2012 June 19 by Richard Lester
Puget Sound Business Journal by Greg Lamm, Staff Writer
Date: Thursday, April 19, 2012, 1:46pm PDT – Last Modified: Thursday, April 19, 2012, 1:51pm PDT
That’s the Bellevue bank’s percentage of nonperforming loans compared to total assets, a percentage that is below most in the industry and that declined from 1.22 percent at the end of the first quarter of 2011.
“We are pleased with the direction we are heading, particularly on the nonperforming loans,” Mitchell told me Thursday. “I particularly like being below 1 percent.”
Puget Sound Bank reported profits increased 13 percent in the first quarter of 2012, compared to the same quarter a year ago. Puget Sound Bank said it saw net income of $517,065, or 21 cents per share, for first quarter 2012 compared to $456,124, or 17 cents per share, for first quarter 2011.
The first-quarter financial performance report is the continuation of a familiar story line that helped the 7-year-old locally owned commercial bank avoid the worst of the banking industry’s financial meltdown by staying focused on lending to small and medium-sized businesses.
For the first quarter of 2012, the bank said revenue was up 14 percent from a year ago, at $2.7 million.
Compared to a year ago, the bank said its loans grew by 9 percent in the first quarter to $187 million. Commercial and industrial loans — including owner-occupied commercial real estate loans — accounted for 60 percent of the bank’s loan portfolio at the end of the quarter, the bank reported.
The bank said its nonperforming loans — a key gauge of a bank’s overall health — were at $2.3 million — 0.99 percent or just shy of 1 percent of total assets.
Mitchell said Puget Sound Bank’s first quarter results reflect a continued focus on building strong relationships with small businesses.
That relationship with small businesses has helped the bank in another way. Puget Sound Bank reported that its non-interest-bearing deposits increased 15 percent from a year ago. And the non-interest accounts now make up 32 percent of the bank’s total deposits, up from 28 percent a year ago.
Mitchell said that reflects a strategy to have a broad banking relationship with its business customers. When the bank makes a loan to a small business, it requires the business to move its business checking account to Puget Sound Bank.
The Federal Reserve had long banned interest-bearing business checking accounts. The rule traced its roots back to the Great Depression, when the government saw it as a way to discourage companies from stashing away cash in interest-bearing accounts instead of reinvesting it in factories or equipment.
But the ban was lifted last summer. Some banks have started offering businesses interest-bearing checking accounts.
Mitchell said with interest rates so low, there has not been much demand among his customers seeking to gain interest on their business checking accounts.
Mitchell also said the bank has continued to pay attention to costs, noting that its revenue increased 14 percent from a year ago, while expenses grew by only 2 percent.
By total assets, Puget Sound Bank is ranked No. 34 on the Puget Sound’s list of largest banks based in Washington. That’s up from No. 41 a year ago.