2014

Puget Sound Bank Reports Second Quarter Results Acquisition Fuels Loan Growth and Sets Stage for Increased Profitability

BELLEVUE, Wash., July 31, 2013 /PRNewswire/ -- Puget Sound Bank (OTCQB: PUGB), today reported net income for the second quarter 2013 of $476,416 or $.18 per share as compared to $533,126 or $.21 per share in the first quarter of 2013. This compares to $526,381 or $.21 per share for the year-earlier quarter.

Net income would have been approximately $645,000 or $0.25 per share before one-time costs resulting from Puget Sound Bank's acquisition of Core Business Bank, completed on June 14, 2013.

"Not only did we grow our loan portfolio 28% year-over-year to $249.2 million as a result of the acquisition and 11% of organic loan growth, we grew it according to our strategic plan – primarily from strong commercial and industrial loans," said Jim Mitchell, Puget Sound Bank president and chief executive officer. "Plus," he continued, "Core Business Bank had no nonperforming loans, so combined with our very low level of nonperforming loans, we continue to build a stronger asset base." The Bank reported 0.54% of total assets as nonperforming, down from 0.66% in the first quarter of this year and 0.75% one year ago.

"The board and executive management team will continue to grow the bank in a careful and prudent manner," said Mr. Mitchell, "beginning with capitalizing on additional growth opportunities with the Bank's new legal lending limit of $9 million and continuing to focus on lending to small-to-medium sized businesses." Including acquired loans from Core Business Bank, Puget Sound Bank's commercial and industrial loans (including owner-occupied real estate) account for approximately 67% of Puget Sound Bank's portfolio as compared to 62% in the year-earlier quarter.

Second Quarter 2013 Highlights:

  • Total shares outstanding increased by 536,916 to 2,914,004 as a result of the acquisition.
  • Total assets grew 26% from a year ago to $318.5 million.
  • Noninterest bearing demand deposits increased 59% from a year ago to $117.5 million, or 43% of total deposits compared to 34% a year ago.
  • Loans grew 11% and deposits grew 4% from a year ago, excluding Core Business Bank balances.
  • Net interest margin increased to 4.23% for the quarter, up from 4.20% last quarter.
  • Tangible book value per share increased to $10.67 from $10.62 a year earlier.
  • Return on equity decreased to 6.55% from 8.08% a year ago due to expenses related to the acquisition. Return on equity would have been 9.01% without acquisition costs.
  • Return on assets decreased to 0.69% from 0.87% a year ago due to expenses related to the acquisition. Return on assets would have been 0.94% without acquisition costs.
  • Nonperforming assets to total assets decreased to 0.54%, down from 0.75% in the year-earlier quarter.
  • Allowance for loan losses and the fair value discount on the acquired loan portfolio, together were 1.50% of loans.
  • Capital ratios continue to substantially exceed regulatory requirements for a well-capitalized financial institution, with total risk-based capital at 16.52%, well above the 10% well-capitalized regulatory requirement.
  • The efficiency ratio increased to 73.5% compared to 69.6% last quarter and 65.0% one year earlier due to expenses related to the acquisition. The efficiency ratio would have been 64.9% without acquisition costs.
  • For the 11th consecutive quarter, Puget Sound Bank was awarded a 5-Star rating, the highest rating available from independent banking rating agency BauerFinancial.

Stronger Net Interest Margin
Net interest margin for the current quarter was 4.23%, continuing a sequential rise in the past year due primarily from loan growth and lower funding costs. Overall, deposits grew 26% to $274 million from $217 million a year ago, with approximately $47 million from Core Business Bank.

Results of Core Business Bank Acquisition
"We are pleased that the acquisition has gone very smoothly for Core Business Bank customers and our combined staffs have been able to minimize any service disruptions," said Mr. Mitchell. "While we expect to incur additional acquisition costs through the conversion of Core Business Bank systems in October of 2013 we anticipate the acquisition to be accretive to 2014 earnings-per-share and tangible book value."

"Although our efficiency ratio increased in the quarter," Mr. Mitchell continued, "this was primarily due to one-time acquisition costs and we expect it to settle around 65% as expenses such as duplicative system and lease costs, professional service fees and other expenses are eliminated and we book increased income from our larger asset base."

About Puget Sound Bank
Puget Sound Bank (OTCQB: PUGB) is a commercial bank proudly serving 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. Staffed by the most experienced, customer-oriented banking professionals in the region, 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 or through Puget Sound Bank's correspondent banking relationship offering branch and ATM deposit access throughout Washington state. For more information visit us online at www.PugetSoundBank.com or call us at 425-455-2400.

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. Actual results may differ materially from the results expressed in forward-looking statements. Investors should not place undue reliance on any forward-looking statement, and should consider factors that might cause differences including changes in interest rates and interest-rate relationships; demand for products and services; the degree of competition by traditional and non-traditional competitors; changes in banking regulations; changes in tax laws; changes in prices; levies and assessments; the impact of technological advances; governmental and regulatory policy changes; the outcomes of contingencies; trends in customer behavior as well as their ability to repay loans; changes in the local and national economy; as well as 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.

CONTACT: Brad Ogura, 425 467-2037

 

Puget Sound Bank







Second Quarter 2013 














CONSOLIDATED STATEMENT OF OPERATIONS





(Unaudited)












Quarterly




2013

2013


2012


($ in thousands except per share data)


2nd Qtr

1st Qtr


2nd Qtr









EARNINGS







   Net interest income

$

2,793

2,629


2,471


   Provision for loan losses

$

68

46


111


   Net interest income after provision for loan losses

2,725

2,583


2,360


   NonInterest income

$

138

139


95


   NonInterest expense

$

2,153

1,928


1,667


   Pre-tax Net income

$

710

794


788


   Provision for income taxes (benefit)

$

233

261


262


   Net income

$

476

533


526


   Preferred dividends

$

25

25


25


  Net income available to common shareholders

$

451

508


501


   1Earnings per share

$

0.18

0.21


0.21


   Average shares outstanding


2,477

2,369


2,349


   Total revenue

$

2,930

2,768


2,566


PERFORMANCE RATIOS







   Return on average assets


0.69%

0.81%


0.87%


   1Return on average tangible common equity

6.55%

7.75%


8.08%


   Net interest margin


4.23%

4.20%


4.26%


   Efficiency ratio


73.5%

69.6%


65.0%









CAPITAL







   Tier 1 leverage ratio


15.04%

13.68%


14.32%


   Tier 1 risk-based capital ratio


15.32%

15.33%


15.59%


   Total risked based capital ratio 


16.52%

16.58%


16.85%


   Tangible Common Equity Ratio


9.83%

9.59%


9.85%









ASSET QUALITY







   Net loan charge-offs (recoveries)

$

78

213


486


   Allowance for loan losses

$

3,085

3,095


2,912


   Allowance for losses to total loans


1.24%

1.52%


1.50%


   Nonperforming loans

$

1,722

1,834


1,906


   Other real estate owned

$

0

0


0


   Nonperforming assets to total assets


0.54%

0.66%


0.75%























Puget Sound Bank







Second Quarter 2013 














CONSOLIDATED FINANCIAL HIGHLIGHTS






(Unaudited)









Quarterly




2013

2013


2012


($ in thousands except per share data)


2nd Qtr

1st Qtr


2nd Qtr









BALANCE SHEET














 Cash and Due From Banks 

$

12,731

8,503


7,198


 Investments 

$

51,517

61,757


49,048


 Commercial and Industrial Loans 

$

127,340

99,031


81,541


 Owner-Occupied Commercial Real Estate 

$

38,931

37,197


37,750


 Other Commercial Real Estate 

$

61,667

51,554


54,352


 Personal Loans 

$

19,912

14,391


19,436


 Non-accrual Loans 

$

1,722

1,834


1,906


 Deferred Loan Fees 

$

(335)

(360)


(296)


    Total Loans 

$

249,238

203,647


194,689


 Allowance for Loan Losses 

$

(3,085)

(3,095)


(2,912)


 Acquired Loan Fair Value Adjustment 


(650)

-


-


   Net Loans 

$

245,503

200,551


191,777


  Goodwill/Core Deposit Intangible


2,218

-


-


 Other Assets 

$

6,555

5,218


5,246


 Total Assets 

$

318,524

276,029


253,269









 Non-interest bearing Demand  

$

117,462

95,560


73,926


 Interest Bearing Demand  

$

23,306

17,763


18,101


 Money Market and Savings 

$

94,464

78,473


71,468


 Certificates of Deposit 

$

38,393

46,611


53,759


    Total Deposits 

$

273,625

238,407


217,254


 Borrowings 


-

-


-


Other Liabilities

$

1,701

1,278


1,186


Total Equity

$

43,199

36,344


34,829


   Total Liabilities and Equity

$

318,524

276,029


253,269









   Tangible Shareholders' equity

$

31,095

26,458


24,943


   Tangible book value per share


10.67

11.13


10.62









1Includes preferred stock dividends not included in net income.





 

SOURCE Puget Sound Bank



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