Puget Sound Bank

Puget Sound Bank promotes LoAnn Phung

2011 May 3 by Richard Lester

Puget Sound Bank is pleased to announce the promotion of LoAnn Phung to Vice President and Manager of Puget Sound Bank’s Customer Service team in Bellevue. In this role, Phung is charged with providing exceptional service to the bank’s commercial deposit clients.

“The people who bring Puget Sound Bank’s service philosophy to life are a diverse group of commercial banking professionals who continually demonstrate success both in banking and in their volunteerism.  LoAnn emulates our core values of providing exceptional service to our clients as well as to our colleagues and we are very proud to promote her to Vice President,” said Sean Brennan, Executive Vice President and Chief Lending Officer.

Puget Sound Bank First Quarter Profits Jump 57%

2011 April 22 by Richard Lester

BELLEVUE, WA — April 20, 2011 — Puget Sound Bank (OTCBB: PUGB.OB), today reported record profits for the first quarter 2011. For the three months ended March 31, 2011, earnings increased 57% to $456,124, compared to $290,009 for the first quarter a year ago. In the fourth quarter of 2010 Puget Sound Bank earned $436,361. The sharp increase in earnings reflects the bank’s strong credit quality and a substantial increase in the net interest margin.

“Following a stellar year for Puget Sound Bank, as 2010 profits rose to $1.4 million, we posted record earnings for the first quarter of 2011,” said Jim Mitchell, President and Chief Executive Officer. “The continued profitability is due to the dedication of our hard-working employees who consistently deliver exceptional service to our customers. We also owe a big thanks to our loyal long-term customers who have established successful businesses in our marketplace. With their support and referrals, we continue building our presence in the business banking market in the Puget Sound region.”

Puget Sound Bank ended 2010 as one of the strongest banks in the nation, based on capital strength, asset quality and profitability, as reported by BauerFinancial, Inc., an independent banking rating agency. Puget Sound Bank was awarded the 5-Star rating which is the highest rating available from Bauer Financial, Inc.

First Quarter 2011 Highlights
• Total net revenues increased 39% to $2.4 million from $1.7 million in first quarter 2010.
• Continued profitability with return on average assets at 0.83% and return on average common equity at 6.72%.
• Net interest margin (NIM) increased to 4.36% from 3.43% in the same quarter a year ago.
• Gross loans grew 23% to $172.2 million from $140.4 million a year ago.
• Total deposits increased 6% to $198.9 million from $187.4 million a year earlier.
• Asset quality places Puget Sound Bank near the top of all banks in the State of Washington with nonperforming assets to total assets at only 1.09%.
• Maintained strong capital ratios that exceed all regulatory requirements for a well-capitalized financial institution with a Total Risk-based Capital Ratio of 14.64% compared to 16.96% in the first quarter a year ago.

“We have navigated through some very difficult economic conditions by sticking to and executing our strategy,” continued Mitchell. “The result is a strong balance sheet and capital position, which will allow us to expand our franchise and build upon our reputation as a trusted provider of business financial products and services. We believe a full economic recovery will be slow, but with hard work, we will continue to steer our way through any challenges, and opportunities, that may come our way.”

“We continue to see improvement in our credit quality, as we focus on small to medium size businesses, which have provided the bank with a well-diversified loan portfolio,” said Phil Mitterling, Executive Vice President and Chief Financial Officer. At the end of the first quarter 2011, the loan portfolio remained well diversified with commercial and industrial (C&I) loans, including owner-occupied commercial real estate loans, accounting for 63% of the loan portfolio, commercial real estate loans representing 29%, and personal and other loans representing 8% of the loan portfolio. Construction and development loans account for only 9% of the loan portfolio.

Nonperforming assets (NPAs) at the end of the first quarter totaled $2.5 million, or 1.09% of total assets, compared to $2.6 million, or 1.15% of total assets at year end. There were no NPAs at the end of the first quarter 2010. “Asset quality remains our primary focus, and with only two nonperforming loans that remained on nonaccrual status at the end of the first quarter, our asset quality has placed us near the top of all banks in the state of Washington,” said Mitterling. “At the same time, we continue to cautiously build our reserves for any potential loan losses.”
There were no charge-offs in the first quarter 2011.

Shareholders’ equity increased 7% to $22.9 million at March 31, 2011, compared to $ $21.4 million a year earlier. Capital ratios continue to be above the well-capitalized guidelines established by regulatory agencies.
The net interest margin (NIM) climbed to 4.36%, an increase of 27 basis points from the preceding quarter, and up 93 basis points from the year ago quarter. “Our loan portfolio increased 23% year-over-year resulting in the shift of assets away from low yielding securities and into higher yielding loans,” added Mitterling.
First quarter noninterest expense increased $195,833 from the preceding quarter to $1.7 million, primarily due to increased salaries and benefits. “As a result of our loan growth and strength of our franchise we were able to hire excellent experienced bankers in this down market to complement our team,” said Mitchell. The efficiency ratio improved year-over-year to 70.6%, from 76.8% in the first quarter a year ago, demonstrating management’s focus on controlling expenses.

Read the full press release here:  Globe Newswire

Safe Harbor Statement. 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. Factors that might cause such a difference include 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 regulation; 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 national and local economy; and other factors, including risk factors, referred to from time to time in filings made by Puget Sound Bank with the Securities and Exchange Commission. Puget Sound Bank undertakes no obligation to update or clarify forward-looking statements, whether as a result of new information, future events or otherwise.

Puget Sound Bank hires Teresa Lundman

2011 April 19 by Richard Lester

Puget Sound Bank hires Teresa Lundman as Customer Service Officer. In this role, Lundman is charged with delivering exceptional customer service to the bank’s commercial deposit clients in the greater Seattle-metropolitan area.  Lundman has been in banking since 2001 and brings a wealth of experience and expertise to the team.

“We are thrilled to welcome Teresa to our commercial banking team,” said Sean Brennan, Executive Vice President and Chief Lending Officer.

Temporary Unlimited FDIC Coverage for Noninterest-Bearing Transaction Accounts (Including IOLTA Accounts)

2011 April 19 by Richard Lester

On November 9, 2010, the FDIC Board of Directors (the “Board”) issued a final rule (the “November Final Rule”) to implement Section 343 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“DFA”) that provides temporary unlimited deposit insurance coverage for noninterest-bearing transaction accounts at all FDIC-insured depository institutions (the “Dodd-Frank Provision”).  The separate coverage for noninterest-bearing transaction accounts became effective on December 31, 2010 and terminates on December 31, 2012.  The Dodd-Frank Provision and November Final Rule are discussed in Financial Institution Letter FIL-76-2010, issued November 9, 2010.  The November Final Rule is published in the Federal Register at 75 Fed. Reg. 69577 (Nov. 15, 2010).

In issuing the November Final Rule, the Board confirmed it would not extend the Transaction Account Guarantee Program (“TAGP”) beyond its sunset date of December 31, 2010.

On December 29, 2010, President Obama signed into law an amendment (the “December 29 Act”) to the Federal Deposit Insurance Act (as amended by Section 343 of the DFA) to include Interest on Lawyer Trust Accounts (“IOLTAs”) within the definition of “noninterest-bearing transaction accounts.”  As a result, IOLTAs will receive temporary unlimited insurance coverage at all FDIC-insured institutions (“IDIs”) from December 31, 2010 through December 31, 2012. 

On January 18, 2011, the Board issued a final rule (the “January Final Rule”) to implement the December 29 Act.  The January Final Rule is discussed in Financial Institution Letter FIL-2-2011, issued January 21, 2011. 

The Dodd-Frank Provision is similar to the TAGP, except that it does not include low-interest Negotiable Order of Withdrawal (“NOW”) accounts.  The Dodd-Frank Provision also differs significantly from the TAGP in that it applies at all IDIs with qualifying deposits. 

The January Final Rule requires that by no later than February 28, 2011, each IDI that offers noninterest-bearing transaction accounts must post prominently an amended notice (see FAQ 17) in the lobby of its main office, in each domestic branch and, if it offers internet deposit services, on its website.  The amended notice provides that noninterest-bearing transaction accounts are fully insured until December 31, 2012, and that IOLTAs are included in the definition of “noninterest-bearing transaction account.” 

The November Final Rule required IDIs participating in the TAGP on December 31, 2010 to notify IOLTA customers by mail that IOLTAs would not receive unlimited insurance coverage starting January 1, 2011.  The December 29 Act now includes IOLTAs in the definition of a “noninterest-bearing transaction account” entitled to temporary unlimited deposit insurance coverage.  Financial Institution Letter FIL-2-2011 encourages (but does not require) IDIs who were participating in TAGP and sent individual notices to IOLTA holders advising that those accounts would not receive unlimited insurance coverage to send a revised notice explaining that IOLTAs will be fully insured through December 31, 2012.  IDIs that have not already sent the individual notices need not send any such notice to IOLTA depositors.  See www.fdic.gov for more information.

Puget Sound Bank Net Income for 2010 Surges to $1.4 million

2011 March 30 by Fresh Team

BELLEVUE, Wash., Jan. 19, 2011 (GLOBE NEWSWIRE) — Puget Sound Bank (OTCBB:PUGB), today reported that higher revenues, sound core deposit growth and strong loan growth generated a substantial increase in full year profits. For the year ended December 31, 2010, Puget Sound Bank’s net income more than tripled to $1.4 million compared to $418,107 in 2009. Net income in the fourth quarter of 2010 increased sharply to $436,361 from $315,122 in the preceding quarter and $361,152 in the fourth quarter a year ago.

“Our achievements this year include strong earnings and a solid increase in net interest margin, demonstrating the underlying earnings power of our franchise and the solid quality of our assets,” said Jim Mitchell, President and Chief Executive Officer. ”We have a strong focus on our customers, and we are delighted with the continued demand for good loans generated by our lending team and the solid growth we have produced in local deposits.”

Fourth Quarter and 2010 Highlights:

• Revenues for 2010 increased 28% to $8.0 million from a year ago.
• Continued profitability in the fourth quarter with return on average assets at 0.76% and return on average common equity at 6.45%.
• Net interest margin increased 54 basis point to 4.09% in the fourth quarter from 3.55% in the year ago quarter.
• Gross loans grew 28% to $171.4 million from $133.7 million a year earlier.
• Total deposits increased 14% to $194.1 million from $170.9 million a year earlier, with demand and interest bearing checking account balances growing 43% from a year ago.
• Tangible book value per common share increased to $9.81 compared to $9.29 a year ago.
• Asset quality continues to be solid with nonperforming assets to total assets at 1.15%.
• The allowance for loan losses totaled 1.85% of the total loan portfolio, compared to 1.86% of total loans a year ago.
• Dividends paid on preferred stock issued to the U.S. Treasury under the Capital Purchase Program for the full year 2010, totaled $290,250.
• Puget Sound Bank continued to maintain strong capital ratios with a Total Risk-based Capital Ratio of 14.85% down from 18.10% a year ago due to loan growth. To be considered “well-capitalized” a bank must have over 10%Total Risk-based Capital.
• Tangible common equity ratio is 10.1%, compared to 10.7% a year ago.

Balance Sheet and Asset Quality Review

Puget Sound Bank’s total assets grew 13% to $221.9 million at December 31, 2010, compared to $197.2 million a year ago. Total loans increased 28% to $171.4 million at year end from $133.7 million a year ago. ”Our loan portfolio performance continues to be superior to the regional and national averages on every credit quality metric, and we are proud of our lending team for their asset quality management,” added Mitchell. ”We believe the regional real estate markets are starting to stabilize and we continue to see loan demand from our small business customers.”

The loan portfolio is well-diversified with commercial and industrial (C&I) loans, including owner-occupied commercial real estate loans, accounting for 66%, commercial real estate loans representing 26%, and personal and other loans representing 8% of the loan portfolio at year end.

Nonperforming loans totaled $2.6 million at December 31, 2010, compared to $1.9 million in the preceding quarter. ”As a percentage of total capital (Texas Ratio), our nonperforming loans continue to be among the lowest in the State of Washington, at 9.5%,” said Phil Mitterling, EVP and Chief Financial Officer. ”Although loan quality is very strong, we continue to build reserves to provide for overall growth in the portfolio and any lingering effects from the economic downturn of the past three years.” At the end of December 31, 2010, Puget Sound Bank’s nonperforming assets were 1.15% of total assets, compared to 0.83% at the end of the preceding quarter.

Puget Sound Bank booked a $563,100 provision for loan losses in the fourth quarter of 2010 compared to $344,000 in the previous quarter and $100,000 in the fourth quarter of 2009. Net charge-offs in the fourth quarter 2010 and the full year, totaled $455,000, or 2.65% of average fourth quarter loan balances. The allowance for loan losses increased to $3.2 million, or 1.85% of total loans at year end, compared to $2.5 million, or 1.86% of total loans a year ago.

Total deposits grew 14% year-over-year to $194.1 million at December 31, 2010, compared to $170.9 million a year ago. The bank had no traditional brokered deposits or other purchased funding at year-end. ”We continue to have a solid core deposit base and we value our loyal customers,” continued Mitterling.

Shareholders’ equity increased 6% to $22.4 million at year end, compared to $21.1 million at December 31, 2009. Tangible book value per share was $9.81 up from $9.29 a year earlier. Puget Sound Bank remains well-capitalized with Total Risk-based Capital at 14.85% at December 31, 2010.

Review of Operations

Puget Sound Bank’s revenues (net interest income plus other operating income) were up 28% for the year at $8.0 million compared to $6.2 million in 2009, reflecting the growth in the balance sheet and a higher net interest margin. Fourth quarter 2010 revenue was $2.3 million compared to $2.1 million in the third quarter of 2010 and $1.7 million a year ago.

In 2010, net interest income before provision for loan losses was $7.7 million, compared to $5.9 million a year ago. Fourth quarter 2010 net interest income, before the provision for loan losses, was $2.3 million, up 14% from the preceding quarter and up 44% from $1.6 million in the same quarter a year ago.

Puget Sound Bank’s net interest margin (net interest income as a percentage of average earnings assets on a tax equivalent basis) was 3.66% in 2010 up 12 basis points from 3.54% generated in 2009. In the fourth quarter of 2010, net interest margin was 4.09% compared to 3.57% in the third quarter of 2010 and 3.55% in the fourth quarter a year ago.

Fourth quarter noninterest expense increased $56,000 from the preceding quarter mainly due to an increase in compensation for additional staffing. ”Controlling discretionary expenses continues to be a priority for everyone at the bank,” said Mitterling. The efficiency ratio improved during the fourth quarter to 62.5% compared to 68.2% reported in the preceding quarter, and 72.2% in the fourth quarter a year ago.

Puget Sound Bank Rated 5 Stars (“Superior Performance”) by BauerFinancial, Inc.

BauerFinancial has rated Puget Sound Bank 5 stars (“superior performance”), its highest rating, based on capital strength, asset quality and profitability. BauerFinancial has been reporting on and analyzing the performance of U.S. banks since 1983. They are an independent organization and no institution pays for its ratings. Click here to access the BauerFinancial website: www.bauerfinancial.com

About Puget Sound Bank

Puget Sound Bank is a locally-owned and operated commercial bank proudly serving the greater Puget Sound region. Based out of Bellevue, Washington, the bank was founded to meet the specialized needs of small and medium-sized businesses, commercial real estate projects, professionals and individuals seeking a higher level of service in the Puget Sound region. Staffed by the most experienced, customer-oriented banking professionals in the region, Puget Sound Bank offers a full range of competitive financial products with superior customer service and a consultative/partnership approach to its clients. Puget Sound Bank provides online banking at www.pugetsoundbank.com and has access to a large branch network in the state of Washington. The bank can also provide remote capture technology which allows its clients to make deposits from their offices. Puget Sound Bank is located at 10500 NE 8^th Street, Suite 1500, Bellevue, Washington. For more information, please call 425-455-2400.

Safe Harbor Statement. 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. Factors that might cause such a difference include 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 regulation; 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 national and local economy; and other factors, including risk factors, referred to from time to time in filings made by Puget Sound Bank with the Securities and Exchange Commission. Puget Sound Bank undertakes no obligation to update or clarify forward-looking statements, whether as a result of new information, future events or otherwise.

Read More at Globe Newswire

FDIC Phishing Alerts

2011 January 12 by Richard Lester

The Federal Deposit Insurance Corporation (FDIC) has received numerous reports from consumers who received an e-mail that has the appearance of being sent from the FDIC. The e-mail informs the recipient that “in cooperation with the Department of Homeland Security, federal, state and local governments…” the FDIC has withdrawn deposit insurance from the recipient’s account “due to account activity that violates the Patriot Act.” It further states deposit insurance will remain suspended until identity and account information can be verified using a system called “IDVerify.” If consumers go to the link provided in the e-mail, it is suspected they will be asked for personal or confidential information, or malicious software may be loaded onto the recipient’s computer.

This e-mail is fraudulent. It was not sent by the FDIC. It is an attempt to obtain personal information from consumers. Financial institutions and consumers should NOT access the link provided within the body of the e-mail and should NOT under any circumstances provide any personal information through this media.

The FDIC is attempting to identify the source of the e-mails and disrupt the transmission. Until this is achieved, consumers are asked to report any similar attempts to obtain this information to the FDIC by sending information to alert@fdic.gov.

For your reference, FDIC Special Alerts may be accessed from the FDIC’s Web site at www.fdic.gov/news/news/SpecialAlert/2011/index.html. To learn how to automatically receive FDIC Special Alerts through e-mail, please visit www.fdic.gov/about/subscriptions/index.html.

Distribution: FDIC-Supervised Banks (Commercial and Savings)

Note: Paper copies of FDIC Special Alerts may be obtained through the FDIC’s Public Information Center, 877-275-3342 or 703-562-2200.

Puget Sound Bank Rated 5 Stars (“Superior”) By BauerFinancial, Inc.

2010 December 10 by Richard Lester

December 7, 2010 – BauerFinancial has increased Puget Sound Bank’s Star rating from 4 Stars (“Excellent”) to 5 Stars (“Superior”), its highest rating. BauerFinancial is an independent organization that has been reporting on and analyzing the performance of US banks since 1983. Institutions do not pay a fee to BauerFinancial for their ratings, nor can they avoid a rating. Please click here to access the BauerFinancial website: www.bauerfinancial.com.

BauerFinancial’s Star ratings are based on the call report data that all banks are required to file with the FDIC on a quarterly basis. Criteria used to determine a bank’s rating includes but is not limited to: 1) the capital ratio (net worth to total assets), 2) liquidity, 3) profitability, and the level of delinquent loans.

Puget Sound Bank’s performance in 2010 reflects the many positive trends we have seen this year: strong capital and liquidity, robust local deposit growth and solid credit quality. We are pleased that our performance continues to be recognized by an independent third party organization.

Notice of Changes in Temporary FDIC Insurance Coverage for Transaction Accounts

2010 November 11 by Richard Lester

All funds in a “noninterest-bearing transaction account” are insured in full by the Federal Deposit Insurance Corporation from December 31, 2010, through December 31, 2012. This temporary unlimited coverage is in addition to, and separate from, the coverage of at least $250,000 available to depositors under the FDIC’s general deposit insurance rules.

The term “noninterest-bearing transaction account” includes a traditional checking account or demand deposit account on which the insured depository institution pays no interest. It does not include other accounts, such as traditional checking or demand deposit accounts that may earn interest, NOW accounts, money-market deposit accounts, and Interest on Lawyers Trust Accounts (“IOLTAs”).

For more information about temporary FDIC insurance coverage of transaction accounts, visit www.fdic.gov.

How to safeguard your accounts and privacy

2010 June 5 by Richard Lester

Phishing Scams

The term “phishing” — as in fishing for confidential information — refers to a scam that encompasses fraudulently obtaining and using an individual’s personal or financial information. This is how it works:

• A consumer receives an e-mail which appears to originate from a financial institution, government agency, or other well-known/reputable entity.
• The message describes an urgent reason you must “verify” or “re-submit” personal or confidential information by clicking on a link embedded in the message.
• The provided link appears to be the Web site of the financial institution, government agency or other well-known/reputable entity, but in “phishing” scams, the Web site belongs to the
• fraudster/scammer.
• Once inside the fraudulent Web site, the consumer may be asked to provide Social Security numbers, account numbers, passwords or other information used to identify the consumer, such as the maiden name of the consumer’s mother or the consumer’s place of birth.
• When the consumer provides the information, those perpetrating the fraud can begin to access consumer accounts or assume the person’s identity.

If you suspect an e-mail or Web site is fraudulent, please report this information to the real bank, company or government agency, using a phone number or e-mail address from a reliable source. Example: If your bank’s Web page looks different or unusual, contact the institution directly to confirm that you haven’t landed on a copycat Web site set up by criminals. Also, contact the Internet Crime Complaint Center (http://www.ic3.gov/), a partnership between the FBI and the National White Collar Crime Center.

If you suspect that you have been a victim of identity theft, perhaps because you submitted personal information in response to a suspicious, unsolicited e-mail or you see unauthorized charges on your credit card, immediately contact your financial institution and, if necessary, close existing accounts and open new ones. Also contact the police and request a copy of any police report or case number for later reference. In addition, call the three major credit bureaus (Equifax at 800-525-6285, Experian at 888-397-3742 and TransUnion at 800-680-7289) to request that a fraud alert be placed on your credit report.

Pharming Scams

Pharming is an attack on personal information used over the internet. A user can be fooled into entering sensitive data such as a password or credit card number into a malicious web site that impersonates a legitimate web site. It is different than phishing in that the attacker does not to rely on the user clicking a link in an email to deceive the user. If the user correctly enters a URL (web address) into a browser’s address bar, the attacker can still redirect the user to a malicious web site.

How can you protect yourself?

Only use pharming-conscious or (PhC) web sites. A PhC web site uses a secure connection to prevent other web sites from impersonating it. PhC web sites typically use the HTTPS web protocol on their login page to allow the user to verify the web site’s identity. If an attacker attempts to impersonate a PhC web site, the user will receive a message from the browser indicating that the web site’s “certificate” does not match the address being visited. Users should NEVER click “Yes” in response to such a window because they may get deceived by a pharming attack.

Multi-Factor Authentication

On October 12, 2005, the Federal Financial Institutions Examination Council (FFIEC) released an updated guidance on the risks and risk management controls necessary to authenticate the identity of customers accessing Internet-based financial services. The guidance, Authentication in an Internet Banking Environment, was issued to reflect the many significant legal and technological changes regarding the protection of customer information, increasing incidents of identity theft and fraud, and the introduction of improved authentication technologies and other risk mitigation strategies.

The growth of Internet banking and other electronic banking activities as well as the increased sophistication of threats to those environments have resulted in higher risks for financial institutions and their customers. An effective authentication system is crucial for the ability of financial institutions to comply with requirements in order to safeguard customer information. This system reduces fraud and the theft of sensitive customer information, which is often the precursor to identity theft, and promotes legal enforceability of financial institutions’ electronic agreements and transactions.

What is Multi-Factor Authentication (MFA)?

To access many online systems today, users commonly utilize an ID and password combination to identify (authenticate) themselves. This is considered “single factor authentication,” one of three basic “factors” used in authentication methodologies. The multi-factor program includes the following data:

1. What an individual knows — information that only a person knows (i.e. ID/ password, PIN, etc.).
2. What an individual has — something physical and unique a person possesses (i.e. token, smart card, ATM card, individual workstation computer, etc.).
3. What an individual is — a physical attribute unique to a person (i.e. a fingerprint, voice-print, eye-retina structure, etc.).

For additional information and resources regarding Identity Theft, please refer to the following Federal Trade Commission website. http://www.ftc.gov/bcp/edu/pubs/consumer/idtheft/idt04.shtm