People’s Utah Bancorp :PUB-US: Earnings Analysis: Q3, 2017 By the Numbers : December 15, 2017

People’s Utah Bancorp reports financial results for the quarter ended September 30, 2017.

We analyze the earnings along side the following peers of People’s Utah Bancorp – MidWestOne Financial Group, Inc. (MOFG-US) that have also reported for this period.

Highlights

  • Summary numbers: Revenues of USD 23.49 million, Net Earnings of USD 6.24 million.
  • Net interest income margins widened from 80.08% to 84.79% compared to the same period last year.
  • Net loan assets changed 9.98% compared to same period last year and 1.17% from previous period, total deposits changed 8.24% compared to same period last year and 4.59% from previous period.
  • Year-on-year change in operating cash flow of -41.19% is about the same as the change in earnings, likely no significant movement in accruals or reserves.
  • Earnings decline from worsening in operating margins as well as one-time items.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income (See complete table at the end of this report):

2017-09-30 2017-06-30 2017-03-31 2016-12-31 2016-09-30
Relevant Numbers (Quarterly)
Revenues (mil) 23.49 23.33 21.92 22.67 22.02
Revenue Growth (%YOY) 6.67 7.96 7.11 12.2 11.49
Earnings (mil) 6.24 6.49 6.52 6.54 6.25
Earnings Growth (%YOY) -0.16 16.44 24.38 33.89 18.65
Net Margin (%) 26.55 27.84 29.75 28.86 28.37
EPS 0.34 0.35 0.36 0.36 0.34
Return on Equity (%) 2.57 2.74 2.82 2.88 2.8
Return on Assets (%) 1.42 1.51 1.54 1.58 1.54

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Market Share Versus Profits

Revenues History
Earnings History

PUB-US’s change in revenue this period compared to the same period last year of 6.67% is almost the same as its change in earnings, and is about average among the announced results thus far in its peer group, suggesting that PUB-US is holding onto its market share. Also, for comparison purposes, revenues changed by 0.70% and earnings by -3.94% compared to the immediate last period.

Revenues Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Leader, Earnings Focus, Laggard, Revenues Focus

Earnings Growth Analysis

The company’s year-on-year earnings decline has not come as a result of decline in net interest income margins or because of any loan loss provisions. Both net interest income margins and net interest income after provisions margins have actually improved. In fact, net interest income margins went from 80.08% to 84.79% and net interest income after provisions margins improved from 78.61% to 80.96% over this period. In addition, loan loss provisions as a percentage of net interest income were 4.52% this period , and 1.84% a year ago.

Net Interest Income Margin Versus Loan Loss Provisions Margin

Quadrant label definitions. Hover to know more

High Risk; High Reward Loans, Risky Loan Portfolio, Conservative Loan Portfolio, Safer Loan Portfolio
Net Interest Income Margin History
Loan Loss Provisions Margin History

Net Loans and Total Deposits

A financial institution’s core operations represented by Net Interest Income and Net Interest Income after Provisions are dependent on both the growth and quality of its deposits as well as the growth and quality of its loans. A firm could boost its interest income in the short-term by just increasing its loan assets with less concern about their quality – but this would eventually lead to greater loan loss provisions. Similarly a drive to increase deposits could result in higher interest expenses and eventually effect the firm’s equity. It is thus important to understand net interest income performance in context to loan loss provisions, loan assets and deposits.

Loan Assets Growth Rate History (Qtr YOY)
Total Deposits Growth Rate History (Qtr YOY)

The firm’s improvement in net interest income margins was influenced by the relative increase in the level of net loan assets. In addition, total deposits as a percentage of equity went from 6.27% to 6.23%. On an absolute basis, net loan assets changed 9.98% compared to the same period last year and 1.17% from the previous period, while total deposits changed 8.24% compared to the same period last year and 4.59% from the previous period.

Cash Versus Earnings – Sustainable Performance?

It is important to examine a company�s cash versus earnings numbers to gauge whether its performance is sustainable.

PUB-US’s change in operating cash flow of -41.19% compared to the same period last year is about the same as its change in earnings this period. Additionally, this change in operating cash flow is about average among its peer group. This suggests that the company did not use accruals or reserves to manage earnings this period, and that, all else being equal, the earnings number is sustainable.

Operating Cash Flow Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Cash Flow based Earnings, Likely Non-cash Earnings, Low Cash Flow Base, Likely Undeclared Earnings

Margins

The company’s decline in earnings has been influenced by the following factors: (1) Contraction of operating margins from 44.48% to 40.09% and (2) One-time items that contributed to a decrease in pretax margins from 44.48% to 38.03%

EBIT Margin History
PreTax Margin History
EBIT Margin Versus PreTax Margin

Quadrant label definitions. Hover to know more

Operation driven Earnings, One-time Favorables, Low Earnings Base, One-time Unfavorables

Access our Ratings and Scores for People’s Utah Bancorp

Company Profile

People’s Utah Bancorp operates as a bank holding company. It operates through its holly-owned banking subsidiaries, Bank of American Fork and Lewiston State Bank, which provides banking and related services to locally-owned businesses, professional firms, real estate developers, residential home builders, high net-worth individuals, investors,and other customers. The company was founded in 1998 and is headquartered in American Fork, UT.

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