Market Overview

People's Utah Bancorp Reports Second Quarter 2015 Results

Share:
AMERICAN FORK, Utah--(BUSINESS WIRE)--

People's Utah Bancorp (the "Company") (Nasdaq: PUB) today announced results for the quarter ended June 30, 2015.

Consolidated net income for the second quarter of 2015 was $4.7 million compared to $3.1 million for the second quarter of 2014, an increase of 52.4%. Earnings per share was $0.30 per diluted share compared to $0.20 per diluted share in the comparable quarter in 2014, an increase of 46.3%.

"We are quite pleased with our successful initial public offering last month and our second quarter 2015 operating results. We have grown our loan portfolio 5.4%, increased deposits by 6.3% since year-end and continue to maintain our net interest margin above 4%," said Richard Beard, President and Chief Executive Officer of People's Utah Bancorp.

Second Quarter Highlights

Highlights of the second quarter of 2015 include:

  • Completed an initial public offering of 2.65 million common shares in June 2015 raising net proceeds after offering expenses of $34.8 million.
  • Net interest margin of 4.43%, an increase of 5 basis points compared to 4.38% for the second quarter of 2014.
  • Return on average common equity of 10.88% and return on average assets of 1.31%.
  • Gross loans grew 5.4% since year-end 2014 and increased 16.8% compared to the second quarter of 2014.
  • Deposits grew 6.3% since year-end 2014 and increased 10.1% compared to the second quarter of 2014.
  • Efficiency ratio of 60.29% as of the second quarter 2015 compared to 66.67% excluding merger-related expenses of $0.6 million in the second quarter of 2014.
  • Tangible book value per share of $11.51 as of June 30, 2015.

Earnings Summary

The increase in net income in second quarter 2015 compared to the second quarter of 2014 was due primarily to a $1.5 million increase in the net interest income after provision for loan losses, a $0.3 million increase in non-interest income, a $0.6 million decrease in non-interest expense and a $0.8 million increase in income tax expense.

Consolidated net income for the six months ended June 30, 2015 increased by 36.4% to $9.5 million compared to $6.9 million for the six months ended June 30, 2014. Diluted earnings per share increased to $0.61 per share for the six month period ended June 30, 2015 from $0.46 per share for the comparable six month period in 2014, an increase of 32.6%.

Return on average assets for the current quarter was 1.31% compared to 0.94% in the second quarter of 2014. Return on average equity for the second quarter of 2015 was 10.88% compared to 8.13% in the corresponding quarter in 2014. Future returns on average equity could be impacted by the additional $34.8 million of capital raised in the initial public offering last month.

Net Interest Income and Margin

Net interest income for the second quarter of 2015 increased $1.6 million compared to the second quarter of 2014, primarily due to an increase in interest income of $1.5 million driven primarily by a higher average balance of our loan portfolio, partially offset by lower loan yields. Average quarterly loan balances increased $148.3 million in the second quarter of 2015 compared to the same period in 2014. Additional increases in net interest margin in the second quarter of 2015 compared to the second quarter of 2014 were the result of slightly higher yields in average earning assets and lower cost of funds. Cost of funds on interest-bearing liabilities was 0.33% for the second quarter 2015 compared to 0.38% for the comparable quarter in 2014. As a result of these changes, net interest margin for the second quarter of 2015 grew to 4.43% compared to 4.37% in the second quarter of 2014.

Provision for Loan Losses

The $0.1 million increase in the provision for loan losses compared to the second quarter of 2014 was primarily due to the impact of higher loan growth offset by lower net charge-offs (annualized) of 0.04% of average loans in the second quarter of 2015 compared to 0.22% in the second quarter of 2014.

Non-interest Income

Non-interest income of $4.1 million for the second quarter of 2015 increased $0.3 million compared to the second quarter of 2014 largely due to higher mortgage banking income from a higher volume of mortgage loans originated and sold to investors during the quarter.

Non-interest Expense

Non-interest expense for the second quarter of 2015 decreased $0.6 million compared to the second quarter of 2014, primarily due to $0.6 million of merger–related expenses in 2014 which were not recurring in 2015. Excluding these merger-related expenses, non-interest expense for the second quarter of 2015 was essentially flat compared to the same quarter in 2014. Additional changes in the components of non-interest expense include an increase in personnel expenses of $0.3 million, which was offset by a decrease of $0.3 million in OREO expenses resulting from lower OREO balances. Higher personnel expenses were driven primarily by higher incentive compensation expense and an increase of five average full-time equivalent employees for the second quarter of 2015 compared to the same quarter in 2014.

Income Tax Provision

Our effective tax rate for the six months ended June 2015 was 34.2% compared to 35.6% for the same period in 2014. The tax rate decreased due primarily from an increase in the portion of nontaxable income to taxable income and certain tax credits.

Loans and Credit Quality

Gross loans increased 5.4% to $991.4 million as of June 30, 2015 from $940.4 million as of year-end 2014. Average loans for the second quarter 2015 increased from $829.0 million in the second quarter 2014 to $977.3 million.

At June 30, 2015, non-performing assets to total assets was 0.57% compared to 0.70% as of June 30, 2014. The allowance for loan losses to loans was 1.56% at June 30, 2015 and 1.67% at June 30, 2014.

Investments Securities

Investment securities at the end of current quarter declined 10.7% to $314.2 million compared to $330.8 million at the end of the second quarter of 2014 as a result of continued strong loan growth. Our available-for-sale securities portfolio totaled $276.4 million at June 30, 2015 and our held to maturity securities portfolio was an amortized cost of $37.8 million at June 30, 2015.

Deposits

Our June 30, 2015 period-end deposits increased $116.6 million, or 10.1%, to $1.3 billion compared to June 30, 2014. These increases were primarily due to growth of our client base and new customers. Our period-end non-interest-bearing deposits increased to $388.0 million, or 25.1%, while our interest-bearing deposits increased to $886.8 million, or 4.6%, from June 30, 2014.

Average interest-bearing deposits increased $42.8 million in the current quarter compared to the second quarter of 2014 and average non-interest bearing deposits increased $58.4 million compared to the second quarter of 2014.

Shareholders' Equity

Shareholders' equity increased to $201.6 million as of June 30, 2015 compared to $151.1 million as of June 30, 2014. The increase resulted primarily from the successful initial public offering of 2.65 million common shares in June 2015, which provided net proceeds after offering expenses of $34.8 million, and net income during the intervening period net of cash dividends paid to shareholders.

Dividend

As previously announced on July 22, 2015, the Board of Directors declared a cash dividend of $0.06 per share, which represents 22.5% of net income for the quarter ended June 30, 2015. The dividend will be payable to shareholders of record on August 3, 2015 and paid on August 14, 2015. Future cash dividends will depend on a variety of factors, including net income, capital, asset quality, general economic conditions and regulatory considerations.

Merger of Bank Charters

Our two subsidiary banks, Bank of American Fork and Lewiston Stake Bank, have applied to the FDIC and Utah Department of Financial Institutions to merge the charters of the two banks. The new amended charter will rename the combined bank to People's Intermountain Bank (PIB) with Bank of American Fork and Lewiston State Bank continuing to do business as registered names of PIB. Products and services will continue to be offered under the names of Bank of American Fork and Lewiston State Bank and we believe this merger of charters will allow the banks to improve efficiencies.

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 2015 at 11:00 a.m. Eastern Time on Wednesday, July 29, 2015. 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 2827289.

To participate on the webcast, log on to: http://services.choruscall.com/links/pub150729.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 August 26, 2015.

Forward-Looking Statements

This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about our industry, management's beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions and uncertainties that are difficult to predict. Although we believe that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements.

There are or will be important factors that could cause our actual results to differ materially from those indicated in these forward-looking statements, including, but not limited to, the following: (i) market and economic conditions (including the interest rate environment, levels of public offerings, mergers and acquisitions and venture capital financing activities) and the associated impact on us; (ii) the sufficiency of our capital, including sources of capital (such as funds generated through retained earnings) and the extent to which capital may be used or required; (iii) our overall investment plans, strategies and activities, including our investment of excess cash/liquidity; (iv) operational, liquidity and credit risks associated with our business; (v) deterioration of our asset quality; (vi) our overall management of interest rate risk; (vii) our ability to execute our strategy and to achieve organic loan and deposit growth; (viii) increased competition in the financial services industry, nationally, regionally or locally, which may adversely affect pricing and terms; (ix) the adequacy of reserves (including allowance for loan and lease losses) and the appropriateness of our methodology for calculating such reserves; (x) volatility and direction of market interest rates; (xi) changes in the regulatory or legal environment; and (xiii) other factors that are discussed in the section titled "Risk Factors," in our Registration Statement on Form S-1 filed with filed with the Securities and Exchange Commission in June 2015.

The foregoing factors should not be construed as exhaustive. If one or more events related to these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may differ materially from what we anticipate. Any forward-looking statement speaks only as of the date on which it is made, and we do not intend, or undertake any obligation to publicly update these forward-looking statements.

About People's Utah Bancorp

People's Utah Bancorp ("People's") is the holding company for a family of community banks with 18 locations in two wholly owned subsidiaries, Bank of American Fork and Lewiston State Bank. The banks have been serving their communities in Utah and southern Idaho for more than 100 years. People's is committed to preserving the community bank model with a full range of bank products and technologies. More information about the People's family of community banks is available at www.peoplesutah.com.

PEOPLE'S UTAH BANCORP
SUMMARY FINANCIAL INFORMATION

   
As of or Year-to-Date
(Dollars in thousands, except share data)

June 30,
2015

 

March 31,
2015

 

December 31,
2014

 

June 30,
2014

Financial Condition Data:
Average loans $ 963,058 $ 948,681 $ 861,785 $ 824,687
Average earning assets 1,337,886 1,329,324 1,250,156 1,219,110
Average total assets 1,407,788 1,391,076 1,331,291 1,298,411
Average shareholders' equity 166,525 161,091 152,788 149,123
 
Selected Balance Sheet Financial Ratios:
Book value per share $ 11.55 $ 11.07 $ 10.68 $ 10.27
Tangible book value per share $ 11.51 $ 11.01 $ 10.63 $ 10.47
Non-performing assets to total assets 0.57 % 0.45 % 0.58 % 0.70 %
Allowance for loan losses to gross loans 1.56 % 1.57 % 1.59 % 1.67 %
Loans to Deposits 77.27 % 77.62 % 78.18 % 73.06 %
 
Asset Quality Data:
Non-performing loans $ 8,429 $ 6,316 $ 7,864 $ 9,213
Non-performing assets 9,044 7,914 9,537 11,287
Net charge-offs 96 4 939 516
 
Capital Ratios:
Tier 1 leverage capital (1) 14.25 % 11.63 % 11.32 % 11.51 %
Total risk–based capital (1) 19.24 % 16.32 % 16.01 % 16.46 %
Average equity to average assets 11.83 % 11.58 % 11.48 % 11.49 %
Tangible common equity to tangible assets (4) 13.50 % 11.56 % 11.48 % 11.32 %
 
 
    Three Months Ended     Six Months Ended

June 30,
2015

 

March 31,
2015

 

June 30,
2014

June 30,
2015

 

June 30,
2014

Selected Performance Ratios:
Net income per basic common share $ 0.31 $ 0.32 $ 0.20 $ 0.63 $ 0.47
Net income per diluted common share $ 0.30 $ 0.31 $ 0.20 $ 0.61 $ 0.46
Net interest margin (2) 4.44 % 4.42 % 4.37 % 4.43 % 4.38 %
Efficiency ratio (3) 60.29 % 60.18 % 66.67 % 60.24 % 65.12 %
Non-interest income to average assets 1.17 % 1.21 % 1.18 % 1.17 % 1.18 %
Non-interest expense to average assets 3.23 % 3.27 % 3.72 % 3.21 % 3.54 %
Return on average assets 1.31 % 1.40 % 0.94 % 1.34 % 1.08 %
Return on average equity 10.88 % 12.08 % 8.13 % 11.10 % 9.26 %
Net charge-offs to average loans 0.04 % 0.00 % 0.22 % 0.02 % 0.13 %
 
 
(1)   Tier 1 leverage capital and Total risk-based capital as of June 30, 2015 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 costs all divided by the sum of net interest income and non-interest income. Merger costs were $615,000 for the three months and six months ended June 30, 2014. There were no merger costs in any period during 2015.
(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 $727,000, $752,000, $776,000 and $824,000 at June 30, 2015, March 31, 2015, December 31, 2104 and June 30, 2014, respectively.
 
 

PEOPLE'S UTAH BANCORP
UNAUDITED CONSOLIDATED BALANCE SHEETS

               
June 30, March 31, December 31, June 30,
(Dollars in thousands, except share data) 2015 2015 2014 2014
ASSETS
Cash and due from banks $ 18,465 $ 18,790 $ 30,277 $ 8,061
Interest bearing deposits 113,535 57,839 16,701 62,915
Federal funds sold   5,064     3,449     724     723  
 
Total cash and cash equivalents 137,064 80,078 47,702 71,699
Investment securities:
Available for sale, at fair value 276,398 281,854 295,637 318,053
Held to maturity, at historical cost   37,799     38,496     35,202     33,723  
 
Total investment securities 314,197 320,350 330,839 351,776
Non-marketable equity securities 1,644 2,600 2,628 2,683
Loans held for sale 9,322 16,397 12,272 11,437
Loans:
Loans held for investment 991,422 956,335 940,457 849,039
Less allowance for loan losses   (15,655 )   (15,297 )   (15,151 )   (14,375 )
 
Total loans held for investment, net 975,767 941,038 925,306 834,664
Premises and equipment, net 22,753 22,036 21,608 21,222
Accrued interest receivable 5,338 5,315 5,253 5,103
Deferred income tax assets 7,697 7,190 7,682 7,886
Other real estate owned 615 1,598 1,673 2,074
Bank-owned life insurance 6,749 6,703 6,657 6,564
Other assets   7,713     5,792     5,505     6,129  
 
Total assets $ 1,488,859   $ 1,409,097   $ 1,367,125   $ 1,321,237  
 
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Non-interest bearing deposits $ 387,971 $ 347,965 $ 327,075 $ 310,019
Interest bearing deposits   886,819     885,497     872,158     848,127  
 
Total deposits 1,274,790 1,233,462 1,199,233 1,158,146
Short-term borrowings 2,334 2,122 1,496 1,309
Accrued interest payable 314 329 343 358
Dividends payable 2,066 1,177
Other liabilities   9,850     9,682     6,328     9,151  
 
Total liabilities 1,287,288 1,245,595 1,209,466 1,170,141
Commitments and contingencies
Shareholders' equity:
Preferred shares, $0.01 par value
Common shares, $0.01 par value 175 148 148 147
Additional paid-in capital 66,425 31,331 31,137 30,679
Retained earnings 134,170 130,393 125,595 119,694
Accumulated other comprehensive income   801     1,630     779     576  
 
Total shareholders' equity   201,571     163,502     157,659     151,096  
 
Total liabilities and shareholders' equity $ 1,488,859   $ 1,409,097   $ 1,367,125   $ 1,321,237  
 
 
Common shares outstanding 17,452,101 14,775,721 14,758,407 14,707,656
 
 

PEOPLE'S UTAH BANCORP
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

       
Three Months Ended Six Months Ended

(Dollars in thousands, except share and per share data)

June 30,
2015

 

March 31,
2015

 

June 30,
2014

June 30,
2015

 

June 30,
2014

Interest income
Interest and fees on loans $ 14,346 $ 13,809 $ 12,469 $ 28,155 $ 24,734
Interest and dividends on investments   1,297   1,450   1,668   2,747   3,356
 
Total interest income 15,643 15,259 14,137 30,902 28,090
Interest expense   740   760   807   1,500   1,639
 
Net interest income 14,903 14,499 13,330 29,402 26,451
Provision for loan losses   450   150   350   600   500
 
Net interest income after provision for loan losses 14,453 14,349 12,980 28,802 25,951
Non-interest income
Service charges on deposit accounts 614 643 708 1,257 1,413
Card processing 1,066 1,002 1,063 2,068 2,059
Mortgage banking 2,025 1,772 1,701 3,797 3,035
Other operating   438   727   356   1,165   1,138
 
Total non-interest income 4,143 4,144 3,828 8,287 7,645
Non-interest expense
Salaries and employee benefits 7,308 7,194 7,038 14,502 13,744
Occupancy, equipment and depreciation 955 990 892 1,945 1,861
Data processing 848 689 772 1,537 1,545
FDIC premiums 191 187 195 378 407
Card processing 534 470 564 1,004 1,066
Other real estate owned 40 17 312 57 318
Marketing and advertising 204 173 177 377 383
Merger-related expenses 615 615
Other   1,403   1,499   1,489   2,902   2,881
 
Total non-interest expense   11,483   11,219   12,054   22,702   22,820
 
 
Income before income tax expense 7,113 7,274 4,754 14,387 10,776
Income tax expense   2,449   2,476   1,693   4,925   3,838
 
Net income $ 4,664 $ 4,798 $ 3,061 $ 9,462 $ 6,938
 
Earnings per common share
Basic $ 0.31 $ 0.32 $ 0.20 $ 0.63 $ 0.47
 
Diluted $ 0.30 $ 0.31 $ 0.20 $ 0.61 $ 0.46
 
Weighted average common shares outstanding:
Basic   15,197,106   14,770,306   14,646,893   14,984,885   14,637,516
 
Diluted   15,684,499   15,301,015   15,054,729   15,493,813   15,062,494
 
 

PEOPLE'S UTAH BANCORP
AVERAGE BALANCES AND YIELDS

               
Three Months Ended
June 30, 2015 June 30, 2014
(Dollars in thousands, except footnotes)

Average
Balance

Interest
Income/
Expense

Average
Yield/
Rate

Average
Balance

Interest
Income/
Expense

Average
Yield/
Rate

ASSETS
Interest earning deposits in other banks and federal funds sold $ 53,436 $ 38 0.29 % $ 42,220 $ 34 0.32 %
Securities (1)
Taxable securities 235,488 867 1.48 % 263,344 1,194 1.82 %
Non-taxable securities (2) 77,852 529 2.73 % 85,050 593 2.80 %
Loans (3) (4) 977,277 14,346 5.89 % 829,060 12,469 6.03 %
Non-marketable equity securities   2,301     1 0.17 %   2,702     %
 
Total interest earning assets 1,346,354 $ 15,781 4.70 % 1,222,376 $ 14,290 4.69 %
 
Allowance for loan losses (15,339 ) (14,468 )
Non-interest earning assets   93,301     93,327  
 
Total average assets $ 1,424,316   $ 1,301,235  
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest bearing deposits:
Demand and savings accounts $ 555,401 $ 385 0.28 % $ 499,425 $ 371 0.30 %
Money market accounts 138,153 78 0.23 % 134,865 75 0.22 %
Certificates of deposit, under $100,000 108,148 110 0.41 % 116,139 144 0.50 %
Certificates of deposit, $100,000 and over   84,089     166 0.79 %   92,522     217 0.94 %
 
Total interest bearing deposits 885,791 739 0.33 % 842,951 807 0.38 %
Short-term borrowings   2,271     1 0.18 %   1,266     %
 
Total interest bearing liabilities 888,062 $ 740 0.33 % 844,217 $ 807 0.38 %
 
Other non-interest bearing liabilities 364,355 306,005
Shareholders' equity   171,899     151,013  
 
Total average liabilities and shareholders' equity $ 1,424,316   $ 1,301,235  
 
Net interest income (tax-equivalent) $ 15,041 $ 13,483
 
Interest rate spread (tax-equivalent) 4.37 % 4.31 %
 
Net interest margin (tax-equivalent) (5) 4.48 % 4.42 %
 
 

PEOPLE'S UTAH BANCORP
AVERAGE BALANCES AND YIELDS

               
Six Months Ended
June 30, 2015 June 30, 2014
(Dollars in thousands, except footnotes) Average
Balance
Interest
Income/
Expense
Average
Yield/
Rate
Average
Balance
Interest
Income/
Expense
Average
Yield/
Rate
ASSETS
Interest earning deposits in other banks and federal funds sold $ 53,672 $ 65 0.24 % $ 51,046 $ 74 0.29 %
Securities (1)
Taxable securities 241,419 1,890 1.58 % 257,093 2,394 1.88 %
Non-taxable securities (2) 77,277 1,067 2.78 % 83,569 1,197 2.89 %
Loans (3) (4) 963,058 28,155 5.90 % 824,687 24,734 6.05 %
Non-marketable equity securities   2,460     2 0.16 %   2,715     1 0.07 %
 
Total interest earning assets 1,337,886 $ 31,179 4.70 % 1,219,110 $ 28,400 4.70 %
 
Allowance for loan losses (15,290 ) (14,518 )
Non-interest earning assets   85,192     93,819  
 
Total average assets $ 1,407,788   $ 1,298,411  
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest bearing deposits:
Demand and savings accounts $ 548,372 $ 758 0.28 % $ 502,882 $ 738 0.30 %
Money market accounts 139,372 157 0.23 % 133,199 148 0.22 %
Certificates of deposit, under $100,000 109,697 234 0.43 % 117,575 305 0.52 %
Certificates of deposit, $100,000 and over   86,155     349 0.82 %   93,192     447 0.97 %
 
Total interest bearing deposits 883,596 1,498 0.34 % 846,848 1,638 0.39 %
Short-term borrowings   1,978     2 0.20 %   1,220     1 0.17 %
 
Total interest bearing liabilities 885,574 $ 1,500 0.34 % 848,068 $ 1,639 0.39 %
 
Other non-interest bearing liabilities 355,689 301,220
Shareholders' equity   166,525     149,123  
 
Total average liabilities and shareholders' equity $ 1,407,788   $ 1,298,411  
 
Net interest income (tax-equivalent) $ 29,679 $ 26,761
 
Interest rate spread (tax-equivalent) 4.36 % 4.31 %
 
Net interest margin (tax-equivalent) (5) 4.47 % 4.43 %
 
 

(1)

  Excludes average unrealized gains of $2.6 million and $378,000 for the three months ended June 30, 2015 and 2014, respectively, and $2.2 million and $85,000 for the six months ended June 30, 2015 and 2014, respectively, which are included in non-interest earning assets.

(2)

Calculated on a fully tax equivalent basis using an assumed tax rate of 35%, which includes federal tax benefits relating to income earned on municipal securities totaling $137,000 and $153,000 for the three months ended June 30, 2015 and 2014, respectively, and $277,000 and $310,000 for the six months ended June 30, 2015 and 2014, respectively.

(3)

Loan interest income includes loan fees of $3.2 million and $2.4 million for the three months ended June 30, 2015 and 2014, respectively, and $2.1 million and $1.6 million for the six months ended June 30, 2015 and 2014, respectively.

(4)

Average loans do not include average non-accrual loans of $7.4 million and $10.3 million for the three months ended June 30, 2015 and 2014, respectively, and $7.2 million and $12.2 million for six months ended June 30, 2015 and 2014, respectively, which are included in non-interest earning assets.

(5)

Net interest margin is computed by dividing net interest income by average interest earning assets.

People's Utah Bancorp
Wolfgang T. N. Muelleck, 801-642-3998
investorrelations@peoplesutah.com

View Comments and Join the Discussion!