Puget Sound Bancorp Reports 18% Net Income Growth

Zero Nonperforming Assets at Quarter-End

BELLEVUE, Wash.--()--Puget Sound Bancorp (OTCQB:PUGB), the holding company for Puget Sound Bank, today reported net income of $1.3 million or $0.37 per share for the quarter ending June 30, 2017, as compared to $1.1 million or $0.32 per share for the year earlier period.

“We are pleased to deliver this bottom-line growth as we continually invest to improve the customer experience at Puget Sound Bank.”

“This double-digit (18%) earnings growth results from our strong and disciplined balance sheet growth, an improving interest-rate environment, and fees from increasing loan commitments,” said Jim Mitchell, Puget Sound Bank chief executive officer, “We are pleased to deliver this bottom-line growth as we continually invest to improve the customer experience at Puget Sound Bank.”

With return on equity at 10.33% and return on assets at 0.97% year-to-date, Puget Sound Bank continues to perform at profitability levels for high-performing banks. This compares to ROE of 9.11% and ROA of 0.90% for the same period last year. Earnings per share increased 23% year-to-date as compared to the same period one year earlier.

Total assets increased 21% at quarter-end to $567.2 million as compared to $467.1 million a year earlier, with loans totaling $371.0 million as compared to $361.9 million a year earlier. Puget Sound Bank had no charge-offs, nonperforming loans or loans 30-days past due at the quarter end. “We are proud of this accomplishment as strong asset quality has always been a core, strategic focus for the Bank,“ said Tony Chalfant, Puget Sound Bank executive vice president and chief credit officer/chief operating officer. “This achievement comes from the collective efforts of our team at Puget Sound Bank and is a reflection of the financial strength of our client base.”

At the end of the second quarter, Puget Sound Bank’s business-related loans (including owner-occupied real estate) accounted for approximately 65% of the Bank’s portfolio, placing the Bank near the top of all banks in Washington state for business loans as a percentage of total loans.

Total deposits at quarter-end increased 23% to $505.1 million as compared to $409.1 million a year earlier, with 44% of total deposits in noninterest bearing accounts.

2017 Second Quarter Highlights

  • Total assets grew 21% to $567.2 million at the end of the second quarter of 2017 as compared to $467.1 million a year ago.
  • Total loans grew 3% to $371.0 million at quarter end as compared to $361.9 million a year earlier.
  • Total deposits grew 23% to $505.1 million at quarter end as compared to $409.1 million a year ago.
  • Noninterest demand deposits increased 30% to $224.6 million (44% of total deposits) at the quarter end as compared to $173.1 million (42% of total deposits)
  • Net interest margin was 3.76% for the quarter as compared to 3.79% one year ago.
  • Tangible book value per share increased to $15.13 at quarter end from $13.99 a year earlier.
  • Return on equity for the year-to-date increased to 10.33% as compared to 9.11% for the year-earlier period. Return on equity for the second quarter increased to 9.90% as compared to 9.22% a year ago.
  • Return on assets for the year-to-date increased to 0.97% as compared to 0.90% for the year earlier period. Return on assets for the second quarter was 0.93% as compared to 0.94% a year ago.
  • The ratio of nonperforming assets to total assets was 0.00% at quarter end as compared to 0.10% in the year-earlier period.
  • Allowance for loan losses and the fair value discount on the acquired loan portfolio, together were 1.20% of loans.
  • The efficiency ratio (noninterest expense divided by revenue) increased to 64.0% for the quarter as compared to 61.0% in the year earlier quarter due mainly to the expense of new office space. While higher than in recent quarters, the efficiency ratio falls within the Bank’s targeted range.
  • Capital ratios continue to exceed regulatory requirements, with total risk-based capital substantially above well-capitalized regulatory requirements.
  • For the 27th consecutive quarter, Puget Sound Bank was awarded a 5-star rating, the highest available from independent banking rating agency BauerFinancial.

“As we continue to deliver this high-performance growth, we remain focused on strengthening the relationships with our customers and with the communities we serve,” said Mr. Mitchell. “For customers, it means investing in advanced technology for added convenience and security as well as hiring and retaining well-qualified staff to deliver a first-class service experience. For our communities, it means a deepened commitment for community outreach, as evidenced by our consistent recognition as one of Washington state’s top corporate philanthropists.”

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

About Puget Sound Bancorp

Based in Bellevue, Washington, Puget Sound Bancorp provides banking products and services through its wholly-owned subsidiary, Puget Sound Bank (member FDIC). 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. As one of Washington state’s top commercial banks (as measured by commercial and industrial loans as a percentage of total loans), 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 mobile devices or through Puget Sound Bank's nationwide ATM network. For more information visit PugetSoundBank.com or call (425) 455-2400.

To access investor relations information for Puget Sound Bancorp, visit PugetSoundBancorp.com 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 Bancorp
Second Quarter 2017
 
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
 
Quarterly        
($ in thousands except per share data) 2017
2nd Qtr
  2017
1st Qtr
      2016
2nd Qtr
     

2017
YTD

  2016
YTD
               
EARNINGS
Net interest income $ 4,845 4,659 4,095 9,504 8,060
Provision for loan losses $ 0     59   73   59     73  
Net interest income after provision for loan losses $ 4,845 4,600 4,022 9,445 7,987
NonInterest income $ 190 222 200 411 397
NonInterest expense $ 3,224     2,874   2,619   6,098     5,263  
Pre-tax Net income $ 1,811 1,947 1,602 3,758 3,122
Provision for income taxes (benefit) $ 545     631   530   1,176     1,034  
Net income $ 1,266 1,316 1,072 2,582 2,088
Preferred dividends $ 0     0   0   0     0  
Net income available to common shareholders $ 1,266 1,316 1,072 2,582 2,088

Earnings per share1

$ 0.37 0.39 0.32 0.76 0.62
Average shares outstanding 3,423 3,410 3,376 3,417 3,368
Total revenue $ 5,035 4,881 4,294 9,916 8,458
PERFORMANCE RATIOS
Return on average assets 0.93 % 1.01 % 0.94 % 0.97 % 0.90 %

Return on average tangible common equity1

9.90 % 10.78 % 9.22 % 10.33 % 9.11 %
Net interest margin 3.76 % 3.77 % 3.79 % 3.76 % 3.70 %
Efficiency ratio 64.0 % 58.9 % 61.0 % 61.5 % 62.2 %
 
CAPITAL
Common equity tier 1 ratio 12.75 % 12.87 %
Tier 1 leverage ratio 10.53 % 11.50 %
Tier 1 risk-based capital ratio 12.75 % 12.87 %
Total risked based capital ratio 13.81 % 13.96 %
Tangible Common Equity Ratio 9.17 % 9.18 % 10.18 %
 
ASSET QUALITY
Net loan charge-offs (recoveries) $ 0 1 (30 )
Allowance for loan losses $ 4,409 4,409 4,199
Allowance for losses to total loans 1.19 % 1.20 % 1.16 %
Nonperforming loans $ 0 402 451
Other real estate owned $ 0 0 0
Nonperforming assets to total assets 0.00 % 0.07 % 0.10 %
 

1Includes preferred stock dividends not included in net income.

 
 
Puget Sound Bancorp
Second Quarter 2017
 
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Unaudited)
 
Quarterly
($ in thousands except per share data) 2017
2nd Qtr
  2017
1st Qtr
      2016
2nd Qtr
       
BALANCE SHEET
 
Cash and Due From Banks $ 21,280 21,167 18,058
Investments $ 165,917 153,068 82,602
Commercial and Industrial Loans $ 160,100 162,751 160,795
Owner-Occupied Commercial Real Estate $ 80,514 76,595 81,756
Other Commercial Real Estate $ 113,779 107,422 92,526
Personal Loans $ 17,516 19,648 27,102
Non-accrual Loans $ - 402 451
Acquired Loan Fair Value Adjustment $ (44 ) (50 ) (120 )
Deferred Loan Fees $ (861 ) (879 ) (587 )
Total Loans $ 371,004 365,889 361,924
Allowance for Loan Losses $ (4,409 ) (4,409 ) (4,199 )
Net Loans $ 366,594 361,479 357,726
Goodwill/Core Deposit Intangible $ 2,077 2,090 2,108
Other Assets $ 11,296   9,950   6,582  
Total Assets $ 567,165 547,754 467,076
 
Non-interest bearing Demand $ 224,618 204,043 173,131
Interest Bearing Demand $ 37,696 37,484 22,630
Money Market and Savings $ 207,148 203,291 185,215
Certificates of Deposit $ 35,673   42,062   28,138  
Total Deposits $ 505,135 486,880 409,115
Debt $ 5,400 5,400 6,000
Other Liabilities $ 2,752 3,304 2,524
Total Equity $ 53,878   52,170   49,438  
Total Liabilities and Equity $ 567,165 547,754 467,076
 
Tangible Shareholders' equity $ 51,801 50,080 47,330
Tangible book value per share $ 15.13 14.66 13.99
Book value per share $ 15.74 15.27 14.62
 

Contacts

Puget Sound Bank
Brad Ogura, 425-467-2037

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