Zero Nonperforming Assets
Puget Sound Bancorp PUGB, the holding company for Puget Sound Bank, announced record net income for the quarter ending September 30, 2017 of $1.4 million or $0.42 per share before one-time extraordinary costs of $441,000 related to the acquisition by Heritage Financial Corporation ("Heritage") HFWA reported in July 2017. With the costs, net income for the quarter was $1.1 million or $0.33 per share. This compares to $724,712 or $0.21 per share for the year-earlier quarter which included a one-time $700,000 charge-off.
As released on July 26, 2017, Heritage and Puget Sound Bancorp jointly announced the signing of a definitive agreement under which Heritage will acquire Puget Sound Bancorp in an all stock transaction valued at approximately $126 million, or $35.84 per share, based on the closing price of Heritage common stock of $27.15 on July 26, 2017. The definitive agreement has been unanimously approved by the board of directors of Heritage and Puget Sound Bancorp. The acquisition is subject to regulatory approvals, approval by Puget Sound Bancorp shareholders, and certain other customary closing conditions and is expected to close in the first quarter of 2018.
"This acquisition will allow us to continue to serve our existing and future customer base with higher lending limits, expanded product and service lines, and additional convenience through the Heritage Bank branch network," said Jim Mitchell, Puget Sound Bank chairman and founder. "But just as important," he continued, "our customers can continue to bank with us at the same location in downtown Bellevue with the same staff they've come to know and trust."
Total assets increased 6% to $556.6 million as compared to $525.6 million a year earlier, and total loans increased 7% to $391.6 million as compared to $364.4 million a year earlier. For the second consecutive quarter, Puget Sound Bank reported no charge-offs, no nonperforming loans and no loans 30-days past due. This follows 17 consecutive quarters of the Bank's ratio of nonperforming assets to total assets below one-half of one percent (placing the Bank near the top of all commercial banks in Washington state) while delivering consistently growing earnings.
Total deposits at quarter-end increased 6% to $493.0 million as compared to $466.5 million a year earlier, with 48.5% of total deposits in noninterest bearing accounts.
2017 Third Quarter Highlights
- Total assets grew 6% to $556.6 million at the end of the third quarter of 2017 as compared to $525.6 million a year ago.
- Total loans grew 7% to $391.6 million at quarter end compared to $364.4 million a year earlier.
- Total deposits grew 6% to $493.0 million at quarter end as compared $466.5 million a year ago.
- Noninterest demand deposits increased 24% to $239.0 million (48.5% of total deposits) at quarter end as compared to $192.1 million (41.2% of total deposits) a year earlier.
- Net interest margin improved to 3.91% for the quarter as compared to 3.61% one year ago.
- Tangible book value per share increased to $15.51 from $14.19 a year earlier.
- Return on equity was 8.44%; without costs related to the Heritage acquisition, ROE would have been 10.71%. This compares to 5.98% in the year-earlier quarter, which included a one-time loan-loss provision; ROE without this expense would have been 9.85%.
- Return on assets was 0.81%; without costs related to the Heritage acquisition, ROA would have been 1.02%. This compares to 0.58% in the year-earlier quarter, which included a one-time loan-loss provision; ROA without this expense would have been 0.95%.
- The ratio of nonperforming assets to total assets was 0.00% as compared to 0.13% 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 64.7%, without costs related to the Heritage acquisition the efficiency ratio would have 56.4%. This compares to 59.5% 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 28th consecutive quarter, Puget Sound Bank was awarded a 5-star rating ("Superior"), the highest available from independent banking rating agency BauerFinancial.
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 | ||||||||||||||||||||||
| Third Quarter 2017 | ||||||||||||||||||||||
| CONSOLIDATED STATEMENT OF OPERATIONS | ||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||
| Quarterly | ||||||||||||||||||||||
| 2017 | 2017 | 2016 | 2017 | 2016 | ||||||||||||||||||
| ($ in thousands except per share data) |
3rd Qtr |
2nd Qtr |
3rd Qtr |
YTD |
YTD |
|||||||||||||||||
| EARNINGS | ||||||||||||||||||||||
| Net interest income | $ | 5,121 | 4,845 | 4,288 | 14,625 | 12,348 | ||||||||||||||||
| Provision for loan losses | $ | 233 | 0 | 748 | 293 | 820 | ||||||||||||||||
| Net interest income after provision for loan losses | $ | 4,888 | 4,845 | 3,540 | 14,332 | 11,528 | ||||||||||||||||
| NonInterest income | $ | 182 | 190 | 220 | 593 | 617 | ||||||||||||||||
| NonInterest expense | $ | 3,430 | 3,224 | 2,680 | 9,528 | 7,943 | ||||||||||||||||
| Pre-tax Net income | $ | 1,639 | 1,811 | 1,080 | 5,397 | 4,202 | ||||||||||||||||
| Provision for income taxes (benefit) | $ | 513 | 545 | 355 | 1,689 | 1,389 | ||||||||||||||||
| Net income | $ | 1,126 | 1,266 | 725 | 3,708 | 2,813 | ||||||||||||||||
| Preferred dividends | $ | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||
| Net income available to common shareholders | $ | 1,126 | 1,266 | 725 | 3,708 | 2,813 | ||||||||||||||||
|
Earnings per share1 |
$ | 0.33 | 0.37 | 0.21 | 1.08 | 0.83 | ||||||||||||||||
| Average shares outstanding | 3,425 | 3,423 | 3,383 | 3,420 | 3,373 | |||||||||||||||||
| Total revenue | $ | 5,302 | 5,035 | 4,508 | 15,218 | 12,965 | ||||||||||||||||
| PERFORMANCE RATIOS | ||||||||||||||||||||||
| Return on average assets | 0.81 | % | 0.93 | % | 0.58 | % | 0.91 | % | 0.79 | % | ||||||||||||
|
Return on average tangible common equity1 |
8.44 | % | 9.90 | % | 5.98 | % | 9.67 | % | 8.03 | % | ||||||||||||
| Net interest margin | 3.91 | % | 3.76 | % | 3.61 | % | 3.81 | % | 3.67 | % | ||||||||||||
| Efficiency ratio | 64.7 | % | 64.0 | % | 59.5 | % | 62.6 | % | 61.3 | % | ||||||||||||
| CAPITAL | ||||||||||||||||||||||
| Common equity tier 1 ratio | 12.90 | % | 12.69 | % | ||||||||||||||||||
| Tier 1 leverage ratio | 10.50 | % | 10.75 | % | ||||||||||||||||||
| Tier 1 risk-based capital ratio | 12.90 | % | 12.69 | % | ||||||||||||||||||
| Total risked based capital ratio | 13.90 | % | 13.76 | % | ||||||||||||||||||
| Tangible Common Equity Ratio | 9.58 | % | 9.17 | % | 9.18 | % | ||||||||||||||||
| ASSET QUALITY | ||||||||||||||||||||||
| Net loan charge-offs (recoveries) | $ | 0 | 0 | 700 | ||||||||||||||||||
| Allowance for loan losses | $ | 4,643 | 4,409 | 4,246 | ||||||||||||||||||
| Allowance for losses to total loans | 1.19 | % | 1.19 | % | 1.16 | % | ||||||||||||||||
| Nonperforming loans | $ | 0 | 0 | 659 | ||||||||||||||||||
| Other real estate owned | $ | 0 | 0 | 0 | ||||||||||||||||||
| Nonperforming assets to total assets | 0.00 | % | 0.00 | % | 0.13 | % | ||||||||||||||||
|
1Includes preferred stock dividends not included in net income. |
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| Puget Sound Bancorp | ||||||||||||||
| Third Quarter 2017 | ||||||||||||||
| CONSOLIDATED FINANCIAL HIGHLIGHTS | ||||||||||||||
| (Unaudited) | ||||||||||||||
| Quarterly | ||||||||||||||
| 2017 | 2017 | 2016 | ||||||||||||
| ($ in thousands except per share data) | 3rd Qtr | 2nd Qtr | 3rd Qtr | |||||||||||
| BALANCE SHEET | ||||||||||||||
| Cash and Due From Banks | $ | 22,180 | 21,280 | 16,828 | ||||||||||
| Investments | $ | 134,067 | 165,917 | 136,627 | ||||||||||
| Commercial and Industrial Loans | $ | 172,799 | 160,100 | 157,808 | ||||||||||
| Owner-Occupied Commercial Real Estate | $ | 85,002 | 80,514 | 83,428 | ||||||||||
| Other Commercial Real Estate | $ | 114,897 | 113,779 | 101,756 | ||||||||||
| Personal Loans | $ | 19,888 | 17,516 | 21,550 | ||||||||||
| Non-accrual Loans | $ | - | - | 659 | ||||||||||
| Acquired Loan Fair Value Adjustment | $ | (40 | ) | (44 | ) | (60 | ) | |||||||
| Deferred Loan Fees | $ | (971 | ) | (861 | ) | (701 | ) | |||||||
| Total Loans | $ | 391,575 | 371,004 | 364,439 | ||||||||||
| Allowance for Loan Losses | $ | (4,643 | ) | (4,409 | ) | (4,246 | ) | |||||||
| Net Loans | $ | 386,932 | 366,594 | 360,193 | ||||||||||
| Goodwill/Core Deposit Intangible | $ | 2,069 | 2,077 | 2,102 | ||||||||||
| Other Assets | $ | 11,391 | 11,296 | 9,807 | ||||||||||
| Total Assets | $ | 556,640 | 567,165 | 525,557 | ||||||||||
| Non-interest bearing Demand | $ | 238,963 | 224,618 | 192,065 | ||||||||||
| Interest Bearing Demand | $ | 40,738 | 37,696 | 44,629 | ||||||||||
| Money Market and Savings | $ | 179,599 | 207,148 | 192,693 | ||||||||||
| Certificates of Deposit | $ | 33,664 | 35,673 | 37,130 | ||||||||||
| Total Deposits | $ | 492,964 | 505,135 | 466,517 | ||||||||||
| Debt | $ | 5,400 | 5,400 | 6,000 | ||||||||||
| Other Liabilities | $ | 3,087 | 2,752 | 2,907 | ||||||||||
| Total Equity | $ | 55,188 | 53,878 | 50,133 | ||||||||||
| Total Liabilities and Equity | $ | 556,640 | 567,165 | 525,557 | ||||||||||
| Tangible Shareholders' equity | $ | 53,119 | 51,801 | 48,031 | ||||||||||
| Tangible book value per share | $ | 15.51 | 15.13 | 14.19 | ||||||||||
| Book value per share | $ | 16.11 | 15.74 | 14.81 | ||||||||||
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