Puget Sound Bank

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.