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People’s Utah Bancorp Reports Third Quarter 2019 Results; Announces Quarterly Dividend Payment

Third Quarter 2019 Highlights

  • Achieved annualized return on average assets of 1.88% for third quarter
  • Realized annualized return on average equity of 13.79% for the third quarter
  • Earnings per diluted share increased 7.3% to $0.59 year-over-year
  • Net interest margin narrowed 22 bps to 5.03% year-over-year
  • Total deposits grew $230 million, or 12.3%, to $2.10 billion year-over-year
  • Total loans held for investment declined 2.5% to $1.68 billion year-over-year
  • Total assets grew $232 million, or 10.5%, to $2.4 billion year-over-year

AMERICAN FORK, Utah, Oct. 23, 2019 (GLOBE NEWSWIRE) -- People’s Utah Bancorp (the “Company” or “PUB”) (PUB) reported net income of $11.1 million for the third quarter of 2019 compared with $11.0 million for the second quarter of 2019, and $10.5 million for the third quarter of 2018. Diluted earnings per common share were $0.59 for the third quarter of 2019 compared with $0.58 for the second quarter of 2019, and $0.55 for the third quarter of 2018. 

Annualized return on average assets was 1.88% for the third quarter of 2019 compared with 1.96% for second quarter of 2019, and 1.91% for the third quarter of 2018. Annualized return on average equity was 13.79% for the third quarter of 2019 compared with 14.33% for the second quarter of 2019, and 14.97% for the third quarter of 2018. 

The Board of Directors declared a quarterly dividend payment of $0.13 per common share. The dividend will be payable on November 12, 2019 to shareholders of record on November 4, 2019. The dividend payout ratio for earnings for the third quarter of 2019 was 22.0%. 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. Our total assets grew 10.5% from a year ago, primarily as a result of strong low-cost, core deposit growth. Total deposits grew $230 million, or 12.3% year-over-year, as our retail branches and commercial treasury management team focused on raising commercial deposits from existing commercial clients, as well as the acquisition of new client relationships. Our loan growth has slowed as we have increased selectivity and managed overall concentrations,” said Len Williams, President and Chief Executive Officer. 

“We achieved a return on average equity of 13.8% and a return on average assets of 1.9%, even as we continue to position, strengthen, and fortify our balance sheet. We have increased our average equity to average assets from 12.8% a year ago to 13.7% for the third quarter of 2019, while increasing our allowance for loan losses as a percentage of total loans from 1.4% a year ago to 1.8% at the end of the third quarter of 2019. We believe this focus will ensure greater strength and safety, given our expectations for a slower economy going forward.”

Mr. Williams continued, “We have decided to simplify our branding strategy to a single, unified name for our Bank, a new logo, and a more contemporary look. We are currently communicating the new brand with our existing clients, through one-on-one discussions and other forms of communication. We plan to make a public announcement on November 12, 2019 regarding our new branding strategy. We expect this new branding strategy will provide us with the opportunity to increase market penetration as potential clients better understand our size, scale, and product offerings as a unified bank. Ultimately, we anticipate that these efforts will result in greater growth in our loan and deposit portfolios and higher overall revenues.”

Net Interest Income and Margin

For the third quarter of 2019, net interest income grew 3.7%, or $1.0 million, to $28.2 million compared with $27.2 million for the same period a year earlier. The increase is primarily the result of average interest earning assets growing 8.3%, or $170 million, while yields on interest earning assets declined 18 basis points to 5.44% for the same period a year ago. Lower yields on interest earning assets were primarily the result of $207 million, or 62.5%, increase in the average amount of lower yielding cash and investment securities held by the Company stemming from average core deposits increasing $172 million, or 9.4%, for the same respective period. Yield on total loans increased 16 basis points to 6.49% for the third quarter of 2019 compared with the same period a year ago, while average loans declined $35.5 million, or 2.1%, for the same comparable period. The percentage of loans to total interest earning assets decreased to 75.7% for the third quarter of 2019 compared with 83.7% for the third quarter of 2018. 

For the third quarter of 2019, total cost of interest-bearing liabilities increased 7 basis points to 0.70% compared with the same period a year ago and is the result of the cost of interest bearing deposits increasing 14 basis points to 0.70% for the same comparable period, while the Company had no short-term borrowing for the third quarter of 2019 compared with $49.4 million of average short-term borrowings in the third quarter of 2018. 

Acquisition accounting adjustments, including the accretion of loan discounts and amortization of core deposit intangibles, added 10 basis points to the net interest margin for the third quarter of 2019.

Provision for Loan Losses

For the third quarter of 2019, provision for loan losses was $2.1 million compared with $1.9 million for the same period a year earlier. The increase in provision for loan losses in the third quarter of 2019 is due primarily to $1.0 million increase in specific reserves, with the remainder the result of increased general reserves. For the third quarter of 2019, the Company incurred net recoveries of $0.3 million compared with net charge-offs of $0.9 million for the same period a year ago.

Noninterest Income

For the third quarter of 2019, noninterest income increased $0.7 million, or 17.7%, to $4.5 million compared with $3.8 million the same period a year ago. The increase was primarily the result of mortgage banking income increasing from higher loan sales in the third quarter of 2019 compared with the same period a year ago due to a significant increase in refinance volumes as overall interest rates declined.

Noninterest Expense

For the third quarter of 2019, noninterest expense was $16.1 million compared with $15.3 million for the same period a year earlier and is primarily the result of $0.5 million in higher salaries and employee benefits and $0.5 million in higher marketing and advertising expenses associated with the rebranding of the Company. The Company expects higher marketing and advertising expense related to the rollout of a new branding strategy both in the fourth quarter of 2019 and into 2020. Higher salaries and employee benefits, and marketing and advertising were offset by lower FDIC premiums as the Company applied its small bank FDIC assessment credits to its overall premium assessment. For the third quarter of 2019, the Company’s efficiency ratio was 49.20% compared with 49.33% for the same period a year ago.

Income Tax Provision

For the third quarter of 2019, income tax expense was $3.4 million compared with $3.3 million for the same period a year earlier. For the third quarter of 2019, the effective tax rate was 23.2% compared with 23.9% for the same period a year ago.

Loans and Credit Quality

Loans held for investment decreased $3.8 million, or 0.2%, to $1.68 billion at September 30, 2019 compared with $1.68 billion at December 31, 2018, and decreased $43.2 million, or 2.5% compared with $1.72 billion at September 30, 2018. The decline is primarily the result of declines in the acquisition, development, and construction loan portfolio of $38.7 million, or 11.9% from December 31, 2018 to September 30, 2019 and $96.4 million, or 25.2%, from a year ago, as the Company has managed loan concentration levels and become more selective with the type and size of construction projects that it is willing to finance, given its perspective on a slowing economy. For the nine months ended September 30, 2019, average loans declined $16.5 million, or 1.0%, to $1.68 billion compared with $1.70 billion for the same period a year earlier.

Non-performing loans were $4.3 million at September 30, 2019 compared with $4.5 million at December 31, 2018, and $5.8 million at September 30, 2018. Non-performing loans to total loans were 0.26% at September 30, 2019 compared with 0.27% at December 31, 2018, and 0.34% at September 30, 2018. Non-performing assets were $4.3 million at September 30, 2019 compared with $4.5 million at December 31, 2018, and $8.8 million at September 30, 2018. Non-performing assets to total assets were 0.17% at September 30, 2019 compared with 0.21% at December 31, 2018, and 0.40% at September 30, 2018. The allowance for loan losses increased $7.2 million, or 30.7%, to $30.5 million at September 30, 2019 compared with the same period a year earlier. The allowance for loan losses to loans held for investment was 1.82% at September 30, 2019 compared with 1.50% at December 31, 2018, and 1.36% at September 30, 2018. 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 discount recorded on the acquired loans is not reflected in the allowance for loan losses or related allowance coverage ratios. Remaining credit discounts on acquired loans was $6.4 million at September 30, 2019.

In June 2016, the Financial Accounting Standard Board (“FASB”) issued Accounting Standard Update (“ASU”) No. 2016-13, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” The ASU significantly changes the accounting for credit loss measurement on loans and debt securities. For loans and held-to-maturity debt securities, the ASU requires a current expected credit loss (“CECL”) measurement to estimate the allowance for credit losses (“ACL”) for the remaining estimated life of the financial asset (including off-balance sheet credit exposures) using historical experience, current conditions, and reasonable and supportable forecasts. The ASU eliminates the existing guidance for Purchased Credit Impaired (“PCI”) loans but requires an allowance for purchased financial assets with more than an insignificant deterioration since origination, otherwise known as purchase credit deteriorated (“PCD”) assets. In addition, the ASU modifies the other-than-temporary impairment model for available-for-sale debt securities to require an allowance for credit impairment instead of a direct write-down, which allows for reversal of credit impairments in future periods based on an improvement in credit. This ASU is effective for interim and annual reporting periods beginning after December 15, 2019.

On October 16, 2019, the FASB voted to delay the adoption by two years to January 2023 for private companies, not-for-profit companies, and certain small public companies that meet the definition of a smaller reporting company (“SRC”), as defined by the Securities and Exchange Commission. To meet the requirements of an SRC, an entity must be an issuer as defined by the SEC and have public float of less than $250 million, or public float of less than $700 million and annual revenues of less than $100 million. As of June 30, 2019, the Company’s public float was $466 million and annual revenues for 2018 were $130 million. As a result, the Company is not an SRC and therefore, will be required to adopt the ASU effective January 1, 2020.

The implementation process includes evaluation of technical accounting topics; developing, validating and implementing models and methodologies used to calculate CECL; updating ACL documentation; validating internal controls; and overall operational readiness for adoption of the ASU. The Company is currently running new models and processes in parallel with existing models and processes under current accounting guidance in advance of the January 1, 2020 effective date. These parallel runs will focus on technical functionality of the CECL calculation, operational execution of the end-to-end process, as well as disclosure requirements. The Company has established a project team and a steering committee to provide cross-functional governance over and make key decisions relating to the project plan and the parallel runs.

The Company intends to recognize an ACL for held-to-maturity and available-for-sale debt securities. The ACL on available-for-sale debt securities will be subject to a limitation based on the fair value of the debt securities. Based on the credit quality of existing debt securities, The Company does not expect the ACL for debt securities to be material.

The Company expects to use the weighted average remaining maturity (“WARM”) approach, adjusted for prepayments, to calculate CECL. As described in the FASB Staff Question and Answers, the Company intends to use a qualitative approach to adjust historical loss information for current conditions and for reasonable and supportable forecasts, and then immediately revert to historical credit losses. As noted in section ASU 320-20-30-9, “An entity shall not rely solely on past events to estimate expected credit losses. When an entity uses historical loss information, it shall consider the need to adjust historical information to reflect the extent to which management expects current conditions and reasonable and supportable forecasts to differ from the conditions that existed for the period over which historical information was evaluated. The adjustments to historical loss information may be qualitative in nature and should reflect changes related to relevant data (such as changes in unemployment rates, property values, commodity values, delinquency, or other factors that are associated with credit losses on the financial asset or in the group of financial assets).”

The Company is currently in the process of evaluating the impact of the ASU on its earnings, financial position, and regulatory capital amounts and ratios related to loans. The Company expects its ACL to increase upon adoption, because the ACL will be required to cover the full remaining expected life of the portfolio, rather than the incurred loss model under current U.S. GAAP. In addition, a portion of the increase will be due to PCI loans that will be reclassified as PCD loans with the credit related non-accretable discount increasing both ACL and loan balances, but not retained earnings. However, accretable discounts held on non-PCD loans are not allowed to be moved to ACL as part of the adoption of this ASU. As a result, the Company will be required to set aside additional ACL for non-PCD loans through retained earnings upon adoption. As a result, the Company will continue to hold accretable discounts that will be recorded to interest income over the remaining life of non-PCD loans as well as a similar amount in ACL.

The Company expects greater volatility in its earnings and those of other banks after adoption due to the nature and time horizon used to calculate CECL. In addition, the Company expects a potential negative impact to credit availability and reduced loan terms to borrowers as this ASU is adopted by financial institutions. Lastly, the Company expects a lack of comparability with financial performance to many of its peers as it adopts this ASU, due to delayed adoption for public companies with total assets similar in size to the Company.

The ultimate effect of CECL on the Company’s ACL will depend on the size and composition of the loan portfolio; the loan portfolio’s credit quality and economic conditions at the time of adoption; as well as any refinements to models, methodologies, and other key assumptions used.

At adoption, the Company will have a cumulative effect adjustment to retained earnings for the change in the ACL, which the Company expects to negatively impact regulatory capital amounts and ratios. An increase in the Company’s ACL will result in a decrease in regulatory capital amounts and ratios. Bank regulatory agencies have provided regulatory capital relief for an initial capital decrease from the adoption of this ASU by allowing a phased adoption over three years, on a straight-line basis, which the Company expects to utilize.

Deposits and Liabilities

Total deposits increased $225 million, or 12.0%, to $2.10 billion at September 30, 2019 compared with $1.88 billion at December 31, 2018, and increased $230 million, or 12.3%, compared with $1.87 billion at September 30, 2018. The increase in total deposits was primarily the result of organic commercial deposit growth. Non-interest bearing deposits were 37.0% of total deposits as of September 30, 2019 compared with 34.2% as of December 31, 2018, and 36.2% as of September 30, 2018.

Shareholders’ Equity

Shareholders’ equity increased by $32.6 million to $323 million at September 30, 2019 compared with $290 million at December 31, 2018 and increased by $43.1 million compared with $280 million at September 30, 2018. The increase resulted primarily from net income earned during the intervening periods, net of cash dividends paid to shareholders; and a reduction in accumulated other comprehensive losses resulting from an improvement in the fair value of investment securities as overall interest rates declined.

Conference Call and Webcast

Management will host a conference call on Thursday, October 24, 2019 at 10:00 a.m. MDT (12:00 p.m. EDT) to discuss its third quarter financial performance. Interested investors may listen to the call live at www.peoplesutah.com. Investment professionals are invited to dial 888-317-6003 (international calls 412-317-6061) and the participant entry number is 5979702. Please dial in 10-15 minutes early so the name and company information can be collected prior to the start of the conference. 

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 for one month after the call. 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, 2018 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 a $2.4 billion bank holding company for People’s Intermountain Bank. People’s Intermountain Bank, is a full-service bank providing loans, deposit and cash management services to businesses and individuals. People’s Intermountain Bank is the largest community bank headquartered in Utah. With 26 branches covering the area between Preston, Idaho to St. George, Utah, People’s Intermountain Bank’s clients have direct access to bankers and decision makers who will work with clients to understand their specific needs and offer customized solutions designed specifically to meet them. The Bank 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. Olson
Executive Vice President and Chief Financial Officer
1 East Main Street
American Fork UT 84003
investorrelations@peoplesutah.com
Phone: 801-642-3998

 
PEOPLE’S UTAH BANCORP
UNAUDITED 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)   2019     2019     2018     2019     2018  
Interest income                                        
Interest and fees on loans   $ 27,544     $ 27,628     $ 27,420     $ 82,152     $ 80,276  
Interest and dividends on investments     2,937       2,422       1,679       7,531       5,018  
Total interest income     30,481       30,050       29,099       89,683       85,294  
Interest expense     2,290       2,330       1,917       6,865       5,190  
Net interest income     28,191       27,720       27,182       82,818       80,104  
Provision for loan losses     2,100       2,150       1,925       5,800       5,450  
Net interest income after provision for loan losses     26,091       25,570       25,257       77,018       74,654  
Non-interest income                                        
Mortgage banking     2,116       1,621       1,668       5,154       4,811  
Card processing     976       814       826       2,405       2,347  
Service charges on deposit accounts     744       705       737       2,106       2,114  
Net gain on sale of investment securities     -       -       -       -       336  
Other     631       458       563       1,737       1,970  
Total non-interest income     4,467       3,598       3,794       11,402       11,578  
Non-interest expense                                        
Salaries and employee benefits     10,410       9,526       9,885       29,822       30,504  
Occupancy, equipment and depreciation     1,439       1,558       1,476       4,453       4,430  
Data processing     879       1,018       890       2,861       2,823  
Marketing and advertising     805       226       342       1,147       1,109  
FDIC premiums     6       148       239       244       867  
Acquisition-related costs     -       -       (118 )     -       232  
Other     2,529       2,223       2,566       7,156       7,186  
Total non-interest expense     16,068       14,699       15,280       45,683       47,151  
Income before income tax expense     14,490       14,469       13,771       42,737       39,081  
Income tax expense     3,355       3,480       3,288       10,108       9,127  
Net income   $ 11,135     $ 10,989     $ 10,483     $ 32,629     $ 29,954  
                                         
Earnings per common share:                                        
Basic   $ 0.59     $ 0.58     $ 0.56     $ 1.73     $ 1.60  
Diluted   $ 0.59     $ 0.58     $ 0.55     $ 1.72     $ 1.58  
                                         
Weighted average common shares outstanding:                                        
Basic     18,840,381       18,805,760       18,713,410       18,809,334       18,664,339  
Diluted     19,029,350       19,007,297       19,010,600       19,008,883       18,979,405  


PEOPLE’S UTAH BANCORP
UNAUDITED CONSOLIDATED BALANCE SHEETS
 
    September 30,     June 30,     December 31,     September 30,  
(Dollars in thousands, except share data)   2019     2019     2018     2018  
ASSETS                                
Cash and due from banks   $ 45,196     $ 38,121     $ 39,471     $ 27,231  
Interest-bearing deposits     195,082       64,064       7,456       23,005  
Federal funds sold     100,118       90,281       1,620       4,697  
Total cash and cash equivalents     340,396       192,466       48,547       54,933  
Investment securities:                                
Available for sale, at fair value     319,857       334,762       280,964       255,021  
Held to maturity, at historical cost     -       -       65,462       67,148  
Total investment securities     319,857       334,762       346,426       322,169  
Non-marketable equity securities     2,623       2,623       2,551       4,231  
Loans held for sale     19,554       18,446       10,267       8,467  
Loans:                                
Loans held for investment     1,675,147       1,672,584       1,678,902       1,718,403  
Allowance for loan losses     (30,471 )     (28,039 )     (25,245 )     (23,309 )
Total loans held for investment, net     1,644,676       1,644,545       1,653,657       1,695,094  
Premises and equipment, net     37,958       37,925       36,532       36,683  
Goodwill     25,673       25,673       25,673       25,673  
Bank-owned life insurance     26,885       26,734       26,433       26,276  
Deferred income tax assets     9,169       9,178       11,514       11,224  
Accrued interest receivable     8,850       8,642       8,282       8,766  
Other intangibles     3,080       3,191       3,412       3,523  
Other real estate owned     -       -       -       2,985  
Other assets     5,742       7,680       11,000       12,829  
Total assets   $ 2,444,463     $ 2,311,865     $ 2,184,294     $ 2,212,853  
                                 
LIABILITIES AND SHAREHOLDERS’ EQUITY                                
Deposits:                                
Non-interest bearing deposits   $ 777,041     $ 707,135     $ 642,594     $ 677,379  
Interest-bearing deposits     1,324,671       1,274,771       1,234,461       1,194,553  
Total deposits     2,101,712       1,981,906       1,877,055       1,871,932  
Short-term borrowings     -       -       -       42,000  
Accrued interest payable     571       546       483       424  
Other liabilities     19,461       16,614       16,594       18,865  
Total liabilities     2,121,744       1,999,066       1,894,132       1,933,221  
                                 
Shareholders’ equity:                                
Preferred shares, $0.01 par value     -       -       -       -  
Common shares, $0.01 par value     189       188       187       187  
Additional paid-in capital     87,704       87,275       86,308       86,098  
Retained earnings     233,634       224,950       207,779       199,161  
Accumulated other comprehensive income/(loss)     1,192       386       (4,112 )     (5,814 )
Total shareholders’ equity     322,719       312,799       290,162       279,632  
Total liabilities and shareholders’ equity   $ 2,444,463     $ 2,311,865     $ 2,184,294     $ 2,212,853  
                                 
Common shares outstanding     18,855,710       18,819,332       18,728,823       18,719,496  


PEOPLE’S UTAH BANCORP
SUMMARY FINANCIAL INFORMATION
 
       
    September 30,     June 30,     December 31,     September 30,  
(Dollars in thousands, except share data)   2019     2019     2018     2018  
Selected Balance Sheet Information:                                
Book value per share   $ 17.12     $ 16.62     $ 15.49     $ 14.94  
Tangible book value per share   $ 15.59     $ 15.09     $ 13.94     $ 13.38  
Non-performing loans to total loans     0.26 %     0.31 %     0.27 %     0.34 %
Non-performing assets to total assets     0.17 %     0.22 %     0.21 %     0.40 %
Allowance for loan losses to loans held for investment     1.82 %     1.68 %     1.50 %     1.36 %
Loans to Deposits     79.18 %     83.91 %     88.65 %     91.01 %
                                 
Asset Quality Data:                                
Non-performing loans   $ 4,255     $ 5,104     $ 4,499     $ 5,830  
Non-performing assets   $ 4,255     $ 5,104     $ 4,499     $ 8,815  
                                 
Capital Ratios:                                
Tier 1 leverage capital (1)     12.64 %     12.78 %     12.27 %     11.90 %
Total risk-based capital (1)     17.88 %     17.24 %     16.36 %     15.46 %
Average equity to average assets     13.66 %     13.69 %     13.04 %     12.76 %
Tangible common equity to tangible assets (2)     12.17 %     12.44 %     12.11 %     11.47 %


    Three Months Ended     Nine Months Ended  
    September 30,     June 30,     September 30,     September 30,     September 30,  
    2019     2019     2018     2019     2018  
Selected Financial Information:                                        
Basic earnings per share   $ 0.59     $ 0.58     $ 0.56     $ 1.73     $ 1.60  
Diluted earnings per share   $ 0.59     $ 0.58     $ 0.55     $ 1.72     $ 1.58  
Net interest margin (3)     5.03 %     5.24 %     5.25 %     5.18 %     5.24 %
Efficiency ratio     49.20 %     46.93 %     49.33 %     48.49 %     51.43 %
Non-interest income to average assets     0.76 %     0.64 %     0.69 %     0.67 %     0.71 %
Non-interest expense to average assets     2.72 %     2.63 %     2.78 %     2.70 %     2.91 %
Annualized return on average assets     1.88 %     1.96 %     1.91 %     1.93 %     1.85 %
Annualized return on average equity     13.79 %     14.33 %     14.97 %     14.16 %     14.85 %
Net charge-offs / (recoveries)   $ (332 )   $ 34     $ 924     $ 574     $ 444  
Annualized net charge-offs / (recoveries) to average loans     -0.08 %     0.01 %     0.21 %     0.05 %     0.03 %
 
(1) Tier 1 leverage capital and Total risk-based capital as of September 30, 2019 are estimates.
(2) Represents the sum of total shareholders’ equity less intangible assets all divided by the sum of total assets less intangible assets. Intangible assets were $28,753,000, $28,864,000, $29,085,000, and $29,196,000 at September 30, 2019, June 30, 2019, December 31, 2018, and September 30, 2018, respectively.
(3) Net interest margin is defined as net interest income divided by average earning assets.


PEOPLE’S UTAH BANCORP
SELECTED AVERAGE BALANCES AND YIELDS
 
    Three Months Ended  
    September 30, 2019     September 30, 2018  
            Interest     Average             Interest     Average  
(Dollars in thousands,   Average     Income/     Yield/     Average     Income/     Yield/  
 except footnotes)   Balance     Expense     Rate     Balance     Expense     Rate  
ASSETS                                                
Interest-earning deposits in other banks and federal funds sold   $ 216,450     $ 1,161       2.13 %   $ 12,426     $ 57       1.84 %
Securities: (1)                                                
Taxable securities     259,870       1,459       2.23 %     243,754       1,180       1.92 %
Non-taxable securities (2)     61,692       295       1.90 %     74,857       348       1.84 %
Total securities     321,562       1,754       2.16 %     318,611       1,528       1.90 %
Loans (3)                                                
Real estate term     909,671       13,881       6.05 %     899,715       13,043       5.75 %
Construction and land development     299,907       6,020       7.96 %     376,142       7,329       7.73 %
Commercial and industrial     281,845       4,791       6.74 %     315,534       5,268       6.62 %
Residential and home equity     174,104       2,513       5.73 %     107,436       1,508       5.57 %
Consumer and other     17,715       339       7.61 %     19,876       272       5.42 %
Total loans     1,683,242       27,544       6.49 %     1,718,703       27,420       6.33 %
                                                 
Non-marketable equity securities     2,623       22       3.32 %     4,521       94       8.25 %
Total interest-earning assets     2,223,877       30,481       5.44 %     2,054,261       29,099       5.62 %
Allowance for loan losses     (28,283 )                     (22,469 )                
Non-interest earning assets     149,270                       146,665                  
Total average assets   $ 2,344,864                     $ 2,178,457                  
LIABILITIES AND SHAREHOLDERS’ EQUITY                                                
Interest-bearing deposits:                                                
Demand and savings accounts   $ 805,587       882       0.43 %   $ 746,957       699       0.37 %
Money market accounts     309,311       759       0.97 %     237,450       445       0.74 %
Certificates of deposit     177,851       649       1.45 %     182,105       493       1.08 %
Total interest-bearing deposits     1,292,749       2,290       0.70 %     1,166,512       1,637       0.56 %
Short-term borrowings     -       -       0.00 %     49,427       280       2.25 %
Total interest-bearing liabilities     1,292,749       2,290       0.70 %     1,215,939       1,917       0.63 %
Non-interest bearing deposits     713,750                       667,896                  
Total funding     2,006,499       2,290       0.45 %     1,883,835       1,917       0.40 %
Other non-interest bearing liabilities     18,086                       16,735                  
Shareholders’ equity     320,279                       277,887                  
Total average liabilities and shareholders’ equity   $ 2,344,864                     $ 2,178,457                  
Net interest income           $ 28,191                     $ 27,182          
Interest rate spread                     4.73 %                     4.99 %
Net interest margin                     5.03 %                     5.25 %
 
(1) Excludes average unrealized gains (losses) of $1.2 million and $(6.6) million for the three months ended September 30, 2019 and 2018, respectively.
(2) Does not include tax effect on tax-exempt investment security income of $98,000 and $116,000 for the three months ended September 30, 2019 and 2018, respectively.
(3) Loan interest income includes loan fees of $1.8 million and $1.8 million for the three months ended September 30, 2019 and 2018, respectively.


PEOPLE’S UTAH BANCORP
SELECTED AVERAGE BALANCES AND YIELDS
 
    Nine Months Ended  
    September 30, 2019     September 30, 2018  
            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   $ 115,594     $ 1,891       2.19 %   $ 13,802     $ 166       1.61 %
Securities: (1)                                                
Taxable securities     271,193       4,635       2.29 %     245,957       3,587       1.95 %
Non-taxable securities (2)     65,851       929       1.89 %     79,080       1,098       1.86 %
Total securities     337,044       5,564       2.21 %     325,037       4,685       1.93 %
Loans (3)                                                
Real estate term     900,408       40,375       6.00 %     886,275       38,066       5.74 %
Construction and land development     309,651       18,555       8.01 %     370,602       21,507       7.76 %
Commercial and industrial     291,008       15,124       6.95 %     315,736       15,640       6.62 %
Residential and home equity     163,966       7,200       5.87 %     106,523       4,224       5.30 %
Consumer and other     16,848       898       7.13 %     19,225       839       5.83 %
Total loans     1,681,881       82,152       6.53 %     1,698,361       80,276       6.32 %
                                                 
Non-marketable equity securities     2,730       76       3.71 %     6,095       167       3.67 %
Total interest-earning assets     2,137,249       89,683       5.61 %     2,043,295       85,294       5.58 %
Allowance for loan losses     (26,708 )                     (20,766 )                
Non-interest earning assets     149,197                       144,195                  
Total average assets   $ 2,259,738                     $ 2,166,724                  
LIABILITIES AND SHAREHOLDERS’ EQUITY                                                
Interest-bearing deposits:                                                
Demand and savings accounts   $ 806,552       2,910       0.48 %   $ 732,912       1,642       0.30 %
Money market accounts     278,057       2,040       0.98 %     223,193       778       0.47 %
Certificates of deposit     179,664       1,852       1.38 %     189,133       1,420       1.00 %
Total interest-bearing deposits     1,264,273       6,802       0.72 %     1,145,238       3,840       0.45 %
Short-term borrowings     3,235       63       2.63 %     92,570       1,350       1.95 %
Total interest-bearing liabilities     1,267,508       6,865       0.72 %     1,237,808       5,190       0.56 %
Non-interest bearing deposits     667,268                       646,419                  
Total funding     1,934,776       6,865       0.47 %     1,884,227       5,190       0.37 %
Other non-interest bearing liabilities     16,818                       12,883                  
Shareholders’ equity     308,144                       269,614                  
Total average liabilities and shareholders’ equity   $ 2,259,738                     $ 2,166,724                  
Net interest income           $ 82,818                     $ 80,104          
Interest rate spread                     4.89 %                     5.02 %
Net interest margin                     5.18 %                     5.24 %
 
(1) Excludes average unrealized losses of $2.2 million and $5.7 million for the nine months ended September 30, 2019 and 2018, respectively.
(2) Does not include tax effect on tax-exempt investment security income of $310,000 and $366,000 for the nine months ended September 30, 2019 and 2018, respectively.
(3) Loan interest income includes loan fees of $4.9 million and $5.1 million for the nine months ended September 30, 2019 and 2018, respectively.