On behalf of BOU Bancorp, Inc., the holding company of Bank of Utah (Bank) and Utah Risk Management, Inc., collectively known as the Company, I am pleased to report a second quarter dividend of $0.60 per share was paid on July 21, 2017. The dividend paid for the first quarter of 2017 was $0.55 per share. The dividend paid for the second quarter of 2016 was $0.65 per share. We continue to build on the strong loan growth in the first quarter of 2017, as evidenced by 8.9 percent growth in net interest income over the prior quarter and 14.4 percent growth year-over-year. This increase in interest income and the ability to keep expenses in check kept our efficiency ratio low at 58.4%.
Net income for the second quarter of 2017 was $4.2 million, compared to $3.7 million for the first quarter of 2017, an increase of 14.4 percent. This is a decrease of 6.7 percent from the same quarter a year ago. The year-over-year decrease is primarily attributed to additional loan loss provisions. The Bank recorded a $300 thousand loan loss provision in the second quarter of 2017, as compared to the same 2016 period in which no provision was taken. We have added $600 thousand in provision this year. Consolidated net income for the six months ending June 30, 2017 was $7.9 million compared to $8.2 million for the comparable 2016 period.
Our market continues to grow at a firm pace. Utah is experiencing its longest job market expansion in the last 15 years, with 44,500 jobs added in the past year. This has put pressure on the housing market—demand is there, but the supply of homes is limited. In addition, the refinance market has softened, thus reducing our year-over-year non-interest income generated by mortgage banking.
Strong earnings have allowed us to reinvest in the Company. We are investing in quality employees and equipment upgrades to support our future growth. This will be beneficial in the long run as we continue to serve our investors, customers and employees.
Many financial publications have recently reported that customers prefer to complete banking transactions online, without the need for face-to-face interaction. Although there is truth to this statement, it does not paint the whole picture. While most routine transactions can happen electronically, more complicated processes are best addressed by phone or in person. We understand the need for both electronic and personal service and offer our customers the best of both. The Bank’s online banking service handles over 94,000 monthly log-ins. The Bank also receives over 22,000 phone calls per month to assist with those more complicated transactions and to answer questions that customers might have concerning their banking.
Virtually all commercial loans are handled in person and most of our residential real estate customers talk directly with a loan officer located nearby. Most outgoing wire transfers are verified by employees using the latest technology to keep your money safe. Our goal is to allow you to do your banking in a way that fits your lifestyle. At the Bank, you will find the technology that allows you the freedom to bank how you want, with the personal attention you expect from a community bank. When you need the expertise of a great banker, they are only a phone call, e-mail or visit away. We believe that the personal touch—when needed—will always be a part of the premier banking experience at Bank of Utah.
Douglas L. DeFries
Bank-President and CEO