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Section 1: 8-K (8-K)

alta-8k_20200729.htm
false 0001636286 0001636286 2020-07-29 2020-07-29

 

 

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):  July 29, 2020

 

Altabancorp

(Exact name of Registrant as Specified in Its Charter)

 

 

Utah

001-37416

87-0622021

(State or Other Jurisdiction

of Incorporation)

(Commission File Number)

(IRS Employer

Identification No.)

 

 

 

1 East Main Street,

American Fork, UT

 

84003

(Address of Principal Executive Offices)

 

(Zip Code)

Registrant’s Telephone Number, Including Area Code: (801) 642-3998

People’s Utah Bancorp

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common Stock, par value $0.01 per share

 

ALTA

 

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

 

 

 

 


 

Item 2.02Results of Operations and Financial Condition.

On July 29, 2020, the Company issued a press release announcing its financial results for the three and six months ended June 30, 2020 and quarterly dividend. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein in its entirety by reference.

The information in this Item 2.02 and the Exhibit attached hereto is furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such document or filing.

Item 7.01Regulation FD Disclosure.

A copy of an investor presentation for the three months ended June 30, 2020, including the Company’s response to Covid-19 is being furnished as Exhibit 99.2. The presentation will also be made available on the investor relations section of the Company’s website at www.altabancorp.com.

The information in Item 7.01 of this Current Report on Form 8-K, including Exhibit 99.2, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed to be incorporated by reference in any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as otherwise stated in such filing.

 

Item 9.01Financial Statements and Exhibits.

 

 

(d) Exhibits

 

Exhibit Number

Description

99.1

Press Release dated July 29, 2020, announcing financial results for the six months ended June 30, 2020 and quarterly dividend

 

99.2

Second Quarter 2020 Investor Presentation

 

104

Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

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Forward-Looking Statements

 

Statements in this Form 8-K 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. 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 in this Form 8-K include, without limitation, statements regarding the Company’s expectations regarding the Company’s financial performance.

 

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) the duration and impact of the COVID-19 pandemic; (ii) market and economic conditions; (iii) capital sufficiency; (iv) operational, liquidity, interest rate and credit risks; (v) deterioration of asset quality; (vi) adequacy of reserves; (vii) investments in new branches and new business opportunities; and (viii) 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, 2019 and Quarterly Reports on Form 10-Q 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 except as required by law.

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SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

     Altabancorp

 

 

 

 

 

Date: July 29, 2020

By:

/s/ Mark K. Olson

 

 

Mark K. Olson

 

 

Executive Vice President and

Chief Financial Officer

 

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Section 2: EX-99.1 (EX-99.1)

alta-ex991_6.htm

Exhibit 99.1

,

ALTABANCORPTM REPORTS SECOND QUARTER 2020 RESULTS

Second Quarter 2020 Highlights

 

Total assets grew $754 million, or 33%, year-over-year to $3.1 billion at June 30, 2020.

 

Total deposits grew $631 million, or 32%, year-over-year to $2.6 billion at June 30, 2020.

 

Loans declined $13.6 million, or 0.8%, year-over-year to $1.7 billion as the Company has further tightened underwriting standards and reduced loan concentrations, which was offset by the funding of $84.6 million in SBA PPP loans.

 

Cash and liquid investments securities totaled $1.3 billion, or 42% of total assets, at June 30, 2020.

 

Tangible equity plus allowance for credit losses totaled $364 million, or 22.0% of total loans held for investment, at June 30, 2020, which provides overall credit protection for both expected and unexpected credit losses in the Company’s loan portfolio.

 

Tangible book value per share increased 13.5% year-over-year to $17.12 at June 30, 2020.

 

Return on average assets was 1.65% and return on average equity was 12.55% for the six months ended June 30, 2020.

AMERICAN FORK, UTAH, July 29, 2020 – AltabancorpTM (Nasdaq: ALTA) (the “Company” or “Alta”) reported net income of $10.3 million for the second quarter of 2020 compared with $10.8 million for the first quarter of 2020, and $11.0 million for the second quarter of 2019.  Diluted earnings per common share were $0.55 for the second quarter of 2020 compared with $0.57 for the first quarter of 2020, and $0.58 for the second quarter of 2019.

 

Annualized return on average assets was 1.52% for the second quarter of 2020 compared with 1.80% for the first quarter of 2020, and 1.96% for the second quarter of 2019. Annualized return on average equity was 12.06% for the second quarter of 2020 compared with 13.05% for the first quarter of 2020, and 14.33% for the second quarter of 2019.  

 

The Board of Directors declared a quarterly dividend payment of $0.13 per common share. The dividend will be payable on August 17, 2020 to shareholders of record as of August 10, 2020. The dividend payout ratio for earnings for the second quarter of 2020 was 24%. This continues the over 50-year trend of paying dividends by the Company.

 

“As with most businesses, we have been significantly impacted by the COVID-19 pandemic.  Our first priority has been the safety and stability of our associates and their families.  Next, we directed our attention to our clients, who were financially impacted by the sudden and substantial negative economic effects of the pandemic.  We have offered to date payment relief to approximately 435 business and 108 individual clients on approximately $327 million in outstanding loan balances,” said Len Williams, President and Chief Executive Officer of AltabancorpTM.

 

“In addition, we funded $84.6 million in Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”) loans to approximately 333 businesses.  We will continue to work together with our clients to ensure that we can provide financial solutions to assist them on their path to recovery as we overcome the pandemic.”

 

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Mr. Williams continued, “Our strong balance sheet provides safety and security to our stakeholders as we work through the negative effects of the economic shutdown.  We believe our balance sheet strength is reflected in the level of allowance for credit losses held by us and our strong regulatory capital position.  In addition, our focus to reduce loan concentrations in our ADC and commercial real estate portfolios and the tightening of our overall underwriting standards over the past couple of years will help to mitigate the negative effects the pandemic may have on our loan portfolio. Lastly, our strong liquidity position provides us the flexibility to aggressively grow as the economy recovers.”

 

Loans and Credit Quality

Loans held for investment declined $13.6 million, or 0.8%, to $1.66 billion at June 30, 2020 compared with $1.67 billion at June 30, 2019.  Quarter-to-date average loans increased $6.7 million, or 0.40%, to $1.69 billion for both the three months ended June 30, 2020 and June 30, 2019.  

The Company offered temporary loan payment relief to 435 businesses and 108 individuals totaling approximately $327 million, or 19.7% of total loans, excluding SBA PPP loans, to address cash flow challenges for those impacted by the COVID-19 pandemic.  Of the $327 million in loans, where the payments were deferred, 89.54% were on loans that were secured by real estate with a weighted average loan to value (“LTV”) ratio of approximately 50%.  Loans that the Company has offered temporary loan payment relief included approximately $88.5 million that the Company has identified as higher risk business sectors, including hotels, retail, restaurants and assisted living centers.  The Company expects to reamortize each loan at the end of the payment deferral period to extend the maturity date rather than retain the original maturity date with a balloon payment upon maturity.  The Company believes this approach provides its clients with the short-term payment relief they need to address the negative cash flow effects resulting from the pandemic and mitigates unusual large cash outlays after the deferment.

The Company funded 333 applications from businesses that participated in the SBA PPP for a total of $84.6 million.  The SBA announced that they would begin taking applications for loan forgiveness on August 10, 2020, at which time the Company will immediately begin filing such applications.

The allowance for credit losses increased $14.6 million, or 52.23%, to $42.7 million at June 30, 2020 compared with $28.0 million the same period a year ago.  The allowance for credit losses to loans held for investment was 2.57% (2.71%, excluding SBA PPP Loans) at June 30, 2020 compared with 1.68% at June 30, 2019.  Remaining accretable discounts on non-purchased credit deteriorated loans was $2.9 million at June 30, 2020, which provides additional protection.

Non-performing loans decreased to $6.4 million at June 30, 2020 compared with $8.8 million at December 31, 2019.  Non-performing loans to total loans were 0.39% at June 30, 2020 compared with 0.53% at December 31, 2019.  Non-performing assets decreased to $6.4 million at June 30, 2020 compared with $8.8 million at December 31, 2019.  Non-performing assets to total assets were 0.21% at June 30, 2020 compared with 0.37% at December 31, 2019.

Commenting on the credit quality trends, Mr. Williams said, “While we’re pleased with the positive credit quality trends we experienced year to date, we do not expect these trends to continue short-term as both governmental and our bank relief programs start to wind down in the third quarter.  The severity of the impact to our credit quality trends will depend upon the length of time that businesses and individuals are negatively impacted by the COVID-19 pandemic and the timing and level of recovery that occurs post-pandemic.”  

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Mr. Williams continued, “The economy for the State of Utah was performing better than most states and the national averages going into the pandemic and is experiencing a more rapid recovery coming out of the pandemic.  The unemployment rate for the nation was 3.5% at February 28, 2020, rose to 14.7% at April 30, 2020, and recovered to 11.1% at June 30, 2020.  The unemployment rate for the State of Utah was 2.5% at February 28, 2020, rose to 10.4% at April 30, 2020, and recovered to 5.1% at June 30, 2020, which is the second lowest unemployment rate of any State in the United States.  Nationally, total jobs increased by 1.6% year-over-year at February 28, 2020, fell to (13.4)% at April 30, 2020, and has recovered to (8.6)% at June 30, 2020.  Total jobs increased year-over-year for the State of Utah to 2.4% at February 28, 2020, fell to (7.2)% at April 30, 2020, and has recovered to (2.7)% at June 30, 2020.  This is the lowest year-over-year change jobs of any State in the United States.  Despite the negative effects that the pandemic has had on the overall year-over-year change in jobs in Utah at the end of the second quarter, construction jobs have actually increased 8.7%, which we believe is a leading indicator of the beginning of an economic recovery in Utah.  We believe that Utah will continue to outperform other states and the nation as a whole as we continue to recover from the negative economic effects of the pandemic.”

Deposits and Liabilities

Total deposits increased $631 million, or 31.86%, to $2.61 billion at June 30, 2020 compared with $1.98 billion at June 30, 2019.  Non-interest bearing deposits increased $278 million, or 39.36%, to $985 million at June 30, 2020 compared with the same period a year earlier, and interest bearing deposits increased, $353 million, or 27.70%, to $1.63 billion at June 30, 2020 compared with the same period a year ago.  Non-interest-bearing deposits to total deposits was 37.71% as of June 30, 2020 compared with 35.68% as of June 30, 2019.

Commenting on the significant increase in deposits, Mr. Williams said, “The increase in total deposits is primarily the result of both governmental and bank relief programs, and businesses and consumers actively conserving cash to try to counter the negative effects of the shutdown in the economy from the COVID-19 pandemic.  In particular, we have seen that many of our borrowers, who requested payment deferments, have held on to their cash that would have otherwise been used to make their monthly payments, and approximately 15% of borrowers, who requested a loan deferral, have continued to make their monthly payment.  We anticipate that total deposits will decline through the remainder of the year as businesses and individuals pay Federal and state taxes that were postponed by government agencies to address the pandemic; borrowers begin to make payments again on loans where payments were deferred; and cash reserves are used by both businesses and consumers to address any shortfalls in income resulting from the pandemic.”

Shareholders’ Equity

Shareholders’ equity increased by $37.3 million, or 11.93%, to $350 million at June 30, 2020 compared with $313 million at June 30, 2019. The increase resulted primarily from net income earned during the intervening periods; change in accumulated other comprehensive income resulting from changes in the fair market value of investment securities available for sale, offset by cash dividends paid to shareholders.

Leverage capital ratio was 11.68% at June 30, 2020 compared with 12.78% at June 30, 2019.  Total risk-based capital ratio was 19.20% at June 30, 2020 compared with 17.24% at June 30, 2019.  The Company’s leverage capital ratio was impacted by the significant increase in total assets resulting from the increase in total deposits, while the Company’s total risk-based capital was not similarly affected as the funds received from the increase in deposits were held in low risk-weighted cash and investment securities.

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Net Interest Income and Margin

For the three months ended June 30, 2020, net interest income decreased $1.9 million, or 6.97%, to $25.8 million compared with $27.7 million for the same period a year earlier.  The decrease is primarily the result of net interest margins narrowing 128 basis points to 3.96% for the same comparable periods offset by average interest earning assets increasing $494 million, or 23.30%, to $2.6 billion for the same comparable periods.  The narrowing of net interest margins is primarily the result of the Federal Reserve reducing benchmark rates to almost zero and an increase in the average amount of lower yielding cash and investment securities held by the Company stemming from average core deposits increasing $232 million, or 18.24%, for the same respective periods.  The percentage of average loans to total average interest earning assets decreased to 64.75% for the three months ended June 30, 2020 compared with 79.52% for the same period a year earlier.

Yields on interest earning assets declined 147 basis points to 4.21% for the three months ended June 30, 2020 compared with 5.68% for the same period a year earlier.  The decline in yields on interest earning assets is primarily the result of the average amount of cash and investment securities held by the Company increasing $487 million, or 112.79%, to $919 million for the same comparable periods with the yield on cash and securities decreasing 59 basis points to 1.63% for the same comparable periods.

In addition, the yield on loans declined 96 basis points for the same comparable periods and average loans outstanding increased $6.7 million, or 0.40%, to $1.69 billion for the same comparable periods.  Yields on loans were negatively impacted by the lower yield on SBA PPP loans.  For the three months ended June 30, 2020, the yield on SBA PPP loans was 2.77%, including the amortization of deferred fees and costs recognized over the contractual term of the loans.  The Company expects that the yield on SBA PPP loans will increase as it begins the process of loan forgiveness with the SBA.

For the three months ended June 30, 2020, total cost of interest bearing liabilities decreased 31 basis points to 0.43% compared with 0.74% for the same period a year earlier, and is the result of the cost of interest bearing deposits decreasing 31 basis points to 0.43% compared with 0.74% for the same period a year ago.  For the three months ended June 30, 2020, the total cost of funds decreased 22 basis points to 0.27% compared with 0.49% for the same period a year ago.

For the three months ended June 30, 2020, acquisition accounting adjustments, including the accretion of loan discounts and fair value amortization on time deposits, added 5 basis points to net interest margin.

For the six months ended June 30, 2020, net interest income decreased $1.6 million, or 2.96%, to $53.0 million compared with $54.6 million for the same period a year earlier.  The decrease is primarily the result of the narrowing of net interest margins resulting from the Federal Reserve reducing benchmark rates to almost zero and an increase in the average amount of lower yielding cash and investment securities held by the Company stemming from average core deposits increasing $178 million, or 14.22%, for the same respective periods.  The percentage of average loans to total average interest earning assets decreased to 68.82% for the six months ended June 30, 2020 compared with 80.37% for the same period a year earlier.  This decrease was offset by average interest earning assets increasing $358 million, or 17.13%, to $2.5 billion for the same comparable periods.

Yields on interest earning assets declined 105 basis points to 4.66% for the six months ended June 30, 2020 compared with 5.71% for the same period a year earlier.  The decline in yields on interest earning assets is primarily the result of the average amount of cash and investment securities held by the Company increasing $353 million, or 86.58%, to $761 million for the same comparable periods with the yield on cash and securities decreasing 35 basis points to 1.89% for the same comparable periods.  In

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addition, the yield on loans declined 64 basis points for the same comparable periods and average loans outstanding increased $5.2 million, or 0.31%, to $1.69 billion for the same comparable periods.

For the six months ended June 30, 2020, total cost of interest bearing liabilities decreased 21 basis points to 0.53% compared with 0.74% for the same period a year earlier, and is the result of the cost of interest bearing deposits decreasing 20 basis points to 0.53% compared with 0.73% for the same period a year ago.  For the six months ended June 30, 2020, the total cost of funds decreased 15 basis points to 0.34% compared with 0.49% for the same period a year ago.

For the six months ended June 30, 2020, acquisition accounting adjustments, including the accretion of loan discounts and fair value amortization on time deposits, added 10 basis points to net interest margin.

The Company expects its net interest income and net interest margins to continue to be adversely impacted in future periods because of the Federal Reserve lowering benchmark rates to near zero and the current asset mix of the Company’s balance sheet.  The amount of the impact is dependent upon the length in time that the Federal Reserve holds benchmark rates to near zero, and the amount of time the Company holds a higher percentage of low yielding cash and investment securities.

Provision for Credit Losses

For the three months ended June 30, 2020, provision for credit losses was $2.1 million compared with $2.2 million for the same period a year earlier.  For the three months ended June 30, 2020, the Company incurred net charge-offs of $0.7 million compared with net charge-offs less than $0.1 million for the same period a year ago.  The decrease in provision for credit losses in the three months ended June 30, 2020 is due primarily to no loan growth quarter-over-quarter offset by higher charge-offs in the second quarter.  

For the six months ended June 30, 2020, provision for credit losses was $2.8 million compared with $3.7 million for the same period a year earlier.  For the six months ended June 30, 2020, the Company incurred net charge-offs of $1.0 million compared with net charge-offs of $0.9 million for the same period a year ago.  The decrease in provision for credit losses in the six months ended June 30, 2020 is due primarily to a decrease of reserves on individually evaluated loans and no loan growth during the six months ended June 30, 2020.   

Noninterest Income

For the three months ended June 30, 2020, noninterest income increased $2.5 million, or 69.98%, to $6.1 million compared with $3.6 million the same period a year ago.  The increase was primarily due to a $1.4 million increase in mortgage banking income resulting from higher loan volume of refinanced mortgages, which was driven by a lower interest rate environment for the same comparable periods.  Total loans sold increased $27.9 million, or 58.37%, to $75.7 million for the three months ended June 30, 2020, compared with $47.8 million for the same period a year earlier.  In addition, the Company recorded a $1.4 million gain on sale of investment securities in the second quarter of 2020 as it sold $48 million of securities to re-balance its investment securities portfolio.

For the six months ended June 30, 2020, noninterest income increased $2.9 million, or 42.12%, to $9.9 million compared with $6.9 million the same period a year ago.  The increase was primarily due to a $1.7 million increase in mortgage banking income resulting from higher loan volume of refinanced mortgages, which was driven by a lower interest rate environment for the same comparable periods and gains on sale of investment securities.  Total loans sold increased $34.9 million, or 38.31%, to $126 million for the six months ended June 30, 2020, compared with $91.1 million for the same period a year ago.

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Noninterest Expense

For the three months ended June 30, 2020, noninterest expense was $16.3 million compared with $14.7 million for the same period a year earlier.  For the three months ended June 30, 2020, the Company’s efficiency ratio was 51.01% compared with 46.93% for the same period a year ago.  

The increase in noninterest expense for the three months ended June 30, 2020 was primarily the result of higher salaries and employee benefits resulting from higher incentive payments made primarily to mortgage loan officers, higher data processing costs and higher marketing and advertising costs.  These higher amounts were partially offset by lower occupancy, equipment and depreciation costs.

For the six months ended June 30, 2020, noninterest expense was $32.4 million compared with $29.6 million for the same period a year earlier.  For the six months ended June 30, 2020, the Company’s efficiency ratio was 51.60% compared with 48.11% for the same period a year ago.  

The increase in noninterest expense for the six months ended June 30, 2020 was primarily the result of higher salaries and employee benefits resulting from higher incentive payments made primarily to mortgage loan officers, higher data processing costs and higher marketing and advertising costs.  These higher amounts were partially offset by lower occupancy, equipment and depreciation costs.

“As we look forward, we anticipate that net interest margins will remain narrow, given the Federal Reserve’s outlook that interest rates will remain near zero through at least 2022,” said Mark Olson, Chief Financial Officer for AltabancorpTM .  “As a result, we are reviewing our overall costs to determine how we can operate our platform more efficiently and effectively, while retaining our high-touch client experience.  We anticipate making changes over the next several quarters to improve our operating leverage.”

Income Tax Provision

For the three months ended June 30, 2020, income tax expense was $3.2 million compared with $3.5 million for the same period a year earlier.  For the three months ended June 30, 2020, the effective tax rate was 23.59% compared with 24.05% for the same period a year ago.  

For the six months ended June 30, 2020, income tax expense was $6.6 million compared with $6.8 million for the same period a year earlier.  For the six months ended June 30, 2020, the effective tax rate was 23.73% compared with 23.91% for the same period a year ago.   

Conference Call and Webcast

Management will host a conference call on Thursday, July 30, 2020 at 10:00 a.m. MDT (12:00 p.m. EDT) to discuss its financial performance.  Interested investors may listen to the call live at www.altabancorp.com.  Investment professionals are invited to dial 888-317-6003 (international calls 412-317-6061) and the participant entry number is 7989407. Please dial in 10-15 minutes early so the name and company information may 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.altabancorp.com or at the same URL for one month after the call. Forward-looking and other material information may be discussed on this conference call.  

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Forward-Looking Statements

This press release may contain certain forward-looking statements that are based on management's current expectations regarding the Company’s financial performance.    Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include the words “believe,” “expect,” “intend,” “estimate” or words of similar meaning, or future or conditional verbs such as “will,” “would,” “should,” “could” or “may.” Factors that could cause future results to vary materially from current management expectations include, but are not limited to, the duration and impact of the COVID-19 pandemic, natural disasters, general economic conditions, economic uncertainty in the United States, changes in interest rates, deposit flows, real estate values, costs or effects of acquisitions, competition, changes in accounting principles, policies or guidelines, legislation or regulation, and other economic, competitive, governmental, regulatory and technological factors (including external fraud and cybersecurity threats) affecting the Company's operations, pricing, products and services. These and other important factors are detailed in its Form 10-K and various securities law filings made periodically by the Company, copies of which are available from the Company’s website.  The Company undertakes no obligation to release publicly the result of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date of this press release or to reflect the occurrence of unanticipated events, except as required by law.

About AltabancorpTM

AltabancorpTM (Nasdaq: ALTA) is the bank holding company for AltabankTM, a full-service bank, providing loans, deposit and cash management services to businesses and individuals through 26 branch locations from Preston, Idaho to St. George, Utah. AltabankTM is the largest community bank in Utah. Our clients have direct access to bankers and decision-makers who work with clients to understand their specific needs and offer customized financial solutions. AltabankTM has been serving communities in Utah and southern Idaho for more than 100 years.  More information about AltabankTM is available at www.altabank.com.  More information about AltabancorpTM is available at www.altabancorp.com.

Investor Relations Contact

Mark K. Olson

Executive Vice President and Chief Financial Officer

AltabancorpTM

1 East Main Street

American Fork UT 84003

[email protected]

Phone: 801-642-3998

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ALTABANCORPTM

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 amounts)

 

2020

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Interest income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and fees on loans

 

$

23,649

 

 

$

25,925

 

 

$

27,628

 

 

$

49,574

 

 

$

54,608

 

Interest and dividends on investments

 

 

3,753

 

 

 

3,459

 

 

 

2,422

 

 

 

7,212

 

 

 

4,594

 

Total interest income

 

 

27,402

 

 

 

29,384

 

 

 

30,050

 

 

 

56,786

 

 

 

59,202

 

Interest expense

 

 

1,613

 

 

 

2,163

 

 

 

2,330

 

 

 

3,776

 

 

 

4,575

 

Net interest income

 

 

25,789

 

 

 

27,221

 

 

 

27,720

 

 

 

53,010

 

 

 

54,627

 

Provision for credit losses

 

 

2,100

 

 

 

650

 

 

 

2,150

 

 

 

2,750

 

 

 

3,700

 

Net interest income after provision for loan losses

 

 

23,689

 

 

 

26,571

 

 

 

25,570

 

 

 

50,260

 

 

 

50,927

 

Non-interest income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage banking

 

 

3,036

 

 

 

1,710

 

 

 

1,621

 

 

 

4,746

 

 

 

3,038

 

Card processing

 

 

917

 

 

 

707

 

 

 

814

 

 

 

1,624

 

 

 

1,429

 

Service charges on deposit accounts

 

 

763

 

 

 

780

 

 

 

705

 

 

 

1,543

 

 

 

1,362

 

Net gain on sale of investment securities

 

 

1,441

 

 

 

-

 

 

 

-

 

 

 

1,441

 

 

 

-

 

Other

 

 

(41

)

 

 

543

 

 

 

458

 

 

 

502

 

 

 

1,106

 

Total non-interest income

 

 

6,116

 

 

 

3,740

 

 

 

3,598

 

 

 

9,856

 

 

 

6,935

 

Non-interest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

10,786

 

 

 

10,844

 

 

 

9,526

 

 

 

21,630

 

 

 

19,412

 

Occupancy, equipment and depreciation

 

 

831

 

 

 

1,539

 

 

 

1,558

 

 

 

2,370

 

 

 

3,014

 

Data processing

 

 

2,383

 

 

 

1,136

 

 

 

1,018

 

 

 

3,519

 

 

 

1,982

 

Marketing and advertising

 

 

339

 

 

 

432

 

 

 

226

 

 

 

771

 

 

 

342

 

FDIC premiums

 

 

165

 

 

 

-

 

 

 

148

 

 

 

165

 

 

 

238

 

Other

 

 

1,771

 

 

 

2,210

 

 

 

2,223

 

 

 

3,981

 

 

 

4,627

 

Total non-interest expense

 

 

16,275

 

 

 

16,161

 

 

 

14,699

 

 

 

32,436

 

 

 

29,615

 

Income before income tax expense

 

 

13,530

 

 

 

14,150

 

 

 

14,469

 

 

 

27,680

 

 

 

28,247

 

Income tax expense

 

 

3,192

 

 

 

3,377

 

 

 

3,480

 

 

 

6,569

 

 

 

6,753

 

Net income

 

$

10,338

 

 

$

10,773

 

 

$

10,989

 

 

$

21,111

 

 

$

21,494

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.55

 

 

$

0.57

 

 

$

0.58

 

 

$

1.12

 

 

$

1.14

 

Diluted

 

$

0.55

 

 

$

0.57

 

 

$

0.58

 

 

$

1.11

 

 

$

1.13

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

18,789,561

 

 

 

18,884,857

 

 

 

18,805,760

 

 

 

18,837,209

 

 

 

18,793,553

 

Diluted

 

 

18,932,511

 

 

 

19,038,127

 

 

 

19,007,297

 

 

 

18,985,319

 

 

 

18,998,480

 

 

 

 


8

 

 


 

ALTABANCORPTM

UNAUDITED CONSOLIDATED BALANCE SHEETS

 

 

June 30,

 

 

March 31,

 

 

December 31,

 

 

June 30,

 

(Dollars in thousands, except share amounts)

 

2020

 

 

2020

 

 

2019

 

 

2019

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

$

47,088

 

 

$

36,203

 

 

$

38,987

 

 

$

38,121

 

Interest-bearing deposits

 

 

275,920

 

 

 

120,176

 

 

 

171,955

 

 

 

64,064

 

Federal funds sold

 

 

829

 

 

 

1,248

 

 

 

1,039

 

 

 

90,281

 

Total cash and cash equivalents

 

 

323,837

 

 

 

157,627

 

 

 

211,981

 

 

 

192,466

 

Investment securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Available for sale, at fair value

 

 

973,457

 

 

 

577,000

 

 

 

405,995

 

 

 

334,762

 

Non-marketable equity securities

 

 

2,890

 

 

 

2,890

 

 

 

2,623

 

 

 

2,623

 

Loans held for sale

 

 

29,264

 

 

 

21,572

 

 

 

18,669

 

 

 

18,446

 

Loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans held for investment

 

 

1,659,018

 

 

 

1,642,516

 

 

 

1,680,918

 

 

 

1,672,584

 

Allowance for credit losses

 

 

(42,683

)

 

 

(41,253

)

 

 

(31,426

)

 

 

(28,039

)

Total loans held for investment, net

 

 

1,616,335

 

 

 

1,601,263

 

 

 

1,649,492

 

 

 

1,644,545

 

Premises and equipment, net

 

 

38,673

 

 

 

39,492

 

 

 

39,474

 

 

 

37,925

 

Goodwill

 

 

25,673

 

 

 

25,673

 

 

 

25,673

 

 

 

25,673

 

Bank-owned life insurance

 

 

27,330

 

 

 

27,184

 

 

 

27,037

 

 

 

26,734

 

Deferred income tax assets

 

 

8,586

 

 

 

8,003

 

 

 

9,716

 

 

 

9,178

 

Accrued interest receivable

 

 

11,682

 

 

 

8,464

 

 

 

7,904

 

 

 

8,642

 

Other intangibles

 

 

2,749

 

 

 

2,859

 

 

 

2,970

 

 

 

3,191

 

Other real estate owned

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Other assets

 

 

5,169

 

 

 

4,985

 

 

 

4,800

 

 

 

7,680

 

Total assets

 

$

3,065,645

 

 

$

2,477,012

 

 

$

2,406,334

 

 

$

2,311,865

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest bearing deposits

 

$

985,455

 

 

$

737,001

 

 

$

719,410

 

 

$

707,135

 

Interest-bearing deposits

 

 

1,627,884

 

 

 

1,385,017

 

 

 

1,336,957

 

 

 

1,274,771

 

Total deposits

 

 

2,613,339

 

 

 

2,122,018

 

 

 

2,056,367

 

 

 

1,981,906

 

Short-term borrowings

 

 

83,490

 

 

 

-

 

 

 

-

 

 

 

-

 

Accrued interest payable

 

 

408

 

 

 

503

 

 

 

546

 

 

 

546

 

Other liabilities

 

 

18,278

 

 

 

14,354

 

 

 

17,059

 

 

 

16,614

 

Total liabilities

 

 

2,715,515

 

 

 

2,136,875

 

 

 

2,073,972

 

 

 

1,999,066

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred shares, $0.01 par value

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Common shares, $0.01 par value

 

 

188

 

 

 

188

 

 

 

189

 

 

 

188

 

Additional paid-in capital

 

 

86,721

 

 

 

86,318

 

 

 

87,913

 

 

 

87,275

 

Retained earnings

 

 

252,032

 

 

 

244,325

 

 

 

242,878

 

 

 

224,950

 

Accumulated other comprehensive income/(loss)

 

 

11,189

 

 

 

9,306

 

 

 

1,382

 

 

 

386

 

Total shareholders’ equity

 

 

350,130

 

 

 

340,137

 

 

 

332,362

 

 

 

312,799

 

Total liabilities and shareholders’ equity

 

$

3,065,645

 

 

$

2,477,012

 

 

$

2,406,334

 

 

$

2,311,865

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common shares outstanding

 

 

18,793,217

 

 

 

18,787,810

 

 

 

18,870,498

 

 

 

18,819,332

 

9

 

 


 

ALTABANCORPTM

SUMMARY FINANCIAL INFORMATION

 

 

 

 

 

 

June 30,

 

 

March 31,

 

 

December 31,

 

 

June 30,

 

(Dollars in thousands, except share amounts)

 

2020

 

 

2020

 

 

2019

 

 

2019

 

Selected Balance Sheet Information:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Book value per share

 

$

18.63

 

 

$

18.10

 

 

$

17.61

 

 

$

16.62

 

Tangible book value per share

 

$

17.12

 

 

$

16.59

 

 

$

16.09

 

 

$

15.09

 

Non-performing loans to total loans

 

 

0.39

%

 

 

0.41

%

 

 

0.53

%

 

 

0.31

%

Non-performing assets to total assets

 

 

0.21

%

 

 

0.27

%

 

 

0.37

%

 

 

0.22

%

Allowance for credit losses to loans held for investment

 

 

2.57

%

 

 

2.51

%

 

 

1.87

%

 

 

1.68

%

Loans to deposits

 

 

62.97

%

 

 

76.48

%

 

 

81.12

%

 

 

83.91

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset Quality Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-performing loans

 

$

6,388

 

 

$

6,590

 

 

$

8,814

 

 

$

5,104

 

Non-performing assets

 

$

6,388

 

 

$

6,590

 

 

$

8,814

 

 

$

5,104

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital Ratios:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tier 1 leverage capital (1)

 

 

11.68

%

 

 

12.74

%

 

 

12.67

%

 

 

12.78

%

Total risk-based capital (1)

 

 

19.20

%

 

 

18.62

%

 

 

18.43

%

 

 

17.24

%

Average equity to average assets

 

 

12.57

%

 

 

13.82

%

 

 

13.63

%

 

 

13.69

%

Tangible common equity to tangible assets (2)

 

 

10.59

%

 

 

12.73

%

 

 

12.77

%

 

 

12.44

%

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

March 31,

 

 

June 30,

 

 

June 30,

 

 

June 30,

 

 

 

2020

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Selected Financial Information:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share

 

$

0.55

 

 

$

0.57

 

 

$

0.58

 

 

$

1.12

 

 

$

1.14

 

Diluted earnings per share

 

$

0.55

 

 

$

0.57

 

 

$

0.58

 

 

$

1.11

 

 

$

1.13

 

Net interest margin (3)

 

 

3.96

%

 

 

4.79

%

 

 

5.24

%

 

 

4.35

%

 

 

5.27

%

Efficiency ratio

 

 

51.01

%

 

 

52.20

%

 

 

46.93

%

 

 

51.60

%

 

 

48.11

%

Non-interest income to average assets

 

 

0.90

%

 

 

0.63

%

 

 

0.64

%

 

 

0.77

%

 

 

0.63

%

Non-interest expense to average assets

 

 

2.39

%

 

 

2.71

%

 

 

2.63

%

 

 

2.54

%

 

 

2.69

%

Annualized return on average assets

 

 

1.52

%

 

 

1.80

%

 

 

1.96

%

 

 

1.65

%

 

 

1.96

%

Annualized return on average equity

 

 

12.06

%

 

 

13.05

%

 

 

14.33

%

 

 

12.55

%

 

 

14.35

%

Net charge-offs

 

$

670

 

 

$

289

 

 

$

34

 

 

$

959

 

 

$

906

 

Annualized net charge-offs to average loans

 

 

0.16

%

 

 

0.07

%

 

 

0.01

%

 

 

0.11

%

 

 

0.11

%

 

________________________________

 

(1)

Tier 1 leverage capital and Total risk-based capital as of June 30, 2020 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 $28.4 million, $28.5 million, $28.6 million, and $28.9 million at June 30, 2020, March 31, 2020, December 31, 2019, and June 30, 2019, respectively.

 

 

(3)

Net interest margin is defined as net interest income divided by average earning assets.

 

10

 

 


 

ALTABANCORPTM

SELECTED AVERAGE BALANCES AND YIELDS

 

 

Three Months Ended

 

 

 

June 30, 2020

 

 

June 30, 2019

 

 

 

 

 

 

 

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

 

$

228,032

 

 

$

52

 

 

 

0.09

%

 

$

88,654

 

 

$

511

 

 

 

2.31

%

Securities: (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxable securities

 

 

645,720

 

 

 

3,452

 

 

 

2.15

%

 

 

276,993

 

 

 

1,572

 

 

 

2.28

%

Non-taxable securities (2)

 

 

45,670

 

 

 

229

 

 

 

2.02

%

 

 

66,425

 

 

 

312

 

 

 

1.88

%

Total securities

 

 

691,390

 

 

 

3,681

 

 

 

2.14

%

 

 

343,418

 

 

 

1,884

 

 

 

2.20

%

Loans (3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Real estate term

 

 

945,680

 

 

 

13,165

 

 

 

5.60

%

 

 

902,214

 

 

 

13,447

 

 

 

5.98

%

Construction and land development

 

 

257,561

 

 

 

4,157

 

 

 

6.49

%

 

 

313,412

 

 

 

6,304

 

 

 

8.07

%

Commercial and industrial

 

 

303,809

 

 

 

3,885

 

 

 

5.14

%

 

 

294,488