The first three quarters of 2020 reminded us that sometimes we get thrust into circumstances in which we have little or no control. There’s a saying, “It’s how you react to those situations that matters,” and it is, but also important is how you prepare for those situations.
Bank of Utah’s operating model has always been to look forward, to anticipate threats and to be proactive. So when 2020 threw us some twists and turns, we were prepared financially with a strong capital and liquidity position. We were also able to react swiftly to customers’ needs, thanks to dedicated employees who are laser-focused on customer service.
As a result of the systems we’ve implemented, our diverse lines of business, employee training and attention to detail, the Bank is not just weathering 2020, it’s prospering in 2020.
Consolidated Net Income for the third quarter was a near-record high, at $7.8 million. Loan and deposit growth soared from the previous year, with a 30.2 and 26.6 percent increase, respectively. Payroll Protection Program (PPP) loans helped bring in new customers, many of whom chose to take advantage of all our services and made Bank of Utah their primary institution. The loan growth helped offset the decline in our Net Interest Margin, which has followed interest rates to lower levels.
Noninterest Income was $8.9 million, a 3.1 percent increase from the previous quarter and a 41.7 percent increase from Q3 2019. This is due, in large part, to the increase in mortgage loan production. Employees worked tirelessly to process the loans, which elevated both production and our image in the community. An increase in production has also been the case for corporate trust and wealth management. This has all been done while keeping our Noninterest Expense in line, with only a 5.5 percent increase from the previous quarter.
Return on Average Assets for Q3 2020 also improved to 1.82 percent compared to 1.79 percent for Q2 2020, ranking the bank in the top 3 percent of all banks in the nation.
There’s another story behind those numbers that I’d like to share: The Bank encourages each employee to serve in their communities. In fact, many employees serve on the boards of more than 75 nonprofit and for-profit organizations across Utah. I am proud of their commitment to the financial, social and emotional well-being of the people in our communities.
Looking ahead, the near future will undoubtedly bring things we cannot control, like the presidential election and its effect on banking policies, possible COVID-19 surges and reduced interest rates. Anticipating the potential risks, we will continue to make the necessary changes to ensure we are protecting the assets of the Bank, as well as improving customer service by adding new products and services. As always, the core of our Bank is the employees that work hard to make this a quality institution for our customers and shareholders; I applaud them for their role in the successes we’ve had this quarter.
Douglas L. DeFries
President and CEO