Net Income Up 41% for Puget Sound Bank

First Quarter Results Reflect Successful Acquisition Strategy

BELLEVUE, Wash.--()--Puget Sound Bank (OTCQB:PUGB) today reported record net income of $752,521 or $0.25 per share for the quarter ending March 31, 2014, an increase of 41% as compared to $533,126 or $0.21 per share for the year earlier period.

This quarter’s net income exceeds all previous quarterly results in the Company’s nine-year history and is the first quarter since announcing the purchase of Core Business Bank in March 2013 (completed in June 2013) to include no acquisition costs.

“The acquisition has met our expectations for delivering ongoing, sustainable growth to our operations with a carefully managed level of risk,” said Jim Mitchell, Puget Sound Bank president and chief executive officer. “And we’re pleased to report our customers experienced a smooth integration last fall. In addition, our tangible book value has increased in the past year, demonstrating the acquisition was accretive within the first year.”

Total loans increased 36% to $277.8 million as compared to $203.6 million a year earlier. Excluding the acquired Core Business Bank loans, Puget Sound Bank’s organic loan growth was 20% as compared to last year. Puget Sound Bank’s C&I (commercial and industrial) loans account for approximately 64% of the Bank’s portfolio. This places the Bank in the top 15% of all commercial banks in Washington state for C&I loans as a percentage of total loans.

2014 First Quarter Highlights

  • Total assets grew 23% to $339.0 million as compared to $276.0 million a year ago.
  • Noninterest demand deposits increased 14% to $108.8 million as compared to $95.6 million a year earlier, or 41% of total deposits (up from 40% a year ago).
  • Total loans grew 36% to $277.8 million and total deposits grew 11% to $264.1 million as compared to a year ago.
  • Net interest margin was 4.17% for the quarter, down slightly from 4.20% one year ago.
  • Tangible book value per share increased to $11.39 from $11.05 a year earlier.
  • Return on equity increased to 8.72% from 7.75% a year ago.
  • Return on assets increased to 0.90% from 0.81% a year ago.
  • Nonperforming assets to total assets decreased to 0.22%, down from 0.66% in the year-earlier period.
  • Allowance for loan losses and the fair value discount on the acquired loan portfolio, together were 1.38% of loans.
  • The efficiency ratio improved to 67.1% for the quarter compared to 69.6% 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 14th consecutive quarter, Puget Sound Bank was awarded a 5-star rating, the highest available from independent banking rating agency BauerFinancial.

“Our numbers show that our C&I focus and acquisition strategy can deliver the growth necessary for Puget Sound Bank to become a high-performing company,” said Mr. Mitchell, “and the board, management and staff are focused on that goal.”

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 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 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,” 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 2014
($ in thousands except per share data)

1st Qtr


4th Qtr


1st Qtr

Net interest income $ 3,261 3,324 2,629
Provision for loan losses $ 0   264 46
Net interest income after provision for loan losses


3,261 3,060 2,583
NonInterest income $ 168 153 139
NonInterest expense $ 2,302   2,348 1,928
Pre-tax Net income $ 1,127 865 794
Provision for income taxes (benefit) $ 374   311 261
Net income $ 753 553 533
Preferred dividends $ 25   25 25
Net income available to common shareholders $ 728 528 508

Earnings per share1

$ 0.25 0.18 0.21
Average shares outstanding 2,948 2,921 2,369
Total revenue $ 3,429 3,477 2,768
Return on average assets 0.90% 0.68% 0.81%

Return on average tangible common equity1

8.72% 6.49% 7.75%
Net interest margin 4.17% 4.24% 4.20%
Efficiency ratio 67.1% 67.5% 69.6%
Tier 1 leverage ratio 13.09% 13.68%
Tier 1 risk-based capital ratio 14.22% 15.33%
Total risked based capital ratio 15.47% 16.58%
Tangible Common Equity Ratio 9.98% 9.73% 9.59%
Net loan charge-offs (recoveries) $ 0 (126) 213
Allowance for loan losses $ 3,538 3,538 3,095
Allowance for losses to total loans 1.27% 1.29% 1.52%
Nonperforming loans $ 738 738 1,834
Other real estate owned $ 0 0 0
Nonperforming assets to total assets 0.22% 0.22% 0.66%

1Includes preferred stock dividends not included in net income.

Puget Sound Bank
First Quarter 2014
($ in thousands except per share data) 2014
1st Qtr
4th Qtr
1st Qtr
Cash and Due From Banks $ 13,966 16,627 8,503
Investments $ 42,336 42,713 61,757
Commercial and Industrial Loans $ 124,867 126,764 99,031
Owner-Occupied Commercial Real Estate $ 54,013 54,377 37,197
Other Commercial Real Estate $ 71,521 71,509 51,554
Personal Loans $ 27,467 22,422 14,391
Non-accrual Loans $ 738 738 1,834
Acquired Loan Fair Value Adjustment $ (309) (378) -
Deferred Loan Fees $ (515)   (522) (360)
Total Loans $ 277,783 274,910 203,647
Allowance for Loan Losses $ (3,538)   (3,538) (3,095)
Net Loans $ 274,245 271,372 200,551
Goodwill/Core Deposit Intangible $ 2,185 2,196 -
Other Assets $ 6,227   6,355 5,218
Total Assets $ 338,958 339,263 276,029
Non-interest bearing Demand $ 108,766 122,148 95,560
Interest Bearing Demand $ 22,478 24,529 17,763
Money Market and Savings $ 98,080 108,158 78,473
Certificates of Deposit $ 34,742   25,932 46,611
Total Deposits $ 264,066 280,767 238,407


28,000 12,000 -
Other Liabilities $ 1,565 2,027 1,278
Total Equity $ 45,328   44,469 36,344
Total Liabilities and Equity $ 338,958 339,263 276,029
Tangible Shareholders' equity $ 33,603 32,785 26,269
Tangible book value per share


11.39 11.18 11.05


Puget Sound Bank
Brad Ogura, 425 467-2037


Puget Sound Bank
Brad Ogura, 425 467-2037