Business Wire | Oct 29, 2020 09:30AM EDT

Altabancorp(tm) Reports Third Quarter 2020 Results

Oct. 29, 2020

AMERICAN FORK, Utah--(BUSINESS WIRE)--Oct. 29, 2020-- * Total assets grew $731 million, or 30%, year-over-year to $3.18 billion at September 30, 2020. * Total deposits grew $615 million, or 29%, year-over-year to $2.72 billion at September 30, 2020. * Loans held for investment grew $22.0 million, or 1.3%, year-over-year to $1.70 billion at September 30, 2020. * Cash and liquid investments securities grew $688 million, or 104%, year-over-year to $1.35 billion, or 42% of total assets, at September 30, 2020. * Tangible book value per share increased $2.07, or 13.3%, year-over-year to $17.66 at September 30, 2020. * Tangible equity plus allowance for credit losses totaled $373 million, or 22.0% of total loans held for investment, at September 30, 2020, which provides overall credit protection for both expected and unexpected credit losses in its loan portfolio. * Return on average assets was 1.58% and return on average equity was 12.57% for the nine months ended September 30, 2020.

Altabancorp(tm) (Nasdaq: ALTA) (the "Company" or "Alta"), the parent company of Altabank(tm), 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 Altabancorp(tm). "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 Altabancorp(tm). "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 Altaexpress(tm)), 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 Altabancorp(tm)

Altabancorp(tm) (Nasdaq: ALTA) is the bank holding company for Altabank(tm), 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. Altabank(tm) 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. Altabank(tm) has been serving communities in Utah and southern Idaho for more than 100 years. More information about Altabank(tm) is available at www.altabank.com. More information about Altabancorp(tm) is available at www.altabancorp.com.

ALTABANCORP^Tm

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

Three Months Ended Nine Months Ended

(Dollars in September September September Septemberthousands, 30, June 30, 30, 30, 30, except share

and pershare 2020 2020 2019 2020 2019 amounts)

Interest income

Interest andfees on $ 22,896 $ 23,649 $ 27,544 $ 72,470 $ 82,152 loans

Interest anddividends on 4,551 3,753 2,937 11,763 7,531 investments

Totalinterest 27,447 27,402 30,481 84,233 89,683 income

Interest 1,651 1,613 2,290 5,427 6,865 expense

Net interest 25,796 25,789 28,191 78,806 82,818 income

Provisionfor credit - 2,100 2,100 2,750 5,800 losses

Net interestincome afterprovision 25,796 23,689 26,091 76,056 77,018 for creditlosses

Noninterest income

Mortgage 3,850 3,036 2,116 8,596 5,154 banking

Card 986 917 976 2,610 2,405 processing

Servicecharges on 813 763 744 2,356 2,106 depositaccounts

Net gain onsale of - 1,441 - 1,441 - investmentsecurities

Other 468 (41 ) 631 970 1,737

Totalnon-interest 6,117 6,116 4,467 15,973 11,402 income

Noninterest expense

Salaries andemployee 11,107 10,786 10,410 32,737 29,822 benefits

Occupancy,equipment 1,155 831 1,439 3,525 4,453 anddepreciation

Data 1,647 2,383 1,280 5,166 3,262 processing

Marketingand 584 339 805 1,355 1,147 advertising

FDIC 183 165 6 348 244 premiums

Other 2,193 1,771 2,128 6,174 6,755

Totalnon-interest 16,869 16,275 16,068 49,305 45,683 expense

Incomebefore 15,044 13,530 14,490 42,724 42,737 income taxexpense

Income tax 3,704 3,192 3,355 10,273 10,108 expense

Net income $ 11,340 $ 10,338 $ 11,135 $ 32,451 $ 32,629



Earnings percommon share:

Basic $ 0.60 $ 0.55 $ 0.59 $ 1.72 $ 1.73

Diluted $ 0.60 $ 0.55 $ 0.59 $ 1.71 $ 1.72



Weightedaveragecommon sharesoutstanding:

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

ALTABANCORP^Tm

UNAUDITED CONSOLIDATED BALANCE SHEETS

September June 30, December 31, September 30, 30,

(Dollars inthousands, 2020 2020 2019 2019 except shareamounts)

ASSETS

Cash and due $ 44,137 $ 47,088 $ 38,987 $ 45,196 from banks

Interest-bearing 180,773 275,920 171,955 195,082 deposits

Federal funds 74 829 1,039 100,118 sold

Total cash and 224,984 323,837 211,981 340,396 cash equivalents

Investment securities:

Available forsale, at fair 1,123,051 973,457 405,995 319,857 value

Non-marketableequity 2,890 2,890 2,623 2,623 securities

Loans held for 31,872 29,264 18,669 19,554 sale

Loans:

Loans held for 1,697,135 1,659,018 1,680,918 1,675,147 investment

Allowance for (41,495 ) (42,683 ) (31,426 ) (30,471 )credit losses

Total loans heldfor investment, 1,655,640 1,616,335 1,649,492 1,644,676 net

Premises and 37,966 38,673 39,474 37,958 equipment, net

Goodwill 25,673 25,673 25,673 25,673

Bank-owned life 42,312 27,330 27,037 26,885 insurance

Deferred income 7,842 8,586 9,716 9,169 tax assets

Accrued interest 14,117 11,682 7,904 8,850 receivable

Other 2,638 2,749 2,970 3,080 intangibles

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 ANDSHAREHOLDERS' EQUITY

Deposits:

Non-interest $ 1,037,970 $ 985,455 $ 719,410 $ 777,041 bearing deposits

Interest-bearing 1,678,809 1,627,884 1,336,957 1,324,671 deposits

Total deposits 2,716,779 2,613,339 2,056,367 2,101,712

Short-term 83,490 83,490 - - borrowings

Accrued interest 487 408 546 571 payable

Other 14,315 18,278 17,059 19,461 liabilities

Total 2,815,071 2,715,515 2,073,972 2,121,744 liabilities



Shareholders' equity:

Preferredshares, $0.01 - - - - par value

Common shares, 188 188 189 189 $0.01 par value

Additional 87,116 86,721 87,913 87,704 paid-in capital

Retained 260,929 252,032 242,878 233,634 earnings

Accumulatedother 12,057 11,189 1,382 1,192 comprehensiveincome/(loss)

Totalshareholders' 360,290 350,130 332,362 322,719 equity

Totalliabilities and $ 3,175,361 $ 3,065,645 $ 2,406,334 $ 2,444,463 shareholders'equity



Common shares 18,802,635 18,793,217 18,870,498 18,855,710 outstanding

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

%

ALTABANCORP^Tm

SUMMARY FINANCIAL INFORMATION



September June December September 30, 30, 31, 30,

(Dollars in thousands, except 2020 2020 2019 2019 share amounts)

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 0.41 % 0.39 % 0.53 % 0.26 %loans

Non-performing assets to 0.22 % 0.21 % 0.37 % 0.17 %total assets

Allowance for credit losses 2.45 % 2.57 % 1.87 % 1.82 %to loans held for investment

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 11.68 % 12.57 % 13.63 % 13.66 %assets

Tangible common equity to 10.55 % 10.59 % 12.77 % 12.17 %tangible assets ^(2)

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

%

________________________________

Three Months Ended Nine Months Ended

September June September September September 30, 30, 30, 30, 30,

2020 2020 2019 2020 2019

SelectedFinancial Information:

Basicearnings per $ 0.60 $ 0.55 $ 0.59 $ 1.72 $ 1.73 share

Dilutedearnings per $ 0.60 $ 0.55 $ 0.59 $ 1.71 $ 1.72 share

Net interest 3.52 % 3.96 % 5.04 % 4.04 % 5.19 %margin ^(3)

Efficiency 52.86 % 51.01 % 49.20 % 52.02 % 48.49 %ratio

Non-interestincome to 0.79 % 0.90 % 0.76 % 0.78 % 0.67 %averageassets

Non-interestexpense to 2.19 % 2.39 % 2.72 % 2.41 % 2.70 %averageassets

Annualizedreturn on 1.47 % 1.52 % 1.88 % 1.58 % 1.93 %averageassets

Annualizedreturn on 12.62 % 12.06 % 13.79 % 12.57 % 14.16 %averageequity

Net $ 1,188 $ 670 $ (332 ) $ 2,147 $ 574 charge-offs

Annualizednetcharge-offs 0.28 % 0.16 % -0.08 % 0.17 % 0.05 %to averageloans

________________________________

^(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 assetsall divided by the sum of total assets less intangible assets. Intangibleassets were $ 28.3 million, $28.4 million, $28.6 million, and $28.8 million atSeptember 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 averageearning 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

%

________________________________

ALTABANCORP^Tm

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 inthousands, except Balance Expense Rate Balance Expense Rate footnotes)

ASSETS

Interest-earningdeposits in other $ 217,220 $ 51 0.09 % $ 213,320 $ 1,161 2.16 %banks and federalfunds sold

Securities: ^(1)

Taxable securities 961,025 4,274 1.77 % 259,870 1,459 2.23 %

Non-taxable 40,625 204 2.00 % 61,692 295 1.90 %securities^ (2)

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 241,399 3,876 6.39 % 299,908 6,020 7.96 %land development

Commercial and 296,999 3,878 5.19 % 281,948 4,873 6.86 %industrial

Residential and 176,265 1,653 3.73 % 174,104 2,513 5.73 %home equity

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 2,890 22 3.02 % 2,624 22 3.32 %equity securities

Totalinterest-earning 2,916,582 27,447 3.74 % 2,220,748 30,481 5.45 %assets

Allowance for (42,840 ) (28,284 ) credit losses

Non-interest 187,522 152,400 earning assets

Total average $ 3,061,264 $ 2,344,864 assets

LIABILITIES ANDSHAREHOLDERS' EQUITY

Interest-bearing deposits:

Demand and savings $ 1,012,180 590 0.23 % $ 805,579 882 0.43 %accounts

Money market 456,543 430 0.37 % 309,328 759 0.97 %accounts

Certificates of 171,089 537 1.25 % 177,850 649 1.45 %deposit

Totalinterest-bearing 1,639,812 1,557 0.38 % 1,292,757 2,290 0.70 %deposits

Short-term 83,490 94 0.45 % - - 0.00 %borrowings

Totalinterest-bearing 1,723,302 1,651 0.38 % 1,292,757 2,290 0.70 %liabilities

Non-interest 958,229 713,742 bearing deposits

Total funding 2,681,531 1,651 0.25 % 2,006,499 2,290 0.45 %

Other non-interest 22,255 18,086 bearing liabilities

Shareholders' 357,478 320,279 equity

Total averageliabilities and $ 3,061,264 $ 2,344,864 shareholders'equity

Net interest income $ 25,796 $ 28,191

Interest rate 3.36 % 4.74 %spread

Net interest margin 3.52 % 5.04 %

________________________________

^(1) Excludes average unrealized gains of $16.5 million and $1.2 million forthe 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 threemonths 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

%

________________________________

ALTABANCORP^Tm

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 inthousands, except Balance Expense Rate Balance Expense Rate footnotes)

ASSETS

Interest-earningdeposits in other $ 182,909 $ 419 0.31 % $ 113,669 $ 1,891 2.22 %banks and federalfunds sold

Securities: ^(1)

Taxable securities 686,319 10,593 2.06 % 271,193 4,635 2.29 %

Non-taxable 45,586 687 2.01 % 65,851 929 1.89 %securities^ (2)

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 258,830 13,056 6.74 % 309,651 18,555 8.01 %land development

Commercial and 293,375 12,670 5.77 % 291,045 15,256 7.01 %industrial

Residential and 174,297 6,174 4.73 % 163,966 7,200 5.87 %home equity

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 2,807 64 3.04 % 2,729 76 3.71 %equity securities

Totalinterest-earning 2,606,856 84,233 4.32 % 2,135,323 89,683 5.62 %assets

Allowance for loan (42,398 ) (26,708 ) losses

Non-interest 171,747 151,123 earning assets

Total average $ 2,736,205 $ 2,259,738 assets

LIABILITIES ANDSHAREHOLDERS' EQUITY

Interest-bearing deposits:

Demand and savings $ 918,853 1,909 0.28 % $ 806,553 2,910 0.48 %accounts

Money market 408,549 1,745 0.57 % 278,062 2,040 0.98 %accounts

Certificates of 171,379 1,679 1.31 % 179,664 1,852 1.38 %deposit

Totalinterest-bearing 1,498,781 5,333 0.48 % 1,264,279 6,802 0.72 %deposits

Short-term 36,140 94 0.35 % 3,235 63 2.63 %borrowings

Totalinterest-bearing 1,534,921 5,427 0.47 % 1,267,514 6,865 0.72 %liabilities

Non-interest 839,294 667,263 bearing deposits

Total funding 2,374,215 5,427 0.31 % 1,934,777 6,865 0.47 %

Other non-interest 17,226 16,817 bearing liabilities

Shareholders' 344,764 308,144 equity

Total averageliabilities and $ 2,736,205 $ 2,259,738 shareholders'equity

Net interest income $ 78,806 $ 82,818

Interest rate 3.84 % 4.89 %spread

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 millionfor the nine months ended September 30, 2020 and 2019, respectively.

View source version on businesswire.com: https://www.businesswire.com/news/home/20201029005295/en/

CONTACT: Investor Relations Contact Mark K. Olson Executive Vice President and Chief Financial Officer Altabancorp(tm) investorrelations@altabancorp.com Phone: 801-642-3998