pub-10q_20180930.htm

(Former name, former address, and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ☒ Yes No ☐

Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

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

Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes No ☒

The number of shares of Registrant’s common stock outstanding on October 31, 2018 was 18,719,496. No preferred shares are issued or outstanding.

	September 30,			December 31,
(Dollars in thousands, except share data)	2018			2017
ASSETS
Cash and cash equivalents:
Cash and due from banks	$	27,231		$	36,235
Interest bearing deposits		23,005			13,158
Federal funds sold		4,697			1,634
Total cash and cash equivalents		54,933			51,027
Investment securities:
Available-for-sale, at fair value		255,021			263,056
Held-to-maturity, at historical cost		67,148			74,654
Total investment securities		322,169			337,710
Non-marketable equity securities		4,231			3,706
Loans held for sale		8,467			10,871
Loans:
Loans held for investment		1,718,403			1,627,444
Allowance for loan losses		(23,309	)		(18,303	)
Total loans held for investment, net		1,695,094			1,609,141
Premises and equipment, net		36,683			30,399
Goodwill		25,673			26,008
Bank-owned life insurance		26,276			23,566
Deferred income tax assets, net		11,224			8,827
Accrued interest receivable		8,766			7,594
Other intangibles		3,523			3,854
Other real estate owned		2,985			994
Other assets		12,829			9,832
Total assets	$	2,212,853		$	2,123,529
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits:
Non-interest bearing deposits	$	677,379		$	641,124
Interest bearing deposits		1,194,553			1,173,508
Total deposits		1,871,932			1,814,632
Short-term borrowings		42,000			40,000
Accrued interest payable		424			353
Other liabilities		18,865			11,126
Total liabilities		1,933,221			1,866,111

Shareholders’ equity:
Preferred shares, $0.01 par value: 3,000,000 shares authorized, no shares issued		-			-
Common shares, $0.01 par value: 30,000,000 shares authorized; 18,719,496
and 18,511,797 shares issued and outstanding as of September 30, 2018
and December 31, 2017, respectively		187			185
Additional paid-in capital		86,098			84,532
Retained earnings		199,161			174,804
Accumulated other comprehensive loss		(5,814	)		(2,103	)
Total shareholders’ equity		279,632			257,418
Total liabilities and shareholders’ equity	$	2,212,853		$	2,123,529

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
(Dollars in thousands, except share and per share data)	2018			2017			2018		2017
Interest income
Interest and fees on loans	$	27,420		$	18,843		$	80,276	$	53,610
Interest and dividends on investments		1,679			1,820			5,018		5,327
Total interest income		29,099			20,663			85,294		58,937
Interest expense		1,917			754			5,190		2,269
Net interest income		27,182			19,909			80,104		56,668
Provision for loan losses		1,925			900			5,450		2,000
Net interest income after provision for loan losses		25,257			19,009			74,654		54,668
Non-interest income
Mortgage banking		1,668			1,686			4,811		5,625
Card processing		826			704			2,347		1,991
Service charges on deposit accounts		737			636			2,114		1,750
Net gain (loss) on sale of investment securities		-			(486	)		336		(499	)
Other		563			500			1,970		1,602
Total non-interest income		3,794			3,040			11,578		10,469
Non-interest expense
Salaries and employee benefits		9,885			8,813			30,504		24,542
Occupancy, equipment and depreciation		1,476			1,164			4,430		3,369
Data processing		890			650			2,823		1,986
Marketing and advertising		342			343			1,109		954
FDIC premiums		239			135			867		391
Acquisition-related costs		(118	)		484			232		660
Other		2,566			1,525			7,186		4,961
Total non-interest expense		15,280			13,114			47,151		36,863
Income before income tax expense		13,771			8,935			39,081		28,274
Income tax expense		3,288			2,697			9,127		9,021
Net income	$	10,483		$	6,238		$	29,954	$	19,253
Earnings per common share:
Basic	$	0.56		$	0.35		$	1.60	$	1.07
Diluted	$	0.55		$	0.34		$	1.58	$	1.05
Weighted average common shares outstanding:
Basic		18,713,410			17,976,066			18,664,339		17,933,010
Diluted		19,010,600			18,396,664			18,979,405		18,355,136

										Accumulated
					Additional					Other
	Common				Paid-in		Retained			Comprehensive
(Dollars in thousands, except share and per share data)	Shares		Amount		Capital		Earnings			Income (Loss)			Total
Balance as of January 1, 2017		17,819,538	$	178	$	68,657	$	160,692		$	(1,010	)	$	228,517
Comprehensive income		-		-		-		19,253			486			19,739
Cash dividends ($0.25 per share)		-		-		-		(4,483	)		-			(4,483	)
Share-based compensation		-		-		382		-			-			382
Exercise of stock options		203,113		2		1,268		-			-			1,270
Balance as of September 30, 2017		18,022,651	$	180	$	70,307	$	175,462		$	(524	)	$	245,425

Balance as of January 1, 2018		18,511,797	$	185	$	84,532	$	174,804		$	(2,103	)	$	257,418
Comprehensive income		-		-		-		29,954			(3,711	)		26,243
Cash dividends ($0.30 per share)		-		-		-		(5,597	)		-			(5,597	)
Share-based compensation		-		-		683		-			-			683
Exercise of stock options		207,699		2		883		-			-			885
Balance as of September 30, 2018		18,719,496	$	187	$	86,098	$	199,161		$	(5,814	)	$	279,632

	Nine Months Ended
	September 30,
(Dollars in thousands)	2018			2017
Cash flows from operating activities:
Net income	$	29,954		$	19,253
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses		5,450			2,000
Depreciation and amortization		2,401			1,926
Deferred income taxes		(1,160	)		(736	)
Net amortization of securities discounts and premiums		1,991			2,188
Increase in cash surrender value of bank-owned life insurance		(460	)		(382	)
Share-based compensation		683			382
Gain on sale of loans held for sale		(3,099	)		(4,061	)
Originations of loans held for sale		(162,308	)		(172,397	)
Proceeds from sale of loans held for sale		167,811			186,542
Net changes in:
Accrued interest receivable		(1,172	)		(629	)
Other assets		(2,546	)		(1,071	)
Accrued interest payable		71			(46	)
Other liabilities		7,739			3,612
Net cash provided by operating activities		45,355			36,581
Cash flows from investing activities:
Net change in loans held for investment		(93,643	)		(97,227	)
Purchase of available-for-sale securities		(30,832	)		(24,599	)
Purchase of held-to-maturity securities		-			(12,198	)
Proceeds from maturities/sales of available-for-sale securities		32,504			132,578
Proceeds from maturities of held-to-maturity securities		6,930			9,323
Purchase of bank-owned life insurance		(2,250	)		-
Purchase of premises and equipment		(8,659	)		(6,137	)
Proceeds from sale of other real estate owned, net of improvements		438			270
Net change of non-marketable equity securities		(525	)		(132	)
Net cash (used in) provided by investing activities		(96,037	)		1,878
Cash flows from financing activities:
Net increase in deposits		57,300			103,107
Proceeds related to exercise of stock options		885			1,270
Net change in short-term borrowings		2,000			574
Cash dividends paid		(5,597	)		(4,483	)
Net cash provided by financing activities		54,588			100,468
Net change in cash and cash equivalents		3,906			138,927
Cash and cash equivalents, beginning of period		51,027			67,938
Cash and cash equivalents, end of period	$	54,933		$	206,865
Supplemental disclosures of cash flow information:
Cash paid for interest	$	5,119		$	2,315
Income taxes paid	$	11,032		$	10,724
Supplemental disclosures of non-cash investing transactions:
Reclassifications from loans to other real estate owned	$	2,985		$	425
Unrealized (losses) / gains on securities available-for-sale	$	(4,948	)	$	787
Measurement period adjustment to goodwill	$	(335	)	$	-

Nature of operations and basis of consolidation — People’s Utah Bancorp, Inc. (“PUB” or the “Company”) is a Utah corporation headquartered in American Fork, Utah. The Company operates all business activities through its wholly-owned banking subsidiary, People’s Intermountain Bank (“PIB” or the “Bank”), which was organized in 1913. The Bank is a Utah state chartered bank. The Bank operates under the jurisdiction of the Utah Department of Financial Institutions, and its deposits are insured by the Federal Deposit Insurance Corporation (“FDIC”). The Bank is not a member of the Federal Reserve System; however, PUB is operated as a bank holding company under the Federal Bank Holding Company Act of 1956 and is the sole shareholder of the Bank. Both PUB and the Bank are subject to periodic examination by applicable federal and state regulatory agencies and file periodic reports and other information with the agencies.

PIB is a community bank that provides highly personalized retail and commercial banking products and services to small and medium sized businesses and individuals. Products and services are offered primarily through 26 retail branches located throughout Utah and southern Idaho. PIB has three banking divisions, Bank of American Fork, Lewiston State Bank, and People’s Town & Country Bank; a leasing division, GrowthFunding Equipment Finance; and a mortgage division, People’s Intermountain Bank Mortgage. The Bank offers a full range of short-term to long-term commercial, personal and mortgage loans. Commercial loans include both secured and unsecured loans for working capital (including inventory and accounts receivable), business expansion (including acquisition of real estate and improvements), and purchase of equipment and machinery. Consumer loans include secured and unsecured loans to finance automobiles, home improvements, education, and personal investments. The Bank also offers mortgage loans secured by personal residences. The Bank offers a full range of deposit services typically available in most financial institutions, including checking accounts, savings accounts, and time deposits. The Bank solicits these accounts from individuals, businesses, associations and organizations, and governmental entities.

The interim condensed consolidated financial statements include the accounts of the Company together with its subsidiary Bank. All intercompany transactions and balances have been eliminated.

The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial information. In the opinion of management, the interim statements reflect all adjustments necessary for a fair presentation of the financial position, results of operations and cash flows of the Company on a consolidated basis and all such adjustments are of a normal recurring nature. These financial statements and the accompanying notes should be read in conjunction with the Company’s audited financial statements for the year ended December 31, 2017, which are included in the Company’s 2017 Form 10-K. Operating results for the three months and nine months ended September 30, 2018 are not necessarily indicative of the results that may be expected for the year ending December 31, 2018, or any other period.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses, the valuation of real estate acquired through foreclosure, deferred tax assets, and share-based compensation.

Earnings per share — Basic earnings per common share represents income available to common shareholders divided by the weighted-average number of common shares outstanding during the period. Diluted earnings per share reflect additional common shares that would have been outstanding if dilutive potential common shares had been issued. Potential common shares include shares that may be issued by the Company for outstanding stock options determined using the treasury stock method and for all outstanding restricted stock units (“RSU”).

Reclassifications — Certain amounts in the prior period’s financial statements have been reclassified to conform to the current period’s presentation.

Impact of Recent Authoritative Accounting Guidance —The Accounting Standards Codification™ (“ASC”) is the Financial Accounting Standards Board’s (“FASB”) officially recognized source of authoritative GAAP applicable to all public and non-public non-governmental entities. Periodically, the FASB will issue Accounting Standard Updates (“ASU”) to its ASC. Rules and interpretive releases of the SEC under the authority of the federal securities laws are also sources of authoritative GAAP for us as an SEC registrant. All other accounting literature is non-authoritative.

In March 2017, FASB issued ASU 2017-08, "Receivables-Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities." The ASU requires entities to amortize the premium on certain purchased callable debt securities to the earliest call date, which more closely aligns the amortization period of premiums and discounts to expectations incorporated in the market prices. Entities will no longer recognize a loss in earnings upon the debtor's exercise of a call on a purchased debt security held at a premium. The ASU does not require any accounting change for debt securities held at a discount; therefore the discount will continue to be amortized as an adjustment of yield over the contractual life of the investment. This ASU is effective for interim and annual reporting periods beginning after December 15, 2018. Early adoption is permitted for all entities. The adoption of ASU No. 2017-08 is not expected to have a material impact on the Company's Consolidated Financial Statements.

In June 2016, the FASB issued ASU No. 2016-13, "Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments." The ASU significantly changes the impairment model for most financial assets that are measured at amortized cost and certain other instruments from an incurred loss model to an expected loss model. This ASU is effective for interim and annual reporting periods beginning after December 15, 2019. Early adoption is permitted for all entities beginning after December 15, 2018, including interim periods within those fiscal years. The Company is in the process of identifying required changes to the loan loss estimation models and processes and evaluating the impact of this new guidance. Once adopted, we expect our allowance for loan losses to increase. However, until our evaluation is complete, the magnitude of the increase will be unknown.

In February 2016, the FASB issued ASU 2016-02, "Leases (ASC 842)." The guidance in this ASU requires most leases to be recognized on the balance sheet as a right-of-use asset and a lease liability. It will be critical to identify leases embedded in a contract to avoid misstating the lessee’s balance sheet. For income statement purposes, the FASB retained a dual model, requiring leases to be classified as either operating or finance. Classification will be based on criteria that are largely similar to those applied in current lease accounting, but without explicit bright lines. This ASU is effective for interim and annual periods beginning after December 15, 2018. We are currently evaluating the impact of this guidance on our Consolidated Financial Statements and the timing of adoption. The Company will compile an inventory of all leased assets to determine the impact of ASU 2016-02 on its financial condition and results of operations. Once adopted, we expect to report higher assets and liabilities on our Consolidated Balance Sheets as a result of including right-of-use assets and lease liabilities related to certain banking offices and certain equipment under noncancelable operating lease agreements, which currently are not reflected in our Consolidated Balance Sheets. We do not expect the guidance to have a material impact on the Consolidated Statements of Income or the Consolidated Statements of Changes in Shareholders’ Equity.

In August 2015, the FASB issued ASU No. 2015-14, “Revenue from Contracts with Customers (Topic 606)”, which defers the effective date of Accounting Standard Update ASU No. 2014-09 one year. ASU No. 2014-09 created Topic 606 and supersedes Topic 605, Revenue Recognition. The core principle of Topic 606 is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In general, the new guidance requires companies to use more judgment and make more estimates than under current guidance, including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. In May 2016, the FASB issued ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients, which provides clarifying guidance in certain narrow areas and adds some practical expedients, but does not change the core revenue recognition principle in Topic 606. ASU No. 2015-14 is effective for interim and annual periods beginning after December 15, 2017. For financial reporting purposes, the standard allows for either full retrospective adoption, meaning the standard is applied to all of the periods presented, or modified retrospective adoption, meaning the standard is applied only to the most current period presented in the financial statements with the cumulative effect of initially applying the standard recognized at the date of initial application. The Company adopted this standard on January 1, 2018 using the full retrospective method.

A significant amount of the Company’s revenues are derived from net interest income on financial assets and liabilities, which are excluded from the scope of the amended guidance. Revenue streams reported as deposit fees and other service charges, which include transaction based deposit fees, and interchange fees on credit and debit cards, are within the scope of Topic 606. The Company completed its assessment of revenue streams and associated incremental costs of contracts affected by the standard. The Company’s adoption of this standard did not change the timing or the amount of revenue recognized in prior periods. However, the presentation of certain costs associated with card processing will now be offset against card processing revenue in non-interest income. The change in presentation resulted in $1.8 million of expenses for the nine months ended September 30, 2018 being netted against card processing income and reported in non-interest income instead of as payment and card processing expenses in non-interest expense. In addition, to conform to the current period presentation, $1.6 million of card processing related expenses for the nine months ended September 30, 2017, were reclassified from payment and card processing expense in non-interest expense to being netted against card processing revenue in non-interest income. The Company elected to apply the practical expedient and therefore does not disclose information about remaining performance obligations that have an original expected term of one year or less and allows the Company to expense costs related to obtaining a contract as incurred when the amortization period would have been one year or less.

The following table presents the impact of adopting of the new revenue standard on our Statements of Income for the nine months ended September 30, 2018 and 2017:

	Nine Months Ended							Nine Months Ended
	September 30, 2018							September 30, 2017
			Balance without							Balance without
(Dollars in thousands, except share and per share data)	As Reported		Adoption of ASC 606		Effect of Change			As Reported		Adoption of ASC 606		Effect of Change
Non-interest income
Card Processing	$	2,347	$	4,177	$	(1,830	)	$	1,991	$	3,579	$	(1,588	)
Service charges on deposit accounts		2,114		2,114		-			1,750		1,750		-

Non-interest Expense
Card Processing	$	-	$	1,830	$	(1,830	)	$	-	$	1,588	$	(1,588	)

Amortized cost and estimated fair value of investment securities available-for-sale are summarized as follows:

					Gross Unrealized Losses
					Less			12
			Gross		Than			Months
	Amortized		Unrealized		12			or			Fair
(Dollars in thousands)	Cost		Gains		Months			Longer			Value
As of September 30, 2018
U.S. Government-sponsored securities	$	48,954	$	-	$	(418	)	$	(561	)	$	47,975
Municipal securities		11,341		68		(66	)		(41	)		11,302
Mortgage-backed securities		197,478		19		(2,615	)		(3,914	)		190,968
Corporate securities		5,000		-		(6	)		(218	)		4,776
	$	262,773	$	87	$	(3,105	)	$	(4,734	)	$	255,021
As of December 31, 2017
U.S. Government-sponsored securities	$	48,950	$	13	$	(6	)	$	(453	)	$	48,504
Municipal securities		13,310		184		(22	)		(18	)		13,454
Mortgage-backed securities		198,100		71		(1,145	)		(1,764	)		195,262
Corporate securities		5,500		573		-			(237	)		5,836
	$	265,860	$	841	$	(1,173	)	$	(2,472	)	$	263,056

Amortized cost and estimated fair value of investment securities held-to-maturity are as follows:

At September 30, 2018 and December 31, 2017, the gross unrealized losses and the fair value for securities available-for-sale and held-to-maturity was as follows:

	September 30, 2018
	Less Than 12 Months					12 Months or More					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
(Dollars in thousands)	Value		Losses			Value		Losses			Value		Losses
Available-for-Sale
U.S. Government-sponsored securities	$	14,537	$	(418	)	$	33,437	$	(561	)	$	47,974	$	(979	)
Municipal securities		4,319		(66	)		1,558		(41	)		5,877		(107	)
Mortgage-backed securities		90,052		(2,615	)		99,170		(3,914	)		189,222		(6,529	)
Corporate securities		1,994		(6	)		2,782		(218	)		4,776		(224	)
	$	110,902	$	(3,105	)	$	136,947	$	(4,734	)	$	247,849	$	(7,839	)
Held-to Maturity
Municipal securities	$	42,342	$	(656	)	$	16,359	$	(452	)	$	58,701	$	(1,108	)

	December 31, 2017
	Less Than 12 Months					12 Months or More					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
(Dollars in thousands)	Value		Losses			Value		Losses			Value		Losses
Available-for-Sale
U.S. Government-sponsored securities	$	5,087	$	(6	)	$	33,543	$	(453	)	$	38,630	$	(459	)
Municipal securities		3,523		(22	)		830		(18	)		4,353		(40	)
Mortgage-backed securities		112,878		(1,145	)		72,859		(1,764	)		185,737		(2,909	)
Corporate securities		-		-			4,763		(237	)		4,763		(237	)
	$	121,488	$	(1,173	)	$	111,995	$	(2,472	)	$	233,483	$	(3,645	)
Held-to Maturity
Municipal securities	$	39,380	$	(293	)	$	10,389	$	(227	)	$	49,769	$	(520	)

The amortized cost and estimated fair value of investment securities that are available-for-sale and held-to-maturity at September 30, 2018, by contractual maturity, are as follows:

Actual maturities may differ from contractual maturities because issuers may have the right to call obligations with or without penalties and other securities may experience pre-payments.

As of September 30, 2018, the Company held 336 investment securities with fair value less than amortized cost compared to 304 at December 31, 2017. Management evaluated these investment securities and determined that the decline in value is temporary and related to the change in market interest rates since purchase. The decline in value is not related to any company or industry specific event. The Company anticipates full recovery of the amortized cost with respect to these securities at maturity, or sooner in the event of a more favorable market interest rate environment.

The Company had sales of available-for-sale securities totaling $500,000 during the nine months ended September 30, 2018, which resulted in a net gain of $336,000 compared with $126.2 million during the nine months ended September 30, 2017, which resulted in a net loss of $486,000. There were no available-for-sale securities in a nonaccrual status at September 30, 2018 or December 31, 2017.

The Company had no sales of held-to-maturity securities during the nine months ended September 30, 2018, compared to $204,000 during the nine months ended September 30, 2017, which resulted in a net loss of $13,000. The company had no held-to-maturity securities in a nonaccrual status at September 30, 2018 or December 31, 2017.

	Three Months Ended September 30, 2018
	Real			Construction		Commercial			Residential		Consumer
	Estate			and Land		and			and		and
(Dollars in thousands)	Term			Development		Industrial			Home Equity		Other			Total
Balance at beginning of period	$	9,028		$	6,789	$	5,780		$	659	$	52		$	22,308
Additions: Provisions for loan losses		469			892		455			14		95			1,925
Deductions:
Gross loan charge-offs		(294	)		-		(945	)		-		(105	)		(1,344	)
Recoveries		46			6		312			2		54			420
Net loan (charge-offs) / recoveries		(248	)		6		(633	)		2		(51	)		(924	)
Balance at end of period	$	9,249		$	7,687	$	5,602		$	675	$	96		$	23,309

	Three Months Ended September 30, 2017
	Real			Construction		Commercial			Residential			Consumer
	Estate			and Land		and			and			and
(Dollars in thousands)	Term			Development		Industrial			Home Equity			Other			Total
Balance at beginning of period	$	7,157		$	5,077	$	4,489		$	503		$	45		$	17,271
Additions: Provisions for loan losses		(303	)		409		770			(44	)		68			900
Deductions:
Gross loan charge-offs		-			-		(621	)		-			(46	)		(667	)
Recoveries		23			2		46			7			27			105
Net loan (charge-offs) / recoveries		23			2		(575	)		7			(19	)		(562	)
Balance at end of period	$	6,877		$	5,488	$	4,684		$	466		$	94		$	17,609

	Nine Months Ended September 30, 2018
	Real			Construction		Commercial			Residential			Consumer
	Estate			and Land		and			and			and
(Dollars in thousands)	Term			Development		Industrial			Home Equity			Other			Total
Balance at beginning of period	$	6,706		$	6,309	$	4,314		$	815		$	159		$	18,303
Additions: Provisions for loan losses		2,779			1,301		1,522			(223	)		71			5,450
Deductions:
Gross loan charge-offs		(294	)		-		(1,235	)		-			(277	)		(1,806	)
Recoveries		58			77		1,001			83			143			1,362
Net loan (charge-offs) / recoveries		(236	)		77		(234	)		83			(134	)		(444	)
Balance at end of period	$	9,249		$	7,687	$	5,602		$	675		$	96		$	23,309

	Nine Months Ended September 30, 2017
	Real			Construction			Commercial			Residential			Consumer
	Estate			and Land			and			and			and
(Dollars in thousands)	Term			Development			Industrial			Home Equity			Other			Total
Balance at beginning of period	$	6,770		$	5,449		$	3,718		$	617		$	161		$	16,715
Additions: Provisions for loan losses		253			(42	)		1,736			40			13			2,000
Deductions:
Gross loan charge-offs		(350	)		-			(893	)		(338	)		(159	)		(1,740	)
Recoveries		204			81			123			147			79			634
Net loan (charge-offs) / recoveries		(146	)		81			(770	)		(191	)		(80	)		(1,106	)
Balance at end of period	$	6,877		$	5,488		$	4,684		$	466		$	94		$	17,609

A restructured loan is considered a troubled debt restructured loan (“TDR”), if the Company, for economic or legal reasons related to the debtor’s financial difficulties, grants a concession in terms or a below-market interest rate to the debtor that it would not otherwise consider. Each TDR loan is separately negotiated with the borrower and includes terms and conditions that reflect the borrower’s prospective ability to service the debt as modified.

Loans totaling $4.1 million were classified as TDR’s during the nine months ended September 30, 2018. No new TDRs occurred during the nine months ended September 30, 2018. In addition, there were no TDRs which incurred a payment default within twelve months of the restructure date during the nine-month periods ended September 30, 2018 and 2017.

Current and past due loans held for investment (accruing and non-accruing) are summarized as follows:

	September 30, 2018
											Purchased
			30-89 Days		90+ Days		Non-		Total		Credit		Total
(Dollars in thousands)	Current		Past Due		Past Due		accrual		Past Due		Impaired		Loans
Commercial real estate:
Real estate term	$	850,094	$	1,040	$	-	$	1,805	$	2,845	$	3,308	$	856,247
Construction and land development		380,306		1,517		-		98		1,615		333		382,254
Total commercial real estate		1,230,400		2,557		-		1,903		4,460		3,641		1,238,501
Commercial and industrial		307,873		2,346		-		1,624		3,970		2,552		314,395
Consumer:
Residential and home equity		152,518		888		-		-		888		-		153,406
Consumer and other		16,355		220		17		5		242		-		16,597
Total consumer		168,873		1,108		17		5		1,130		-		170,003
Total gross loans	$	1,707,146	$	6,011	$	17	$	3,532	$	9,560	$	6,193	$	1,722,899

	December 31, 2017
											Purchased
			30-89 Days		90+ Days		Non-		Total		Credit		Total
(Dollars in thousands)	Current		Past Due		Past Due		accrual		Past Due		Impaired		Loans
Commercial real estate:
Real estate term	$	777,746	$	2,243	$	-	$	-	$	2,243	$	4,159	$	784,148
Construction and land development		361,847		7,095		-		-		7,095		648		369,590
Total commercial real estate		1,139,593		9,338		-		-		9,338		4,807		1,153,738
Commercial and industrial		285,785		4,210		-		223		4,433		3,867		294,085
Consumer:
Residential and home equity		156,379		2,212		-		-		2,212		-		158,591
Consumer and other		25,307		283		1		-		284		-		25,591
Total consumer		181,686		2,495		1		-		2,496		-		184,182
Total gross loans	$	1,607,064	$	16,043	$	1	$	223	$	16,267	$	8,674	$	1,632,005

In addition to past due and non-accrual criteria, the Company also analyzes loans using a loan grading system. Performance-based grading follows the Company’s definitions of Pass, Special Mention, Substandard and Doubtful, which are consistent with published definitions of regulatory risk classifications.

Definitions of Pass, Special Mention, Substandard, and Doubtful are summarized as follows:

Pass: A Pass asset is higher quality and does not fit any of the other categories described below. The likelihood of loss is considered remote.

Special Mention: A Special Mention asset has potential weaknesses that may be temporary or, if left uncorrected, may result in a loss. While concerns exist, the Company is currently protected and loss is considered unlikely and not imminent.

Substandard: A Substandard asset is inadequately protected by the current sound net worth and paying capacity of the obligor or of the collateral pledged, if any. Assets so classified have well defined weaknesses and are characterized by the distinct possibility that the Company may sustain some loss if deficiencies are not corrected.

Doubtful: A Doubtful asset has all the weaknesses inherent in a Substandard asset with the added characteristics that the weaknesses make collection or liquidation in full highly questionable.

For Consumer loans, the Company generally assigns internal risk grades similar to those described above based on payment performance.

Outstanding loan balances (accruing and non-accruing) categorized by these credit quality indicators are summarized as follows:

	September 30, 2018
			Special						Total		Total
(Dollars in thousands)	Pass		Mention		Substandard		Doubtful		Loans		Allowance
Commercial real estate:
Real estate term	$	827,297	$	17,896	$	11,054	$	-	$	856,247	$	9,249
Construction and land development		378,895		1,596		1,763		-		382,254		7,687
Total commercial real estate		1,206,192		19,492		12,817		-		1,238,501		16,936
Commercial and industrial		295,243		6,186		12,966		-		314,395		5,602
Consumer loans:
Residential and home equity		149,310		1,701		2,395		-		153,406		675
Consumer and other		16,543		27		27		-		16,597		96
Total consumer		165,853		1,728		2,422		-		170,003		771
Total	$	1,667,288	$	27,406	$	28,205	$	-	$	1,722,899	$	23,309

	December 31, 2017
			Special						Total		Total
(Dollars in thousands)	Pass		Mention		Substandard		Doubtful		Loans		Allowance
Commercial real estate:
Real estate term	$	758,575	$	13,055	$	12,518	$	-	$	784,148	$	6,706
Construction and land development		358,766		7,227		3,597		-		369,590		6,309
Total commercial real estate		1,117,341		20,282		16,115		-		1,153,738		13,015
Commercial and industrial		274,535		13,464		6,086		-		294,085		4,314
Consumer loans:
Residential and home equity		152,753		3,913		1,925		-		158,591		815
Consumer and other		25,461		45		72		13		25,591		159
Total consumer		178,214		3,958		1,997		13		184,182		974
Total	$	1,570,090	$	37,704	$	24,198	$	13	$	1,632,005	$	18,303

The ALLL and outstanding loan balances reviewed according to the Company’s impairment method are summarized as follows:

	September 30, 2018
	Real		Construction		Commercial		Residential		Consumer
	Estate		and Land		and		and		and
(Dollars in thousands)	Term		Development		Industrial		Home Equity		Other		Total
Allowance for loan losses:
Individually evaluated for impairment	$	-	$	-	$	279	$	-	$	-	$	279
Collectively evaluated for impairment		9,249		7,687		5,323		675		96		23,030
Purchased credit-impaired loans		-		-		-		-		-		-
Total	$	9,249	$	7,687	$	5,602	$	675	$	96	$	23,309
Outstanding loan balances:
Individually evaluated for impairment	$	4,355	$	1,441	$	11,564	$	2,112	$	-	$	19,472
Collectively evaluated for impairment		848,584		380,480		300,279		151,294		16,597		1,697,234
Purchased credit-impaired loans		3,308		333		2,552		-		-		6,193
Total gross loans	$	856,247	$	382,254	$	314,395	$	153,406	$	16,597	$	1,722,899

	December 31, 2017
	Real		Construction		Commercial		Residential		Consumer
	Estate		and Land		and		and		and
(Dollars in thousands)	Term		Development		Industrial		Home Equity		Other		Total
Allowance for loan losses:
Individually evaluated for impairment	$	-	$	3	$	41	$	101	$	-	$	145
Collectively evaluated for impairment		6,706		6,306		4,273		714		159		18,158
Purchased credit-impaired loans		-		-		-		-		-		-
Total	$	6,706	$	6,309	$	4,314	$	815	$	159	$	18,303
Outstanding loan balances:
Individually evaluated for impairment	$	6,191	$	2,568	$	2,044	$	1,150	$	-	$	11,953
Collectively evaluated for impairment		773,798		366,374		288,174		157,441		25,591		1,611,378
Purchased credit-impaired loans		4,159		648		3,867		-		-		8,674
Total gross loans	$	784,148	$	369,590	$	294,085	$	158,591	$	25,591	$	1,632,005

Information on impaired loans, excluding Purchased Credit Impaired (“PCI”) loans, is summarized as follows:

	September 30, 2018
			Recorded Investment
	Unpaid						Total
	Principal		With No		With		Recorded		Related
(Dollars in thousands)	Balance		Allowance		Allowance		Investment		Allowance
Commercial real estate:
Real estate term	$	7,607	$	4,355	$	-	$	4,355	$	-
Construction and land development		2,194		1,441		-		1,441		-
Total commercial real estate		9,801		5,796		-		5,796		-
Commercial and industrial		14,523		9,723		1,841		11,564		279
Consumer loans:
Residential and home equity		2,112		2,112		-		2,112		-
Consumer and other		-		-		-		-		-
Total consumer		2,112		2,112		-		2,112		-
Total	$	26,436	$	17,631	$	1,841	$	19,472	$	279

	December 31, 2017
			Recorded Investment
	Unpaid						Total
	Principal		With No		With		Recorded		Related
(Dollars in thousands)	Balance		Allowance		Allowance		Investment		Allowance
Commercial real estate:
Real estate term	$	7,090	$	6,191	$	-	$	6,191	$	-
Construction and land development		3,485		2,372		196		2,568		3
Total commercial real estate		10,575		8,563		196		8,759		3
Commercial and industrial		6,204		1,276		768		2,044		41
Consumer loans:
Residential and home equity		1,150		229		921		1,150		101
Consumer and other		-		-		-		-		-
Total consumer		1,150		229		921		1,150		101
Total	$	17,929	$	10,068	$	1,885	$	11,953	$	145

	Three Months Ended
	September 30, 2018				September 30, 2017
	Average		Interest		Average		Interest
	Recorded		Income		Recorded		Income
(Dollars in thousands)	Investment		Recognition		Investment		Recognition
Commercial real estate:
Real estate term	$	10,127	$	111	$	6,648	$	100
Construction and land development		1,043		16		1,880		73
Total commercial real estate		11,170		127		8,528		173
Commercial and industrial		10,049		140		4,659		103
Consumer loans:
Residential and home equity		2,728		33		1,052		26
Consumer and other		-		-		-		-
Total consumer		2,728		33		1,052		26
Total	$	23,947	$	300	$	14,239	$	302

	Nine Months Ended
	September 30, 2018				September 30, 2017
	Average		Interest		Average		Interest
	Recorded		Income		Recorded		Income
(Dollars in thousands)	Investment		Recognition		Investment		Recognition
Commercial real estate:
Real estate term	$	8,366	$	257	$	5,765	$	118
Construction and land development		1,716		90		2,397		104
Total commercial real estate		10,082		347		8,162		222
Commercial and industrial		7,198		268		4,464		148
Consumer loans:
Residential and home equity		2,175		76		1,054		37
Consumer and other		-		-		-		-
Total consumer		2,175		76		1,054		37
Total	$	19,455	$	691	$	13,680	$	407

Purchased credit-impaired loans and purchased non-credit-impaired loans. Purchased loans, including loans acquired in business combinations, are recorded at their fair value at the acquisition date. Credit discounts are included in the determination of fair value; therefore, an allowance for loan and lease losses is not recorded at the acquisition date. Acquired loans are evaluated upon acquisition and classified as either purchased credit-impaired (PCI) or purchased non-credit-impaired. PCI loans reflect credit deterioration since origination such that it is probable at acquisition that the Company will be unable to collect all contractually required payments. The outstanding contractual unpaid principal balance of PCI loans, excluding acquisition accounting adjustments, was $9.2 million at September 30, 2018 and $12.4 million at December 31, 2017. The carrying balance of PCI loans was $6.2 million at September 30, 2018 and $8.7 million at December 31, 2017.

The following table presents the changes in the accretable yield for PCI loans for the nine months ended September 30, 2018, and 2017:

As of September 30, 2018 and December 31, 2017, the non-accretable difference between the contractually required payments and cash flows expected to be collected were $3.0 million and $3.7 million, respectively.

Loans and Deposits to affiliates — The Company has entered into loan transactions with certain directors, affiliated companies and executive committee members (“affiliates”). Such transactions were made in the ordinary course of business on substantially the same terms and conditions, including interest rates and collateral, as those prevailing at the same time for comparable transactions with other customers, and did not, in the opinion of management, involve more than normal credit risk or present other unfavorable features. Total outstanding loans with affiliates were approximately $4.3 million and $3.4 million as of September 30, 2018, and December 31, 2017, respectively. Available lines of credit for loans and credit cards to affiliates were approximately $1.3 million and $330,000 as of September 30, 2018, and December 31, 2017, respectively. Deposits from affiliates were $8.8 million and $7.1 million as of September 30, 2018 and December 31, 2017, respectively.

Litigation contingencies — The Company is involved in various claims, legal actions and complaints which arise in the ordinary course of business. In the Company’s opinion, all such matters are adequately covered by insurance, are without merit or are of such kind, or involve such amounts, that unfavorable disposition would not have a material adverse effect on the financial condition or results of operations of the Company.

Commitments to extend credit — In the normal course of business, the Company has outstanding commitments and contingent liabilities, such as commitments to extend credit and unused credit card lines, which are not included in the accompanying consolidated financial statements. The Company’s exposure to credit loss in the event of non-performance by other parties to the financial instruments for commitments to extend credit and unused credit card lines is represented by the contractual or notional amount of those instruments. The Company uses the same credit policies in making such commitments as it does for instruments that are included in the consolidated balance sheets.

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. The commitments to extend credit may expire without being drawn upon. Therefore, the total commitment amounts do not necessarily represent future cash requirements. The amount of collateral obtained, if it is deemed necessary by the Company, is based on management’s credit evaluation of the customer.

Unused credit card lines are commitments for possible future extensions of credit to existing customers. These lines of credit are uncollateralized and usually do not contain a specified maturity date and may not be drawn upon to the total extent to which the Company is committed.

The Company measures and discloses certain assets and liabilities at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (that is, not a forced liquidation or distressed sale). GAAP establishes a consistent framework for measuring fair value and disclosure requirements about fair value measurements. Among other things, the standard requires us to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s estimates for market assumptions. These two types of inputs create the following fair value hierarchy:

The estimated fair value amounts of financial instruments have been determined by the Company using available market information and appropriate valuation methodologies. However, considerable judgment is required to interpret data to develop the estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company could realize at a future date. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. In addition, reasonable comparability between financial institutions may not be likely due to the wide range of permitted valuation techniques and numerous estimates that must be made given the absence of active secondary markets for many of the financial instruments. This lack of uniform valuation methodologies also introduces a greater degree of subjectivity to these estimated fair values. Transfers between levels of the fair value hierarchy are deemed to occur at the end of the reporting period.

The following methods were used to estimate the fair value of each class of financial instruments:

Cash and cash equivalents: The carrying amount of these items is a reasonable estimate of their fair value.

Securities: The estimated fair values of investment securities are priced using current active market quotes, if available, which are considered Level 1 measurements. For most of the portfolio, matrix pricing based on the securities’ relationship to other benchmark quoted prices is used to establish the fair value. These measurements are considered Level 2.

Non-marketable securities: The fair value is based upon the redemption value of the stock, which equates to its carrying value.

Loans Held for Sale: The carrying amount of these items is a reasonable estimate of their fair value.

Loans held for investment: The fair value is estimated by discounting the future cash flows and estimated prepayments using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining term. Some loan types fair value approximated carrying value because of their floating rate or expected maturity characteristics.

Bank-owned life insurance: The fair value of BOLI policies owned is based on the various insurance contracts' cash surrender value.

Deposits: The carrying amount of deposits with no stated maturity, such as savings and checking accounts, is a reasonable estimate of their fair value. The market value of certificates of deposit is based upon the discounted value of contractual cash flows. The discount rate is determined using the rates currently offered on comparable instruments.

Short-term borrowings: Short-term borrowing are overnight advances with the FHLB and their carrying amount is considered a reasonable approximation of their fair value.

The following table presents estimated fair values of the Company’s financial instruments as of September 30, 2018 and December 31, 2017:

			September 30, 2018				December 31, 2017
			Carrying		Estimated		Carrying		Estimated
(Dollars in thousands)	Level		Value		Fair Value		Value		Fair Value
Financial Assets:
Cash and cash equivalents		1	$	54,933	$	54,933	$	51,027	$	51,027
Investment securities available-for-sale		2		255,021		255,021		263,056		263,056
Investment securities held-to-maturity		2		67,148		66,050		74,654		74,301
Non-marketable securities		2		4,231		4,231		3,706		3,706
Loans held for sale		2		8,467		8,467		10,871		10,871
Loans held for investment		3		1,695,094		1,692,440		1,609,141		1,607,388
Bank-owned life insurance		1		26,276		26,276		23,566		23,566

Financial Liabilities:
Total deposits		2	$	1,871,932	$	1,580,894	$	1,814,632	$	1,596,966
Short-term borrowings		2		42,000		42,000		40,000		40,000

(Dollars in thousands)	Level 1		Level 2		Level 3		Total
As of September 30, 2018
Fair valued on a recurring basis:
Investment securities available-for-sale	$	-	$	255,021	$	-	$	255,021
Fair valued on a non-recurring basis:
Impaired loans		-		-		1,562		1,562

As of December 31, 2017
Fair valued on a recurring basis:
Investment securities available-for-sale	$	-	$	263,056	$	-	$	263,056
Fair valued on a non-recurring basis:
Impaired loans		-		-		1,740		1,740

Income tax expense was $3.3 million and $2.7 million for the three months ended September 30, 2018 and 2017, respectively. The Company’s effective tax rate for the third quarter of 2018 was 23.9% compared with 30.2% in the third quarter of 2017. The tax rate in the third quarter of 2018 is lower than the same quarter in 2017 due primarily to the reduction in the federal corporate tax rate to a flat rate of 21%, the reduction of the Utah state corporate tax rate to 4.95% as well as tax benefits related to tax-deductible stock compensation expense.

The consolidated Tier 1 Leverage ratio increased to 11.90% as of September 30, 2018 from 11.46% at December 31, 2017. Federal Reserve Board Regulations require maintenance of certain minimum reserve balances based on certain average deposits, which, as of September 30, 2018 and December 31, 2017, were $16.3 million and $19.0 million, respectively. The Company’s Board of Directors may declare a cash or stock dividend out of retained earnings provided the regulatory minimum capital ratios are met. The Company plans to maintain capital ratios that meet the well-capitalized standards per the regulations and, therefore, plans to limit dividends to amounts that are appropriate to maintain those well-capitalized regulatory capital ratios.

In June 2014, the Board of Directors (“Board”) and shareholders of the Company approved a share-based incentive plan (“the Plan”). The Plan provides for various share-based incentive awards including incentive share-based options, non-qualified share-based options, restricted shares, and stock appreciation rights to be granted to officers, directors and other key employees. The maximum aggregate number of shares that may be issued under the Plan is 800,000 common shares. The share-based awards are granted to participants under the Plan at a price not less than the fair value on the date of grant and for terms of up to ten years. The Plan also allows for granting of share-based awards to directors and consultants who are not employees of the Company.

During the nine months ended September 30, 2018, the Company granted options for the purchase of 33,382 common shares, which have a weighted average exercise price of $32.31 per share and a weighted average fair value as of the date of grant of $3.58 per share. Additionally, the Company granted 32,128 restricted stock units (“RSU”) at a weighted-average fair value of $31.03 per unit. The options and RSU’s generally vest over periods from one to three years. The Company recorded share-based compensation expense of $683,000 and $382,000 for the nine months ended September 30, 2018 and 2017, respectively.

During the nine months ended September 30, 2018, the Company made acquisition related measurement period adjustments of $335,000. Changes to initially estimated fair values from a business combination are recognized as an adjustment to goodwill over the measurement period, which cannot exceed one year from the acquisition date. The adjustments to goodwill related to changes in the preliminary goodwill recorded for the acquisition of Town & Country Bank and were related to loan valuations.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion is intended to provide a more comprehensive review of People’s Utah Bancorp’s operating results and financial condition than can be obtained from reading the Unaudited Condensed Consolidated Financial Statements alone. The discussion should be read in conjunction with the Unaudited Condensed Consolidated Financial Statements and the notes thereto included in “Part I. Item 1. Financial Statements.”

This Quarterly Report on Form 10–Q may contain certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect our current views and are not historical facts. These statements can generally be identified by use of phrases such as “believe,” “expect,” “will,” “seek,” “should,” “anticipate,” “estimate,” “intend,” “plan,” “target,” “project,” “commit” or other words of similar import. Similarly, statements that describe our future financial condition, results of operations, objectives, strategies, plans, goals or future performance and business are also forward-looking statements. Statements that project future financial conditions, results of operations and shareholder value are not guarantees of performance and many of the factors that will determine these results and values are beyond our ability to control or predict. For those statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. These are forward-looking statements and involve known and unknown risks, uncertainties and other factors, including, but not limited to, those described in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections in this report and our Annual Report on Form 10-K for the year ended December 31, 2017 (“Form 10-K”), and other parts of this report that could cause our actual results to differ materially from those anticipated in these forward-looking statements. The following is a non-exclusive list of factors which could cause our actual results to differ materially from our forward-looking statements in this prospectus:

Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated, expected, projected, intended, committed or believed.

Please take into account that forward-looking statements speak only as of the date of this Form 10-Q. We do not undertake any obligation to release publicly our revisions to such forward-looking statements to reflect events or circumstances after the date of this Form 10-Q.

People’s Utah Bancorp (“PUB”) is the holding company for People’s Intermountain Bank. People’s Intermountain Bank (“Bank”, “PIB”) is a full-service community bank providing loans, deposit and cash management services to individuals and businesses. Our primary customers are small to medium sized businesses that require highly personalized commercial banking products and services. People’s Intermountain Bank has 26 branch locations in three banking divisions, Bank of American Fork, Lewiston State Bank, and People’s Town & Country Bank; a leasing division, GrowthFunding Equipment Finance; and a mortgage division, People’s Intermountain Bank Mortgage. The Bank has been serving communities in Utah and southern Idaho for more than 100 years.

Our recent loan growth is the result of mergers and acquisitions as well as organic growth that we believe was generated by our seasoned relationship managers and supporting associates who provide outstanding service and quick responsiveness to our customers. The primary source of funding for our asset growth has been the generation of core deposits, which we raised through acquisitions as well as from our existing branch system.

Our results of operations are largely dependent on net interest income. Net interest income is the difference between interest income we earn on interest earning assets, which are comprised of loans, investment securities and short-term investments and the interest we pay on our interest bearing liabilities, which are primarily deposits, and, to a lesser extent, other borrowings. Management strives to match the re-pricing characteristics of the interest earning assets and interest bearing liabilities to protect net interest income from changes in market interest rates and changes in the shape of the yield curve.

We measure our performance by calculating our net interest margin, return on average assets, and return on average equity. Net interest margin is calculated by dividing net interest income, which is the difference between interest income on interest earning assets and interest expense on interest bearing liabilities, by average interest earning assets. Net interest income is our largest source of revenue. Interest rate fluctuations, as well as changes in the amount and type of earning assets and liabilities, combine to affect net interest income. We also measure our performance by our efficiency ratio, which is calculated by dividing non-interest expense by the sum of net interest income and non-interest income.

Utah Branches from Banner Bank — On October 6, 2017, we completed our acquisition of $257 million in loans and seven Utah branch locations with $160 million in low-cost core deposits from Banner Corporation’s subsidiary Banner Bank. The Bank paid a deposit premium of $13.8 million based on average deposits at closing. The seven branch locations in Utah include Salt Lake City, Provo, South Jordan, Woods Cross, Orem, Salem, and Springville. The Woods Cross and Orem branches were consolidated into our existing Bank of American Fork Bountiful and Orem branches, respectively. We are operating these acquired branches under the name of Bank of American Fork, a division of PIB.

Town & Country Bank — On November 13, 2017, we completed the merger of Town & Country Bank located in St. George, Utah, including the acquisition of $117 million in loans and the assumption of $124 million in deposits. We consolidated our existing St. George branch and Town & Country’s branch into one branch. Under the terms of the merger, each outstanding Town & Country common share converted into the right to receive 0.2917 PUB common shares and $4.23 per common share in cash, including $2.0 million of cash held in escrow that is subject to indemnification claims. Town & Country shareholders also received an additional cash distribution of $1.68 per common share in cash. A total of 466,546 PUB common shares were issued in this transaction. We operate this branch under the name of People’s Town & Country Bank, a division of PIB.

In addition to financial results presented in accordance with generally accepted accounting principles ("GAAP"), this Management’s Discussion & Analysis contains certain non-GAAP financial measures. We have presented these non-GAAP financial measures because we believe that they provide useful and comparative information to assess trends in our core operations and facilitates the comparison of our financial performance with the performance of our peers and the comparative years presented. We have excluded acquisition related costs, net gains and losses on the sale of certain securities, and the write-down of our deferred income tax assets due to the reduction in the Federal corporate income tax rate to derive non-GAAP financial information related to the company’s core operations. The Company believes this non-GAAP financial information is useful in understanding the Company’s core financial performance.

However, these non-GAAP financial measures are supplemental and are not a substitute for any analysis based on GAAP. Where applicable, we have also presented comparable earnings information using GAAP financial measures. For a reconciliation of these non-GAAP financial measures, see the tables below. Because not all companies use the same calculations, our presentation may not be comparable to other similarly titled non-GAAP measures as calculated by other companies.

^(NG) Non-GAAP Financial Measures
In addition to financial results presented in accordance with GAAP, this schedule contains certain non-GAAP financial measures. Management has presented these non-GAAP financial measures because it believes that they provide useful and comparative information to assess trends in core operations and facilitate the comparison of our financial performance with the performance of our peers.

(Dollars in thousands)	Three Months Ended									Nine Months Ended
	September 30,			June 30,			September 30,			September 30,			September 30,
Revenue from Core Operations	2018			2018			2017			2018			2017
Net interest income (GAAP)	$	27,182		$	26,978		$	19,909		$	80,104		$	56,668
Total non-interest income		3,794			4,066			3,040			11,578			10,469
Total revenues (GAAP)		30,976			31,044			22,949			91,682			67,137
Exclude net (gain)/ loss on sale of investment securities		-			(333	)		486			(333	)		499
Revenue from core operations (non-GAAP)	$	30,976		$	30,711		$	23,435		$	91,349		$	67,636

	Three Months Ended									Nine Months Ended
	September 30,			June 30,			September 30,			September 30,			September 30,
Non-interest Income from Core Operations	2018			2018			2017			2018			2017
Total non-interest income (GAAP)	$	3,794		$	4,066		$	3,040		$	11,578		$	10,469
Exclude net (gain)/ loss on sale of investment securities		-			(333	)		486			(333	)		499
Non-interest income from core operations (non-GAAP)	$	3,794		$	3,733		$	3,526		$	11,245		$	10,968

	Three Months Ended									Nine Months Ended
	September 30,			June 30,			September 30,			September 30,			September 30,
Non-interest Expense from Core Operations	2018			2018			2017			2018			2017
Total non-interest expense (GAAP)	$	15,280		$	15,823		$	13,114		$	47,151		$	36,863
Exclude acquisition-related costs		118			(1	)		(484	)		(232	)		(660	)
Non-interest expense from core operations (non-GAAP)	$	15,398		$	15,822		$	12,630		$	46,919		$	36,203

	Three Months Ended									Nine Months Ended
	September 30,			June 30,			September 30,			September 30,			September 30,
Net Income from Core Operations	2018			2018			2017			2018			2017
Net income (GAAP)	$	10,483		$	10,467		$	6,238		$	29,954		$	19,253
Exclude net (gain)/ loss on sale of investment securities		-			(333	)		486			(333	)		499
Exclude acquisition-related costs		(118	)		1			484			232			660
Exclude tax related benefit		28			79			(293	)		24			(370	)
Write down of deferred income tax assets (DTA)		-			-			-			-			-
Net income (non-GAAP)	$	10,393		$	10,214		$	6,915		$	29,877		$	20,042

^(NG) Non-GAAP Financial Measures
In addition to financial results presented in accordance with GAAP, this schedule contains certain non-GAAP financial measures. Management has presented these non-GAAP financial measures because it believes that they provide useful and comparative information to assess trends in core operations and facilitate the comparison of our financial performance with the performance of our peers.
(Dollars in thousands)	Three Months Ended									Nine Months Ended
	September 30,			June 30,			September 30,			September 30,			September 30,
Acquisition Accounting Impact on Net Interest Margin	2018			2018			2017			2018			2017
Net interest income (GAAP)	$	27,182		$	26,978		$	19,909		$	80,104		$	56,668
Exclude discount accretion (premium amortization) on purchased loans		(222	)		(777	)		(20	)		(2,165	)		(38	)
Exclude premium amortization on acquired certificates of deposit ("CD")		(35	)		(35	)		(69	)		(106	)		(207	)
Net interest income before acquisition accounting impact (Non-GAAP)	$	26,925		$	26,166		$	19,820		$	77,833		$	56,423

Average earning assets (GAAP)	$	2,054,261		$	2,058,125		$	1,657,085		$	2,043,295		$	1,619,351
Exclude average net loan discount on acquired loans		9,549			10,146			844			10,531			858
Average earning assets before acquired loan discount (Non-GAAP)	$	2,063,810		$	2,068,271		$	1,657,929		$	2,053,826		$	1,620,209

Net interest margin ("NIM") (GAAP)		5.25	%		5.26	%		4.77	%		5.24	%		4.68	%
Exclude impact on NIM from discount accretion		-0.04	%		-0.15	%		0.00	%		-0.14	%		0.00	%
Exclude impact on NIM from CD premium amortization		-0.01	%		-0.01	%		-0.02	%		-0.01	%		-0.02	%
Net interest margin before acquisition accounting adjustments (Non-GAAP)		5.20	%		5.10	%		4.75	%		5.09	%		4.66	%

(Dollars in thousands)	Three Months Ended									Nine Months Ended
	September 30,			June 30,			September 30,			September 30,			September 30,
Additional Non-GAAP Financial Information	2018			2018			2017			2018			2017
Diluted earnings per share (GAAP)	$	0.55		$	0.55		$	0.34		$	1.58		$	1.05
Diluted earnings per share (Non-GAAP)	$	0.55		$	0.54		$	0.38		$	1.57		$	1.09

Efficiency ratio (GAAP)		49.33	%		50.97	%		57.14	%		51.43	%		54.91	%
Efficiency ratio (Non-GAAP)		49.71	%		51.52	%		53.89	%		51.36	%		53.53	%

Non-interest income to average assets (GAAP)		0.69	%		0.75	%		0.69	%		0.71	%		0.82	%
Non-interest income to average assets (Non-GAAP)		0.69	%		0.69	%		0.80	%		0.69	%		0.86	%

Non-interest expense to average assets (GAAP)		2.78	%		2.91	%		2.98	%		2.91	%		2.89	%
Non-interest expense to average assets (Non-GAAP)		2.80	%		2.91	%		2.87	%		2.90	%		2.84	%

Return on average assets (GAAP)		1.91	%		1.93	%		1.42	%		1.85	%		1.51	%
Return on average assets (Non-GAAP)		1.89	%		1.88	%		1.57	%		1.84	%		1.57	%

Return on average equity (GAAP)		14.97	%		15.60	%		10.14	%		14.85	%		10.80	%
Return on average equity (Non-GAAP)		14.84	%		15.22	%		11.24	%		14.82	%		11.24	%

You should read the selected financial information data set forth below in conjunction with our historical consolidated financial statements and related notes.


	September 30,			June 30,			December 31,			September 30,
(Dollars in thousands, except share data)	2018			2018			2017			2017
Selected Balance Sheet Information:
Book value per share	$	14.94		$	14.54		$	13.91		$	13.62
Tangible book value per share	$	13.38		$	12.97		$	12.29		$	13.59
Non-performing loans to total loans		0.34	%		0.51	%		0.18	%		0.34	%
Non-performing assets to total assets		0.40	%		0.40	%		0.18	%		0.25	%
Allowance for loan losses to loans held for investment		1.36	%		1.32	%		1.12	%		1.45	%
Loans to Deposits		91.01	%		94.32	%		89.27	%		79.09	%

Asset Quality Data:
Non-performing loans	$	5,830		$	8,649		$	2,899		$	4,141
Non-performing assets		8,815			8,649			3,893			4,466

Capital Ratios:
Tier 1 leverage capital ⁽¹⁾		11.90	%		11.48	%		11.46	%		14.07	%
Total risk-based capital ⁽¹⁾		15.46	%		15.22	%		14.67	%		20.35	%
Average equity to average assets		12.76	%		12.36	%		13.58	%		13.98	%
Tangible common equity to tangible assets ⁽³⁾		11.47	%		11.36	%		10.87	%		13.69	%

	Three Months Ended									Nine Months Ended
	September 30,			June 30,			September 30,			September 30,			September 30,
	2018			2018			2017			2018			2017
Selected Financial Information:
Basic earnings per share	$	0.56		$	0.56		$	0.35		$	1.60		$	1.07
Diluted earnings per share	$	0.55		$	0.55		$	0.34		$	1.58		$	1.05
Net interest margin ⁽²⁾		5.25	%		5.26	%		4.77	%		5.24	%		4.68	%
Efficiency ratio		49.33	%		50.97	%		57.14	%		51.43	%		54.91	%
Non-interest income to average assets		0.69	%		0.75	%		0.69	%		0.71	%		0.82	%
Non-interest expense to average assets		2.78	%		2.91	%		2.98	%		2.91	%		2.89	%
Return on average assets		1.91	%		1.93	%		1.42	%		1.85	%		1.51	%
Return on average equity		14.97	%		15.60	%		10.14	%		14.85	%		10.80	%
Net charge-offs / (recoveries)		924			(102	)		562			444			1,106
Annualized net charge-offs / (recoveries) to average loans		0.21	%		-0.02	%		0.18	%		0.03	%		0.13	%

Factors that determine the level of net income include the volume of earning assets and interest bearing liabilities, yields earned and rates paid, fee income, non-interest expense, the level of non-performing loans and other non-earning assets, and the amount of non-interest bearing liabilities supporting earning assets. Non-interest income primarily includes service charges and other fees on deposits, and mortgage banking income. Non-interest expense consists primarily of employee compensation and benefits, occupancy, equipment and depreciation expense, and other operating expenses.

Average Balance and Yields. The following tables set forth a summary of average balances with corresponding interest income and interest expense, as well as average yield, cost and net interest margin information for the periods presented. Average balances are derived from daily balances. Average non-accrual loans are derived from quarterly balances and are included as non-interest earning assets for purposes of these tables.

	Three Months Ended
	September 30, 2018								September 30, 2017
				Interest		Average						Interest		Average
	Average			Income/		Yield/			Average			Income/		Yield/
(Dollars in thousands, except footnotes)	Balance			Expense		Rate			Balance			Expense		Rate
ASSETS
Interest earning deposits in other banks and federal funds sold	$	12,426		$	57		1.84	%	$	87,981		$	283		1.28	%
Securities: ⁽¹⁾
Taxable securities		243,754			1,180		1.92	%		260,941			1,116		1.70	%
Non-taxable securities⁽²⁾		74,857			348		1.84	%		89,001			414		1.85	%
Total securities		318,611			1,528		1.90	%		349,942			1,530		1.73	%
Loans⁽³⁾
Real estate term		899,715			13,043		5.75	%		628,113			8,818		5.57	%
Construction and land development		376,142			7,329		7.73	%		268,896			5,404		7.97	%
Commercial and industrial		315,534			5,268		6.62	%		220,795			3,412		6.13	%
Residential and home equity		107,436			1,508		5.57	%		83,295			935		4.46	%
Consumer and other		19,876			272		5.42	%		16,104			273		6.73	%
Total loans		1,718,703			27,420		6.33	%		1,217,203			18,842		6.14	%

Non-marketable equity securities		4,521			94		8.25	%		1,959			8		1.62	%
Total interest earning assets		2,054,261			29,099		5.62	%		1,657,085			20,663		4.95	%
Allowance for loan losses		(22,469	)							(17,437	)
Non-interest earning assets		146,665								106,406
Total average assets	$	2,178,457							$	1,746,054

LIABILITIES AND SHAREHOLDERS’ EQUITY
Interest bearing deposits:
Demand and savings accounts	$	746,957		$	699		0.37	%	$	673,789		$	451		0.27	%
Money market accounts		237,450			445		0.74	%		166,862			95		0.23	%
Certificates of deposit		182,105			493		1.08	%		148,129			206		0.55	%
Total interest bearing deposits		1,166,512			1,637		0.56	%		988,780			752		0.30	%
Short-term borrowings		49,427			280		2.25	%		3,583			2		0.19	%
Total interest bearing liabilities		1,215,939			1,917		0.63	%		992,363			754		0.30	%
Non-interest bearing deposits		667,896								495,719
Total funding		1,883,835			1,917		0.40	%		1,488,082			754		0.20	%
Other non-interest bearing liabilities		16,735								13,921
Shareholders’ equity		277,887								244,051
Total average liabilities and shareholders’ equity	$	2,178,457							$	1,746,054
Net interest income				$	27,182							$	19,909
Interest rate spread							4.99	%							4.65	%
Net interest margin							5.25	%							4.77	%

	Nine Months Ended
	September 30, 2018								September 30, 2017
				Interest		Average						Interest		Average
	Average			Income/		Yield/			Average			Income/		Yield/
(Dollars in thousands, except footnotes)	Balance			Expense		Rate			Balance			Expense		Rate
ASSETS
Interest earning deposits in other banks and federal funds sold	$	13,802		$	166		1.61	%	$	50,314		$	418		1.11	%
Securities: ⁽¹⁾
Taxable securities		245,957			3,587		1.95	%		298,335			3,625		1.62	%
Non-taxable securities⁽²⁾		79,080			1,098		1.86	%		91,606			1,268		1.85	%
Total securities		325,037			4,685		1.93	%		389,941			4,893		1.68	%
Loans⁽³⁾
Real estate term		886,275			38,066		5.74	%		612,344			25,393		5.54	%
Construction and land development		370,602			21,507		7.76	%		247,966			14,464		7.80	%
Commercial and industrial		315,736			15,640		6.62	%		216,803			9,901		6.11	%
Residential and home equity		106,523			4,224		5.30	%		82,755			3,067		4.95	%
Consumer and other		19,225			839		5.83	%		17,195			785		6.11	%
Total loans		1,698,361			80,276		6.32	%		1,177,063			53,610		6.09	%

Non-marketable equity securities		6,095			167		3.67	%		2,033			16		1.04	%
Total interest earning assets		2,043,295			85,294		5.58	%		1,619,351			58,937		4.87	%
Allowance for loan losses		(20,766	)							(16,957	)
Non-interest earning assets		144,195								101,826
Total average assets	$	2,166,724							$	1,704,220

LIABILITIES AND SHAREHOLDERS’ EQUITY
Interest bearing deposits:
Demand and savings accounts	$	732,912		$	1,642		0.30	%	$	664,664		$	1,327		0.27	%
Money market accounts		223,193			778		0.47	%		169,752			273		0.22	%
Certificates of deposit		189,133			1,420		1.00	%		152,109			638		0.56	%
Total interest bearing deposits		1,145,238			3,840		0.45	%		986,525			2,238		0.30	%
Short-term borrowings		92,570			1,350		1.95	%		6,416			31		0.64	%
Total interest bearing liabilities		1,237,808			5,190		0.56	%		992,941			2,269		0.31	%
Non-interest bearing deposits		646,419								460,674
Total funding		1,884,227			5,190		0.37	%		1,453,615			2,269		0.21	%
Other non-interest bearing liabilities		12,883								12,200
Shareholders’ equity		269,614								238,405
Total average liabilities and shareholders’ equity	$	2,166,724							$	1,704,220
Net interest income				$	80,104							$	56,668
Interest rate spread							5.02	%							4.56	%
Net interest margin							5.24	%							4.68	%

Rate/Volume Analysis. The following table shows the change in interest income and interest expense and the amount of change attributable to variances in volume, rates and the combination of volume and rates based on the relative changes of volume and rates. For purposes of this table, the change in interest due to both volume and rate has been allocated to change due to volume and rate in proportion to the relationship of absolute dollar amounts of change in each.

	Three Months Ended September 30,									Nine Months Ended September 30,
	2018 vs. 2017									2018 vs. 2017
	Increase (Decrease) Due to:									Increase (Decrease) Due to:
(Dollars in thousands)	Volume			Rate			Net			Volume			Rate			Net
Interest income:
Interest earning deposits in other banks and federal funds sold	$	(314	)	$	88		$	(226	)	$	(388	)	$	136		$	(252	)
Taxable securities		(77	)		141			64			(696	)		658			(38	)
Non-taxable securities		(66	)		-			(66	)		(174	)		4			(170	)
Total securities		(143	)		141			(2	)		(870	)		662			(208	)
Loans
Real estate term		3,929			296			4,225			11,736			937			12,673
Construction and land development		2,094			(169	)		1,925			7,117			(74	)		7,043
Commercial and industrial		1,563			293			1,856			4,841			898			5,739
Residential and home equity		308			265			573			930			227			1,157
Consumer and other		57			(58	)		(1	)		90			(36	)		54
Total Loans		7,951			627			8,578			24,714			1,952			26,666

Non-marketable equity securities		21			65			86			67			84			151
Total interest income		7,515			921			8,436			23,523			2,834			26,357
Interest expense:
Demand and savings accounts		53			195			248			144			171			315
Money market accounts		55			295			350			107			398			505
Certificates of deposit		56			231			287			184			598			782
Short-term borrowings		152			126			278			1,144			175			1,319
Total interest expense		316			847			1,163			1,579			1,342			2,921
Net interest income	$	7,199		$	74		$	7,273		$	21,944		$	1,492		$	23,436

Net interest income increased $7.3 million to $27.2 million for the three months ended September 30, 2018 compared with $19.9 million for the same period of 2017. The increase is primarily the result of average interest earning assets increasing $397 million, and yields on interest earning assets increasing 67 basis points for the same comparable period to 5.62% for the three months ended September 30, 2018. The increase in average interest earning assets was the result of both organic growth and the acquisition of the seven Utah branches of Banner Bank and the merger of Town & Country Bank. Higher yields on interest earning assets was primarily the result of yields on loans increasing 19 basis points to 6.33% for the same comparable period and the percentage of average loans to total average interest earning assets increasing to 83.7% for the three months ended September 30, 2018 compared with 73.5% for the same period of 2017.

Total cost of interest bearing liabilities increased 33 basis points to 0.63% for the third quarter of 2018 and is the result of interest bearing deposits increasing 26 basis points to 0.56% and a $45.8 million increase in average short-term borrowing at a borrowing rate of 2.25% during the third quarter of 2018 compared with the same period a year earlier. The Company expects the increase in cost of interest bearing deposits to accelerate over the next several quarters as financial institutions increase their competitive deposit pricing.

Net interest margins increased 48 basis points to 5.25% for the third quarter of 2018 compared with the same period a year earlier. Acquisition accounting adjustments, including the accretion of loan discounts and amortization of certificate of deposits premiums, added 5 basis points to the net interest margin in the third quarter of 2018.

Net interest income increased $23.4 million to $80.1 million for the nine months ended September 30, 2018 compared with $56.7 million for the same period of 2017. The increase is primarily the result of average interest earning assets increasing $424 million, and yields on interest earning assets increasing 71 basis points for the same comparable period to 5.58% for the nine months ended September 30, 2018. The increase in average interest earning assets was the result of both organic growth and the acquisition of the seven Utah branches of Banner Bank and the merger of Town & Country Bank. Higher yields on interest earning assets was primarily the result of yields on loans increasing 23 basis points to 6.32% for the same comparable period and the percentage of average loans to total average interest earning assets increasing to 83.1% for the nine months ended September 30, 2018 compared with 72.7% for the same period of 2017.

Total cost of interest bearing liabilities increased 25 basis points to 0.56% for the nine months ended September 30, 2018, and is the result of an $86.2 million increase in average short-term borrowing at a borrowing rate of 1.95% during the nine months ended September 30, 2018, and the cost of interest bearing deposits increasing 15 basis points to 0.45% for the nine months ended September 30, 2018, compared with the same period a year earlier. The Company expects the increase in cost of interest bearing deposits to accelerate over the next several quarters as financial institutions increase their competitive deposit pricing.

Net interest margins increased 56 basis points to 5.24% for the nine months ended September 30, 2018, compared with the same period a year earlier. Acquisition accounting adjustments, including the accretion of loan discounts and amortization of certificate of deposits premiums, added 15 basis points to the net interest margin in the nine months ended September 30, 2018.

	Three Months Ended
	September 30,		September 30,		$ Better /			% Better /
(Dollars in thousands)	2018		2017		(Worse)			(Worse)
Interest income	$	29,099	$	20,663	$	8,436			40.8	%
Interest expense		1,917		754		(1,163	)		-154.2	%
Net interest income		27,182		19,909		7,273			36.5	%
Provision for loan losses		1,925		900		(1,025	)		-113.9	%
Net interest income after provision for loan losses		25,257		19,009		6,248			32.9	%
Non-interest income		3,794		3,040		754			24.8	%
Non-interest expense		15,280		13,114		(2,166	)		-16.5	%
Income before income tax expense		13,771		8,935		4,836			54.1	%
Income tax expense		3,288		2,697		(591	)		-21.9	%
Net income	$	10,483	$	6,238	$	4,245			68.1	%

Net Income. Net income increased $4.2 million to $10.5 million for the three months ended September 30, 2018, compared with $6.2 million for the three months ended September 30, 2017. This was primarily attributable to an increase in net interest income of $7.3 million, and an increase in non-interest income of $0.8 million, offset by an increase in non-interest expense of $2.2 million, an increase in provision for loan losses of $1.0 million, and an increase in income tax expense of $0.6 million.

Net Interest Income and Net Interest Margin. The increase in net interest income for the three months ended September 30, 2018 compared with the same quarter in 2017 was primarily driven by interest earned on a higher average loan volume attributable to both organic growth and our two acquisition transactions in 2017. Interest expense in the three months ended September 30, 2018 increased from the same period in 2017 due to an increase in average short-term borrowings and deposits outstanding, and an increase in the cost of short-term borrowings and deposits.

The yield on our average interest earning assets was 5.62% for the three months ended September 30, 2018 compared with 4.95% for the same period of 2017. The cost of total funding increased in the three months ended September 30, 2018 to 0.40% from 0.20% in the comparable quarter in 2017.

Provision for Loan Losses. The provision for loan losses in each period is a charge against earnings in that period. The provision is that amount required to maintain the allowance for loan losses at a level that, in management’s judgment, is adequate to absorb loan losses inherent in the loan portfolio.

Provision for loan losses was $1.9 million for the three months ended September 30, 2018 compared with $0.9 million for the same period of 2017. The increase in provision for loan losses is due primarily to the increase in allowance for loan losses to loans held for investment, excluding specific reserves, offset by a $1.3 million decrease in specific reserves on classified loans. The Company incurred net charge-offs of $0.9 million in the third quarter of 2018 compared with net charge-offs of $0.6 million in the third quarter of 2017.

Non-interest Income. The following table presents, for the periods indicated, the major categories of non-interest income:

Noninterest income was $3.8 million for the third quarter of 2018 compared with $3.0 million the same period a year ago. The increase was primarily due to a loss on sale of securities in the same period a year ago; an increase in card processing fees and service charges on deposit accounts, offset by lower mortgage banking income.

Non-interest Expense. The following table presents, for the periods indicated, the major categories of non-interest expense:

Non-interest expense was $15.3 million for the three months ended September 30, 2018 compared with $13.1 million for the same period of 2017. Non-interest expense for the three months ended September 30, 2018 increased as a result of $1.1 million of higher salaries and employee benefits, primarily from the addition of employees retained from the acquisition of the seven Utah branches of Banner Bank and the merger of Town & Country Bank, and $0.3 million of higher occupancy, equipment and depreciation costs associated with the net increase of five branches from these transactions, and $0.2 million in higher data processing costs associated with an increase in total accounts from both organic growth and acquisition transactions. The Company’s efficiency ratio was 49.33% for the three months ended September 30, 2018 compared with 57.14% for the same period of 2017.

Income Tax Expense. We recorded income tax expense of $3.3 million for the three months ended September 30, 2018 compared with $2.7 million for the same period in 2017. The effective tax rate for the three months ended September 30, 2018 was 23.9% compared with 30.2% in the corresponding three months of 2017. The tax rate for the three months ended September 30, 2018 is lower than the same quarter in 2017 as a result of the reduction in the federal corporate tax rate to a flat rate of 21%, the reduction of the Utah state corporate tax rate to 4.95% as well as tax benefits related to tax-deductible stock compensation expense.

	Nine Months Ended
	September 30,		September 30,		$ Better /			% Better /
(Dollars in thousands)	2018		2017		(Worse)			(Worse)
Interest income	$	85,294	$	58,937	$	26,357			44.7	%
Interest expense		5,190		2,269		(2,921	)		-128.7	%
Net interest income		80,104		56,668		23,436			41.4	%
Provision for loan losses		5,450		2,000		(3,450	)		-172.5	%
Net interest income after provision for loan losses		74,654		54,668		19,986			36.6	%
Non-interest income		11,578		10,469		1,109			10.6	%
Non-interest expense		47,151		36,863		(10,288	)		-27.9	%
Income before income tax expense		39,081		28,274		10,807			38.2	%
Income tax expense		9,127		9,021		(106	)		-1.2	%
Net income	$	29,954	$	19,253	$	10,701			55.6	%

Net Income. Net income increased $10.7 million to $30.0 million for the nine months ended September 30, 2018, compared with $19.3 million for the nine months ended September 30, 2017. This was primarily attributable to an increase in net interest income of $23.4 million, and an increase in non-interest income of $1.1 million, offset by an increase in non-interest expense of $10.3 million, an increase in provision for loan losses of $3.5 million, and an increase in income tax expense of $0.1 million.

Net Interest Income and Net Interest Margin. The increase in net interest income for the nine months ended September 30, 2018 compared with the same period in 2017 was primarily driven by interest earned on a higher average loan volume attributable to both organic growth and our two acquisition transactions in 2017. Interest expense in the nine months ended September 30, 2018 increased from the same period in 2017 due to an increase in average short-term borrowings and deposits outstanding, and an increase in the cost of short-term borrowings and deposits.

The yield on our average interest earning assets was 5.58% for the nine months ended September 30, 2018 compared with 4.87% for the same period of 2017. The cost of total funding increased in the nine months ended September 30, 2018 to 0.37% from 0.21% in the comparable period in 2017.

Provision for loan losses was $5.5 million for the nine months ended September 30, 2018 compared with $2.0 million for the same period of 2017. The increase in provision for loan losses is due primarily to the increase in allowance for loan losses to loans held for investment, excluding specific reserves, offset by a $0.3 million decrease in specific reserves on classified loans. The Company incurred net charge-offs of $0.4 million in the nine months ended September 30, 2018 compared with net charge-offs of $1.1 million in the comparable period in 2017.

Non-interest Income. The following table presents, for the periods indicated, the major categories of non-interest income:

Noninterest income was $11.6 million for the nine months ended September 30, 2018 compared with $10.5 million the same period a year ago. The increase was primarily due to gain on sale of securities compared with a loss from the same period a year ago, an increase in card processing fees and service charges on deposit accounts, offset by lower mortgage banking income.

Non-interest Expense. The following table presents, for the periods indicated, the major categories of non-interest expense:

Non-interest expense was $47.2 million for the nine months ended September 30, 2018 compared with $36.9 million for the same period of 2017. Non-interest expense for the nine months ended September 30, 2018 increased as a result of $6.0 million of higher salaries and employee benefits primarily from the addition of employees retained from the acquisition of the seven Utah branches of Banner Bank and the merger of Town & Country Bank, and $1.1 million of higher occupancy, equipment and depreciation costs associated with the net increase of five branches from these transactions, and $0.8 million in higher data processing costs associated with an increase in total accounts from both organic growth and acquisition transactions. The Company’s efficiency ratio was 51.43% for the nine months ended September 30, 2018 compared with 54.91% for the same period of 2017.

Income Tax Expense. We recorded an income tax expense of $9.1 million for the nine months ended September 30, 2018 compared with $9.0 million for the same period in 2017. The effective tax rate for the nine months ended September 30, 2018 was 23.4% compared with 31.9% in the corresponding nine months of 2017. The tax rate for the nine months ended September 30, 2018 is lower than the same period in 2017 as a result of the reduction in the federal corporate tax rate to a flat rate of 21%, the reduction of the Utah state corporate tax rate to 4.95% as well as tax benefits related to tax-deductible stock compensation expense.

Total assets were $2.21 billion at September 30, 2018, a 4.2% increase compared with December 31, 2017. Total loans held for investment were $1.72 billion at September 30, 2018, an increase of 5.6% from December 31, 2017. Total deposits were $1.87 billion at September 30, 2018, an increase of 3.2% compared with December 31, 2017.

The following table sets forth information regarding the composition of the loan portfolio at the end of each of the periods presented.

We originate certain residential mortgage loans for sale to investors that are carried at cost. Due to the short period held, generally less than 90 days, we consider the carrying value of these loans held for sale to be the approximate fair value.

The following table shows the amounts of outstanding loans, which, based on remaining scheduled repayments of principal, were due in one year or less, more than one year through five years, and more than five years. Lines of credit or other loans having no stated maturity and no stated schedule of repayments are reported as due in one year or less. In the table below, loans are classified as real estate related if they are collateralized by real estate. The tables also present, for loans with maturities over one year, an analysis with respect to fixed interest rate loans and adjustable interest rate loans.

										Rate Structure for
										Loans Maturing Over
	Maturity									One Year
				One
	One			through		After
	Year			Five		Five						Adjustable
(Dollars in thousands)	or Less			Years		Years		Total		Fixed Rate		Rate
Loans held for investment:
Commercial real estate loans:
Real estate term	$	112,491		$	182,793	$	560,963	$	856,247	$	99,966	$	643,790
Construction and land development		311,276			39,799		31,179		382,254		16,629		54,349
Total commercial real estate loans		423,767			222,592		592,142		1,238,501		116,595		698,139
Commercial and industrial loans		124,471			147,358		42,566		314,395		103,234		86,690
Consumer loans:
Residential and home equity		15,430			34,643		103,333		153,406		17,718		120,258
Consumer and other		6,770			7,547		2,280		16,597		9,395		432
Total consumer loans		22,200			42,190		105,613		170,003		27,113		120,690
Total gross loans held for investment	$	570,438	⁽¹⁾	$	412,140	$	740,321	$	1,722,899	$	246,942	$	905,519	⁽¹⁾

Concentrations. As of September 30, 2018, in management’s judgment, a concentration of loans existed in real estate related loans. At that date, real estate related loans comprised 80.8% of total loans held for investment, of which 49.7% are real estate term loans, 22.2% are construction and land development loans, and 8.9% are residential and home equity loans. We require collateral on real estate lending arrangements and typically maintain loan-to-value ratios of up to 80%, except for some residential construction loans of up to 95% loan-to-value provided the loan includes pre-approved long-term financing. Our concentration in commercial and industrial loans has increased to 18.2% at September 30, 2018 from 18.0% at December 31, 2017.

Non-Performing Assets. Loans are placed on non-accrual status when they become 90 days or more past due or at such earlier time as management determines timely recognition of interest to be in doubt. Accrual of interest is discontinued on a loan when management believes, after considering economic and business conditions, collection efforts, and the borrower’s financial condition, that the borrower will be unable to make payments as they become due. When interest accrual is discontinued, all unpaid accrued interest is reversed. Interest income is subsequently recognized only to the extent cash payments are received, or payment is considered certain. Loans may be returned to accrual status when all delinquent interest and principal amounts contractually due are brought current and future payments are reasonably assured.

The following non-performing assets table summarizes the loans for which the accrual of interest has been discontinued and loans more than 90 days past due and still accruing interest, including those non-accrual loans that are troubled-debt restructured loans, and OREO:

	September 30,		December 31,
(Dollars in thousands)	2018		2017
Non-accrual loans, not troubled-debt restructured
Real estate term	$	310	$	-
Construction and land development		98		-
Commercial and industrial		1,455		223
Residential and home equity		-		-
Consumer and other		5		-
Total non-accrual, not troubled-debt restructured loans		1,868		223
Troubled-debt restructured loans non-accrual
Real estate term		1,495		-
Construction and land development		-		-
Commercial and industrial		169		-
Residential and home equity		-		-
Consumer and other		-		-
Total troubled-debt restructured, non-accrual loans		1,664		-
Total non-accrual loans⁽¹⁾		3,532		223
Accruing loans past due 90 days or more		17		1
Total non-performing loans (NPL)		3,549		224

OREO		2,985		994
Total non-performing assets (NPA)⁽²⁾	$	6,534	$	1,218
Accruing troubled debt restructured loans	$	2,423	$	3,307
Non-accrual troubled debt restructured loans		1,664		-
Total troubled debt restructured loans	$	4,087	$	3,307

Impaired Loans. Impaired loans are loans for which it is probable that we will be unable to collect all principal and interest payments due according to the contractual terms of the loan agreement. We measure impairment based on the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s observable market price, or the fair value of the collateral, if the loan is collateral-dependent.

In determining whether or not a loan is impaired, we consider payment status, collateral value and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. We determine the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all the circumstances surrounding the loan and borrower, including the length of delay, the reasons for the delay, the borrower’s prior payment record and the amount of the shortfall in relation to the principal and interest owed. Loans for which an insignificant shortfall in amount of payments is anticipated, but where we expect to collect all amounts due, are not considered impaired.

Troubled-debt Restructured Loans. A restructured loan is considered a troubled debt restructured loan, or TDR, if we, for economic or legal reasons related to the debtor’s financial difficulties, grant a concession in terms or a below-market interest rate to the debtor that we would not otherwise consider. TDR loans were $4.1 million and $3.3 million at September 30, 2018 and December 31, 2017, respectively. Our TDR loans are considered impaired loans of which $1.66 million at September 30, 2018, are designated as non-accrual. We had no non-accrual TDR loans at December 31, 2017.

Each restructured debt is separately negotiated with the borrower and includes terms and conditions that reflect the borrower’s prospective ability to service the debt as modified.

OREO Properties. OREO represents real property taken either through foreclosure or through a deed in lieu thereof from the borrower. All OREO properties are recorded by us at amounts equal to or less than the fair market value of the properties based on current independent appraisals reduced by estimated selling costs. The following table provides a summary of the changes in the OREO balance:

We maintain an adequate allowance for loan losses, or ALLL, based on a comprehensive methodology that assesses the losses inherent in the loan portfolio. Our ALLL is based on a continuing review of loans which includes consideration of actual loss experience, changes in the size and character of the portfolio, identification of individual problem situations which may affect the borrower’s ability to repay, evaluations of the prevailing and anticipated economic conditions, and other qualitative factors. This evaluation is inherently subjective, as it requires estimates that are susceptible to significant revision as more information becomes available.

Our ALLL is increased by charges to income and decreased by charge-offs (net of recoveries). While we use available information to recognize losses on loans, changes in economic conditions may necessitate revision of the estimate in future years.

The ALLL consists of specific and general components. The specific component relates to loans determined to be impaired that are individually evaluated for impairment. For impaired loans individually evaluated, an allowance is established when the discounted cash flows, or the fair value of the collateral if the loans are collateral-dependent, of the impaired loan are lower than the carrying value of the loan. The general component covers all loans not individually evaluated for impairment and is based on historical loss experience adjusted for qualitative factors. Various qualitative factors are considered including changes to underwriting policies, loan concentrations, volume and mix of loans, size and complexity of individual credits, locations of credits and new market areas, changes in local and national economic conditions, and trends in past due, non-accrual and classified loan balances.

The following table sets forth the activity in our allowance for loan losses for the periods indicated:

	Three Months Ended						Nine Months Ended
	September 30,			September 30,			September 30,			September 30,
(Dollars in thousands)	2018			2017			2018			2017
Allowance for loan losses:
Beginning balance	$	22,308		$	17,271		$	18,303		$	16,715
Loans charged off:
Real estate term		(294	)		-			(294	)		(350	)
Construction and land development		-			-			-			-
Commercial and industrial		(945	)		(621	)		(1,235	)		(893	)
Residential and home equity		-			-			-			(338	)
Consumer and other		(105	)		(46	)		(277	)		(159	)
Total charge-offs		(1,344	)		(667	)		(1,806	)		(1,740	)
Recoveries:
Real estate term		46			23			58			204
Construction and land development		6			2			77			81
Commercial and industrial		312			46			1,001			123
Residential and home equity		2			7			83			147
Consumer and other		54			27			143			79
Total recoveries		420			105			1,362			634
Net loan (charge-offs) recoveries		(924	)		(562	)		(444	)		(1,106	)
Provision for loan losses		1,925			900			5,450			2,000
Ending balance	$	23,309		$	17,609		$	23,309		$	17,609
Loans held for investment	$	1,718,403		$	1,215,573		$	1,718,403		$	1,215,573
Average loans		1,718,703			1,217,203			1,698,361			1,177,063
Selected ratios:
Net loan charge-offs (recoveries) to average loans		0.21	%		0.18	%		0.03	%		0.13	%
Provision for loan losses to average loans		0.44	%		0.29	%		0.43	%		0.23	%
Allowance for loan losses to loans held for investment		1.36	%		1.45	%		1.36	%		1.45	%

The allowance for loan losses to loans held for investment was 1.36% at September 30, 2018 compared with 1.45% at September 30, 2017. In accordance with acquisition accounting, loans acquired from the Utah branches of Banner Bank and Town & Country Bank were recorded at their estimated fair value, which resulted in a net discount to the loans’ contractual amounts, a portion of which reflects a discount for possible credit losses. Credit discounts are included in the determination of fair value, and as a result, no allowance for loan and lease losses is recorded for acquired loans at the acquisition date. The discount recorded on the acquired loans is not reflected in the allowance for loan losses or related allowance coverage ratios. Remaining discounts on acquired loans were $9.5 million at September 30, 2018. The allowance for loan losses is also adjusted based on changes to the underlying loan portfolio, changes to our historical loss rates, and adjustments to qualitative ALLL factors due to changes in current conditions.

Our construction and land development portfolio reflects borrower concentration risk, and also carries the enhanced risks encountered with construction loans generally. Construction and land development loans are generally more risky than permanent mortgage loans because they are dependent upon the borrower’s ability to generate cash to service the loan, and the value of the collateral depends on project completion when market conditions may have changed. Our commercial real estate loans are a mixture of new and seasoned properties, retail, office, warehouse, and some industrial properties. Loans on properties are usually underwritten at a loan to value ratio of up to 75% with a minimum debt coverage ratio of 1.25 times.

We allocate our allowance for loan losses by assigning general percentages to our major loan categories (construction and land development, commercial real estate term, residential real estate, C&I and consumer), assigning specific percentages to each category of loans graded in accordance with the guidelines established by our regulatory agencies, and making specific allocations to impaired loans when factors are present requiring a greater reserve than would be required using the assigned risk rating allocation, which is typically based on a review of appraisals or other collateral analysis.

The following table indicates management’s allocation of the ALLL in each category to total loans as of each of the following dates:

Investment securities were $322.2 million at September 30, 2018 and $337.7 million at December 31, 2017. Our portfolio of investment securities is comprised of both available-for-sale securities and securities that we intend to hold to maturity. At September 30, 2018, we held no investment securities from any issuer which totaled over 10% of our shareholders’ equity.

The following table shows the amortized cost for maturities of investment securities and the weighted average yields of such securities, including the benefit of tax-exempt securities:

						After One but					After Five but
	Within One Year					within Five Years					within Ten Years					After Ten Years					Total
(Dollars in thousands)	Amount		Yield			Amount		Yield			Amount		Yield			Amount		Yield			Amount		Yield
Available-for-sale securities:
U.S. Government agencies	$	10,999		1.15	%	$	37,955		1.74	%	$	-		0.00	%	$	-		0.00	%	$	48,954		1.61	%
Municipal securities		2,315		3.54	%		5,173		2.85	%		3,853		2.14	%		-		0.00	%		11,341		2.75	%
Mortgage-backed securities		-		0.00	%		19,863		1.42	%		42,514		1.75	%		135,101		2.42	%		197,478		2.17	%
Other securities		-		0.00	%		2,000		3.34	%		3,000		2.65	%		-		0.00	%		5,000		2.92	%
Total		13,314		1.57	%		64,991		1.78	%		49,367		1.83	%		135,101		2.42	%		262,773		2.11	%
Held-to-maturity securities:
Municipal securities		9,876		1.40	%		37,334		1.69	%		14,859		1.98	%		5,079		2.45	%		67,148		1.77	%
Total investment securities	$	23,190		1.50	%	$	102,325		1.75	%	$	64,226		1.87	%	$	140,180		2.42	%	$	329,921		2.04	%

Actual maturities may differ from contractual maturities because issuers may have the right to call obligations with or without penalties.

We evaluate securities for other-than-temporary impairment at least on an annual basis, and more frequently when economic or market concerns warrant such evaluation. Consideration is given to (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) our intent and ability to retain our investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value.

Total deposits were $1.87 billion at September 30, 2018 and $1.81 billion at December 31, 2017. The increase in total deposits is attributed primarily to organic growth as a result of enhanced deposit pricing. Non-interest bearing demand deposits were $677.4 million, or 36.2% of total deposits at September 30, 2018 compared with $641.1 million, or 35.3% of total deposits at December 31, 2017. Interest bearing deposits are comprised of interest bearing DDA accounts, money market accounts, regular savings accounts, certificates of deposit of under $250,000, and certificates of deposit of $250,000 or more.

The following table shows the average amount and average rate paid on the categories of deposits for each of the periods presented:

Additionally, the following table shows the maturities of CDs of $250,000 or more:

Deposits are gathered from individuals, partnerships and corporations in our market areas. The interest rates paid are competitively priced for each particular deposit product and structured to meet our funding requirements. We will continue to manage interest expense through deposit pricing. We expect that deposit cost will continue to increase in future quarters.

Shareholders’ equity totaled $279.6 million at September 30, 2018, an increase of $22.2 million or 8.6% since December 31, 2017. The increase in shareholders’ equity for the nine months ended September 30, 2018 was primarily due to an increase of $1.6 million in additional paid in capital from exercises of stock options, share-based compensation, and net income of $30.0 million for the period less dividends paid of $5.6 million.

Dividends of $0.30 per share were declared during the nine months ended September 30, 2018 representing 18.7% of the net income for the same period. We announced a quarterly dividend of $0.11 per share on October 24, 2018, payable on November 13, 2018 for shareholders’ of record on November 6, 2018. Future cash dividends will depend on a variety of factors, including net income, capital, asset quality, general economic conditions, and regulatory considerations.

We are subject to risk-based capital adequacy guidelines related to the adoption of U.S. Basel III Capital Rules. Specifically, the rules impose, among other requirements, new minimum capital requirements including a Tier 1 leverage capital ratio of 4.0%, a common equity Tier 1 risk-based capital ratio of 4.5%, a Tier 1 risk-based capital ratio of 6% and a total risk-based capital ratio of 8%.

PUB and the Bank were well-capitalized at September 30, 2018, December 31, 2017 and September 30, 2017 for federal regulatory purposes.

The following table sets forth our off-balance sheet lending commitments as of September 30, 2018:

The following table sets forth our significant contractual obligations as of September 30, 2018:

The ability to have readily available funds sufficient to repay fully maturing liabilities is of primary importance to depositors, creditors and regulators. Our liquidity, represented by cash borrowing lines, federal funds and available-for-sale securities, is a result of our operating, investing and financing activities and related cash flows. In order to ensure funds are available at all times, we devote resources to projecting on a monthly basis the amount of funds that will be required and we maintain relationships with a diversified customer base so funds are accessible. Liquidity requirements can also be met through short-term borrowings or the disposition of short-term assets. We have borrowing lines at a correspondent bank totaling $25.0 million. We also have a current borrowing line with the FHLB, totaling $522.0 million at September 30, 2018, which is secured by various real estate loans pledged as collateral totaling $621.7 million and investment securities of $138.5 million. Additionally, we have a borrowing line with the Federal Reserve Bank of $24.0 million, which is secured by $24.9 million of investment securities.

We believe our liquid assets are adequate to meet our cash flow needs for loan funding and deposit cash withdrawal for the next 60 to 90 days. At September 30, 2018, we had approximately $142.3 million in net liquid assets comprised of $54.9 million in cash and cash equivalents, including interest bearing deposits of $23.0 million and federal funds sold of $4.7 million, $255.0 million in available-for-sale investment securities and $8.5 million in loans held for sale, less $176.1 million of available-for-sale securities pledged as collateral for short-term borrowings.

On a long-term basis, our liquidity will be met by changing the relative distribution of our asset portfolios by reducing our investment or loan volumes, or selling or encumbering assets. Further, we will increase liquidity by soliciting higher levels of deposit accounts through promotional activities and/or borrowing from our correspondent banks as well as the FHLB. At the current time, our long-term liquidity needs primarily relate to funds required to support loan originations and commitments, deposit withdrawals and pending acquisitions. All of these needs can currently be met by cash flows from investment payments and maturities, and investment sales if the need arises.

Our liquidity is comprised of three primary classifications: cash flows from or used in operating activities; cash flows from or used in investing activities; and cash flows from or used in financing activities.

Net cash provided by or used in operating activities has consisted primarily of net income adjusted for certain non-cash income and expense items such as the loan loss provision, depreciation and amortization, amortization of investment discount and premiums, share based compensation, changes in the value of bank owned life insurance and other gains and losses.

Our primary investing activities are the origination of real estate, commercial and consumer loans and purchases and sales of investment securities. At September 30, 2018, we had outstanding loan commitments of $582.2 million, credit card commitments of $25.1 million and outstanding letters of credit of $26.0 million. We anticipate that we will have sufficient funds available to meet current loan commitments.

Net cash provided from financing activities for the nine months ended September 30, 2018 was $54.6 million, principally from increases in short-term borrowings offset by a decrease in deposit balances and dividends paid to shareholders during the period.

The Company’s assessment of market risk at September 30, 2018 indicates there have been no material changes in the quantitative and qualitative disclosures from those in our Annual Report on Form 10-K for the year ended December 31, 2017 filed with the SEC.

The Company’s Chief Executive Officer and Chief Financial Officer have reviewed and evaluated the effectiveness of the Company’s disclosure controls and procedures (as required by Exchange Act Rules 240.13a-15(b) and 15d-14(a)) at September 30, 2018. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that the Company’s current disclosure controls and procedures are effective and timely, providing them with material information relating to the Company required to be disclosed in the reports the Company files or submits under the Exchange Act.

There have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the nine months ended September 30, 2018, to which this report relates that have materially affected, or are reasonably likely to materially affect the Company’s internal control over financial reporting.

The Company is involved in various claims, legal actions and complaints which arise in the ordinary course of business. In the Company’s opinion, all such matters are adequately covered by insurance, are without merit or are of such kind, or involve such amounts, that unfavorable disposition would not have a material adverse effect on the financial condition or results of operations of the Company.

There have been no material changes in our assessment of our risk factors from those set forth in our Annual Report on Form 10-K for the year ended December 31, 2017.

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on November 9, 2018

In connection with the quarterly report of People’s Utah Bancorp (the “Company”) on Form 10-Q for the period ended September 30, 2018, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), we, Len E. Williams, President and Chief Executive Officer, and Mark K. Olson, Executive Vice President and Chief Financial Officer, of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to our knowledge:

UTAH		87-0622021
(State or other jurisdiction of		(IRS Employer
incorporation or organization)		Identification No.)
1 East Main Street, American Fork, Utah		84003
(Address of principal executive offices)		(Zip Code)

PART I. FINANCIAL INFORMATION
Item 1 – Financial Statements
Unaudited Consolidated Balance Sheets	3
Unaudited Consolidated Statements of Income	4
Unaudited Consolidated Statements of Comprehensive Income	5
Unaudited Consolidated Statements of Changes in Shareholders’ Equity	6
Unaudited Consolidated Statements of Cash Flows	7
Notes to Unaudited Consolidated Financial Statements	8
Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3 – Quantitative and Qualitative Disclosures about Market Risk	43
Item 4 – Controls and Procedures	43
PART II. OTHER INFORMATION
Item 1 – Legal Proceedings	44
Item 1A – Risk Factors	44
Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds	44
Item 3 – Defaults upon Senior Securities	44
Item 4 – Mine Safety Disclosures	44
Item 5 – Other Information	44
Item 6 – Exhibits	45
Signatures	46

	September 30,		December 31,
(Dollars in thousands)	2018		2017
Commitments to extend credit, including unsecured commitments of $17,912 and $13,625 as of September 30, 2018 and December 31, 2017, respectively	$	582,174	$	637,029
Stand-by letters of credit and bond commitments, including unsecured commitments of $474 and $440 as of September 30, 2018 and December 31, 2017, respectively		26,013		27,943
Unused credit card lines, all unsecured		25,096		24,949

Large accelerated filer	☐	Accelerated filer	☒

Non-accelerated filer	☐	Smaller reporting company	☐

Emerging growth company	☒

	Available-For-Sale				Held-To-Maturity
	Amortized		Fair		Amortized		Fair
(Dollars in thousands)	Cost		Value		Cost		Value
Securities maturing in:
One year or less	$	13,314	$	13,181	$	9,876	$	9,851
After one year through five years		64,991		63,569		37,334		36,900
After five years through ten years		49,367		47,589		14,859		14,360
After ten years		135,101		130,682		5,079		4,939
	$	262,773	$	255,021	$	67,148	$	66,050

	September 30,			December 31,
(Percentage of total loans held for investment)	2018			2017
Loans held for investment:
Commercial real estate loans:
Real estate term		49.7	%		48.1	%
Construction and land development		22.2	%		22.6	%
Total commercial real estate loans		71.9	%		70.7	%
Commercial and industrial loans		18.2	%		18.0	%
Consumer loans:
Residential and home equity		8.9	%		9.7	%
Consumer and other		1.0	%		1.6	%
Total consumer loans		9.9	%		11.3	%
Total loans held for investment		100.0	%		100.0	%

	Basel III
	Regulatory
	Requirements -
	Well Capitalized			PUB
	(Greater than or			Actual as of			Actual as of			Actual as of
	Equal to Stated			September 30,			December 31,			September 30,
	Percentage)			2018			2017			2017
Common equity tier 1 capital		6.50	%		14.21	%		13.51	%		19.07	%
Tier 1 risk-based capital		8.00	%		14.21	%		13.51	%		19.07	%
Total risk-based capital		10.00	%		15.46	%		14.67	%		20.35	%
Tier 1 leverage capital ratio		5.00	%		11.90	%		11.46	%		14.07	%

			Payments Due by Period
	Total				One to		Three to		After
	Amounts		Less than		Three		Five		Five
Other Commitments (Dollars in thousands)	Committed		One Year		Years		Years		Years
Commitments to extend credit	$	582,174	$	364,032	$	118,305	$	17,759	$	82,078
Standby letters of credit		26,013		26,013		-		-		-
Credit cards		25,096		25,096		-		-		-
Total	$	633,283	$	415,141	$	118,305	$	17,759	$	82,078

Exhibit Number		Description

31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes - Oxley Act of 2002

31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes - Oxley Act of 2002

32		Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes - Oxley Act of 2002

101		The following financial information from People’s Utah Bancorp Quarterly Report on Form 10-Q for the quarter ended September 30, 2018 is formatted in XBRL: (i) the Unaudited Condensed Consolidated Statements of Financial Condition, (ii) the Unaudited Condensed Consolidated Statements of Income, (iii) the Unaudited Condensed Consolidated Statements of Stockholders’ Equity and Comprehensive Income, (iv) the Unaudited Condensed Consolidated Statements of Cash Flows, and (v) the Notes to Unaudited Condensed Consolidated Financial Statements

November 9, 2018	/s/ Len E. Williams
	Len E. Williams
	President and Chief Executive Officer (Principal Executive Officer)

November 9, 2018	/s/ Mark K. Olson
	Mark K. Olson
	EVP and Chief Financial Officer (Principal Financial Officer)