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People’s Utah Bancorp Reports Second Quarter 2016 Results

AMERICAN FORK, Utah, July 27, 2016 (GLOBE NEWSWIRE) -- People’s Utah Bancorp (the “Company”) (Nasdaq:PUB) today announced results for the quarter ended June 30, 2016.

Consolidated net income for the quarter ended June 30, 2016 was $5.6 million compared to $5.2 million in the first quarter of 2016 and $4.7 million for the second quarter of 2015, an increase of 6.4% and 19.6%, respectively. Diluted earnings per share was $0.31 compared to $0.29 in the first quarter of 2016 and $0.30 for the second quarter in 2015. Diluted earnings per share for the first and second quarters of 2016 includes the impact of the increased shares issued in the June 2015 initial public offering.

“PUB continues its positive trend of posting strong operating results for the second quarter of 2016 compared to the prior quarter of 2016. Our current quarter’s net income, diluted earnings per share, return on average equity and return on average assets all increased compared to the prior quarter. We are also pleased with our overall loan growth year-over-year, the improvement in our net interest margin and efficiency ratio. On the credit quality side we experienced a relatively low level of nonperforming assets for the quarter. We are pleased to once again be included in the Russell 2000 Index,” said Richard Beard, President and Chief Executive Officer of People’s Utah Bancorp.

Highlights of the Second Quarter of 2016

  • Net income of $5.6 million and diluted earnings per share of $0.31.
  • Declared a quarterly dividend of $0.07 per share.
  • Net interest margin increased to 4.66%.
  • Return on average equity increased to 10.23%.
  • Return on average assets increased to 1.43%.
  • Efficiency ratio improved to 57.38%.
  • Loans held for investment at quarter-end grew 10.5% year-over-year.
  • Deposits at quarter-end grew 5.6% year over year.
  • PUB included in the Russell 2000 Index.

Earnings Summary

Net income for the second quarter of 2016 of $5.6 million compared to $5.2 million in the first quarter of 2016 was impacted primarily by the following factors: (a) higher net interest income of $0.5 million, (b) an increase in non-interest income of $0.6 million, (c) offset by an increase in non-interest expense of $0.3 million and in income tax expense of $0.5 million. These factors contributed to diluted earnings per share increasing to $0.31 per share in the second quarter of 2016 compared to $0.29 per share in the first quarter of 2016.

Net income for the second quarter of 2016 of $5.6 million compared to $4.7 million in the second quarter of 2015 was impacted primarily by the following factors: (a) higher net interest income of $2.3 million, (b) an increase in non-interest income of $0.3 million, (c) offset by an increase in non-interest expense of $0.9 million and in income tax expense of $0.9 million. Additionally, weighted-average shares increased by 2.5 million shares or 15.9% during the second quarter of 2016 compared to the comparable quarter in 2015 resulting primarily from our initial public offering in June 2015. These factors, in spite of the increase in weighted-average shares, contributed to higher diluted earnings per share of $0.31 per share in the first quarter of 2016 compared to $0.30 per share in the second quarter of 2015.

Return on average assets for the quarter ended June 30, 2016 was 1.43% compared to 1.36% in the first quarter of 2016. Return on average equity for the second quarter of 2016 was 10.23% compared to 9.88% in the first quarter of 2016.

Net Interest Income and Margin

Net interest income for the second quarter of 2016 increased $0.5 million compared to the first quarter of 2016, primarily due to a higher percentage of loans held for investment in our earning asset mix and an increase in loans held for investment of $25.7 million. This contributed to a higher net interest margin of 4.66% in the current quarter compared to 4.58% in first quarter of 2016.

Net interest income for the second quarter of 2016 increased $2.3 million compared to the comparable quarter of 2015, primarily due to a higher percentage of loans held for investment in our earning asset mix, an increase in loans held for investment of $104.4 million and higher loan yields. This resulted in the higher net interest margin of 4.66% in the current quarter compared to 4.44% in the second quarter of 2015.

Provision for Loan Losses

The provision for loan losses for the second quarter of 2016 was $25,000 higher compared to the first quarter of 2016 principally due to loan growth experienced during the second quarter. The provision for loan losses for the second quarter of 2016 was $225,000 lower than the allowance for second quarter of 2015 due to continuing improvement in credit quality, net recoveries in the current quarter, and minimal net charge-offs in the current and recent quarters. Additionally, we continue to experience low levels of non-performing assets which was 0.38% of total assets for the quarter ended June 30, 2016.

Non-interest Income

Non-interest income for the second quarter of 2016 increased by 16.9% compared to the first quarter of 2016 and increased by 6.2% compared to the second quarter of 2015 primarily due to higher mortgage banking and card processing income, offset by declines in service charges. Although the Company has experienced higher mortgage banking income and residential mortgage loan volumes compared to prior years, this growth may not continue in future periods because the mortgage banking business has historically been a cyclical business.

Non-interest Expense

Non-interest expense for the second quarter of 2016 increased by $0.3 million or 2.2% compared to the first quarter of 2016 and increased by $0.9 million or 8.0% compared to the second quarter of 2015. The increase in non-interest expense in the second quarter of 2016 compared to the first quarter 2016 was primarily driven by higher marketing and advertising expenses of $0.1 million and various other expenses of $0.3 million, offset by lower data processing expenses of $0.1 million when compared to the first quarter of 2016. The increase in the second quarter 2016 compared to the comparable quarter in 2015 is primarily from higher salaries and benefits of $0.7 million and various other expenses of $0.2 million, including expenses related to higher marketing and advertising and occupancy costs. The increase in salaries and benefits is primarily due to annual salary increases, higher payroll tax and medical benefits, new hires related to the expansion of our leasing division, and variable compensation costs to support our balance sheet and income growth.

Our efficiency ratio for the second quarter of 2016 improved to 57.4% compared to 59.3% in the first quarter of 2016 and 60.29% in the second quarter of 2015. While we continue to focus on improving our efficiency ratio, the ratio could be impacted by investments in new branches which we hope to open in 2016 and early 2017, and the expansion of the leasing division. Since 2012 our leasing division has purchased lease paper from other originators. In the second quarter of 2016 we began hiring leasing personnel and incurring expenses for the expansion of our leasing division to begin originating leases. We anticipate modest growth in 2016 from our current portfolio.

Income Tax Provision

The effective tax rate for the second quarter of 2016 was 37.9% compared to 35.5% for the first quarter of 2016 and 34.4% in the second quarter of 2015. The tax rate in 2016 is higher than 2015 due primarily to a one-time tax credit of approximately $400,000 in 2015. Income tax expense for the second quarter of 2016 increased compared to the first quarter of 2016 due to adjustments in the expected recoverability of certain tax credits.

Loans and Credit Quality

Loans held for investment in the second quarter of 2016 increased 10.5% year-over-year and 4.6% from December 31, 2015. Average loans grew $119.3 million to $1.1 billion from the second quarter of 2015 to the current quarter of 2016.

Non-performing loans increased slightly to $5.4 million as of June 30, 2016 compared to $5.2 million as of the first quarter 2016 and declined from $7.4 million as of the year-end 2015 and $8.7 million as of the second quarter of 2015 due to improving credit quality in the loan portfolio. As of June 30, 2016, the ratio of non-performing assets to total assets was 0.38% compared to 0.37% as of March 31, 2016, 0.51% as of the December 31, 2015 and 0.62% as of June 30, 2015. The allowance for loan losses to loans was 1.45% as of June 30, 2016, 1.39% as of March 31, 2016, 1.45% as of December 31, 2015 and 1.56% as of June 30, 2015.

Investment Securities

Investment securities at June 30, 2016 declined by 14.2% to $342.1 million compared to $398.6 million at year-end 2015 to partially fund loan growth; and increased 8.9% from $314.2 million at June 30, 2015 primarily from the investment of net proceeds received from the Company’s initial public offering and the year-over-year growth in deposits.

Deposits and Liabilities

Total deposits at the end of the second quarter of 2016 were $1.35 billion compared to $1.31 billion at December 31, 2015 and $1.27 billion at June 30, 2015. Increases during these periods were primarily due to growth of the client base and new customers. Non-interest-bearing deposits were 31.9% of total deposits as of June 30, 2016 compared to 31.2% as of December 31, 2015 and 30.4% as of June 30, 2015. Short-term borrowings declined from $27.2 million at December 31, 2015 to $2.9 million at June 30, 2016.

Shareholders’ Equity

Shareholders’ equity increased to $220.4 million at June 30, 2016 compared to $209.4 million as of year-end 2015 and $201.6 million at June 30, 2015. The increase resulted primarily from net income during the intervening periods net of cash dividends paid to shareholders.

Dividend

As previously announced on July 20, 2016, the Board of Directors declared a quarterly cash dividend of $0.07 per share. The dividend will be payable to shareholders of record on August 1, 2016 and paid on August 12, 2016. The dividend payout ratio for earnings for the six months ended June 30, 2016 was 22.9%.

Conference Call and Webcast

Management will conduct a live conference call and webcast for investors, analysts and the public relating to the Company's results for the second quarter of 2016 at 11:00 a.m. Eastern time on Thursday, July 28, 2016. 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 8242498. 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 on the webcast, log on to: http://services.choruscall.com/links/pub160428

If you are unable to participate during the live webcast, the call will be archived on www.peoplesutah.com or at the webcast URL above until August 31, 2016. 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. These forward-looking statements include, but are not limited to, (i) statements concerning our plan to hire additional staff and incur expenses to accommodate the expansion of our leasing portfolio, and (ii) our belief that we will have modest growth in 2016 in our leasing portfolio.

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, 2015 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 with 18 locations in two banking divisions, Bank of American Fork and Lewiston State Bank and one leasing division, GrowthFunding Equipment Finance. The Company has been serving communities in Utah and southern Idaho for more than 100 years. PUB is committed to preserving the community bank model with a full range of bank products and technologies. More information about PUB is available at www.peoplesutah.com.

PEOPLE’S UTAH BANCORP
SUMMARY FINANCIAL INFORMATION
As of or Year-to-Date
June 30, March 31, December 31, June 30,
(Dollars in thousands, except share data) 2016 2016 2015 2015
Financial Condition Data:
Average loans $1,078,689 $1,060,783 $983,294 $963,058
Average earning assets 1,474,149 1,466,419 1,391,108 1,337,886
Average total assets 1,555,227 1,546,945 1,468,942 1,407,788
Average shareholders’ equity 216,074 213,443 186,889 166,525
Selected Balance Sheet Financial Ratios:
Book value per share $12.42 $12.16 $11.92 $11.55
Tangible book value per share $12.38 $12.12 $11.88 $11.51
Non-performing assets to total assets 0.38% 0.37% 0.51% 0.62%
Allowance for loan losses to gross loans 1.45% 1.39% 1.45% 1.56%
Loans to Deposits 81.08% 80.61% 80.23% 77.27%
Asset Quality Data:
Non-performing loans $5,383 $5,183 $7,418 $8,675
Non-performing assets 6,027 5,827 7,986 9,290
Net charge-offs (recoveries) (170) 34 594 96
Capital Ratios:
Tier 1 leverage capital (1) 13.99% 13.85% 13.38% 14.09%
Total risk–based capital (1) 19.20% 19.07% 18.96% 19.36%
Average equity to average assets 13.89% 13.80% 12.72% 11.83%
Tangible common equity to tangible assets (4) 13.89% 13.81% 13.42% 13.50%


Three Months Ended Six Months Ended
June 30, March 31, June 30, June 30, June 30,
2016 2016 2015 2016 2015
Selected Performance Ratios:
Basic earnings per share $0.31 $0.30 $0.31 $0.61 $0.63
Diluted earnings per share $0.31 $0.29 $0.30 $0.60 $0.61
Net interest margin (2) 4.66% 4.58% 4.44% 4.63% 4.43%
Efficiency ratio (3) 57.38% 59.30% 60.29% 58.32% 60.24%
Non-interest income to average assets 1.13% 0.98% 1.17% 1.06% 1.19%
Non-interest expense to average assets 3.18% 3.16% 3.23% 3.17% 3.25%
Return on average assets 1.43% 1.36% 1.31% 1.40% 1.36%
Return on average equity 10.23% 9.88% 10.88% 10.07% 11.46%
Net charge-offs (recoveries) to average loans -0.07% 0.01% 0.04% -0.03% 0.02%

(1) Tier 1 leverage capital and Total risk-based capital as of June 30, 2016 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 all divided by the sum of net interest income and non-interest income.
(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 $630,000, $654,000, $679,000 and $727,000 at June 30, 2016, March 31, 2016, December 31, 2015, and June 30, 2015, respectively.

PEOPLE’S UTAH BANCORP
UNAUDITED CONSOLIDATED BALANCE SHEETS
June 30, March 31, December 31, June 30,
(Dollars in thousands, except share data) 2016 2016 2015 2015
ASSETS
Cash and due from banks $21,092 $20,973 $19,745 $18,465
Interest bearing deposits 59,535 20,434 20,428 113,535
Federal funds sold 5,899 5,488 2,176 5,064
Total cash and cash equivalents 86,526 46,895 42,349 137,064
Investment securities:
Available for sale, at fair value 280,705 313,641 332,736 276,398
Held to maturity, at historical cost 61,437 64,272 65,882 37,799
Total investment securities 342,142 377,913 398,618 314,197
Non-marketable equity securities 1,827 1,827 2,244 1,644
Loans held for sale 11,915 13,123 17,947 9,322
Loans:
Loans held for investment 1,095,828 1,070,146 1,047,975 991,422
Less allowance for loan losses (16,152) (15,723) (15,557) (15,655)
Total loans held for investment, net 1,079,676 1,054,423 1,032,418 975,767
Premises and equipment, net 22,120 22,027 22,104 22,753
Accrued interest receivable 5,586 5,826 5,767 5,338
Deferred income tax assets 7,495 7,753 8,606 7,697
Other real estate owned 644 644 568 615
Bank-owned life insurance 19,448 19,308 19,170 6,749
Other assets 5,637 5,933 6,191 7,713
Total assets $1,583,016 $1,555,672 $1,555,982 $1,488,859
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits:
Non-interest bearing deposits $429,995 $407,849 $408,508 $387,971
Interest bearing deposits 916,368 916,467 900,677 886,819
Total deposits 1,346,363 1,324,316 1,309,185 1,274,790
Short-term borrowings 2,855 2,549 27,204 2,334
Accrued interest payable 303 309 314 314
Other liabilities 13,048 13,116 9,871 9,850
Total liabilities 1,362,569 1,340,290 1,346,574 1,287,288
Commitments and contingencies
Shareholders’ equity:
Preferred shares, $0.01 par value - - - -
Common shares, $0.01 par value 178 177 176 175
Additional paid-in capital 68,236 67,924 67,338 66,425
Retained earnings 150,568 146,233 142,223 134,170
Accumulated other comprehensive income 1,465 1,048 (329) 801
Total shareholders’ equity 220,447 215,382 209,408 201,571
Total liabilities and shareholders’ equity $1,583,016 $1,555,672 $1,555,982 $1,488,859
Common shares outstanding 17,752,820 17,715,348 17,567,154 17,452,101


PEOPLE’S UTAH BANCORP
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended Six Months Ended
(Dollars in thousands, except share June 30, March 31, June 30, June 30, June 30,
and per share data) 2016 2016 2015 2016 2015
Interest income
Interest and fees on loans $16,420 $15,851 $14,346 $32,271 $28,155
Interest and dividends on investments 1,489 1,603 1,297 3,092 2,747
Total interest income 17,909 17,454 15,643 35,363 30,902
Interest expense 698 754 740 1,452 1,500
Net interest income 17,211 16,700 14,903 33,911 29,402
Provision for loan losses 225 200 450 425 600
Net interest income after provision for loan losses 16,986 16,500 14,453 33,486 28,802
Non-interest income
Service charges on deposit accounts 531 513 614 1,044 1,257
Card processing 1,136 1,031 1,066 2,167 2,068
Mortgage banking 2,277 1,748 2,025 4,025 3,797
Other operating 454 471 438 925 1,165
Total non-interest income 4,398 3,763 4,143 8,161 8,287
Non-interest expense
Salaries and employee benefits 7,959 7,884 7,308 15,843 14,502
Occupancy, equipment and depreciation 1,076 988 955 2,064 1,945
Data processing 670 777 848 1,447 1,537
FDIC premiums 188 195 191 383 378
Card processing 549 590 534 1,139 1,004
Other real estate owned 5 32 40 37 57
Marketing and advertising 290 169 204 459 377
Other 1,663 1,500 1,403 3,163 2,902
Total non-interest expense 12,400 12,135 11,483 24,535 22,702
Income before income tax expense 8,984 8,128 7,113 17,112 14,387
Income tax expense 3,407 2,885 2,449 6,292 4,925
Net income $5,577 $5,243 $4,664 $10,820 $9,462
Earnings per common share:
Basic $0.31 $0.30 $0.31 $0.61 $0.63
Diluted $0.31 $0.29 $0.30 $0.60 $0.61
Weighted average common shares outstanding:
Basic 17,738,182 17,632,288 15,197,106 17,685,235 14,984,885
Diluted 18,173,034 18,124,846 15,684,499 18,148,713 15,493,816


PEOPLE’S UTAH BANCORP
SELECTED AVERAGE BALANCES AND YIELDS
Three Months Ended
June 30, 2016 June 30, 2015
Interest Average Interest Average
Average Income/ Yield/ Average Income/ Yield/
(Dollars in thousands, except footnotes) Balance Expense Rate Balance Expense Rate
Taxable securities (1) $271,850 $1,047 1.55% $235,488 $867 1.48%
Non-taxable securities (1) (2) 90,428 646 2.87% 77,852 529 2.73%
Loans (3) (4) 1,096,584 16,421 6.02% 977,277 14,346 5.89%
Total interest earning assets 1,481,879 18,136 4.92% 1,346,354 15,781 4.70%
Total average assets 1,563,509 1,424,316
Total interest bearing deposits 918,147 698 0.31% 888,062 740 0.33%
Shareholders’ equity 218,705 171,899
Net interest income (tax-equivalent) 17,438 15,041
Net interest margin (tax-equivalent) 4.73% 4.48%
Six Months Ended
June 30, 2016 June 30, 2015
Interest Average Interest Average
Average Income/ Yield/ Average Income/ Yield/
(Dollars in thousands, except footnotes) Balance Expense Rate Balance Expense Rate
Taxable securities (1) $281,738 $2,186 1.56% $241,419 $1,890 1.58%
Non-taxable securities (1) (2) 92,923 1,328 2.87% 77,277 1,067 2.78%
Loans (3) (4) 1,078,687 32,272 6.02% 963,058 28,155 5.90%
Total interest earning assets 1,474,149 35,828 4.89% 1,337,886 31,179 4.70%
Total average assets 1,555,227 1,407,788
Total interest bearing deposits 926,164 1,452 0.32% 885,574 1,500 0.34%
Shareholders’ equity 216,074 166,525
Net interest income (tax-equivalent) 34,376 29,679
Net interest margin (tax-equivalent) 4.69% 4.47%

(1) Excludes average unrealized gains of $1.5 million and $2.6 million for the three months ended June 30, 2016 and 2015, respectively, and $1.1 million and $2.2 million for the six months ended June 30, 2016 and 2015, respectively.
(2) Includes tax effect on tax-exempt investment security income of $226,000 and $286,000 for the three months ended June 30, 2016 and 2015, respectively and $464,000 and $426,000 for the six months ended June 30, 2016 and 2015, respectively.
(3) Loan interest income includes loan fees of $1.4 million and $1.1 million for the three months ended June 30, 2016 and 2015, respectively, and $2.8 million and $2.1 million for the six months ended June 30, 2016 and 2015, respectively.
(4) Excludes average non-accrual loans of $5.3 million and $7.4 million for the three months ended June 30, 2016 and 2015, respectively, and $5.8 million and $7.2 million for the six months ended June 30, 2016 and 2015, respectively.


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

Source:People's Utah Bancorp