Puget Sound Bancorp Reports First Quarter Results

Third Consecutive Million-Dollar Net-Income Quarter

BELLEVUE, Wash.--(BUSINESS WIRE)-- Puget Sound Bancorp (OTCQB: PUGB), the holding company for Puget Sound Bank, today reported net income of $1,016,034 or $0.30 per share for the quarter ending March 31, 2016, as compared to $979,470 or $0.31 per share for the year earlier period.

Year-over-year, the Bank reported strong growth overall with earnings moderated by one-time due diligence expenses associated with the Bank’s ongoing acquisition program. “As we continue to explore non-organic growth opportunities, we may occasionally have an increase in expenses as seen this quarter,” said Jim Mitchell, Puget Sound Bank president and chief executive officer. “We will continue to evaluate opportunities to expand our market presence through strategic acquisitions.”

Total loans at the end of the first quarter increased to $333.5 million as compared to $318.6 million a year earlier. Puget Sound Bank’s commercial-related loans account 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.

“This quarter’s results validate the success of our relationship-focused strategy and continued investments aimed at growing our bank, strengthening our team, and partnering with many of the Puget Sound region’s strongest operating companies, said Sean Brennan, Puget Sound Bank executive vice president and chief lending officer.

“As we enter our 11th year of business,” Mr. Brennan added, “it is gratifying to see that our initial objective of partnering with small- to medium-size businesses remains financially successful and ensures an ongoing civic partnership with our community.”

Total deposits at quarter-end increased 22% to $416.8 million as compared to $341.6 million a year earlier, with 46% of total deposits in noninterest bearing accounts.

2016 First Quarter Highlights

• Total assets grew 20% to $473.0 million as compared to $395.5 million a year ago.
• Noninterest demand deposits increased 26% to $193.7 million as compared to $153.6 million a year earlier, or 46% of total deposits.
• Total loans grew 5% to $333.5 million and total deposits grew 22% to $416.8 million as compared to a year ago.
• Net interest margin was 3.60% for the quarter as compared to 4.13% one year ago.
• Tangible book value per share increased to $13.63 from $12.33 a year earlier.
• Return on equity was 9.00% as compared to 10.07% a year ago. Excluding one-time due diligence expenses return on equity would have been 9.62%.
• Return on assets was 0.86% compared to 1.01% a year ago.
• Nonperforming assets to total assets was 0.10% as compared to 0.69% in the year-earlier period.
• Allowance for loan losses and the fair value discount on the acquired loan portfolio, together were 1.27% of loans.
• The efficiency ratio was 63.5% for the quarter (excluding one-time due diligence expenses the efficiency ratio would have improved to 60.9%). This compares to 61.6% in the year earlier quarter.
• Capital ratios continue to exceed regulatory requirements, with total risk-based capital substantially above well-capitalized regulatory requirements.
• For the 22nd consecutive quarter, Puget Sound Bank was awarded a 5-star rating, the highest available from independent banking rating agency BauerFinancial.

“We continue to carefully manage our expenses while ensuring that we deliver the outstanding service levels that our customers expect,” said Phil Mitterling, executive vice president and chief financial officer. “We expect that our efficiency ratio will continue to be in the range between 60% and 65% as we invest in technology and employee development for the successful long-term growth of this company.”

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

About Puget Sound Bancorp

Puget Sound Bancorp is based in Bellevue, Washington and 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 www.PugetSoundBank.com or call (425) 455-2400.

To access investor relations information for Puget Sound Bancorp, visit www.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 BancorpFirst Quarter 2016
CONSOLIDATED STATEMENT OF OPERATIONS(Unaudited)
			Quarterly
($ in thousands except per share data)			20161st Qtr			20154th Qtr					20151st Qtr
EARNINGS
Net interest income		$	3,966			3,939					3,729
Provision for loan losses		$	0			4					29
Net interest income after provision for loan losses		$	3,966			3,935					3,700
NonInterest income		$	198			235					182
NonInterest expense		$	2,644			2,476					2,408
Pre-tax Net income		$	1,520			1,694					1,473
Provision for income taxes (benefit)		$	504			551					493
Net income		$	1,016			1,142					979
Preferred dividends		$	0			34					25
Net income available to common shareholders		$	1,016			1,108					954
Earnings per share1		$	0.30			0.33					0.31
Average shares outstanding			3,361			3,339					3,060
Total revenue		$	4,164			4,173					3,911
PERFORMANCE RATIOS
Return on average assets			0.86	%		0.95	%				1.01	%
Return on average tangible common equity1			9.00	%		10.04	%				10.07	%
Net interest margin			3.60	%		3.57	%				4.13	%
Efficiency ratio			63.5	%		59.3	%				61.6	%
CAPITAL
Common equity tier 1 ratio						12.99	%				11.43	%
Tier 1 leverage ratio						10.52	%				12.95	%
Tier 1 risk-based capital ratio						12.99	%				14.25	%
Total risked based capital ratio						14.11	%				15.44	%
Tangible Common Equity Ratio			9.74	%		9.25	%				10.20	%
ASSET QUALITY
Net loan charge-offs (recoveries)		$	0			(97	)				86
Allowance for loan losses		$	4,096			4,096					3,956
Allowance for losses to total loans			1.23	%		1.21	%				1.24	%
Nonperforming loans		$	451			477					2,724
Other real estate owned		$	0			0					0
Nonperforming assets to total assets			0.10	%		0.10	%				0.69	%
1Includes preferred stock dividends not included in net income.

Puget Sound BancorpFirst Quarter 2016
CONSOLIDATED FINANCIAL HIGHLIGHTS(Unaudited)
			Quarterly
($ in thousands except per share data)			20161st Qtr			20154th Qtr					20151st Qtr
BALANCE SHEET
Cash and Due From Banks		$	19,182			29,313					19,019
Investments		$	115,947			109,209					53,422
Commercial and Industrial Loans		$	143,416			143,247					133,488
Owner-Occupied Commercial Real Estate		$	75,107			71,179					63,217
Other Commercial Real Estate		$	85,875			94,096					91,264
Personal Loans		$	29,338			29,226					28,551
Non-accrual Loans		$	451			477					2,724
Acquired Loan Fair Value Adjustment		$	(132	)		(139	)				(180	)
Deferred Loan Fees		$	(565	)		(533	)				(492	)
Total Loans		$	333,490			337,553					318,571
Allowance for Loan Losses		$	(4,096	)		(4,096	)				(3,956	)
Net Loans		$	329,394			333,457					314,615
Goodwill/Core Deposit Intangible		$	2,115			2,122					2,146
Other Assets		$	6,329			6,712					6,259
Total Assets		$	472,968			480,813					395,461
Non-interest bearing Demand		$	193,720			208,125					153,551
Interest Bearing Demand		$	23,732			21,313					28,071
Money Market and Savings		$	172,610			166,111					133,733
Certificates of Deposit		$	26,728			29,776					26,261
Total Deposits		$	416,790			425,325					341,616
Borrowings		$	6,000			6,000					-
Other Liabilities		$	2,198			3,069					1,690
Total Equity		$	47,980			46,419					52,155
Total Liabilities and Equity		$	472,968			480,813					395,461
Tangible Shareholders' equity		$	45,865			44,297					40,123
Tangible book value per share		$	13.63			13.23					12.33
Book value per share		$	14.26			13.87					12.99

View source version on businesswire.com: http://www.businesswire.com/news/home/20160420006204/en/

Puget Sound Bank
Brad Ogura, 425-467-2037

Source: Puget Sound Bancorp

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