President's Message

On behalf of BOU Bancorp Inc., (Company) the holding company of Bank of Utah (Bank) and Utah Risk Management, I am pleased to report a cash dividend paid in the second quarter of 2016 of $0.55 per share as compared to $0.40 per share in the first quarter of 2016, an increase of 37.5 percent. In addition, a cash dividend of $0.65 per share was declared on July 19, 2016, payable July 22, 2016.

Consolidated net income for the second quarter of 2016 was $4.5 million compared to $3.7 million for the first quarter of 2016 and $4.0 million for the second quarter of 2015, an increase of 22 percent and 13 percent, respectively. Consolidated net income for the six months ending June 30, 2016 was $8.2 million compared to $7.3 million for the comparable 2015 period, an increase of 12.5 percent.

Consistent growth from our lending department provided a strong income base, which was supplemented by continued growth in our mortgage and trust departments. These results demonstrate confidence in our core business model.
The processes and systems that have been put in place over the past few years have allowed us to continue to grow earnings, while maintaining a low-risk profile. This can be illustrated by the recent changes that have taken place in our corporate trust department. In January, a reorganization of this specialized area gave the Bank an opportunity to bring in 11 seasoned veterans that fit our culture of accountability. They hit the ground running by improving the existing processes and systems that were in place. These changes improved monitoring, collections, sales and compliance. Gross revenue for the second quarter of 2016 was $1.77 million compared to $1.48 million for the first quarter of 2016.

Our mortgage department is positioned to handle increased growth. Currently, we have experienced a strong increase in mortgage volume due to growth in our sales force and the addition of new, high-quality production builders. We added 15 employees to the department this year and have been able to integrate them into our system while still maintaining a customer satisfaction level of over 94 percent.

Future Growth
The third quarter of this year will mark another milestone for the Bank as we will exceed $1 billion in assets. This consistent growth in assets and earnings will allow us to continue assisting customers in their businesses and personal lives. We will add new products and services as the banking landscape evolves.

State of the Economy
We have seen volatility in the world in recent months. Brexit has shaken the markets. Countries such as Sweden, Switzerland and Denmark have paid negative interest rates on deposits. This is not the case in Utah. Our economy is thriving, according to an exclusive study conducted by CNBC. In an article released on July 12, Utah is ranked the top state for business in the nation for 2016 and has been in the top 10 every year for the past 10 years. Utah’s population has nearly tripled since 1970 and is expected to nearly double by 2050. We believe the state will continue to grow and so will your bank.

Douglas L. DeFries
Bank-President and CEO
Company-Vice President