People’s Utah Bancorp Reports Second Quarter 2017 Results; Increases Quarterly Dividend Payment

AMERICAN FORK, Utah, July 26, 2017 (GLOBE NEWSWIRE) -- People’s Utah Bancorp (the “Company”) (Nasdaq: PUB), a bank holding company and parent of People’s Intermountain Bank (“Bank”), reported net income of $6.5 million compared with $6.5 million in the first quarter of 2017, and $5.6 million for the second quarter of 2016.  Diluted earnings per common share were $0.35 in the second quarter of 2017 compared with $0.36 in the first quarter of 2017, and $0.31 for the second quarter of 2016.  For the six months ended June 30, 2017 net income was $13.0 million, or $0.71 per diluted common share, compared with $10.8 million, or $0.60 per diluted common share, for the same period a year earlier. 

The Board of Directors declared a quarterly dividend of $0.09 per common share, a 12.5%, or $0.01 per common share increase from the prior quarter. The dividend will be payable on August 14, 2017 to shareholders of record on August 7, 2017. The dividend payout ratio for earnings for the quarter ended June 30, 2017 was 24.9%.  This continues our over 50-year trend in paying dividends.

Highlights of the Second Quarter of 2017

• Deposits grew $115 million, or 8.5%, to $1.5 billion year-over-year
• Loans held for investment grew $106 million, or 9.6%, to $1.2 billion year-over-year
• Net interest margin increased 4 bps to 4.71% year-over-year
• Return on average equity increased to 10.91% year-over-year
• Return on average assets increased to 1.53% year-over-year
• Efficiency ratio improved to 52.19%

“We’re pleased to have achieved strong growth across our community banking family, while improving our net interest margins and operating efficiencies,” said Richard Beard, President and Chief Executive Officer of People’s Utah Bancorp. “While we continue to achieve solid loan growth, we’ve maintained a strong focus on credit quality as reflected in our low level of nonperforming assets and net charge-offs.  As a result of our efforts to profitably grow our business, we continue to experience positive trends in our operating results.”

Earnings Summary

Net income for the second quarter of 2017 of $6.5 million compared with $6.5 million in the first quarter of 2017 was primarily impacted by the following factors: (a) higher net interest income of $1.2 million due primarily to strong loan and deposit growth; (b) higher provision for loan losses of $0.7 million due primarily to $49 million growth in loans held for investment; (c) higher non-interest income of $0.2 million, (d) lower non-interest expense of $0.1 million, principally from lower salaries and benefits; and (e) higher income tax expense of $0.8 million due to lower deduction of non-qualifying stock awards in the second quarter.  These factors contributed to diluted earnings per common share decreasing $0.01 per share to $0.35 per share in the second quarter of 2017 compared to $0.36 per share in the first quarter of 2017.

Net income for the second quarter of 2017 of $6.5 million compared with $5.6 million in the second quarter of 2016 was impacted primarily by the following factors: (a) higher net interest income of $1.8 million due primarily to strong loan and deposit growth; and (b) higher provision for loan losses of $0.7 million due primarily to loan growth.

Return on average assets for the second quarter of 2017 was 1.53% compared with 1.59% for the first quarter of 2017, and 1.43% for the second quarter of 2016.  Return on average equity for the second quarter of 2017 was 10.91% compared with 11.39% for the first quarter of 2017, and 10.26% for the second quarter of 2016.

Net Interest Income and Margin

Net interest income for the second quarter of 2017 increased $1.2 million compared with the first quarter of 2017, primarily due to a $29.6 million increase in average earning assets and a 15 basis points increase in yield on interest earning assets.  Average loans increased by $41.7 million during the comparable periods.  This contributed to a higher net interest margin of 4.71% in the current quarter compared with 4.55% in the first quarter of 2017. 

Net interest income for the second quarter of 2017 increased $1.8 million compared with the same period a year earlier, primarily due to a $133 million increase in the average earning assets and a 4 basis points increase in the yield on interest earning assets.  Average loans increased by $80.8 million during the comparable periods.  This resulted in a higher net interest margin of 4.71% in the current quarter compared to 4.67% in the second quarter of 2016. 

Provision for Loan Losses

The provision for loan losses for the second quarter of 2017 was $0.7 million higher compared with the first quarter of 2017, and $0.7 million higher compared with the second quarter of 2016, due primarily to growth in loans held for investment.  The Company incurred net charge-offs of $0.3 million in the second quarter of 2017 compared with $0.3 million in the first quarter of 2017, and net recoveries of ($0.2) million in the second quarter of 2016. 

Non-interest Income

Non-interest income for the second quarter of 2017 increased $0.2 million compared with the first quarter of 2017 primarily due to the sale of land held by the Bank, and was flat with the same period a year earlier.  The Company has experienced lower mortgage banking income and residential mortgage loan volumes in the first and second quarters of 2017 compared to the second quarter of 2016.

Non-interest Expense

Non-interest expense for the second quarter of 2017 decreased by $0.1 million compared with the first quarter of 2017, principally related to lower salaries and benefits, and was flat compared with the same period a year ago.  Our personnel costs have increased in 2017 due to cost-of-living increases and new hires to support our growth, but are offset by a $0.5 million refund in medical benefits premiums recorded in the second quarter.

Our efficiency ratio for the second quarter of 2017 improved to 52.2% compared with 56.8% in the first quarter of 2017 and 57.4% in the second quarter of 2016.

Income Tax Provision

The effective tax rate for the second quarter of 2017 was 35.6% compared with 29.6% for the first quarter of 2017 and 37.9% in the second quarter of 2016.  Income tax expense for the second quarter of 2017 increased compared with the first quarter of 2017 due to tax benefits related to tax-deductible stock compensation expense and the reversal of a liability related to unrecognized tax credits, all totaling $0.6 million in taxable benefits for the first quarter of 2017.  The tax rate in the second quarter of 2017 is lower than the same quarter in 2016 due primarily to adjustments in the expected recoverability of certain tax credits.

Loans and Credit Quality

Loans held for investment at June 30, 2017 increased $105.6 million, or 9.6% year-over-year, and $81.5 million, or 7.3% from December 31, 2016.  Average loans grew $80.8 million to $1.2 billion from the second quarter of 2016 to the current quarter of 2017.

Non-performing loans increased to $7.6 million at June 30, 2017, compared to $5.7 million at March 31, 2017, $5.4 million at December 31, 2016, and $5.4 million at June 30, 2016.  Non-performing assets to total assets were 0.47% at June 30, 2017, 0.35% at March 31, 2017, 0.34% at December 31, 2016, and 0.38% at June 30, 2016.  The allowance for loan losses to loans held for investment was 1.43% at June 30, 2017, 1.44% at March 31, 2017, 1.49% at December 31, 2016 and 1.47% at June 30, 2016.

Investment Securities

Investment securities at June 30, 2017 increased by 17.7% to $402.6 million compared with $342.1 million at the same period a year earlier as a result of the year-over-year growth in deposits.

Deposits and Liabilities

Total deposits at June 30, 2017 were $1.46 billion compared with $1.43 billion at December 31, 2016 and $1.35 billion at June 30, 2016.  Increases during these periods were primarily due to growth of the client base and new customers. Non-interest-bearing deposits were 31.9% of total deposits as of June 30, 2017 compared with 31.1% as of December 31, 2016 and 31.9% as of June 30, 2016.  

Shareholders’ Equity

Shareholders’ equity increased to $239.9 million at June 30, 2017 compared with $228.5 million as of year-end 2016 and $220.4 million at June 30, 2016. The increase resulted primarily from net income during the intervening periods net of cash dividends paid to shareholders.

Conference Call and Webcast

Management will conduct a live conference call and webcast for investors, analysts and the public relating to the Company's results for the second quarter of 2017 at 2:00 p.m. Eastern time on Thursday, July 27, 2017. The conference call will be accessible by telephone and through the internet. Interested individuals are invited to listen to the call by telephone at 888-317-6003 (international calls 412-317-6061) and the conference ID is 3290312.

To participate on the webcast, log on to:  http://services.choruscall.com/links/pub170728.html

If you are unable to participate during the live webcast, the call will be archived on www.peoplesutah.com or at the webcast URL above until August 28, 2017. Forward-looking and other material information may be discussed on this conference call.

Forward-Looking Statements

Statements in this release that are based on information other than historical data or that express the Company’s expectations regarding future events or determinations are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. Statements based on historical data are not intended and should not be understood to indicate the Company’s expectations regarding future events. Forward-looking statements provide current expectations or forecasts of future events or determinations. These forward-looking statements are not guarantees of future performance or determinations, nor should they be relied upon as representing management’s views as of any subsequent date.

Forward-looking statements involve significant risks and uncertainties, and actual results may differ materially from those presented, either expressed or implied, in this release. Factors that could cause actual results to differ materially from those expressed in the forward-looking statements include: (i) market and economic conditions; (ii) capital sufficiency; (iii) operational, liquidity, interest rate and credit risks; (iv) deterioration of asset quality; (v) achieving loan and deposit growth; (vi) increased competition; (vii) adequacy of reserves; (viii) investments in new branches and new business opportunities; and (ix) changes in the regulatory or legal environment; as well as other factors discussed in the section titled “Risk Factors,” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 filed with the Securities and Exchange Commission.

The foregoing factors should not be construed as exhaustive. The Company does not intend, or undertake any obligation to publicly update these forward-looking statements.

About People’s Utah Bancorp

People’s Utah Bancorp is the holding company for People’s Intermountain Bank, which has 20 locations in two banking divisions, Bank of American Fork and Lewiston State Bank, a leasing division, GrowthFunding Equipment Finance, and a mortgage division, People’s Intermountain Bank Mortgage. PUB has a pending transaction, subject to customary closing conditions, to acquire Town & Country Bank, Inc. in St, George, Utah.  PIB has been serving communities in Utah and southern Idaho for more than 100 years. PUB is committed to preserving the community-bank model with a full range of bank products and technologies. More information about PUB is available at www.peoplesutah.com.

PEOPLE’S UTAH BANCORP
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
		Three Months Ended												Six Months Ended
(Dollars in thousands, except share		June 30,				March 31,				June 30,				June 30,				June 30,
and per share data)		2017				2017				2016				2017				2016
Interest income
Interest and fees on loans		$	17,928			$	16,853			$	16,420			$	34,781			$	32,271
Interest and dividends on investments			1,802				1,705				1,489				3,507				3,092
Total interest income			19,730				18,558				17,909				38,288				35,363
Interest expense			749				766				698				1,515				1,452
Net interest income			18,981				17,792				17,211				36,773				33,911
Provision for loan losses			900				200				225				1,100				425
Net interest income after provision for loan losses			18,081				17,592				16,986				35,673				33,486
Non-interest income
Service charges on deposit accounts			578				536				531				1,114				1,044
Card processing			1,208				1,124				1,136				2,332				2,167
Mortgage banking			1,960				1,979				2,277				3,939				4,025
Other operating			602				486				454				1,088				925
Total non-interest income			4,348				4,125				4,398				8,473				8,161
Non-interest expense
Salaries and employee benefits			7,762				7,967				7,959				15,729				15,843
Occupancy, equipment and depreciation			1,088				1,117				1,076				2,205				2,064
Data processing			661				675				740				1,336				1,447
FDIC premiums			130				126				188				256				383
Card processing			516				529				549				1,045				1,139
Marketing and advertising			349				262				290				611				459
Other			1,845				1,780				1,598				3,625				3,200
Total non-interest expense			12,351				12,456				12,400				24,807				24,535
Income before income tax expense			10,078				9,261				8,984				19,339				17,112
Income tax expense			3,584				2,740				3,407				6,324				6,292
Net income		$	6,494			$	6,521			$	5,577			$	13,015			$	10,820
Earnings per common share:
Basic		$	0.37			$	0.36			$	0.31			$	0.73			$	0.61
Diluted		$	0.35			$	0.36			$	0.31			$	0.71			$	0.60
Weighted average common shares outstanding:
Basic			17,937,926				17,884,026				17,738,182				17,911,125				17,685,235
Diluted			18,351,531				18,316,331				18,173,034				18,334,028				18,148,713

 

PEOPLE’S UTAH BANCORP
UNAUDITED CONSOLIDATED BALANCE SHEETS
		June 30,				March 31,				December 31,				June 30,
(Dollars in thousands, except share data)		2017				2017				2016				2016
ASSETS
Cash and due from banks		$	28,315			$	25,773			$	26,524			$	21,092
Interest bearing deposits			26,027				62,171				37,958				59,535
Federal funds sold			3,093				2,884				3,456				5,899
Total cash and cash equivalents			57,435				90,828				67,938				86,526
Investment securities:
Available for sale, at fair value			325,172				334,249				335,609				280,705
Held to maturity, at historical cost			77,394				78,041				73,512				61,437
Total investment securities			402,566				412,290				409,121				342,142
Non-marketable equity securities			1,959				1,959				1,827				1,827
Loans held for sale			7,655				13,053				20,826				11,915
Loans:
Loans held for investment			1,201,391				1,152,030				1,119,877				1,095,828
Less allowance for loan losses			(17,271	)			(16,644	)			(16,715	)			(16,152	)
Total loans held for investment, net			1,184,120				1,135,386				1,103,162				1,079,676
Premises and equipment, net			23,551				22,701				21,926				22,120
Accrued interest receivable			5,616				5,779				5,557				5,586
Deferred income tax assets			9,845				9,731				9,799				7,495
Other real estate owned			468				245				245				644
Bank-owned life insurance			19,970				19,842				19,714				19,448
Other assets			5,190				5,834				5,866				5,637
Total assets		$	1,718,375			$	1,717,648			$	1,665,981			$	1,583,016
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits:
Non-interest bearing deposits		$	465,988			$	462,886			$	443,100			$	429,995
Interest bearing deposits			995,064				1,005,779				981,974				916,368
Total deposits			1,461,052				1,468,665				1,425,074				1,346,363
Short-term borrowings			3,302				3,372				3,199				2,855
Accrued interest payable			269				279				305				303
Other liabilities			13,850				11,087				8,886				13,048
Total liabilities			1,478,473				1,483,403				1,437,464				1,362,569
Commitments and contingencies
Shareholders’ equity:
Preferred shares, $0.01 par value			-				-				-				-
Common shares, $0.01 par value			179				179				178				178
Additional paid-in capital			69,623				69,256				68,657				68,236
Retained earnings			170,840				165,782				160,692				150,568
Accumulated other comprehensive income			(740	)			(972	)			(1,010	)			1,465
Total shareholders’ equity			239,902				234,245				228,517				220,447
Total liabilities and shareholders’ equity		$	1,718,375			$	1,717,648			$	1,665,981			$	1,583,016
Common shares outstanding			17,948,347				17,925,284				17,819,538				17,752,820

 

PEOPLE’S UTAH BANCORP
SUMMARY FINANCIAL INFORMATION
		June 30,				March 31,				December 31,				June 30,
(Dollars in thousands, except share data)		2017				2017				2016				2016
Selected Balance Sheet Information:
Book value per share		$	13.37			$	13.07			$	12.82			$	12.42
Tangible book value per share		$	13.34			$	13.04			$	12.79			$	12.38
Non-performing assets to total assets			0.47	%			0.35	%			0.34	%			0.38	%
Allowance for loan losses to loans held for investment			1.43	%			1.44	%			1.49	%			1.47	%
Loans to Deposits			81.57	%			78.20	%			78.87	%			81.08	%
Asset Quality Data:
Non-performing loans		$	7,611			$	5,703			$	5,357			$	5,383
Non-performing assets			8,079				5,948				5,602				6,027
Capital Ratios:
Tier 1 leverage capital (1)			14.15	%			14.10	%			13.71	%			13.99	%
Total risk-based capital (1)			19.81	%			20.11	%			20.19	%			19.20	%
Average equity to average assets			14.00	%			13.93	%			13.83	%			13.89	%
Tangible common equity to tangible assets (4)			13.93	%			13.61	%			13.69	%			13.89	%

 

		Three Months Ended												Six Months Ended
		June 30,				March 31,				June 30,				June 30,				June 30,
		2017				2017				2016				2017				2016
Selected Financial Information:
Basic earnings per share		$	0.37			$	0.36			$	0.31			$	0.73			$	0.61
Diluted earnings per share		$	0.35			$	0.36			$	0.31			$	0.71			$	0.60
Net interest margin (2)			4.71	%			4.55	%			4.67	%			4.63	%			4.63	%
Efficiency ratio (3)			52.19	%			56.83	%			57.38	%			54.44	%			58.32	%
Non-interest income to average assets			1.03	%			1.00	%			1.13	%			1.02	%			1.06	%
Non-interest expense to average assets			2.92	%			3.03	%			3.19	%			2.97	%			3.17	%
Return on average assets			1.53	%			1.59	%			1.43	%			1.56	%			1.40	%
Return on average equity			10.91	%			11.39	%			10.26	%			11.14	%			10.07	%
Net charge-offs (recoveries)			273				271				(204	)			544				(170	)
Annualized net charge-offs (recoveries) to average loans			0.09	%			0.10	%			-0.07	%			0.09	%			-0.03	%
Average Balances:
Average loans		$	1,177,403			$	1,135,689			$	1,096,584			$	1,156,661			$	1,078,687
Average earning assets			1,614,867				1,585,312				1,481,879				1,600,171				1,474,149
Average total assets			1,698,666				1,667,071				1,563,509				1,682,956				1,555,227
Average shareholders’ equity			238,765				232,269				218,705				235,535				216,074
(1)  Tier 1 leverage capital and Total risk-based capital as of June 30, 2017 are estimates.
(2)  Net interest margin is defined as net interest income divided by average earning assets.
(3)  Represents the sum of non-interest expense less merger and acquisitions costs all divided by the sum of net interest income and non-interest income. Merger and acquisitions costs were $175,000 for the period ending June 30, 2017.  There were no merger and acquisitions costs in the first quarter of 2017 or in any period during 2016
(4)  Represents the sum of total shareholders’ equity less intangible assets all divided by the sum of total assets less intangible assets. Intangible assets were $533,000, $557,000, $581,000 and $630,000 at June 30, 2017, March 31, 2017, December 31, 2016, and June 30, 2016, respectively.

 

PEOPLE’S UTAH BANCORP
SELECTED AVERAGE BALANCES AND YIELDS
			Three Months Ended
			June 30, 2017												June 30, 2016
							Interest				Average								Interest				Average
			Average				Income/				Yield/				Average				Income/				Yield/
(Dollars in thousands, except footnotes)			Balance				Expense				Rate				Balance				Expense				Rate
Taxable securities (1)			$	319,877			$	1,309				1.64	%		$	271,850			$	1,047				1.55	%
Non-taxable securities (1) (2)				93,688				432				1.85	%			90,428				420				1.87	%
Loans (3) (4)				1,177,403				17,928				6.11	%			1,096,584				16,420				6.02	%
Total interest earning assets				1,614,867				19,730				4.90	%			1,481,879				17,909				4.86	%
Total average assets				1,698,666												1,563,509
Total interest bearing deposits				980,562				721				0.29	%			908,496				697				0.31	%
Shareholders’ equity				238,765												218,705
Net interest income								18,981												17,211
Net interest margin												4.71	%											4.67	%
			Six Months Ended
			June 30, 2017												June 30, 2016
							Interest				Average								Interest				Average
			Average				Income/				Yield/				Average				Income/				Yield/
(Dollars in thousands, except footnotes)			Balance				Expense				Rate				Balance				Expense				Rate
Taxable securities (1)			$	317,342			$	2,510				1.59	%		$	281,738			$	2,186				1.56	%
Non-taxable securities (1) (2)				92,930				854				1.85	%			92,923				863				1.87	%
Loans (3) (4)				1,156,661				34,781				6.06	%			1,078,687				32,272				6.02	%
Total interest earning assets				1,600,171				38,288				4.83	%			1,474,149				35,363				4.82	%
Total average assets				1,682,956												1,555,227
Total interest bearing deposits				985,379				1,486				0.30	%			905,657				1,414				0.31	%
Shareholders’ equity				235,535												216,074
Net interest income								36,773												33,911
Net interest margin												4.63	%											4.63	%
(1)  Excludes average unrealized gains (losses) of $786,000 and $1.5 million for the three months ended June 30, 2017 and 2016, respectively, and ($1.2) million and $1.1 million for the six months ended June 30, 2017 and 2016, respectively.
(2)  Does not include tax effect on tax-exempt investment security income of $233,000 and $226,000 for the three months ended June 30, 2017 and 2016, respectively and $460,000 and $464,000 for the six months ended June 30, 2017 and 2016, respectively.
(3)  Loan interest income includes loan fees of $1.6 million and $1.4 million for the three months ended June 30, 2017 and 2016, respectively, and $3.0 million and $2.8 million for the six months ended June 30, 2017 and 2016, respectively.
(4)  Excludes average non-accrual loans of $6.6 million and $5.3 million for the three months ended June 30, 2017 and 2016, respectively, and $6.1 million and $5.8 million for the six months ended June 30, 2017 and 2016, respectively.

Investor Relations Contact:
                    Wolfgang T. N. Muelleck
                    Executive Vice President/Chief Financial Officer
                    1 East Main Street
                    American Fork UT 84003
                    investorrelations@peoplesutah.com
                    Phone: 801-642-3998