Le Lézard
Classified in: Business, Covid-19 virus
Subjects: EARNINGS, Dividend, Conference Call, Webcast

Altabancorptm Reports Third Quarter 2020 Results


Altabancorptm (Nasdaq: ALTA) (the "Company" or "Alta"), the parent company of Altabanktm, reported net income of $11.3 million for the third quarter of 2020 compared with $10.3 million for the second quarter of 2020, and $11.1 million for the third quarter of 2019. Diluted earnings per common share were $0.60 for the third quarter of 2020 compared with $0.55 for the second quarter of 2020, and $0.59 for the third quarter of 2019.

Annualized return on average assets was 1.47% for the third quarter of 2020 compared with 1.52% for the second quarter of 2020, and 1.88% for the third quarter of 2019. Annualized return on average equity was 12.62% for the third quarter of 2020 compared with 12.06% for the second quarter of 2020, and 13.79% for the third quarter of 2019.

The Board of Directors declared a quarterly dividend payment of $0.15 per common share. The dividend will be payable on November 16, 2020 to shareholders of record as of November 9, 2020. The dividend payout ratio for earnings for the third quarter of 2020 was 24.9%. This continues the over 50-year trend of paying dividends by the Company.

"We are pleased with the results we achieved in the third quarter as we continue to actively manage the negative effects of the COVID-19 pandemic," said Len Williams, President and Chief Executive Officer of Altabancorptm. "Our mortgage banking team is one area, in particular, that has performed well. Mortgage banking revenues grew 67% for the year compared with a year ago, reflecting strong refinance demand and higher margins due to decline in overall interest rates."

Mr. Williams continued, "Our strong balance sheet provides safety and security to our stakeholders as we work through the negative effects of the pandemic. 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 potential negative effects the economic shutdown from the pandemic may have on our loan portfolio. Lastly, our strong liquidity position provides us the flexibility to aggressively grow our loan portfolio as the economy begins to recover.

"We continue to focus on the safety and stability of our associates and their families through the allocation of technology and resources to ensure that a majority of our associates are able to work from home. We have also enhanced cleaning protocols for our office spaces and branch locations to ensure that our associates and clients feel safe when they visit us. We continue to direct our attention to our clients, who were financially impacted by the pandemic. We have provided substantial financial relief to our clients through participation in government programs as well as our own payment relief programs. We expect to participate with additional funding for SBA PPP loans, if passed by the Federal Government. 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 all work to overcome the pandemic."

COVID-19 Pandemic and Utah Economy

The State of Utah has developed a COVID-19 Transmission Index ("Transmission Index"), which categorizes levels of transmission as High, Moderate, or Low. Each county receives a rating every week. The Company's COVID-19 pandemic response plan directly correlates to the State's Transmission Index. The counties where our branches are located presently have a Transmission Index of Moderate or greater. As a result, all of our branch lobbies are available by appointment only, while our drive-up windows remain open. To ensure the safety of our associates and clients, we require masks to be worn in all branch locations and in our back office locations, when associates are unable to socially distance from other associates. Approximately 60% of our workforce remains working from home and will continue to do so until the Transmission Index in the corresponding county moves to Low.

The Company is fortunate to operate in a region that appears to be weathering the COVID-19 pandemic fairly well economically. The Utah economy has performed better than the nation as a whole during the pandemic with the Utah unemployment rate at 5.0% at the end of September 2020 compared with 7.9% for the nation for the same period. Commercial and consumer construction activities remain strong with overall construction jobs increasing 6.6% year-over-year. Utah's total personal income rose 4.3% in the first quarter of 2020 compared with the first quarter of 2019. Utah's growth rate ranked seventh in the nation. Nationally, personal income only increased 3.3% over the same period. Utah's house prices were up 1.28% in the second quarter of 2020 from the first quarter of 2020.

The Company expects that the Utah economy will continue to perform better than most states in the U.S.

Small Business Administration Paycheck Protection Program ("SBA PPP")

The Company funded 333 loans, totaling $84.6 million under the SBA?s PPP loan program. As of the date of this earnings release, the Company has filed 62 applications, or 19%, with the SBA, totaling $19.0 million and has received loan forgiveness on 15 loans, totaling $0.8 million. As of the date of this earnings release, the Company has not received a denial on any application submitted to the SBA for loan forgiveness. The Company is participating in the PPPL facility offered by the Federal Reserve to fund SBA PPP loans and to receive regulatory capital relief for such loans. The Company expects to have most of its SBA PPP loans forgiven by the end of the second quarter 2021.

Loan Accommodations

The Company offered a temporary loan payment relief program of deferments up to six months to borrowers impacted by the COVID-19 pandemic. Under rare circumstances, deferred loans will be re-evaluated at the end of the deferral period. To qualify for a second loan deferral, the Company will require a full re-underwriting of the credit.

As of the date of this earnings release, the Company offered temporary loan payment relief to 415 businesses and 108 individuals totaling approximately $320 million, or 18.5% of total loans, excluding SBA PPP loans, to address cash flow challenges for those impacted by the COVID-19 pandemic. To the date of this earning release, the deferral period had ended for 237 borrowers, or 45.49%, for loans totaling $128 million. This leaves 284 borrowers, or 54.51%, for loans totaling $191 million still on deferral. There are only four borrowers on small balance loans totaling $0.07 million, who have not made a subsequent loan payment for 30 days or greater, after their payment deferment agreement expired. We have not entered into another loan payment deferment agreement with any borrower, who has entered into a previous loan payment deferment agreement. Since these loans were performing loans that were current on their payments prior to the COVID-19 pandemic, these modifications are not considered to be troubled debt restructurings pursuant to applicable accounting and regulatory guidance.

Loan Credit Quality Trends

Non-performing loans decreased to $6.9 million at September 30, 2020 compared with $8.8 million at December 31, 2019. Non-performing loans to total loans were 0.41% at September 30, 2020 compared with 0.53% at December 31, 2019. Non-performing assets decreased to $6.9 million at September 30, 2020 compared with $8.8 million at December 31, 2019. Non-performing assets to total assets were 0.22% at September 30, 2020 compared with 0.37% at December 31, 2019.

Allowance for Credit Losses

The allowance for credit losses increased $11.0 million, or 36.18%, to $41.5 million at September 30, 2020 compared with $30.5 million the same period a year ago. The allowance for credit losses to loans held for investment was 2.45% at September 30, 2020 compared with 1.82% at September 30, 2019.

Loans

Loans held for investment grew $22.0 million, or 1.3%, to $1.70 billion at September 30, 2020 compared with $1.68 billion at September 30, 2019. Quarter-to-date average loans increased $11.6 million, or 0.69%, to $1.69 billion for the three months ended September 30, 2020 compared with $1.68 billion for the three months ended September 30, 2019. Loans held for sale increased $12.3 million, or 63.00%, to $31.9 million at September 30, 2020 because of increased mortgage loan volume.

Deposits and Liabilities

Total deposits increased $615 million, or 29.27%, to $2.72 billion at September 30, 2020 compared with $2.10 billion at September 30, 2019. Non-interest bearing deposits increased, $261 million, or 33.58%, to $1.0 billion at September 30, 2020 compared with the same period a year earlier, and interest bearing deposits increased, $354 million, or 26.73%, to $1.68 billion at September 30, 2020 compared with the same period a year ago. Non-interest-bearing deposits to total deposits were 38.21% as of September 30, 2020 compared with 36.97% as of September 30, 2019.

Shareholders' Equity

Shareholders' equity increased by $37.6 million, or 11.64%, to $360 million at September 30, 2020 compared with $323 million at September 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, due to a decline in overall interest rates; and cash dividends paid to shareholders.

The Company's Leverage capital ratio was 10.87% at September 30, 2020 compared with 12.64% at September 30, 2019. The total risk-based capital ratio was 19.13% at September 30, 2020 compared with 17.88% at September 30, 2019. The Company's regulatory capital ratios were negatively impacted by the adoption of ASU 2016-13 ("CECL") and the Company election to take the full impact of such adoption against its regulatory capital ratios during the first quarter of 2020.

Net Interest Income and Margin

For the three months ended September 30, 2020, net interest income decreased $2.4 million, or 8.50%, to $25.8 million compared with $28.2 million for the same period a year earlier. The decrease is primarily the result of net interest margins narrowing 152 basis points to 3.52% 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 $592 million, or 29.48%, for the same respective periods offset by average interest earning assets increasing $696 million, or 31.33%, to $2.92 billion for the same comparable periods. The percentage of average loans to total average interest earning assets decreased to 58.11% for the three months ended September 30, 2020 compared with 75.80% for the same period a year earlier.

Yields on interest earning assets declined 171 basis points to 3.74% for the three months ended September 30, 2020 compared with 5.45% 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 $684 million, or 128%, to $1.22 billion for the same comparable periods with the yield on cash and securities declining 70 basis points to 1.49% for the third quarter of 2020 compared with 2.19% for the same comparable periods. In addition, the yield on loans declined 112 basis points to 5.37% compared with 6.49% for the same comparable periods. Average loans outstanding increased $11.6 million, or 0.69%, to $1.69 billion for the same comparable periods.

For the three months ended September 30, 2020, total cost of interest bearing liabilities decreased 32 basis points to 0.38% compared with 0.70% for the same period a year earlier, and is primarily the result of the cost of interest bearing deposits decreasing 32 basis points to 0.38% compared with 0.70% for the same period a year ago. For the three months ended September 30, 2020, the total cost of funds decreased 20 basis points to 0.25% compared with 0.45% for the same period a year ago.

For the three months ended September 30, 2020, acquisition accounting adjustments, including the accretion of loan discounts and fair value amortization on time deposits, added 7 basis points to net interest margin.

For the nine months ended September 30, 2020, net interest income decreased $4.0 million, or 4.84%, to $78.8 million compared with $82.8 million for the same period a year earlier. The decrease is primarily the result of net interest margins narrowing 115 basis points to 4.04% 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 $407 million, or 21.05%, for the same respective periods offset by average interest earning assets increasing $472 million, or 22.08%, to $2.61 billion for the same comparable periods. The percentage of average loans to total average interest earning assets decreased to 64.80% for the nine months ended September 30, 2020 compared with 78.76% for the same period a year earlier.

Yields on interest earning assets declined 130 basis points to 4.32% for the nine months ended September 30, 2020 compared with 5.62% 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 $464 million, or 103%, to $915 million for the same comparable periods with the yield on cash and securities decreasing 38 basis points to 1.28% for the same comparable periods. In addition, the yield on loans declined 80 basis points for the same comparable periods and average loans outstanding increased $7.4 million, or 0.44%, to $1.69 billion for the same comparable periods.

For the nine months ended September 30, 2020, total cost of interest bearing liabilities decreased 25 basis points to 0.47% compared with 0.72% for the same period a year earlier, and is the result of the cost of short-term borrowings decreasing 228 basis points to 0.35%, as well as cost of interest bearing deposits decreasing 24 basis points to 0.48% compared with 0.72% for the same period a year ago. For the nine months ended September 30, 2020, the total cost of funds decreased 16 basis points to 0.31% compared with 0.47% for the same period a year ago.

For the nine months ended September 30, 2020, acquisition accounting adjustments, including the accretion of loan discounts and fair value amortization on time deposits, added 9 basis points to net interest margin.

Provision for Credit Losses

For the three months ended September 30, 2020, the Company did not record any provision for credit losses compared with $2.1 million for the same period a year earlier as calculated under the prior incurred loss methodology. The provisions for the current and preceding two quarters reflect expected lifetime credit losses based upon the current conditions and the potential effects from forecasted deterioration of economic metrics due to the COVID-19 pandemic based on the outlook as of September 30, 2020. The decrease in provision for loan losses in the three months ended September 30, 2020 compared with the same period a year earlier is due primarily to an $11 million, or 60.18%, decline in loans individually evaluated for impairment to $7.4 million and the related allowance for impairment of $4.4 million offset by a $49 million, or 3.00%, increase in loans collectively evaluated for impairment to $1.6 billion and the related allowance of $37.1 million. For the three months ended September 30, 2020, the Company incurred net charge-offs of $1.2 million compared with net recoveries of $0.3 million for the same period a year ago.

For the nine months ended September 30, 2020, provision for credit losses was $2.8 million compared with $5.8 million for the same period a year earlier as calculated under the prior incurred loss methodology. For the nine months ended September 30, 2020, the Company incurred net charge-offs of $2.1 million compared with net charge-offs of $0.6 million for the same period a year ago.

"Our overall asset quality trends have improved throughout 2020 and charge-offs across our portfolios have remained relatively low," said Mark Olson, Executive Vice President and Chief Financial Officer of Altabancorptm. "We expect to see asset quality trends begin to deteriorate and charge-offs to increase beginning in 2021 as the positive effects of government stimulus and loan payment relief programs come to an end. We believe the allowance for credit losses is adequate to cover our current expected credit losses. However, we will continue to closely monitor macroeconomic conditions and the overall performance of our loan portfolio to determine if we should adjust our expectations of credit losses."

Noninterest Income

For the three months ended September 30, 2020, noninterest income increased $1.7 million, or 36.94%, to $6.1 million compared with $4.5 million the same period a year ago. The increase was primarily due to a $1.7 million, or 81.95%, increase in mortgage banking income to $3.9 million compared with $2.1 million for the same period a year ago resulting from higher volume and wider margins on loans sold, which was favorably impacted by an increase in mortgage loan refinances, as overall interest rates declined.

For the nine months ended September 30, 2020, noninterest income increased $4.6 million, or 40.09%, to $15.97 million compared with $11.4 million for the same period a year earlier. The increase in noninterest income was primarily due to a $3.4 million, or 66.78%, increase in mortgage banking income and a $1.4 million gain on the sale of investment securities.

"We expect to continue to see improving noninterest income as we expand our mortgage banking operations both in Utah and surrounding states and reap the benefits of a significant investment in the technology used in our mortgage operations from an operational efficiency and enhanced client experience perspective," said Mr. Williams.

Noninterest Expense

For the three months ended September 30, 2020, noninterest expense was $16.9 million compared with $16.1 million for the same period a year earlier. For the three months ended September 30, 2020, the Company's efficiency ratio was 52.86% compared with 49.20% for the same period a year ago.

For the nine months ended September 30, 2020, noninterest expense was $49.3 million compared with $45.7 million for the same period a year earlier. For the nine months ended September 30, 2020, the Company's efficiency ratio was 52.02% compared with 48.49% for the same period a year ago.

The increase in noninterest expense for both the three and nine months ended September 30, 2020 was primarily the result of higher salaries and associate benefits resulting primarily from higher incentive payments, particularly in the mortgage banking division. In addition, the Company has incurred higher data processing expenses due to investments made in new technologies for the mortgage banking division; technology investments made in the commercial banking division, including costs for its cloud-based, commercial loan origination application (nCino), including automated processes for smaller ticket commercial loans (titled Altaexpresstm), costs for the implementation of a Salesforce CRM solution, costs for a new cloud-based, commercial client treasury management solution; and costs for a new cloud-based, construction budget, draw and inspection management solution for both commercial and consumer clients. The Company expects to continue to make significant investments in new technologies to enhance its client's experience and empower clients to transact more business on its mobile platform; to lower the overall costs of its operating platform; and to become more scalable as the Company aggressively evaluates acquisition opportunities.

Noninterest expense also increased from higher marketing and advertising expenses, because of continued efforts to improve overall brand recognition in the regional markets in which the Company operates.

"We anticipate overall interest rates to remain near zero for the foreseeable future," said Mr. Olson. "As a result, we continue to review our overall operating costs to determine how we can better leverage our platform, 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 September 30, 2020, income tax expense was $3.7 million compared with $3.4 million for the same period a year earlier. For the three months ended September 30, 2020, the effective tax rate was 24.62% compared with 23.15% for the same period a year ago.

For the nine months ended September 30, 2020, income tax expense was $10.3 million compared with $10.1 million for the same period a year earlier. For the nine months ended September 30, 2020, the effective tax rate was 24.05% compared with 23.65% for the same period a year ago.

Conference Call and Webcast

Management will host a conference call on Thursday, October 29, 2020 at 10:00 a.m. MDT (12:00 p.m. EDT) to discuss the Company's financial performance.

Interested parties may listen to the call live at www.altabancorp.com. Investment professionals, who wish to ask questions regarding the Company's financial performance, will need to register to participate in the call by October 28, 2020 by visiting http://www.directeventreg.com/registration/event/6513568. Upon registering, you will receive a confirmation with dial-in details. Please dial in 10-15 minutes early so your name and your company information may be collected prior to the start of the conference. The Company's third quarter earnings release and investor presentation will be available prior to the call on the Company's investor relations website. An audio archive and written transcript of the conference call will be available on the Company's investor website within 24 hours after the end of the call. Forward-looking statements may be made and other material information may be discussed on this conference call.?

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 the Company's Form 10-K, Form 10-Qs, and various other 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 with total assets of $3.2 billion. 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.

ALTABANCORPtm

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 amounts)

 

2020

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Interest income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and fees on loans

 

$

22,896

 

 

$

23,649

 

 

$

27,544

 

 

$

72,470

 

 

$

82,152

 

Interest and dividends on investments

 

 

4,551

 

 

 

3,753

 

 

 

2,937

 

 

 

11,763

 

 

 

7,531

 

Total interest income

 

 

27,447

 

 

 

27,402

 

 

 

30,481

 

 

 

84,233

 

 

 

89,683

 

Interest expense

 

 

1,651

 

 

 

1,613

 

 

 

2,290

 

 

 

5,427

 

 

 

6,865

 

Net interest income

 

 

25,796

 

 

 

25,789

 

 

 

28,191

 

 

 

78,806

 

 

 

82,818

 

Provision for credit losses

 

 

-

 

 

 

2,100

 

 

 

2,100

 

 

 

2,750

 

 

 

5,800

 

Net interest income after provision for credit losses

 

 

25,796

 

 

 

23,689

 

 

 

26,091

 

 

 

76,056

 

 

 

77,018

 

Noninterest income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage banking

 

 

3,850

 

 

 

3,036

 

 

 

2,116

 

 

 

8,596

 

 

 

5,154

 

Card processing

 

 

986

 

 

 

917

 

 

 

976

 

 

 

2,610

 

 

 

2,405

 

Service charges on deposit accounts

 

 

813

 

 

 

763

 

 

 

744

 

 

 

2,356

 

 

 

2,106

 

Net gain on sale of investment securities

 

 

-

 

 

 

1,441

 

 

 

-

 

 

 

1,441

 

 

 

-

 

Other

 

 

468

 

 

 

(41

)

 

 

631

 

 

 

970

 

 

 

1,737

 

Total non-interest income

 

 

6,117

 

 

 

6,116

 

 

 

4,467

 

 

 

15,973

 

 

 

11,402

 

Noninterest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

11,107

 

 

 

10,786

 

 

 

10,410

 

 

 

32,737

 

 

 

29,822

 

Occupancy, equipment and depreciation

 

 

1,155

 

 

 

831

 

 

 

1,439

 

 

 

3,525

 

 

 

4,453

 

Data processing

 

 

1,647

 

 

 

2,383

 

 

 

1,280

 

 

 

5,166

 

 

 

3,262

 

Marketing and advertising

 

 

584

 

 

 

339

 

 

 

805

 

 

 

1,355

 

 

 

1,147

 

FDIC premiums

 

 

183

 

 

 

165

 

 

 

6

 

 

 

348

 

 

 

244

 

Other

 

 

2,193

 

 

 

1,771

 

 

 

2,128

 

 

 

6,174

 

 

 

6,755

 

Total non-interest expense

 

 

16,869

 

 

 

16,275

 

 

 

16,068

 

 

 

49,305

 

 

 

45,683

 

Income before income tax expense

 

 

15,044

 

 

 

13,530

 

 

 

14,490

 

 

 

42,724

 

 

 

42,737

 

Income tax expense

 

 

3,704

 

 

 

3,192

 

 

 

3,355

 

 

 

10,273

 

 

 

10,108

 

Net income

 

$

11,340

 

 

$

10,338

 

 

$

11,135

 

 

$

32,451

 

 

$

32,629

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.60

 

 

$

0.55

 

 

$

0.59

 

 

$

1.72

 

 

$

1.73

 

Diluted

 

$

0.60

 

 

$

0.55

 

 

$

0.59

 

 

$

1.71

 

 

$

1.72

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

18,796,401

 

 

 

18,789,561

 

 

 

18,840,381

 

 

 

18,823,507

 

 

 

18,809,334

 

Diluted

 

 

18,934,123

 

 

 

18,932,511

 

 

 

19,029,350

 

 

 

18,968,129

 

 

 

19,008,883

 

ALTABANCORPtm

UNAUDITED CONSOLIDATED BALANCE SHEETS

 

 

 

September 30,

 

 

June 30,

 

 

December 31,

 

 

September 30,

 

(Dollars in thousands, except share amounts)

 

2020

 

 

2020

 

 

2019

 

 

2019

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

$

44,137

 

 

$

47,088

 

 

$

38,987

 

 

$

45,196

 

Interest-bearing deposits

 

 

180,773

 

 

 

275,920

 

 

 

171,955

 

 

 

195,082

 

Federal funds sold

 

 

74

 

 

 

829

 

 

 

1,039

 

 

 

100,118

 

Total cash and cash equivalents

 

 

224,984

 

 

 

323,837

 

 

 

211,981

 

 

 

340,396

 

Investment securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Available for sale, at fair value

 

 

1,123,051

 

 

 

973,457

 

 

 

405,995

 

 

 

319,857

 

Non-marketable equity securities

 

 

2,890

 

 

 

2,890

 

 

 

2,623

 

 

 

2,623

 

Loans held for sale

 

 

31,872

 

 

 

29,264

 

 

 

18,669

 

 

 

19,554

 

Loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans held for investment

 

 

1,697,135

 

 

 

1,659,018

 

 

 

1,680,918

 

 

 

1,675,147

 

Allowance for credit losses

 

 

(41,495

)

 

 

(42,683

)

 

 

(31,426

)

 

 

(30,471

)

Total loans held for investment, net

 

 

1,655,640

 

 

 

1,616,335

 

 

 

1,649,492

 

 

 

1,644,676

 

Premises and equipment, net

 

 

37,966

 

 

 

38,673

 

 

 

39,474

 

 

 

37,958

 

Goodwill

 

 

25,673

 

 

 

25,673

 

 

 

25,673

 

 

 

25,673

 

Bank-owned life insurance

 

 

42,312

 

 

 

27,330

 

 

 

27,037

 

 

 

26,885

 

Deferred income tax assets

 

 

7,842

 

 

 

8,586

 

 

 

9,716

 

 

 

9,169

 

Accrued interest receivable

 

 

14,117

 

 

 

11,682

 

 

 

7,904

 

 

 

8,850

 

Other intangibles

 

 

2,638

 

 

 

2,749

 

 

 

2,970

 

 

 

3,080

 

Other real estate owned

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Other assets

 

 

6,376

 

 

 

5,169

 

 

 

4,800

 

 

 

5,742

 

Total assets

 

$

3,175,361

 

 

$

3,065,645

 

 

$

2,406,334

 

 

$

2,444,463

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest bearing deposits

 

$

1,037,970

 

 

$

985,455

 

 

$

719,410

 

 

$

777,041

 

Interest-bearing deposits

 

 

1,678,809

 

 

 

1,627,884

 

 

 

1,336,957

 

 

 

1,324,671

 

Total deposits

 

 

2,716,779

 

 

 

2,613,339

 

 

 

2,056,367

 

 

 

2,101,712

 

Short-term borrowings

 

 

83,490

 

 

 

83,490

 

 

 

-

 

 

 

-

 

Accrued interest payable

 

 

487

 

 

 

408

 

 

 

546

 

 

 

571

 

Other liabilities

 

 

14,315

 

 

 

18,278

 

 

 

17,059

 

 

 

19,461

 

Total liabilities

 

 

2,815,071

 

 

 

2,715,515

 

 

 

2,073,972

 

 

 

2,121,744

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders' equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred shares, $0.01 par value

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Common shares, $0.01 par value

 

 

188

 

 

 

188

 

 

 

189

 

 

 

189

 

Additional paid-in capital

 

 

87,116

 

 

 

86,721

 

 

 

87,913

 

 

 

87,704

 

Retained earnings

 

 

260,929

 

 

 

252,032

 

 

 

242,878

 

 

 

233,634

 

Accumulated other comprehensive income/(loss)

 

 

12,057

 

 

 

11,189

 

 

 

1,382

 

 

 

1,192

 

Total shareholders' equity

 

 

360,290

 

 

 

350,130

 

 

 

332,362

 

 

 

322,719

 

Total liabilities and shareholders' equity

 

$

3,175,361

 

 

$

3,065,645

 

 

$

2,406,334

 

 

$

2,444,463

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common shares outstanding

 

 

18,802,635

 

 

 

18,793,217

 

 

 

18,870,498

 

 

 

18,855,710

 

ALTABANCORPtm

SUMMARY FINANCIAL INFORMATION

 

 

 

 

 

 

September 30,

 

 

June 30,

 

 

December 31,

 

 

September 30,

 

(Dollars in thousands, except share amounts)

 

2020

 

 

2020

 

 

2019

 

 

2019

 

Selected Balance Sheet Information:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Book value per share

 

$

19.16

 

 

$

18.63

 

 

$

17.61

 

 

$

17.12

 

Tangible book value per share

 

$

17.66

 

 

$

17.12

 

 

$

16.09

 

 

$

15.59

 

Non-performing loans to total loans

 

 

0.41

%

 

 

0.39

%

 

 

0.53

%

 

 

0.26

%

Non-performing assets to total assets

 

 

0.22

%

 

 

0.21

%

 

 

0.37

%

 

 

0.17

%

Allowance for credit losses to loans held for investment

 

 

2.45

%

 

 

2.57

%

 

 

1.87

%

 

 

1.82

%

Loans to deposits

 

 

62.11

%

 

 

62.97

%

 

 

81.12

%

 

 

79.18

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset Quality Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-performing loans

 

$

6,944

 

 

$

6,388

 

 

$

8,814

 

 

$

4,255

 

Non-performing assets

 

$

6,944

 

 

$

6,388

 

 

$

8,814

 

 

$

4,255

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital Ratios:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tier 1 leverage capital (1)

 

 

10.87

%

 

 

11.68

%

 

 

12.67

%

 

 

12.64

%

Total risk-based capital (1)

 

 

19.13

%

 

 

19.20

%

 

 

18.43

%

 

 

17.88

%

Average equity to average assets

 

 

11.68

%

 

 

12.57

%

 

 

13.63

%

 

 

13.66

%

Tangible common equity to tangible assets (2)

 

 

10.55

%

 

 

10.59

%

 

 

12.77

%

 

 

12.17

%

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

June 30,

 

 

September 30,

 

 

September 30,

 

 

September 30,

 

 

 

2020

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Selected Financial Information:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share

 

$

0.60

 

 

$

0.55

 

 

$

0.59

 

 

$

1.72

 

 

$

1.73

 

Diluted earnings per share

 

$

0.60

 

 

$

0.55

 

 

$

0.59

 

 

$

1.71

 

 

$

1.72

 

Net interest margin (3)

 

 

3.52

%

 

 

3.96

%

 

 

5.04

%

 

 

4.04

%

 

 

5.19

%

Efficiency ratio

 

 

52.86

%

 

 

51.01

%

 

 

49.20

%

 

 

52.02

%

 

 

48.49

%

Non-interest income to average assets

 

 

0.79

%

 

 

0.90

%

 

 

0.76

%

 

 

0.78

%

 

 

0.67

%

Non-interest expense to average assets

 

 

2.19

%

 

 

2.39

%

 

 

2.72

%

 

 

2.41

%

 

 

2.70

%

Annualized return on average assets

 

 

1.47

%

 

 

1.52

%

 

 

1.88

%

 

 

1.58

%

 

 

1.93

%

Annualized return on average equity

 

 

12.62

%

 

 

12.06

%

 

 

13.79

%

 

 

12.57

%

 

 

14.16

%

Net charge-offs

 

$

1,188

 

 

$

670

 

 

$

(332

)

 

$

2,147

 

 

$

574

 

Annualized net charge-offs to average loans

 

 

0.28

%

 

 

0.16

%

 

 

-0.08

%

 

 

0.17

%

 

 

0.05

%

________________________________

(1) Tier 1 leverage capital and Total risk-based capital as of September 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 $ 28.3 million, $28.4 million, $28.6 million, and $28.8 million at September 30, 2020, June 30, 2020, December 31, 2019, and September 30, 2019, respectively.

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

ALTABANCORPtm

SELECTED AVERAGE BALANCES AND YIELDS

 

 

 

Three Months Ended

 

 

 

September 30, 2020

 

 

September 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

 

$

217,220

 

 

$

51

 

 

 

0.09

%

 

$

213,320

 

 

$

1,161

 

 

 

2.16

%

Securities: (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxable securities

 

 

961,025

 

 

 

4,274

 

 

 

1.77

%

 

 

259,870

 

 

 

1,459

 

 

 

2.23

%

Non-taxable securities (2)

 

 

40,625

 

 

 

204

 

 

 

2.00

%

 

 

61,692

 

 

 

295

 

 

 

1.90

%

Total securities

 

 

1,001,650

 

 

 

4,478

 

 

 

1.78

%

 

 

321,562

 

 

 

1,754

 

 

 

2.16

%

Loans (3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Real estate term

 

 

968,473

 

 

 

13,297

 

 

 

5.46

%

 

 

909,671

 

 

 

13,881

 

 

 

6.05

%

Construction and land development

 

 

241,399

 

 

 

3,876

 

 

 

6.39

%

 

 

299,908

 

 

 

6,020

 

 

 

7.96

%

Commercial and industrial

 

 

296,999

 

 

 

3,878

 

 

 

5.19

%

 

 

281,948

 

 

 

4,873

 

 

 

6.86

%

Residential and home equity

 

 

176,265

 

 

 

1,653

 

 

 

3.73

%

 

 

174,104

 

 

 

2,513

 

 

 

5.73

%

Consumer and other

 

 

11,686

 

 

 

192

 

 

 

6.55

%

 

 

17,611

 

 

 

257

 

 

 

5.81

%

Total loans

 

 

1,694,822

 

 

 

22,896

 

 

 

5.37

%

 

 

1,683,242

 

 

 

27,544

 

 

 

6.49

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-marketable equity securities

 

 

2,890

 

 

 

22

 

 

 

3.02

%

 

 

2,624

 

 

 

22

 

 

 

3.32

%

Total interest-earning assets

 

 

2,916,582

 

 

 

27,447

 

 

 

3.74

%

 

 

2,220,748

 

 

 

30,481

 

 

 

5.45

%

Allowance for credit losses

 

 

(42,840

)

 

 

 

 

 

 

 

 

 

 

(28,284

)

 

 

 

 

 

 

 

 

Non-interest earning assets

 

 

187,522

 

 

 

 

 

 

 

 

 

 

 

152,400

 

 

 

 

 

 

 

 

 

Total average assets

 

$

3,061,264

 

 

 

 

 

 

 

 

 

 

$

2,344,864

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Demand and savings accounts

 

$

1,012,180

 

 

 

590

 

 

 

0.23

%

 

$

805,579

 

 

 

882

 

 

 

0.43

%

Money market accounts

 

 

456,543

 

 

 

430

 

 

 

0.37

%

 

 

309,328

 

 

 

759

 

 

 

0.97

%

Certificates of deposit

 

 

171,089

 

 

 

537

 

 

 

1.25

%

 

 

177,850

 

 

 

649

 

 

 

1.45

%

Total interest-bearing deposits

 

 

1,639,812

 

 

 

1,557

 

 

 

0.38

%

 

 

1,292,757

 

 

 

2,290

 

 

 

0.70

%

Short-term borrowings

 

 

83,490

 

 

 

94

 

 

 

0.45

%

 

 

-

 

 

 

-

 

 

 

0.00

%

Total interest-bearing liabilities

 

 

1,723,302

 

 

 

1,651

 

 

 

0.38

%

 

 

1,292,757

 

 

 

2,290

 

 

 

0.70

%

Non-interest bearing deposits

 

 

958,229

 

 

 

 

 

 

 

 

 

 

 

713,742

 

 

 

 

 

 

 

 

 

Total funding

 

 

2,681,531

 

 

 

1,651

 

 

 

0.25

%

 

 

2,006,499

 

 

 

2,290

 

 

 

0.45

%

Other non-interest bearing liabilities

 

 

22,255

 

 

 

 

 

 

 

 

 

 

 

18,086

 

 

 

 

 

 

 

 

 

Shareholders' equity

 

 

357,478

 

 

 

 

 

 

 

 

 

 

 

320,279

 

 

 

 

 

 

 

 

 

Total average liabilities and shareholders' equity

 

$

3,061,264

 

 

 

 

 

 

 

 

 

 

$

2,344,864

 

 

 

 

 

 

 

 

 

Net interest income

 

 

 

 

 

$

25,796

 

 

 

 

 

 

 

 

 

 

$

28,191

 

 

 

 

 

Interest rate spread

 

 

 

 

 

 

 

 

 

 

3.36

%

 

 

 

 

 

 

 

 

 

 

4.74

%

Net interest margin

 

 

 

 

 

 

 

 

 

 

3.52

%

 

 

 

 

 

 

 

 

 

 

5.04

%

________________________________

(1) Excludes average unrealized gains of $16.5 million and $1.2 million for the three months ended September 30, 2020 and 2019, respectively.

(2) Does not include tax effect on tax-exempt investment security income of $68,000 and $98,000 for the three months ended September 30, 2020 and 2019, respectively.

(3) Loan interest income includes loan fees of $1.8 million for both the three months ended September 30, 2020 and 2019, respectively.

ALTABANCORPtm

SELECTED AVERAGE BALANCES AND YIELDS

 

 

 

Nine Months Ended

 

 

 

September 30, 2020

 

 

September 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

 

$

182,909

 

 

$

419

 

 

 

0.31

%

 

$

113,669

 

 

$

1,891

 

 

 

2.22

%

Securities: (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxable securities

 

 

686,319

 

 

 

10,593

 

 

 

2.06

%

 

 

271,193

 

 

 

4,635

 

 

 

2.29

%

Non-taxable securities (2)

 

 

45,586

 

 

 

687

 

 

 

2.01

%

 

 

65,851

 

 

 

929

 

 

 

1.89

%

Total securities

 

 

731,905

 

 

 

11,280

 

 

 

2.06

%

 

 

337,044

 

 

 

5,564

 

 

 

2.21

%

Loans (3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Real estate term

 

 

950,036

 

 

 

39,929

 

 

 

5.61

%

 

 

900,408

 

 

 

40,375

 

 

 

6.00

%

Construction and land development

 

 

258,830

 

 

 

13,056

 

 

 

6.74

%

 

 

309,651

 

 

 

18,555

 

 

 

8.01

%

Commercial and industrial

 

 

293,375

 

 

 

12,670

 

 

 

5.77

%

 

 

291,045

 

 

 

15,256

 

 

 

7.01

%

Residential and home equity

 

 

174,297

 

 

 

6,174

 

 

 

4.73

%

 

 

163,966

 

 

 

7,200

 

 

 

5.87

%

Consumer and other

 

 

12,697

 

 

 

641

 

 

 

6.75

%

 

 

16,811

 

 

 

766

 

 

 

6.09

%

Total loans

 

 

1,689,235

 

 

 

72,470

 

 

 

5.73

%

 

 

1,681,881

 

 

 

82,152

 

 

 

6.53

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-marketable equity securities

 

 

2,807

 

 

 

64

 

 

 

3.04

%

 

 

2,729

 

 

 

76

 

 

 

3.71

%

Total interest-earning assets

 

 

2,606,856

 

 

 

84,233

 

 

 

4.32

%

 

 

2,135,323

 

 

 

89,683

 

 

 

5.62

%

Allowance for loan losses

 

 

(42,398

)

 

 

 

 

 

 

 

 

 

 

(26,708

)

 

 

 

 

 

 

 

 

Non-interest earning assets

 

 

171,747

 

 

 

 

 

 

 

 

 

 

 

151,123

 

 

 

 

 

 

 

 

 

Total average assets

 

$

2,736,205

 

 

 

 

 

 

 

 

 

 

$

2,259,738

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Demand and savings accounts

 

$

918,853

 

 

 

1,909

 

 

 

0.28

%

 

$

806,553

 

 

 

2,910

 

 

 

0.48

%

Money market accounts

 

 

408,549

 

 

 

1,745

 

 

 

0.57

%

 

 

278,062

 

 

 

2,040

 

 

 

0.98

%

Certificates of deposit

 

 

171,379

 

 

 

1,679

 

 

 

1.31

%

 

 

179,664

 

 

 

1,852

 

 

 

1.38

%

Total interest-bearing deposits

 

 

1,498,781

 

 

 

5,333

 

 

 

0.48

%

 

 

1,264,279

 

 

 

6,802

 

 

 

0.72

%

Short-term borrowings

 

 

36,140

 

 

 

94

 

 

 

0.35

%

 

 

3,235

 

 

 

63

 

 

 

2.63

%

Total interest-bearing liabilities

 

 

1,534,921

 

 

 

5,427

 

 

 

0.47

%

 

 

1,267,514

 

 

 

6,865

 

 

 

0.72

%

Non-interest bearing deposits

 

 

839,294

 

 

 

 

 

 

 

 

 

 

 

667,263

 

 

 

 

 

 

 

 

 

Total funding

 

 

2,374,215

 

 

 

5,427

 

 

 

0.31

%

 

 

1,934,777

 

 

 

6,865

 

 

 

0.47

%

Other non-interest bearing liabilities

 

 

17,226

 

 

 

 

 

 

 

 

 

 

 

16,817

 

 

 

 

 

 

 

 

 

Shareholders' equity

 

 

344,764

 

 

 

 

 

 

 

 

 

 

 

308,144

 

 

 

 

 

 

 

 

 

Total average liabilities and shareholders' equity

 

$

2,736,205

 

 

 

 

 

 

 

 

 

 

$

2,259,738

 

 

 

 

 

 

 

 

 

Net interest income

 

 

 

 

 

$

78,806

 

 

 

 

 

 

 

 

 

 

$

82,818

 

 

 

 

 

Interest rate spread

 

 

 

 

 

 

 

 

 

 

3.84

%

 

 

 

 

 

 

 

 

 

 

4.89

%

Net interest margin

 

 

 

 

 

 

 

 

 

 

4.04

%

 

 

 

 

 

 

 

 

 

 

5.19

%

________________________________

(1) Excludes average unrealized gains (losses) of $10.4 million and ($2.2) million for the nine months ended September 30, 2020 and 2019, respectively.

(2) Does not include tax effect on tax-exempt investment security income of $229,000 and $310,000 for the nine months ended September 30, 2020 and 2019, respectively.

(3) Loan interest income includes loan fees of $5.0 million and $4.9 million for the nine months ended September 30, 2020 and 2019, respectively.

 


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