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

Third Quarter Highlights

  • Total deposits grew $344 million, or 22.5%, to $1.87 billion year-over-year
  • Loans held for investment grew $503 million, or 41.4%, to $1.72 billion year-over-year
  • Net interest margin widened 48 bps to 5.25% year-over-year
  • Earnings per diluted share increased 61.8% to $0.55 for the third quarter of 2018 year-over-year
  • Return on average assets of 1.91% for the third quarter of 2018
  • Return on average equity of 14.97% for the third quarter of 2018

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. 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)   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 BANCORP
SELECTED 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 BANCORP
SELECTED 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 BANCORP
NON-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 BANCORP

NON-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 BANCORP

NON-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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