)
  Quarterly
($ in thousands except per share data) 2014
2nd Qtr
  2014
1st Qtr
  2013
2nd Qtr
   
BALANCE SHEET
 
Cash and Due From Banks $ 11,110 13,966 12,731
Investments $ 40,877 42,336 51,517
Commercial and Industrial Loans $ 129,732 124,867 127,340
Owner-Occupied Commercial Real Estate $ 61,219 54,013 38,931
Other Commercial Real Estate $ 82,137 71,521 61,667
Personal Loans $ 27,801 27,467 19,912
Non-accrual Loans $ 738 738 1,722
Acquired Loan Fair Value Adjustment $ (267 ) (309 ) (650 )
Deferred Loan Fees $ (616 ) (515 ) (335 )
Total Loans $ 300,745 277,783 248,588
Allowance for Loan Losses $ (3,821 ) (3,538 ) (3,085 )
Net Loans $ 296,923 274,245 245,503
Goodwill/Core Deposit Intangible $ 2,175 2,185 2,218
Other Assets $ 6,177   6,227   6,555  
Total Assets $ 357,262 338,958 318,524
 
Non-interest bearing Demand $ 132,086 108,766 117,462
Interest Bearing Demand $ 24,296 22,478 23,306
Money Market and Savings $ 115,507 98,080 94,464
Certificates of Deposit $ 33,758   34,742   38,393  
Total Deposits $ 305,647 264,066 273,625
Borrowings

$

3,415 28,000 -
Other Liabilities $ 1,959 1,565 1,701
Total Equity $ 46,241   45,328   43,199  
Total Liabilities and Equity $ 357,262 338,958 318,524
 
Tangible Shareholders' equity $ 34,306 33,603 31,300
Tangible book value per share

$

11.59 11.39 10.74

Book value per share

$

12.32

12.13

11.50

 

Contacts

Puget Sound Bank
Brad Ogura, 425-467-2037