President's Message

On behalf of BOU Bancorp, Inc., the holding company of Bank of Utah (Bank) and Utah Risk Management, Inc. (URM), collectively known as the Company, I am pleased to report a third quarter dividend of $0.09 per share paid on October 22, 2018. The dividend paid for the second quarter of 2018 was $0.08 per share. The dividend paid for the third quarter of 2017 was $0.12 per share. All per share information has been adjusted to reflect the impact of a nine-for-one stock dividend that was effective May 1, 2018.

Year to date, we have earned $17.9 million. Although the year is only three-quarters complete, our earnings have exceeded all 2017. Our profitability has been augmented by the lower corporate tax rate and an increasing rate environment; however, our core business remains strong. Our loan and deposit balances continue to trend upward and our non-interest income lines of business also contribute positively to the bottom line. Additionally, our previously announced acquisition of AmBank and the resulting access to new markets will improve our earning potential.

Net income for the third quarter of 2018 was $6.8 million compared to $6.0 million in the second quarter of 2018 and $4.6 million for the third quarter of 2017, an increase of 12.7 percent and 45.8 percent respectively. Consolidated net income for the nine months ending September 30, 2018 was $17.9 million, compared to $12.6 million for the nine months ending September 30, 2017, an increase of 42.2 percent.

Loan growth and the increase in the net interest margin continues to drive earnings. Net interest income, on a fully taxable equivalent basis, was $13.9 million for the third quarter of 2018, a 5.2 percent increase from the previous quarter and an 18.0 percent increase from third quarter of 2017. Loans increased 1.0 percent from the previous quarter and 12.0 percent over the last 12 months. The net interest margin, on a fully taxable equivalent basis, rose to 4.42 percent, compared to 4.27 percent for the previous quarter and 4.22 percent for third quarter 2017. We expect to see a slight increase in the margin as the Federal Reserve continues to raise interest rates. However, pressures from rising deposit rates may keep the net interest margin from rising at the same level.

Future Growth and the Economy
Bank of Utah has always taken a thoughtful approach to managing the Bank’s assets, as well as the locations of our branch network.

Utah’s economic expansion, and specifically along the southern end of the Wasatch Front, continues to outpace the nation. Utah County ranks second in the country for job growth with the projected population to grow an additional one million in the next 50 years.

The acquisition of AmBank, which we expect to close in November, grows our presence in Utah County with a branch in Provo and one in Lindon. It also establishes Bank of Utah in Wasatch County with our first branch in Heber City. We believe the acquisition of a quality bank, such as AmBank, will enable us to help our customers achieve their financial goals and allow Bank of Utah to obtain the growth and profitability that our shareholders have come to expect.

Our mission is to have a quality institution that our customers, shareholders and employees are proud to call their own. We will continue to focus on what is necessary to serve each of these groups in a profitable and wise manner.

Douglas L. DeFries
President and CEO