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People’s Utah Bancorp Reports Third Quarter Results and Announces Quarterly Dividend Payment

October 24, 2018 6:30 PM

Third Quarter Highlights

AMERICAN FORK, Utah, Oct. 24, 2018 (GLOBE NEWSWIRE) -- People’s Utah Bancorp (the “Company” or “PUB”) (Nasdaq: PUB) reported net income of $10.5 million for the third quarter of 2018 compared with $10.5 million for the second quarter of 2018, and $6.2 million for the third quarter of 2017. Diluted earnings per common share were $0.55 for the third quarter of 2018 compared with $0.55 for the second quarter of 2018, and $0.34 for the third quarter of 2017. For the nine months ended September 30, 2018 net income was $30.0 million, or $1.58 per diluted common share, compared with $19.3 million, or $1.05 per diluted common share, for the same period a year earlier.

The Company has excluded non-recurring income including gains or losses on sale of investment securities; costs related to the acquisition of the Utah branches of Banner Bank and the merger of Town & Country Bank incurred in both 2017 and 2018; and higher income tax expense related to the revaluation of its deferred income tax assets recorded in 2017 to derive non-GAAP financial information related to the Company’s core operations. The Company believes this non-GAAP(NG) financial information is useful in understanding the Company’s core financial performance.

Net income from core operations was $10.4 million, or $0.55 per diluted common share, for the third quarter of 2018 compared with $10.2 million, or $0.54 per diluted common share, for the second quarter of 2018 and $6.9 million, or $0.38 per diluted common share, for the third quarter of 2017(NG). For the nine months ended September 30, 2018 net income from core operations was $29.9 million, or $1.57 per diluted common share, compared with $20.0 million, or $1.09 per diluted common share, for the same period a year earlier(NG).

Return on average assets was 1.91% for the third quarter of 2018 compared with 1.93% for second quarter of 2018, and 1.42% for the third quarter of 2017. Return on average assets from core operations for the third quarter 2018 was 1.89% compared with 1.88% for the second quarter of 2018, and 1.57% for the third quarter of 2017(NG).

Return on average equity was 14.97% for the third quarter of 2018 compared with 15.60% for the second quarter of 2018, and 10.14% for the third quarter of 2017. Return on average equity from core operations was 14.84% for the third quarter of 2018 compared with 15.22% for the second quarter of 2018, and 11.24% for the third quarter of 2017(NG).

The Board of Directors declared a quarterly dividend payment of $0.11 per common share. The dividend will be payable on November 13, 2018 to shareholders of record on November 6, 2018. The dividend payout ratio for earnings for the quarter ended September 30, 2018 was 19.6%. This continues the over 50-year trend of paying dividends by the Company.

“People’s Utah Bancorp achieved strong financial performance in the third quarter. We experienced widening net interest margins and solid loan and deposit growth from a year ago both organically and through our acquisition transactions,” said Len Williams, President and Chief Executive Officer. “We are pleased that we achieved $90 million in core deposit growth in the third quarter and maintained our net interest margins from the second quarter of 2018, despite experiencing greater deposit pricing pressures and strong competitive demand for deposits from both banks and credit unions. We anticipate continued competition for deposits and deposit pricing pressures, consistent with our peers, in the near term. Our focus continues to be on growing our business organically and diversifying our loan portfolio. The economic outlook for the Utah market continues to be strong, which we believe provides us further opportunities to grow our organization. We continue to actively evaluate potential acquisition opportunities throughout the Intermountain West.”

Net Interest Income and Margin

Net interest income grew 36.5%, or $7.3 million, to $27.2 million for the third quarter of 2018 compared with $19.9 million for the third quarter of 2017. The increase is primarily the result of average interest-earning assets growing 24.0%, or $397 million, and yields on interest-earning assets increasing 67 basis points for the same comparable periods to 5.62% for the third quarter of 2018. Higher yields on interest-earning assets were primarily the result of yields on loans increasing 19 basis points to 6.33% for the same comparable periods and the percentage of loans to total interest-earning assets increasing to 83.7% for the third quarter of 2018 compared with 73.5% for the third quarter of 2017.

Total cost of interest-bearing liabilities increased 33 basis points to 0.63% for the third quarter of 2018 and is the result of the cost of interest-bearing deposits increasing 26 basis points to 0.56% for the third quarter of 2018 compared with the same period a year earlier, and an increase in average short-term borrowing of $45.8 million at a borrowing rate of 2.25% for the third quarter of 2018. The Company expects the increase in cost of interest-bearing deposits to continue to accelerate over the next several quarters as financial institutions increase their competitive deposit pricing.

Acquisition accounting adjustments, including the accretion of loan discounts and amortization of certificates of deposit premium, added 5 basis points to the net interest margin in the third quarter of 2018.

Provision for Loan Losses

Provision for loan losses was $1.9 million for the third quarter of 2018 compared with $0.9 million for the third quarter of 2017. The increase in provision for loan losses is due primarily to the increase in allowance for loan losses to loans held for investment, excluding specific reserves, offset by a $1.3 million decrease in specific reserves on classified loans. The Company incurred net charge-offs of $0.9 million in the third quarter of 2018 compared with net charge-offs of $0.6 million in the third quarter of 2017.

Noninterest Income

Noninterest income was $3.8 million for the third quarter of 2018 compared with $3.0 million the same period a year ago. The increase was primarily due to a loss on sale of securities a year ago; an increase in card processing fees and service charges on deposit accounts compared with a year earlier; offset by lower mortgage banking income year-over-year.

Noninterest Expense

Noninterest expense was $15.3 million for the third quarter of 2018 compared with $13.1 million for the third quarter of 2017. Noninterest expense for the third quarter of 2018 increased as a result of $1.1 million of higher salaries and employee benefits primarily from the addition of employees retained from the acquisition of the Utah branches of Banner Bank and the merger of Town & Country Bank, $0.3 million of higher occupancy, equipment and depreciation costs associated with the net increase of five branches from these transactions, and $0.2 million in higher data processing costs associated with an increase in total accounts from both organic growth and acquisition transactions.

The Company’s efficiency ratio was 49.33% for the third quarter of 2018 compared with 57.14% for the third quarter of 2017. The Company’s efficiency ratio from core operations was 49.71% for the third quarter of 2018 compared with 53.89% for the third quarter of 2017(NG).

Income Tax Provision

Income tax expense was $3.3 million for the third quarter of 2018 compared with $2.7 million for the third quarter of 2017. The effective tax rate for the third quarter of 2018 was 23.9% compared with 30.2% for the same period a year earlier. The lower effective tax rate in 2018 compared with 2017 is the result of the reduction in the federal corporate tax rate to a flat rate of 21%, the reduction of the Utah state corporate tax rate to 4.95% as well as tax benefits related to tax-deductible stock compensation expense.

Loans and Credit Quality

Loans held for investment increased $503 million, or 41.4%, to $1.72 billion at September 30, 2018 compared with $1.22 billion at September 30, 2017. Average loans grew $501 million, or 41.2%, to $1.72 billion for the quarter ended September 30, 2018 compared with $1.22 billion for the quarter ended September 30, 2017. The increase in loans held for investment was both the result of organic growth as well as loans purchased with the acquisition of the Utah branches of Banner Bank and the merger of Town & Country Bank.

Non-performing loans increased to $5.8 million at September 30, 2018 compared with $4.1 million at September 30, 2017. Non-performing loans to total loans were 0.34% at September 30, 2018 compared with 0.34% at September 30, 2017. Non-performing assets increased to $8.8 million at September 30, 2018 compared with $4.5 million at September 30, 2017. Non-performing assets to total assets were 0.40% at September 30, 2018 compared with 0.25% at September 30, 2017. The allowance for loan losses to loans held for investment was 1.36% at September 30, 2018 compared with 1.45% at September 30, 2017. In accordance with acquisition accounting, loans acquired from the Utah branches of Banner Bank and Town & Country Bank were recorded at their estimated fair value, which resulted in a net discount to the loans’ contractual amounts, a portion of which reflects a discount for possible credit losses. Credit discounts are included in the determination of fair value, and as a result, no allowance for loan and lease losses is recorded for acquired loans at the acquisition date. The allowance for loan losses to loans held for investment, excluding purchased loans was 1.66% at September 30, 2018. The discount recorded on the acquired loans is not reflected in the allowance for loan losses or related allowance coverage ratios. Remaining discounts on acquired loans was $9.5 million at September 30, 2018.

Deposits and Liabilities

Total deposits increased $344 million, or 22.5%, to $1.87 billion at September 30, 2018 compared with $1.53 billion at September 30, 2017. The increase in total deposits was the result of both organic growth as well as the assumption of deposits from the Utah branches of Banner Bank and Town & Country Bank. Non-interest-bearing deposits were 36.2% of total deposits as of September 30, 2018 compared with 34.5% as of September 30, 2017.

Shareholders’ Equity

Shareholders’ equity increased by $34.2 million to $280 million at September 30, 2018 compared with $245 million at September 30, 2017. The increase resulted primarily from the exchange of Town & Country shares for 466,546 PUB common shares; and from net income earned 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 third quarter of 2018 at 12:00 p.m. Eastern time on Thursday, October 25, 2018. 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 participant entry number is 0621347. Please dial in 10-15 minutes early so the name and company information can be collected prior to the start of the conference. To participate in the webcast, log on to:

http://services.choruscall.com/links/pub181025.html.

If you are unable to participate during the live webcast, the call will be archived on our website www.peoplesutah.com or at the same URL above until November 26, 2018. 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, 2017 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. People’s Intermountain Bank is a full-service community bank providing loans, deposit and cash management services to individuals and businesses. The Company offers its clients direct access to decision makers, unparalleled responsiveness, seasoned relationship managers, and technology solutions. People’s Intermountain Bank has 26 locations in three banking divisions, Bank of American Fork, Lewiston State Bank, and People’s Town & Country Bank; a leasing division, GrowthFunding Equipment Finance; and a mortgage division, People’s Intermountain Bank Mortgage. The Company has been serving communities in Utah and southern Idaho for more than 100 years. More information about PUB is available at www.peoplesutah.com.

Investor Relations Contact:

Mark K. OlsonExecutive Vice President and Chief Financial Officer1 East Main StreetAmerican Fork UT 84003[email protected]Phone: 801-642-3998

PEOPLE’S UTAH BANCORPUNAUDITED CONSOLIDATED STATEMENTS OF INCOME

Three Months Ended Nine Months Ended
(Dollars in thousands, except share September 30, June 30, September 30, September 30, September 30,
and per share data) 2018 2018 2017 2018 2017
Interest income
Interest and fees on loans $27,420 $27,073 $18,843 $80,276 $53,610
Interest and dividends on investments 1,679 1,683 1,820 5,018 5,327
Total interest income 29,099 28,756 20,663 85,294 58,937
Interest expense 1,917 1,778 754 5,190 2,269
Net interest income 27,182 26,978 19,909 80,104 56,668
Provision for loan losses 1,925 1,475 900 5,450 2,000
Net interest income after provision for loan losses 25,257 25,503 19,009 74,654 54,668
Non-interest income
Mortgage banking 1,668 1,505 1,686 4,811 5,625
Card processing 826 799 704 2,347 1,991
Service charges on deposit accounts 737 704 636 2,114 1,750
Net gain (loss) on sale of investment securities - 333 (486) 336 (499)
Other 563 725 500 1,970 1,602
Total non-interest income 3,794 4,066 3,040 11,578 10,469
Non-interest expense
Salaries and employee benefits 9,885 10,196 8,813 30,504 24,542
Occupancy, equipment and depreciation 1,476 1,411 1,164 4,430 3,369
Data processing 890 1,063 650 2,823 1,986
Marketing and advertising 342 321 343 1,109 954
FDIC premiums 239 299 135 867 391
Acquisition-related costs (118) 1 484 232 660
Other 2,566 2,532 1,525 7,186 4,961
Total non-interest expense 15,280 15,823 13,114 47,151 36,863
Income before income tax expense 13,771 13,746 8,935 39,081 28,274
Income tax expense 3,288 3,279 2,697 9,127 9,021
Net income $10,483 $10,467 $6,238 $29,954 $19,253
Earnings per common share:
Basic $0.56 $0.56 $0.35 $1.60 $1.07
Diluted $0.55 $0.55 $0.34 $1.58 $1.05
Weighted average common shares outstanding:
Basic 18,713,410 18,679,908 17,976,066 18,664,339 17,933,010
Diluted 19,010,600 18,989,176 18,396,664 18,979,405 18,355,136

PEOPLE’S UTAH BANCORP UNAUDITED CONSOLIDATED BALANCE SHEETS

September 30, June 30, December 31, September 30,
(Dollars in thousands, except share data) 2018 2018 2017 2017
ASSETS
Cash and due from banks $27,231 $33,484 $36,235 $26,986
Interest-bearing deposits 23,005 17,930 13,158 173,778
Federal funds sold 4,697 908 1,634 6,101
Total cash and cash equivalents 54,933 52,322 51,027 206,865
Investment securities:
Available for sale, at fair value 255,021 236,699 263,056 226,808
Held to maturity, at historical cost 67,148 67,922 74,654 75,808
Total investment securities 322,169 304,621 337,710 302,616
Non-marketable equity securities 4,231 6,151 3,706 1,959
Loans held for sale 8,467 11,058 10,871 10,742
Loans:
Loans held for investment 1,718,403 1,691,959 1,627,444 1,215,573
Allowance for loan losses (23,309) (22,308) (18,303) (17,609)
Total loans held for investment, net 1,695,094 1,669,651 1,609,141 1,197,964
Premises and equipment, net 36,683 29,335 30,399 26,271
Goodwill 25,673 25,673 26,008 -
Bank-owned life insurance 26,276 26,120 23,566 20,096
Deferred income tax assets 11,224 10,764 8,827 10,234
Accrued interest receivable 8,766 7,658 7,594 6,186
Other intangibles 3,523 3,633 3,854 509
Other real estate owned 2,985 - 994 325
Other assets 12,829 14,784 9,832 6,369
Total assets $2,212,853 $2,161,770 $2,123,529 $1,790,136
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits:
Non-interest bearing deposits $677,379 $646,574 $641,124 $527,236
Interest-bearing deposits 1,194,553 1,135,366 1,173,508 1,000,945
Total deposits 1,871,932 1,781,940 1,814,632 1,528,181
Short-term borrowings 42,000 90,000 40,000 3,773
Accrued interest payable 424 369 353 259
Other liabilities 18,865 17,862 11,126 12,498
Total liabilities 1,933,221 1,890,171 1,866,111 1,544,711
Shareholders’ equity:
Preferred shares, $0.01 par value - - - -
Common shares, $0.01 par value 187 187 185 180
Additional paid-in capital 86,098 85,620 84,532 70,307
Retained earnings 199,161 190,735 174,804 175,462
Accumulated other comprehensive loss (5,814) (4,943) (2,103) (524)
Total shareholders’ equity 279,632 271,599 257,418 245,425
Total liabilities and shareholders’ equity $2,212,853 $2,161,770 $2,123,529 $1,790,136
Common shares outstanding 18,719,496 18,683,883 18,511,797 18,022,651

PEOPLE’S UTAH BANCORP SUMMARY FINANCIAL INFORMATION

September 30, June 30, December 31, September 30,
(Dollars in thousands, except share data) 2018 2018 2017 2017
Selected Balance Sheet Information:
Book value per share $14.94 $14.54 $13.91 $13.62
Tangible book value per share $13.38 $12.97 $12.29 $13.59
Non-performing loans to total loans 0.34% 0.51% 0.18% 0.34%
Non-performing assets to total assets 0.40% 0.40% 0.18% 0.25%
Allowance for loan losses to loans held for investment 1.36% 1.32% 1.12% 1.45%
Loans to Deposits 91.01% 94.32% 89.27% 79.09%
Asset Quality Data:
Non-performing loans $5,830 $8,649 $2,899 $4,141
Non-performing assets 8,815 8,649 3,893 4,466
Capital Ratios:
Tier 1 leverage capital (1) 11.90% 11.48% 11.46% 14.07%
Total risk-based capital (1) 15.46% 15.22% 14.67% 20.35%
Average equity to average assets 12.76% 12.36% 13.58% 13.98%
Tangible common equity to tangible assets (3) 11.47% 11.36% 10.87% 13.69%

Three Months Ended Nine Months Ended
September 30, June 30, September 30, September 30, September 30,
2018 2018 2017 2018 2017
Selected Financial Information:
Basic earnings per share $0.56 $0.56 $0.35 $1.60 $1.07
Diluted earnings per share $0.55 $0.55 $0.34 $1.58 $1.05
Net interest margin (2) 5.25% 5.26% 4.77% 5.24% 4.68%
Efficiency ratio 49.33% 50.97% 57.14% 51.43% 54.91%
Non-interest income to average assets 0.69% 0.75% 0.69% 0.71% 0.82%
Non-interest expense to average assets 2.78% 2.91% 2.98% 2.91% 2.89%
Return on average assets 1.91% 1.93% 1.42% 1.85% 1.51%
Return on average equity 14.97% 15.60% 10.14% 14.85% 10.80%
Net charge-offs / (recoveries) 925 (102) 562 445 1,106
Annualized net charge-offs / (recoveries) to average loans 0.21% -0.02% 0.18% 0.04% 0.13%

________________________________(1) Tier 1 leverage capital and Total risk-based capital as of September 30, 2018 are estimates.(2) Net interest margin is defined as net interest income divided by average earning assets.(3) Represents the sum of total shareholders’ equity less intangible assets all divided by the sum of total assets less intangible assets. Intangible assets were $29,196,000, $29,306,000 and $509,000 at September 30, 2018, June 30, 2018 and September 30, 2017, respectively.

PEOPLE’S UTAH BANCORPSELECTED AVERAGE BALANCES AND YIELDS

Three Months Ended
September 30, 2018 September 30, 2017
Interest Average Interest Average
Average Income/ Yield/ Average Income/ Yield/
(Dollars in thousands, except footnotes) Balance Expense Rate Balance Expense Rate
ASSETS
Interest-earning deposits in other banks and federal funds sold $12,426 $57 1.84% $87,981 $283 1.28%
Securities: (1)
Taxable securities 243,754 1,180 1.92% 260,941 1,116 1.70%
Non-taxable securities (2) 74,857 348 1.84% 89,001 414 1.85%
Total securities 318,611 1,528 1.90% 349,942 1,530 1.73%
Loans (3)
Real estate term 899,715 13,043 5.75% 628,113 8,818 5.57%
Construction and land development 376,142 7,329 7.73% 268,896 5,404 7.97%
Commercial and industrial 315,534 5,268 6.62% 220,795 3,412 6.13%
Residential and home equity 107,436 1,508 5.57% 83,295 935 4.46%
Consumer and other 19,876 272 5.42% 16,104 273 6.73%
Total loans 1,718,703 27,420 6.33% 1,217,203 18,842 6.14%
Non-marketable equity securities 4,521 94 8.25% 1,959 8 1.62%
Total interest-earning assets 2,054,261 29,099 5.62% 1,657,085 20,663 4.95%
Allowance for loan losses (22,469) (17,437)
Non-interest earning assets 146,665 106,406
Total average assets $2,178,457 $1,746,054
LIABILITIES AND SHAREHOLDERS’ EQUITY
Interest-bearing deposits:
Demand and savings accounts $746,957 $699 0.37% $673,789 $451 0.27%
Money market accounts 237,450 445 0.74% 166,862 95 0.23%
Certificates of deposit 182,105 493 1.08% 148,129 206 0.55%
Total interest-bearing deposits 1,166,512 1,637 0.56% 988,780 752 0.30%
Short-term borrowings 49,427 280 2.25% 3,583 2 0.19%
Total interest-bearing liabilities 1,215,939 1,917 0.63% 992,363 754 0.30%
Non-interest bearing deposits 667,896 495,719
Total funding 1,883,835 1,917 0.40% 1,488,082 754 0.20%
Other non-interest bearing liabilities 16,735 13,921
Shareholders’ equity 277,887 244,051
Total average liabilities and shareholders’ equity $2,178,457 $1,746,054
Net interest income $27,182 $19,909
Interest rate spread 4.99% 4.65%
Net interest margin 5.25% 4.77%

________________________________(1) Excludes average unrealized losses of $6.6 million and $602,000 for the three months ended September 30, 2018 and 2017, respectively.(2) Does not include tax effect on tax-exempt investment security income of $116,000 and $223,000 for the three months ended September 30, 2018 and 2017, respectively.(3) Loan interest income includes loan fees of $1.8 million and $1.6 million for the three months ended September 30, 2018 and 2017, respectively.

PEOPLE’S UTAH BANCORPSELECTED AVERAGE BALANCES AND YIELDS

Nine Months Ended
September 30, 2018 September 30, 2017
Interest Average Interest Average
Average Income/ Yield/ Average Income/ Yield/
(Dollars in thousands, except footnotes) Balance Expense Rate Balance Expense Rate
ASSETS
Interest-earning deposits in other banks and federal funds sold $13,802 $166 1.61% $50,314 $418 1.11%
Securities: (1)
Taxable securities 245,957 3,587 1.95% 298,335 3,625 1.62%
Non-taxable securities (2) 79,080 1,098 1.86% 91,606 1,268 1.85%
Total securities 325,037 4,685 1.93% 389,941 4,893 1.68%
Loans (3)
Real estate term 886,275 38,066 5.74% 612,344 25,393 5.54%
Construction and land development 370,602 21,507 7.76% 247,966 14,464 7.80%
Commercial and industrial 315,736 15,640 6.62% 216,803 9,901 6.11%
Residential and home equity 106,523 4,224 5.30% 82,755 3,067 4.95%
Consumer and other 19,225 839 5.83% 17,195 785 6.11%
Total loans 1,698,361 80,276 6.32% 1,177,063 53,610 6.09%
Non-marketable equity securities 6,095 167 3.67% 2,033 16 1.04%
Total interest-earning assets 2,043,295 85,294 5.58% 1,619,351 58,937 4.87%
Allowance for loan losses (20,766) (16,957)
Non-interest earning assets 144,195 101,826
Total average assets $2,166,724 $1,704,220
LIABILITIES AND SHAREHOLDERS’ EQUITY
Interest-bearing deposits:
Demand and savings accounts $732,912 $1,642 0.30% $664,664 $1,327 0.27%
Money market accounts 223,193 778 0.47% 169,752 273 0.22%
Certificates of deposit 189,133 1,420 1.00% 152,109 638 0.56%
Total interest-bearing deposits 1,145,238 3,840 0.45% 986,525 2,238 0.30%
Short-term borrowings 92,570 1,350 1.95% 6,416 31 0.64%
Total interest-bearing liabilities 1,237,808 5,190 0.56% 992,941 2,269 0.31%
Non-interest bearing deposits 646,419 460,674
Total funding 1,884,227 5,190 0.37% 1,453,615 2,269 0.21%
Other non-interest bearing liabilities 12,883 12,200
Shareholders’ equity 269,614 238,405
Total average liabilities and shareholders’ equity $2,166,724 $1,704,220
Net interest income $80,104 $56,668
Interest rate spread 5.02% 4.56%
Net interest margin 5.24% 4.68%

________________________________(1) Excludes average unrealized losses of $5.7 million and $1.0 million for the nine months ended September 30, 2018 and 2017, respectively.(2) Does not include tax effect on tax-exempt investment security income of $366,000 and $683,000 for the nine months ended September 30, 2018 and 2017, respectively.(3) Loan interest income includes loan fees of $5.1 million and $4.7 million for the nine months ended September 30, 2018 and 2017, respectively.

PEOPLE’S UTAH BANCORPNON-GAAP SELECTED FINANCIAL INFORMATION

(NG) Non-GAAP Financial Measures
In addition to financial results presented in accordance with generally accepted accounting principles ("GAAP"),
this press release contains certain non-GAAP financial measures. Management has presented these non-GAAP
financial measures because it believes that they provide useful and comparative information to assess trends in
core operations and facilitate the comparison of our financial performance with the performance of our peers.
(Dollars in thousands) Three Months Ended Nine Months Ended
September 30, June 30, September 30, September 30, September 30,
Revenue from Core Operations 2018 2018 2017 2018 2017
Net interest income (GAAP) $27,182 $26,978 $19,909 $80,104 $56,668
Total non-interest income 3,794 4,066 3,040 11,578 10,469
Total GAAP revenues 30,976 31,044 22,949 91,682 67,137
Exclude net (gain) loss on sale of investment securities - (333) 486 (333) 499
Revenue from core operations (non-GAAP) $30,976 $30,711 $23,435 $91,349 $67,636
Three Months Ended Nine Months Ended
September 30, June 30, September 30, September 30, September 30,
Non-interest Income from Core Operations 2018 2018 2017 2018 2017
Total non-interest income (GAAP) $3,794 $4,066 $3,040 $11,578 $10,469
Exclude net (gain) loss on sale of investment securities - (333) 486 (333) 499
Non-interest income from core operations (non-GAAP) $3,794 $3,733 $3,526 $11,245 $10,968
Three Months Ended Nine Months Ended
September 30, June 30, September 30, September 30, September 30,
Non-interest Expense from Core Operations 2018 2018 2017 2018 2017
Total non-interest expense (GAAP) $15,280 $15,823 $13,114 $47,151 $36,863
Exclude acquisition-related costs 118 (1) (484) (232) (660)
Non-interest expense from core operations (non-GAAP) $15,398 $15,822 $12,630 $46,919 $36,203
Three Months Ended Nine Months Ended
September 30, June 30, September 30, September 30, September 30,
Net Income from Core Operations 2018 2018 2017 2018 2017
Net income (GAAP) $10,483 $10,467 $6,238 $29,954 $19,253
Exclude net (gain) loss on sale of investment securities - (333) 486 (333) 499
Exclude acquisition-related costs (118) 1 484 232 660
Exclude tax related benefit 28 79 (293) 24 (370)
Revaluation of deferred income tax assets (DTA) - - - - -
Net income (non-GAAP) $10,393 $10,214 $6,915 $29,877 $20,042

PEOPLE’S UTAH BANCORPNON-GAAP SELECTED FINANCIAL INFORMATION

(NG) Non-GAAP Financial Measures (continued)
(Dollars in thousands) Three Months Ended Nine Months Ended
September 30, June 30, September 30, September 30, September 30,
Acquisition Accounting Impact on Net Interest Margin 2018 2018 2017 2018 2017
Net interest income (GAAP) $27,182 $26,978 $19,909 $80,104 $56,668
Exclude discount accretion (premium amortization) on purchased loans (222) (777) (20) (2,165) (38)
Exclude premium amortization on acquired certificates of deposit ("CD") (35) (35) (69) (106) (207)
Net interest income before acquisition accounting impact (Non-GAAP) $26,925 $26,166 $19,820 $77,833 $56,423
Average earning assets (GAAP) $2,054,261 $2,058,125 $1,657,085 $2,043,295 $1,619,351
Exclude average net loan discount on acquired loans 9,549 10,146 844 10,531 858
Average earning assets before acquired loan discount (Non-GAAP) $2,063,810 $2,068,271 $1,657,929 $2,053,826 $1,620,209
Net interest margin ("NIM") (GAAP) 5.25% 5.26% 4.77% 5.24% 4.68%
Exclude impact on NIM from discount accretion -0.04% -0.15% 0.00% -0.14% 0.00%
Exclude impact on NIM from CD premium amortization -0.01% -0.01% -0.02% -0.01% -0.02%
Net interest margin before acquisition accounting adjustments (Non-GAAP) 5.20% 5.10% 4.75% 5.09% 4.66%

PEOPLE’S UTAH BANCORPNON-GAAP SELECTED FINANCIAL INFORMATION

(NG) Non-GAAP Financial Measures (continued)
(Dollars in thousands) Three Months Ended Nine Months Ended
September 30, June 30, September 30, September 30, September 30,
Additional Non-GAAP Financial Information 2018 2018 2017 2018 2017
Diluted earnings per share (GAAP) $0.55 $0.55 $0.34 $1.58 $1.05
Diluted earnings per share (non-GAAP) $0.55 $0.54 $0.38 $1.57 $1.09
Efficiency ratio (GAAP) 49.33% 50.97% 57.14% 51.43% 54.91%
Efficiency ratio (non-GAAP) 49.71% 51.52% 53.89% 51.36% 53.53%
Non-interest income to average assets (GAAP) 0.69% 0.75% 0.69% 0.71% 0.82%
Non-interest income to average assets (non-GAAP) 0.69% 0.69% 0.80% 0.69% 0.86%
Non-interest expense to average assets (GAAP) 2.78% 2.91% 2.98% 2.91% 2.89%
Non-interest expense to average assets (non-GAAP) 2.80% 2.91% 2.87% 2.90% 2.84%
Return on average assets (GAAP) 1.91% 1.93% 1.42% 1.85% 1.51%
Return on average assets (non-GAAP) 1.89% 1.88% 1.57% 1.84% 1.57%
Return on average equity (GAAP) 14.97% 15.60% 10.14% 14.85% 10.80%
Return on average equity (non-GAAP) 14.84% 15.22% 11.24% 14.82% 11.24%

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Source: People's Utah Bancorp

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