10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2018

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-37416

PEOPLE’S UTAH BANCORP

(Exact name of registrant as specified in its charter)

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)

(801) 642-3998

Registrant’s telephone number, including area code

Not Applicable

(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.

Large accelerated filer	☐		Accelerated filer	☒
Non-accelerated filer	☐	(Do not check if a smaller reporting company)	Smaller reporting company	☐
Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period forcomplying 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 July 31, 2018 was 18,705,736. No preferred shares are issued or outstanding.

TABLE OF CONTENTS

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	24
Item 3 – Quantitative and Qualitative Disclosures about Market Risk	45
Item 4 – Controls and Procedures	45
PART II. OTHER INFORMATION
Item 1 – Legal Proceedings	46
Item 1A – Risk Factors	46
Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds	46
Item 3 – Defaults upon Senior Securities	46
Item 4 – Mine Safety Disclosures	46
Item 5 – Other Information	46
Item 6 – Exhibits	47
Signatures	48

PEOPLE’S UTAH BANCORP AND SUBSIDIARIES

UNAUDITED CONSOLIDATED BALANCE SHEETS

	June 30,			December 31,
(Dollars in thousands, except share data)	2018			2017
ASSETS
Cash and cash equivalents:
Cash and due from banks	$	33,484		$	36,235
Interest bearing deposits		17,930			13,158
Federal funds sold		908			1,634
Total cash and cash equivalents		52,322			51,027
Investment securities:
Available-for-sale, at fair value		236,699			263,056
Held-to-maturity, at historical cost		67,922			74,654
Total investment securities		304,621			337,710
Non-marketable equity securities		6,151			3,706
Loans held for sale		11,058			10,871
Loans:
Loans held for investment		1,691,959			1,627,444
Allowance for loan losses		(22,308	)		(18,303	)
Total loans held for investment, net		1,669,651			1,609,141
Premises and equipment, net		29,335			30,399
Goodwill		25,673			26,008
Bank-owned life insurance		26,120			23,566
Deferred income tax assets		10,764			8,827
Accrued interest receivable		7,658			7,594
Other intangibles		3,633			3,854
Other real estate owned		-			994
Other assets		14,784			9,832
Total assets	$	2,161,770		$	2,123,529
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits:
Non-interest bearing deposits	$	646,574		$	641,124
Interest bearing deposits		1,135,366			1,173,508
Total deposits		1,781,940			1,814,632
Short-term borrowings		90,000			40,000
Accrued interest payable		369			353
Other liabilities		17,862			11,126
Total liabilities		1,890,171			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; 18,683,883
and 18,511,797 shares issued and outstanding as of June 30, 2018
and December 31, 2017, respectively		187			185
Additional paid-in capital		85,620			84,532
Retained earnings		190,735			174,804
Accumulated other comprehensive loss		(4,943	)		(2,103	)
Total shareholders’ equity		271,599			257,418
Total liabilities and shareholders’ equity	$	2,161,770		$	2,123,529

See accompanying notes to the unaudited consolidated financial statements.

3

PEOPLE’S UTAH BANCORP AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

	Three Months Ended				Six Months Ended
	June 30,				June 30,
(Dollars in thousands, except share and per share data)	2018		2017		2018		2017
Interest income
Interest and fees on loans	$	27,073	$	17,923	$	52,856	$	34,767
Interest and dividends on investments		1,683		1,802		3,339		3,507
Total interest income		28,756		19,725		56,195		38,274
Interest expense		1,778		749		3,273		1,515
Net interest income		26,978		18,976		52,922		36,759
Provision for loan losses		1,475		900		3,525		1,100
Net interest income after provision for loan losses		25,503		18,076		49,397		35,659
Non-interest income
Mortgage banking		1,505		1,960		3,143		3,939
Card processing		799		692		1,522		1,287
Service charges on deposit accounts		704		578		1,377		1,114
Net gain (loss) on sale of investment securities		333		1		335		(10	)
Other operating		725		606		1,407		1,099
Total non-interest income		4,066		3,837		7,784		7,429
Non-interest expense
Salaries and employee benefits		10,196		7,762		20,619		15,729
Occupancy, equipment and depreciation		1,411		1,088		2,954		2,205
Data processing		1,063		661		1,933		1,336
Marketing and advertising		321		349		767		611
FDIC premiums		299		130		628		256
Acquisition-related costs		1		175		350		175
Other		2,532		1,670		4,620		3,437
Total non-interest expense		15,823		11,835		31,871		23,749
Income before income tax expense		13,746		10,078		25,310		19,339
Income tax expense		3,279		3,584		5,839		6,324
Net income	$	10,467	$	6,494	$	19,471	$	13,015
Earnings per common share:
Basic	$	0.56	$	0.36	$	1.04	$	0.73
Diluted	$	0.55	$	0.35	$	1.03	$	0.71
Weighted average common shares outstanding:
Basic		18,679,908		17,937,926		18,639,397		17,911,125
Diluted		18,989,176		18,351,531		18,963,549		18,334,028

See accompanying notes to the unaudited consolidated financial statements.

4

PEOPLE’S UTAH BANCORP AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

	Three Months Ended						Six Months Ended
	June 30,						June 30,
(Dollars in thousands)	2018			2017			2018			2017
Net income	$	10,467		$	6,494		$	19,471		$	13,015
Other comprehensive income
Unrealized holding (losses)/gains on securities available-for-sale		(1,319	)		375			(3,787	)		438
Income tax benefit/(expense)		330			(143	)		947			(168	)
Unrealized holding (losses)/gains on securities available-for-sale, net of tax		(989	)		232			(2,840	)		270
Total comprehensive income	$	9,478		$	6,726		$	16,631		$	13,285

See accompanying notes to the unaudited consolidated financial statements.

5

PEOPLE’S UTAH BANCORP AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

										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		-		-		-		13,015			270			13,285
Cash dividends ($0.16 per share)		-		-		-		(2,867	)		-			(2,867	)
Share-based compensation		-		-		218		-			-			218
Exercise of stock options		128,809		1		748		-			-			749
Balance as of June 30, 2017		17,948,347	$	179	$	69,623	$	170,840		$	(740	)	$	239,902
Balance as of January 1, 2018		18,511,797	$	185	$	84,532	$	174,804		$	(2,103	)	$	257,418
Comprehensive income		-		-		-		19,471			(2,840	)		16,631
Cash dividends ($0.19 per share)		-		-		-		(3,540	)		-			(3,540	)
Share-based compensation		-		-		370		-			-			370
Exercise of stock options		172,086		2		718		-			-			720
Balance as of June 30, 2018		18,683,883	$	187	$	85,620	$	190,735		$	(4,943	)	$	271,599

See accompanying notes to the unaudited consolidated financial statements.

6

PEOPLE’S UTAH BANCORP AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

	Six Months Ended
	June 30,
(Dollars in thousands)	2018			2017
Cash flows from operating activities:
Net income	$	19,471		$	13,015
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses		3,525			1,100
Depreciation and amortization		1,538			1,267
Deferred income taxes		(990	)		(214	)
Net amortization of securities discounts and premiums		1,312			1,501
Increase in cash surrender value of bank owned life insurance		(304	)		(256	)
Share-based compensation		370			218
Gain on sale of loans held for sale		(2,047	)		(2,838	)
Originations of loans held for sale		(108,638	)		(115,621	)
Proceeds from sale of loans held for sale		110,498			131,630
Net changes in:
Accrued interest receivable		(64	)		(59	)
Other assets		(4,611	)		517
Accrued interest payable		16			(36	)
Other liabilities		6,736			4,964
Net cash provided by operating activities		26,812			35,188
Cash flows from investing activities:
Net change in loans held for investment		(63,290	)		(82,558	)
Purchase of available-for-sale securities		-			(24,599	)
Purchase of held-to-maturity securities		-			(12,198	)
Proceeds from maturities/sales of available-for-sale securities		21,645			34,350
Proceeds from maturities of held-to-maturity securities		6,345			7,939
Purchase of bank-owned life insurance		(2,250	)		-
Purchase of premises and equipment		(448	)		(2,758	)
Proceeds from sale of other real estate owned, net of improvements		438			302
Net change of non-marketable equity securities		(2,445	)		(132	)
Net cash used in investing activities		(40,005	)		(79,654	)
Cash flows from financing activities:
Net (decrease) increase in deposits		(32,692	)		35,978
Proceeds related to exercise of stock options		720			749
Net change in short-term borrowings		50,000			103
Cash dividends paid		(3,540	)		(2,867	)
Net cash provided by financing activities		14,488			33,963
Net change in cash and cash equivalents		1,295			(10,503	)
Cash and cash equivalents, beginning of period		51,027			67,938
Cash and cash equivalents, end of period	$	52,322		$	57,435
Supplemental disclosures of cash flow information:
Cash paid for interest	$	3,257		$	1,551
Income taxes paid	$	6,869		$	6,217
Supplemental disclosures of non-cash investing transactions:
Reclassifications from loans to other real estate owned	$	-		$	468
Unrealized gains / (losses) on securities available-for-sale	$	(3,787	)	$	438
Measurement period adjustment to goodwill	$	(335	)	$	-

See accompanying notes to the unaudited consolidated financial statements.

7

PEOPLE’S UTAH BANCORP AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Note 1 — Basis of Presentation

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 six months ended June 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”).

8

Note 1 — Basis of Presentation – Continued

Earnings per common share have been computed based on the following:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
(Dollars in thousands, except share and per share data)	2018		2017		2018		2017
Numerator
Net income	$	10,467	$	6,494	$	19,471	$	13,015
Denominator
Weighted-average number of common shares outstanding		18,679,908		17,937,926		18,639,397		17,911,125
Incremental shares assumed for stock options and RSUs		309,268		413,605		324,152		422,903
Weighted-average number of dilutive shares outstanding		18,989,176		18,351,531		18,963,549		18,334,028
Basic earnings per common share	$	0.56	$	0.36	$	1.04	$	0.73
Diluted earnings per common share	$	0.55	$	0.35	$	1.03	$	0.71

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 February 2018, the FASB issued ASU 2018-02, Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.  This ASU gives businesses the option of reclassifying to retained earnings the so-called “stranded tax effects” left in accumulated other comprehensive income (“AOCI”) because of the reduction to the corporate income tax rate.  The amendments are effective for all organizations for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years.  Early adoption is permitted.  The FASB said that businesses and organizations should apply the amendments either in the period of adoption or retrospectively to each period in which the effect of the change in the tax rate is recognized.  The Company early adopted this ASU on December 31, 2017.

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 January 2017, FASB issued ASU 2017-04, "Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment." The ASU removes the requirement to compare the implied fair value of goodwill with its carrying value as required in Step 2 of the goodwill impairment test. Under the ASU, registrants would perform their goodwill impairment test and recognize an impairment charge for any amount the carrying value exceeds the reporting unit's fair value, but limited by the amount of goodwill allocated to that reporting unit. This ASU is effective for interim and annual reporting periods beginning after December 15, 2019. Early adoption is permitted for all entities after January 1, 2017. The Company early adopted this ASU on December 31, 2017 and adoption did not have a material effect on the Company's Consolidated Financial Statements.

In January 2017, FASB issued ASU 2017-03, "Accounting Changes and Error Corrections (Topic 250) and Investments-Equity Method and Joint Ventures (Topic 323)." The ASU amends the Codification for SEC staff announcements made at recent Emerging Issues Task Force (EITF) meetings. The SEC guidance that specifically relates to our Consolidated Financial Statements was from the September 2016 meeting, where the SEC staff expressed their expectations about the extent of disclosures registrants should make about the effects of the new FASB guidance as well as any amendments issued prior to adoption, on revenue (ASU 2014-09), leases (ASU 2016-02) and credit losses on financial instruments (ASU 2016-13) in accordance with SAB Topic 11.M. Registrants are required to disclose the effect that recently issued accounting standards will have on their financial statements when adopted in a future period. In cases where a registrant cannot reasonably estimate the impact of the adoption, then additional qualitative disclosures should be considered. The ASU incorporates these SEC staff views into ASC 250 and adds references to that guidance in the transition paragraphs of each of the three new standards. The Company has adopted the amendments in this ASU and appropriate disclosures have been included in this Note for each recently issued accounting standard.

9

Note 1 — Basis of Presentation – Continued

In December 2016, FASB issued ASU No. 2016-19, "Technical Corrections and Improvements" and ASU 2016-20, "Technical Corrections and Improvements to Topic 606: Revenue from Contracts with Customers." On November 10, 2010, FASB added a standing project that will facilitate the FASB Accounting Standards Codification ("Codification”) updates for technical corrections, clarifications, and improvements. These amendments are referred to as Technical Corrections and Improvements. Maintenance updates include non-substantive corrections to the Codification, such as editorial corrections, various link-related changes, and changes to source fragment information. These updates contain amendments that will affect a wide variety of Topics in the Codification. The amendments in these ASUs will apply to all reporting entities within the scope of the affected accounting guidance and generally fall into one of four categories: amendments related to differences between original guidance and the Codification, guidance clarification and reference corrections, simplification, and minor improvements. In summary, the amendments represent changes to clarify the Codification, correct unintended application of guidance, or make minor improvements to the Codification that are not expected to have a significant effect on current accounting practice. Transition guidance varies based on the amendments in the ASUs. The amendments that require transition guidance are effective for fiscal years and interim reporting periods after December 15, 2016. Early adoption is permitted including adoption in an interim period. All other amendments are effective upon the issuance of these ASUs. Neither ASU 2016-19 nor ASU 2016-20 had a material impact on the Company's Consolidated Financial Statements.

In August 2016, the FASB issued ASU No. 2016-15, "Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments." The ASU amends the guidance on the classification of certain cash receipts and payments in the statement of cash flows and is intended to reduce the diversity in practice. This ASU is effective for interim and annual reporting periods beginning after December 15, 2017. Early adoption is permitted for all entities beginning after December 15, 2017, including interim periods within those fiscal years. The adoption of ASU 2016-15 on January 1, 2018 did not 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 January 2016, the FASB issued ASU 2016-01, "Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities." The ASU amends the guidance in GAAP on the classification and measurement of financial instruments. The ASU includes the following changes: i) equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income; (ii) requires the use of exit price notion when measuring the fair value of financial instruments for disclosure purposes; (iii) requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (i.e. securities or loans and receivables) on the balance sheet or the accompanying notes to the financial statements; (iv) allows an equity investment that does not have readily determinable fair values, to be measured at cost minus impairment (if any), plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer; (v) eliminates the requirement to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet, and requires a reporting organization to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk (also referred to as “own credit”) when the organization has elected to measure the liability at fair value in accordance with the fair value option for financial instruments; (vi) requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (i.e. securities or loans and receivables) on the balance sheet or in the accompanying notes to the financial statements; and (vii) clarifies that a valuation allowance on a deferred tax asset related to available-for-sale securities should be evaluated in combination with the organization’s other deferred tax assets. This ASU is effective for interim and annual periods beginning after December 15, 2017. The Company adopted ASU No. 2016-01 effective January 1, 2018, and the adoption did not have a material impact on the Company's Consolidated Financial Statements.

10

Note 1 — Basis of Presentation – Continued

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 $1.2 million of expenses for the six months ended June 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, $1.0 million of card processing related expenses for the six months ended June 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 six months ended June 30, 2018 and 2017:

	Six Months Ended							Six Months Ended
	June 30, 2018							June 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	$	1,522	$	2,749	$	(1,227	)	$	1,287	$	2,332	$	(1,045	)
Service charges on deposit accounts		1,377		1,377		-			1,114		1,114		-
Non-interest Expense
Card Processing	$	-	$	1,227	$	(1,227	)	$	-	$	1,045	$	(1,045	)

11

Note 2 — Investment Securities

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 June 30, 2018
U.S. Government-sponsored securities	$	48,953	$	-	$	(327	)	$	(590	)	$	48,036
Municipal securities		11,977		107		(65	)		(27	)		11,992
Mortgage-backed securities		177,360		27		(2,376	)		(3,110	)		171,901
Corporate securities		5,000		-		(12	)		(218	)		4,770
	$	243,290	$	134	$	(2,780	)	$	(3,945	)	$	236,699
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:

					Gross Unrealized Losses
					Less			12
			Gross		Than			Months
	Amortized		Unrealized		12			or			Fair
(Dollars in thousands)	Cost		Gains		Months			Longer			Value
As of June 30, 2018
Municipal securities	$	67,922	$	17	$	(543	)	$	(337	)	$	67,059
As of December 31, 2017
Municipal securities	$	74,654	$	167	$	(293	)	$	(227	)	$	74,301

12

Note 2 — Investment Securities – continued

At June 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:

	June 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	$	14,628	$	(327	)	$	33,407	$	(590	)	$	48,035	$	(917	)
Municipal securities		4,783		(65	)		810		(27	)		5,593		(92	)
Mortgage-backed securities		80,778		(2,376	)		88,267		(3,110	)		169,045		(5,486	)
Corporate securities		1,987		(12	)		2,783		(218	)		4,770		(230	)
	$	102,176	$	(2,780	)	$	125,267	$	(3,945	)	$	227,443	$	(6,725	)
Held-to Maturity
Municipal securities	$	48,014	$	(543	)	$	9,196	$	(337	)	$	57,210	$	(880	)
	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 June 30, 2018, by contractual maturity, are as follows:

	Available-For-Sale				Held-To-Maturity
	Amortized		Fair		Amortized		Fair
(Dollars in thousands)	Cost		Value		Cost		Value
Securities maturing in:
One year or less	$	2,528	$	2,545	$	8,388	$	8,370
After one year through five years		75,740		74,398		38,735		38,430
After five years through ten years		52,157		50,523		15,153		14,725
After ten years		112,865		109,233		5,646		5,534
	$	243,290	$	236,699	$	67,922	$	67,059

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 June 30, 2018, the Company held 327 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.

13

Note 2 — Investment Securities – continued

The Company had sales of available-for-sale securities totaling $500,000 during the six months ended June 30, 2018, which resulted in a net gain of $335,000.  There were no sales of available-for-sale securities for the six months ended June 30, 2017. There were no available-for-sale securities in a nonaccrual status at June 30, 2018 or December 31, 2017.

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

Note 3 — Loans and Allowance for Loan Losses

Loans are summarized as follows:

	June 30,			December 31,
(Dollars in thousands)	2018			2017
Loans held for investment:
Commercial real estate loans:
Real estate term	$	842,352		$	784,148
Construction and land development		373,845			369,590
Total commercial real estate loans		1,216,197			1,153,738
Commercial and industrial loans		310,228			294,085
Consumer loans:
Residential and home equity		153,084			158,591
Consumer and other		16,978			25,591
Total consumer loans		170,062			184,182
Total gross loans		1,696,487			1,632,005
Net deferred loan fees		(4,528	)		(4,561	)
Total loans held for investment		1,691,959			1,627,444
Allowance for loan losses		(22,308	)		(18,303	)
Total loans held for investment, net	$	1,669,651		$	1,609,141

Changes in the allowance for loan losses (“ALLL”) are as follows:

	Three Months Ended June 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	$	7,249	$	6,808		$	5,962		$	642		$	70		$	20,731
Additions: Provisions for loan losses		1,779		(65	)		(258	)		(37	)		56			1,475
Deductions:
Gross loan charge-offs		-		-			(97	)		-			(107	)		(204	)
Recoveries		-		46			173			54			33			306
Net loan (charge-offs) / recoveries		-		46			76			54			(74	)		102
Balance at end of period	$	9,028	$	6,789		$	5,780		$	659		$	52		$	22,308

14

Note 3 — Loans and Allowance for Loan Losses – Continued

	Three Months Ended June 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	$	7,149		$	4,683	$	4,222		$	529		$	61		$	16,644
Additions: Provisions for loan losses		181			394		342			(28	)		11			900
Deductions:
Gross loan charge-offs		(350	)		-		(114	)		-			(48	)		(512	)
Recoveries		177			-		39			2			21			239
Net loan (charge-offs) / recoveries		(173	)		-		(75	)		2			(27	)		(273	)
Balance at end of period	$	7,157		$	5,077	$	4,489		$	503		$	45		$	17,271

	Six Months Ended June 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		2,310		409		1,067			(237	)		(24	)		3,525
Deductions:
Gross loan charge-offs		-		-		(290	)		-			(172	)		(462	)
Recoveries		12		71		689			81			89			942
Net loan (charge-offs) / recoveries		12		71		399			81			(83	)		480
Balance at end of period	$	9,028	$	6,789	$	5,780		$	659		$	52		$	22,308

	Six Months Ended June 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		556			(451	)		966			84			(55	)		1,100
Deductions:
Gross loan charge-offs		(350	)		-			(272	)		(338	)		(113	)		(1,073	)
Recoveries		181			79			77			140			52			529
Net loan (charge-offs) / recoveries		(169	)		79			(195	)		(198	)		(61	)		(544	)
Balance at end of period	$	7,157		$	5,077		$	4,489		$	503		$	45		$	17,271

15

Note 3 — Loans and Allowance for Loan Losses – Continued

Non-accrual loans are summarized as follows:

	June 30,		December 31,
(Dollars in thousands)	2018		2017
Non-accrual loans, not troubled debt restructured:
Real estate term	$	1,580	$	-
Construction and land development		320		-
Commercial and industrial		1,539		223
Residential and home equity		728		-
Consumer and other		39		-
Total non-accrual loans, not troubled debt restructured		4,206		223
Troubled debt restructured loans, non-accrual:
Real estate term		1,556		-
Construction and land development		-		-
Commercial and industrial		195		-
Residential and home equity		-		-
Consumer and other		-		-
Total troubled debt restructured loans, non-accrual		1,751		-
Total non-accrual loans	$	5,957	$	223

Troubled debt restructured loans are summarized as follows:

	June 30,		December 31,
(Dollars in thousands)	2018		2017
Accruing troubled debt restructured loans	$	2,495	$	3,307
Non-accrual troubled debt restructured loans		1,751		-
Total troubled debt restructured loans	$	4,246	$	3,307

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 $1.8 million were classified as TDR’s during the six months ended June 30, 2018.  No new TDRs occurred during the six months ended June 30, 2017.  In addition, there were no TDRs which incurred a payment default within twelve months of the restructure date during the six-month periods ended June 30, 2018 and 2017.

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

	June 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	$	836,191	$	2,659	$	-	$	3,136	$	5,795	$	366	$	842,352
Construction and land development		367,187		5,920		-		320		6,240		418		373,845
Total commercial real estate		1,203,378		8,579		-		3,456		12,035		784		1,216,197
Commercial and industrial		299,280		1,932		322		1,734		3,988		6,960		310,228
Consumer:
Residential and home equity		151,450		906		-		728		1,634		-		153,084
Consumer and other		16,684		241		14		39		294		-		16,978
Total consumer		168,134		1,147		14		767		1,928		-		170,062
Total gross loans	$	1,670,792	$	11,658	$	336	$	5,957	$	17,951	$	7,744	$	1,696,487

16

Note 3 — Loans and Allowance for Loan Losses – Continued

	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	$	780,895	$	2,243	$	-	$	-	$	2,243	$	1,010	$	784,148
Construction and land development		361,845		7,095		-		-		7,095		650		369,590
Total commercial real estate		1,142,740		9,338		-		-		9,338		1,660		1,153,738
Commercial and industrial		282,638		4,210		-		223		4,433		7,014		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

Credit Quality Indicators:

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:

	June 30, 2018
			Special						Total		Total
(Dollars in thousands)	Pass		Mention		Substandard		Doubtful		Loans		Allowance
Commercial real estate:
Real estate term	$	813,802	$	18,401	$	10,149	$	-	$	842,352	$	9,028
Construction and land development		370,273		1,614		1,958		-		373,845		6,789
Total commercial real estate		1,184,075		20,015		12,107		-		1,216,197		15,817
Commercial and industrial		287,284		5,707		17,237		-		310,228		5,780
Consumer loans:
Residential and home equity		148,554		1,497		3,033		-		153,084		659
Consumer and other		16,863		46		57		12		16,978		52
Total consumer		165,417		1,543		3,090		12		170,062		711
Total	$	1,636,776	$	27,265	$	32,434	$	12	$	1,696,487	$	22,308

17

Note 3 — Loans and Allowance for Loan Losses – Continued

	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:

	June 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	$	372	$	-	$	877	$	3	$	-	$	1,252
Collectively evaluated for impairment		8,656		6,789		4,551		656		52		20,704
Purchased credit-impaired loans		-		-		352		-		-		352
Total	$	9,028	$	6,789	$	5,780	$	659	$	52	$	22,308
Outstanding loan balances:
Individually evaluated for impairment	$	8,750	$	1,549	$	9,453	$	2,638	$	-	$	22,390
Collectively evaluated for impairment		833,236		371,878		293,815		150,446		16,978		1,666,353
Purchased credit-impaired loans		366		418		6,960		-		-		7,744
Total gross loans	$	842,352	$	373,845	$	310,228	$	153,084	$	16,978	$	1,696,487

	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		776,947		366,372		285,027		157,441		25,591		1,611,378
Purchased credit-impaired loans		1,010		650		7,014		-		-		8,674
Total gross loans	$	784,148	$	369,590	$	294,085	$	158,591	$	25,591	$	1,632,005

18

Note 3 — Loans and Allowance for Loan Losses – Continued

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

	June 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	$	11,916	$	7,695	$	1,055	$	8,750	$	372
Construction and land development		2,191		1,549		-		1,549		-
Total commercial real estate		14,107		9,244		1,055		10,299		372
Commercial and industrial		10,887		3,208		6,245		9,453		877
Consumer loans:
Residential and home equity		2,638		2,374		264		2,638		3
Consumer and other		-		-		-		-		-
Total consumer		2,638		2,374		264		2,638		3
Total	$	27,632	$	14,826	$	7,564	$	22,390	$	1,252

	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

The interest income recognized on impaired loans was as follows:  

	Three Months Ended
	June 30, 2018				June 30, 2017
	Average		Interest		Average		Interest
	Recorded		Income		Recorded		Income
(Dollars in thousands)	Investment		Recognition		Investment		Recognition
Commercial real estate:
Real estate term	$	6,312	$	43	$	4,734	$	6
Construction and land development		2,033		35		2,872		32
Total commercial real estate		8,345		78		7,606		38
Commercial and industrial		7,822		87		4,280		36
Consumer loans:
Residential and home equity		2,086		22		850		10
Consumer and other		-		-		-		-
Total consumer		2,086		22		850		10
Total	$	18,253	$	187	$	12,736	$	84

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Note 3 — Loans and Allowance for Loan Losses – Continued

	Six Months Ended
	June 30, 2018				June 30, 2017
	Average		Interest		Average		Interest
	Recorded		Income		Recorded		Income
(Dollars in thousands)	Investment		Recognition		Investment		Recognition
Commercial real estate:
Real estate term	$	7,471	$	146	$	5,316	$	36
Construction and land development		2,058		74		2,660		63
Total commercial real estate		9,529		220		7,976		99
Commercial and industrial		5,749		128		4,365		90
Consumer loans:
Residential and home equity		1,894		43		1,055		23
Consumer and other		-		-		-		-
Total consumer		1,894		43		1,055		23
Total	$	17,172	$	391	$	13,396	$	212

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 $10.7 million at June 30, 2018 and $12.4 million at December 31, 2017. The carrying balance of PCI loans was $7.7 million at June 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 six months ended June 30, 2018, and 2017:

	Six Months Ended
	June 30,
(Dollars in thousands)	2018			2017
Balance, beginning of period	$	8,536		$	573
Accretion to interest income		(1,943	)		(18	)
Reclassification from non-accretable discount		189			9
Balance, end of period	$	6,782		$	564

As of June 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 $3.8 million and $3.4 million as of June 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 June 30, 2018, and December 31, 2017, respectively.  Deposits from affiliates were $8.2 million and $7.1 million as of June 30, 2018 and December 31, 2017, respectively.

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Note 4 — Commitments and Contingencies

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.

Contractual amounts of off-balance sheet financial instruments were as follows:

	June 30,		December 31,
(Dollars in thousands)	2018		2017
Commitments to extend credit, including unsecured    commitments of $16,481 and $13,625 as of June 30, 2018    and December 31, 2017, respectively	$	587,699	$	637,029
Stand-by letters of credit and bond commitments, including    unsecured commitments of $455 and $440 as of    June 30, 2018 and December 31, 2017, respectively		28,892		27,943
Unused credit card lines, all unsecured		22,045		24,949

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.

Note 5 — Fair Value

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:

• Level 1 – Quoted prices in active markets for identical instruments. An active market is a market in which transactions occur with sufficient frequency and volume to provide pricing information on an ongoing basis. A quoted price in an active market provides the most reliable evidence of fair value and shall be used to measure fair value whenever available

• Level 2 – Observable inputs other than Level 1 including quoted prices in active markets for similar instruments, quoted prices in less active markets for identical or similar instruments, or other observable inputs that can be corroborated by observable market data.

• Level 3 – Unobservable inputs supported by little or no market activity for financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation; also includes observable inputs from non-binding single dealer quotes not corroborated by observable market data. In developing Level 3 measurements, management incorporates whatever market data might be available and uses discounted cash flow models where appropriate. These calculations include projections of future cash flows, including appropriate default and loss assumptions, and market based discount rates.  

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Note 5 — Fair Value - Continued

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 were valued at 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 June 30, 2018 and December 31, 2017:

			June 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	$	52,322	$	52,322	$	51,027	$	51,027
Securities - available-for-sale		2		236,699		236,699		263,056		263,056
Securities - held-to-maturity		2		67,922		67,059		74,654		74,301
Non-marketable securities		2		6,151		6,151		3,706		3,706
Loans held for sale		2		11,058		11,058		10,871		10,871
Loans held for investment		3		1,669,651		1,664,262		1,609,141		1,607,388
Bank-owned life insurance		1		26,120		26,120		23,566		23,566
Financial Liabilities:
Total deposits		2	$	1,781,940	$	1,556,471	$	1,814,632	$	1,596,966
Short-term borrowings		2		90,000		90,000		40,000		40,000

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Note 5 — Fair Value - Continued

Assets measured on a recurring and non-recurring basis are as follows:

(Dollars in thousands)	Level 1		Level 2		Level 3		Total
As of June 30, 2018
Fair valued on a recurring basis:
Investment securities available-for-sale	$	-	$	236,699	$	-	$	236,699
Fair valued on a non-recurring basis:
Impaired loans		-		-		6,312		6,312
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

Note 6 — Income Taxes

Income tax expense was $3.3 million and $3.6 million for the three months ended June 30, 2018 and 2017, respectively. The Company’s effective tax rate for the second quarter of 2018 was 23.9% compared with 35.6% in the second quarter of 2017. The tax rate in the second 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.     

Note 7 — Regulatory Capital Matters

The consolidated Tier 1 Leverage ratio increased from 11.46% at December 31, 2017 to 11.48% as of June 30, 2018. Federal Reserve Board Regulations require maintenance of certain minimum reserve balances based on certain average deposits which as of June 30, 2018 and December 31, 2017 were $17.0 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.

Note 8 — Incentive Share-Based Plan and Other Employee Benefits

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 six months ended June 30, 2018, the Company granted options for the purchase of 26,400 common shares, which have a weighted average exercise price of $31.42 per share and a weighted average fair value as of the date of grant of $3.3944 per share.  Additionally, the Company granted 27,788 restricted stock units (“RSU”) at a weighted-average fair value of $30.30 per unit.  The options and RSU’s generally vest over periods from one to three years. The Company recorded share-based compensation expense of $370,000 and $218,000 for the six months ended June 30, 2018 and 2017, respectively.

Note 9 — Acquisition Related Measurement Period Adjustments

During the six months ended June 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.

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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.”

FORWARD-LOOKING 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:

• changes in general economic conditions, either nationally or in our local market;

• inflation, interest rates, securities market volatility and monetary fluctuations;

• increases in competitive pressures among financial institutions and businesses offering similar products and services;

• higher defaults on our loan portfolio than we expect;

• changes in management’s estimate of the adequacy of the allowance for loan losses;

• risks associated with our growth and expansion strategy and related costs;

• ability to raise liquidity, either with deposits or other funding sources, to support our growth in assets;

• risks associated with the integration of current and future acquisitions

• increased lending risks associated with our high concentration of real estate loans;

• ability to successfully grow our business in Utah and neighboring states;

• legislative or regulatory changes or changes in accounting principles, policies or guidelines;

• risks associated with cyber security

• technological changes;

• regulatory or judicial proceedings; and

• other factors and risks including those described under “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this report and our Annual Report on Form 10-K for the year ended December 31, 2017.

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.

Overview

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,

24

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.

Mergers & Acquisitions

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.

Non-GAAP Financial Measures

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.

25

(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									Six Months Ended
	June 30,			March 31,			June 30,			June 30,			June 30,
Revenue from Core Operations	2018			2018			2017			2018			2017
Net interest income (GAAP)	$	26,978		$	25,944		$	18,976		$	52,922		$	36,759
Total non-interest income		4,066			3,718			3,837			7,784			7,429
Total GAAP revenues		31,044			29,662			22,813			60,706			44,188
Exclude net (gain)/ loss on sale of investment    securities		(333	)		-			-			(333	)		-
Revenue from core operations (non-GAAP)	$	30,711		$	29,662		$	22,813		$	60,373		$	44,188
	Three Months Ended									Six Months Ended
	June 30,			March 31,			June 30,			June 30,			June 30,
Non-interest Income from Core Operations	2018			2018			2017			2018			2017
Total non-interest income (GAAP)	$	4,066		$	3,718		$	3,837		$	7,784		$	7,429
Exclude net (gain)/ loss on sale of investment    securities		(333	)		-			-			(333	)		-
Non-interest income from core operations    (non-GAAP)	$	3,733		$	3,718		$	3,837		$	7,451		$	7,429
	Three Months Ended									Six Months Ended
	June 30,			March 31,			June 30,			June 30,			June 30,
Non-interest Expense from Core Operations	2018			2018			2017			2018			2017
Total non-interest expense (GAAP)	$	15,823		$	16,048		$	11,835		$	31,871		$	23,749
Exclude acquisition-related costs		(1	)		(349	)		(175	)		(350	)		(175	)
Non-interest expense from core operations    (non-GAAP)	$	15,822		$	15,699		$	11,660		$	31,521		$	23,574
	Three Months Ended									Six Months Ended
	June 30,			March 31,			June 30,			June 30,			June 30,
Net Income from Core Operations	2018			2018			2017			2018			2017
Net income (GAAP)	$	10,467		$	9,004		$	6,494		$	19,471		$	13,015
Exclude net (gain)/ loss on sale of investment    securities		(333	)		-			-			(333	)		-
Exclude acquisition-related costs		1			349			175			350			175
Exclude tax related benefit		79			(77	)		(62	)		(4	)		(57	)
Write down of deferred income tax    assets (DTA)		-			-			-			-			-
Net income (non-GAAP)	$	10,214		$	9,276		$	6,607		$	19,484		$	13,133

26

(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									Six Months Ended
	June 30,			March 31,			June 30,			June 30,			June 30,
Acquisition Accounting Impact on Net Interest Margin	2018			2018			2017			2018			2017
Net interest income (GAAP)	$	26,978		$	25,944		$	18,976		$	52,922		$	36,759
Exclude discount accretion (premium    amortization) on purchased loans		(777	)		(1,167	)		(8	)		(1,944	)		(18	)
Exclude premium amortization on acquired    certificates of deposit ("CD")		(35	)		(35	)		(69	)		(70	)		(137	)
Net interest income before acquisition    accounting impact (Non-GAAP)	$	26,166		$	24,742		$	18,899		$	50,908		$	36,604
Average earning assets (GAAP)	$	2,058,125		$	2,017,090		$	1,614,867		$	2,037,721		$	1,600,171
Exclude average net loan discount on    acquired loans		10,146			11,924			866			11,030			866
Average earning assets before acquired loan    discount (Non-GAAP)	$	2,068,271		$	2,029,014		$	1,615,733		$	2,048,751		$	1,601,037
Net interest margin ("NIM") (GAAP)		5.26	%		5.22	%		4.71	%		5.24	%		4.63	%
Exclude impact on NIM from discount    accretion		-0.15	%		-0.23	%		0.00	%		-0.19	%		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)		5.10	%		4.98	%		4.69	%		5.04	%		4.61	%

(Dollars in thousands)	Three Months Ended									Six Months Ended
	June 30,			March 31,			June 30,			June 30,			June 30,
Additional Non-GAAP Financial Information	2018			2018			2017			2018			2017
Diluted earnings per share (GAAP)	$	0.55		$	0.48		$	0.35		$	1.03		$	0.71
Diluted earnings per share (non-GAAP)	$	0.54		$	0.49		$	0.36		$	1.03		$	0.72
Efficiency ratio (GAAP)		50.97	%		54.10	%		51.88	%		52.50	%		53.75	%
Efficiency ratio (non-GAAP)		51.52	%		52.93	%		51.11	%		52.21	%		53.35	%
Non-interest income to average assets (GAAP)		0.75	%		0.70	%		0.91	%		0.73	%		0.89	%
Non-interest income to average assets (non-GAAP)		0.69	%		0.70	%		0.91	%		0.70	%		0.89	%
Non-interest expense to average assets (GAAP)		2.91	%		3.04	%		2.79	%		2.97	%		2.85	%
Non-interest expense to average assets (non-GAAP)		2.91	%		2.97	%		2.75	%		2.94	%		2.83	%
Return on average assets (GAAP)		1.93	%		1.70	%		1.53	%		1.82	%		1.56	%
Return on average assets (non-GAAP)		1.88	%		1.75	%		1.56	%		1.82	%		1.58	%
Return on average equity (GAAP)		15.60	%		13.96	%		10.91	%		14.79	%		11.17	%
Return on average equity (non-GAAP)		15.22	%		14.38	%		11.10	%		14.80	%		11.27	%

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Selected Financial Information

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

	June 30,			March 31,			December 31,			June 30,
(Dollars in thousands, except share data)	2018			2018			2017			2017
Selected Balance Sheet Information:
Book value per share	$	14.54		$	14.13		$	13.91		$	13.37
Tangible book value per share	$	12.97		$	12.57		$	12.29		$	13.34
Non-performing loans to total loans		0.51	%		0.44	%		0.18	%		0.64	%
Non-performing assets to total assets		0.40	%		0.34	%		0.18	%		0.47	%
Allowance for loan losses to loans held for investment		1.32	%		1.23	%		1.12	%		1.44	%
Loans to Deposits		94.32	%		92.86	%		89.27	%		81.57	%
Asset Quality Data:
Non-performing loans	$	8,649		$	7,398		$	2,899		$	7,611
Non-performing assets		8,649			7,398			3,893			8,079
Capital Ratios:
Tier 1 leverage capital (1)		11.48	%		11.26	%		11.46	%		14.15	%
Total risk-based capital (1)		15.22	%		14.71	%		14.67	%		19.82	%
Average equity to average assets		12.36	%		12.20	%		13.58	%		14.06	%
Tangible common equity to tangible assets (3)		11.36	%		11.00	%		10.87	%		13.93	%
	Three Months Ended									Six Months Ended
	June 30,			March 31,			June 30,			June 30,			June 30,
	2018			2018			2017			2018			2018
Selected Financial Information:
Basic earnings per share	$	0.56		$	0.48		$	0.36		$	1.04		$	0.73
Diluted earnings per share	$	0.55		$	0.48		$	0.35		$	1.03		$	0.71
Net interest margin (2)		5.26	%		5.22	%		4.71	%		5.24	%		4.63	%
Efficiency ratio		50.97	%		54.10	%		51.88	%		52.50	%		53.75	%
Non-interest income to average assets		0.75	%		0.70	%		0.91	%		0.73	%		0.89	%
Non-interest expense to average assets		2.91	%		3.04	%		2.79	%		2.97	%		2.85	%
Return on average assets		1.93	%		1.70	%		1.53	%		1.82	%		1.56	%
Return on average equity		15.60	%		13.96	%		10.91	%		14.79	%		11.14	%
Net charge-offs / (recoveries)		(102	)		(378	)		273			(480	)		544
Annualized net charge-offs / (recoveries) to average loans		-0.02	%		-0.09	%		0.09	%		-0.06	%		0.09	%

⁽¹⁾ Tier 1 leverage capital and Total risk-based capital as of June 30, 2018 are estimates.

⁽²⁾ Net interest margin is defined as net interest income divided by average earning assets.

⁽³⁾ Represents the sum of total shareholders’ equity less intangible assets all divided by the sum of total assets less intangible assets.    Intangible assets were $29,306,000, $29,088,000, and $533,000 at June 30, 2018, March 31, 2018, and June 30, 2017, respectively.

28

Results of Operations

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.

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	Three Months Ended
	June 30, 2018								June 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	$	15,533		$	64		1.65	%	$	21,594		$	56		1.04	%
Securities: (1)
Taxable securities		241,724			1,192		1.98	%		319,878			1,309		1.64	%
Non-taxable securities (2)		79,949			369		1.85	%		93,686			432		1.85	%
Total securities		321,673			1,561		1.95	%		413,564			1,741		1.69	%
Loans (3)
Real estate term		903,637			12,860		5.71	%		620,616			8,567		5.54	%
Construction and land development		368,823			7,303		7.94	%		238,412			4,659		7.84	%
Commercial and industrial		317,629			5,281		6.67	%		218,937			3,273		6.00	%
Residential and home equity		105,219			1,380		5.26	%		81,765			1,157		5.68	%
Consumer and other		17,940			249		5.58	%		17,672			267		6.05	%
Total loans		1,713,248			27,073		6.34	%		1,177,402			17,923		6.11	%
Non-marketable equity securities		7,671			58		3.04	%		2,307			5		0.78	%
Total interest earning assets		2,058,125			28,756		5.60	%		1,614,867			19,725		4.90	%
Allowance for loan losses		(21,073	)							(16,658	)
Non-interest earning assets		140,723								100,457
Total average assets	$	2,177,775							$	1,698,666
LIABILITIES AND SHAREHOLDERS’    EQUITY
Interest bearing deposits:
Demand and savings accounts	$	733,223		$	492		0.27	%	$	660,564		$	438		0.27	%
Money market accounts		207,663			176		0.34	%		168,021			73		0.17	%
Certificates of deposit		185,936			468		1.01	%		151,976			210		0.55	%
Total interest bearing deposits		1,126,822			1,136		0.40	%		980,561			721		0.29	%
Short-term borrowings		128,288			642		2.01	%		12,428			28		0.89	%
Total interest bearing liabilities		1,255,110			1,778		0.57	%		992,989			749		0.30	%
Non-interest bearing deposits		642,063								454,235
Total funding		1,897,173			1,778		0.38	%		1,447,224			749		0.21	%
Other non-interest bearing liabilities		11,433								12,677
Shareholders’ equity		269,169								238,765
Total average liabilities and shareholders’    equity	$	2,177,775							$	1,698,666
Net interest income				$	26,978							$	18,976
Interest rate spread							5.04	%							4.60	%
Net interest margin							5.26	%							4.71	%

⁽¹⁾ Excludes average unrealized losses of $6.4 million and $786,000 for the three months ended June 30, 2018 and 2017, respectively.

⁽²⁾ Does not include tax effect on tax-exempt investment security income of $123,000 and $233,000 for the three months ended June 30, 2018 and 2017, respectively.  

⁽³⁾ Loan interest income includes loan fees of $1.7 million and $1.6 million for the three months ended June 30, 2018 and 2017.  

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	Six Months Ended
	June 30, 2018								June 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	$	14,501		$	109		1.51	%	$	31,168		$	135		0.87	%
Securities: (1)
Taxable securities		247,078			2,406		1.96	%		317,342			2,510		1.59	%
Non-taxable securities (2)		81,226			751		1.86	%		92,930			854		1.85	%
Total securities		328,304			3,157		1.94	%		410,272			3,364
Loans (3)
Real estate term		879,444			25,024		5.74	%		604,327			16,575		5.53	%
Construction and land development		367,787			14,178		7.77	%		237,330			9,060		7.70	%
Commercial and industrial		315,838			10,371		6.62	%		214,774			6,489		6.09	%
Residential and home equity		106,060			2,716		5.16	%		82,481			2,131		5.21	%
Consumer and other		18,893			567		6.05	%		17,749			512		5.82	%
Total loans		1,688,022			52,856		6.31	%		1,156,661			34,767		6.06	%
Non-marketable equity securities		6,894			73		2.15	%		2,070			8		0.77	%
Total interest earning assets		2,037,721			56,195		5.56	%		1,600,171			38,274		4.82	%
Allowance for loan losses		(19,901	)							(16,713	)
Non-interest earning assets		142,940								99,498
Total average assets	$	2,160,760							$	1,682,956
LIABILITIES AND SHAREHOLDERS’    EQUITY
Interest bearing deposits:
Demand and savings accounts	$	725,774		$	943		0.26	%	$	660,026		$	876		0.27	%
Money market accounts		215,946			333		0.31	%		171,221			178		0.21	%
Certificates of deposit		192,705			927		0.97	%		154,131			432		0.56	%
Total interest bearing deposits		1,134,425			2,203		0.39	%		985,378			1,486		0.30	%
Short-term borrowings		114,498			1,070		1.88	%		7,856			29		0.74	%
Total interest bearing liabilities		1,248,923			3,273		0.53	%		993,234			1,515		0.31	%
Non-interest bearing deposits		635,503								442,861
Total funding		1,884,426			3,273		0.35	%		1,436,095			1,515		0.21	%
Other non-interest bearing liabilities		10,925								11,326
Shareholders’ equity		265,409								235,535
Total average liabilities and shareholders’    equity	$	2,160,760							$	1,682,956
Net interest income				$	52,922							$	36,759
Interest rate spread							5.03	%							4.52	%
Net interest margin							5.24	%							4.63	%

⁽¹⁾ Excludes average unrealized losses of $5.3 million and $1.2 million for the six months ended June 30, 2018 and 2017, respectively.

⁽²⁾ Does not include tax effect on tax-exempt investment security income of $250,000 and $460,000 for the three months ended June 30, 2018 and 2017, respectively.

⁽³⁾ Loan interest income includes loan fees of $3.3 million and $3.0 million for the three months ended June 30, 2018 and 2017.

31

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 June 30,									Six Months Ended June 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	$	(19	)	$	27		$	8		$	(94	)	$	68		$	(26	)
Taxable securities		(356	)		239			(117	)		(619	)		515			(104	)
Non-taxable securities		(63	)		-			(63	)		(108	)		5			(103	)
Total securities		(419	)		239			(180	)		(727	)		520			(207	)
Loans
Real estate term		4,020			273			4,293			7,807			642			8,449
Construction and land development		2,582			62			2,644			5,028			90			5,118
Commercial and industrial		1,608			400			2,008			3,277			605			3,882
Residential and home equity		313			(90	)		223			604			(19	)		585
Consumer and other		3			(21	)		(18	)		34			21			55
Total Loans		8,526			624			9,150			16,750			1,339			18,089
Non-marketable equity securities		24			29			53			37			28			65
Total interest income		8,112			919			9,031			15,966			1,955			17,921
Interest expense:
Demand and savings accounts		49			5			54			86			(19	)		67
Money market accounts		20			83			103			54			101			155
Certificates of deposit		55			203			258			128			367			495
Short-term borrowings		541			73			614			935			106			1,041
Total interest expense		665			364			1,029			1,203			555			1,758
Net interest income	$	7,447		$	555		$	8,002		$	14,763		$	1,400		$	16,163

Net interest income increased $8.0 million to $27.0 million for the three months ended June 30, 2018 compared with $19.0 million for the same period of 2017.  The increase is primarily the result of average interest earning assets increasing $443 million, and yields on interest earning assets increasing 70 basis points for the same comparable period to 5.60% for the three months ended June 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 6.34% for the same comparable period and the percentage of average loans to total average interest earning assets increasing to 83.24% for the three months ended June 30, 2018 compared with 72.91% for the same period of 2017.  

Total cost of interest-bearing liabilities increased 27 basis points to 0.57% for the second quarter of 2018 and is the result of a $116 million increase in short-term borrowing at a borrowing rate of 2.01% during the second quarter of 2018, and the cost of interest-bearing deposits increasing 11 basis points to 0.40% for the second 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 55 basis points to 5.26% for the second 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 16 basis points to the net interest margin in the second quarter of 2018.

Net interest income increased $16.2 million to $52.9 million for the six months ended June 30, 2018 compared with $36.8 million for the same period of 2017.  The increase is primarily the result of average interest earning assets increasing $438 million, and yields on interest earning assets increasing 74 basis points for the same comparable period to 5.56% for the six months ended June 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

32

of yields on loans increasing 25 basis points to 6.31% for the same comparable period and the percentage of average loans to total average interest earning assets increasing to 82.84% for the six months ended June 30, 2018 compared with 72.28% for the same period of 2017.

Total cost of interest-bearing liabilities increased 22 basis points to 0.53% for the six months ended June 30, 2018, and is the result of a $106.6 million increase in short-term borrowing at a borrowing rate of 1.88% during the six months ended June 30, 2018, and the cost of interest-bearing deposits increasing 9 basis points to 0.39% for the six months ended June 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 61 basis points to 5.24% for the six months ended June 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 20 basis points to the net interest margin in the six months ended June 30, 2018.

33

Financial Overview for the Three Months Ended June 30, 2018 and 2017

	Three Months Ended
	June 30,		June 30,		$ Better /			% Better /
(Dollars in thousands)	2018		2017		(Worse)			(Worse)
Interest income	$	28,756	$	19,725	$	9,031			45.8	%
Interest expense		1,778		749		(1,029	)		-137.4	%
Net interest income		26,978		18,976		8,002			42.2	%
Provision for loan losses		1,475		900		(575	)		-63.9	%
Net interest income after provision for loan losses		25,503		18,076		7,427			41.1	%
Non-interest income		4,066		3,837		229			6.0	%
Non-interest expense		15,823		11,835		(3,988	)		-33.7	%
Income before income tax expense		13,746		10,078		3,668			36.4	%
Income tax expense		3,279		3,584		305			8.5	%
Net income	$	10,467	$	6,494	$	3,973			61.2	%

Net Income. Net income increased $4.0 million to $10.5 million for the three months ended June 30, 2018, compared with $6.5 million for the three months ended June 30, 2017. This was primarily attributable to an increase in net interest income of $8.0 million, an increase in non-interest income of $0.2 million, a decrease in income tax expense of $0.3 million, offset by an increase in non-interest expense of $4.0 million, and an increase in provision for loan losses of $0.6 million.

Net Interest Income and Net Interest Margin. The increase in net interest income for the three months ended June 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 June 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 5.60% for the three months ended June 30, 2018 compared with 4.90% for the same period of 2017.  The cost of total funding increased in the three months ended June 30, 2018 to 0.38% from 0.21% 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 $1.5 million for the three months ended June 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, and a $0.3 million increase in specific reserves on classified loans.  The Company incurred net recoveries of $0.1 million in the second quarter of 2018 compared with net charge-offs of $0.3 million in the second quarter of 2017.

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

	Three Months Ended
	June 30,		June 30,		$ Better /			% Better /
(Dollars in thousands)	2018		2017		(Worse)			(Worse)
Mortgage banking	$	1,505	$	1,960	$	(455	)		-23.2	%
Card processing		799		692		107			15.5	%
Service charges on deposit accounts		704		578		126			21.8	%
Net gain (loss) on sale of investment securities		333		1		332			33200.0	%
Other operating		725		606		119			19.6	%
Total non-interest income	$	4,066	$	3,837	$	229			6.0	%

Noninterest income was $4.1 million for the second quarter of 2018 compared with $3.8 million the same period a year ago.   The increase was primarily due to gain on sale of securities, an increase in card processing fees and service charges on deposit accounts, offset by lower mortgage banking income.

34

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

	Three Months Ended
	June 30,		June 30,		$ Better /			% Better /
(Dollars in thousands)	2018		2017		(Worse)			(Worse)
Salaries and employee benefits	$	10,196	$	7,762	$	(2,434	)		-31.4	%
Occupancy, equipment and depreciation		1,411		1,088		(323	)		-29.7	%
Data processing		1,063		661		(402	)		-60.8	%
Marketing and advertising		321		349		28			8.0	%
FDIC premiums		299		130		(169	)		-130.0	%
Acquisition-related costs		1		175		174			99.4	%
Other		2,532		1,670		(862	)		-51.6	%
Total non-interest expense	$	15,823	$	11,835	$	(3,988	)		-33.7	%

Non-interest expense was $15.8 million for the three months ended June 30, 2018 compared with $11.8 million for the same period of 2017.  Non-interest expense for the three months ended June 30, 2018 increased as a result of $2.4 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 $0.4 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 50.97% for the three months ended June 30, 2018 compared with 51.88% for the same period of 2017.

Income Tax Expense. We recorded income tax expense of $3.3 million for the three months ended June 30, 2018 compared with $3.6 million for the same period in 2017. The effective tax rate for the three months ended June 30, 2018 was 23.9% compared with 35.6% in the corresponding three months of 2017. The tax rate for the three months ended June 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.

Financial Overview for the Six Months Ended June 30, 2018 and 2017

	Six Months Ended
	June 30,		June 30,		$ Better /			% Better /
(Dollars in thousands)	2018		2017		(Worse)			(Worse)
Interest income	$	56,195	$	38,274	$	17,921			46.8	%
Interest expense		3,273		1,515		(1,758	)		-116.0	%
Net interest income		52,922		36,759		16,163			44.0	%
Provision for loan losses		3,525		1,100		(2,425	)		-220.5	%
Net interest income after provision for loan losses		49,397		35,659		13,738			38.5	%
Non-interest income		7,784		7,429		355			4.8	%
Non-interest expense		31,871		23,749		(8,122	)		-34.2	%
Income before income tax expense		25,310		19,339		5,971			30.9	%
Income tax expense		5,839		6,324		485			7.7	%
Net income	$	19,471	$	13,015	$	6,456			49.6	%

Net Income. Net income increased $6.5 million to $19.5 million for the six months ended June 30, 2018, compared with $13.0 million for the six months ended June 30, 2017. This was primarily attributable to an increase in net interest income of $16.2 million, an increase in non-interest income of $0.4 million, a decrease in income tax expense of $0.5 million, offset by an increase in non-interest expense of $8.1 million and an increase in provision for loan losses of $2.4 million.

Net Interest Income and Net Interest Margin. The increase in net interest income for the six months ended June 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 six months ended June 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.

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The yield on our average interest earning assets was 5.56% for the six months ended June 30, 2018 compared with 4.82% for the same period of 2017.  The cost of total funding increased in the six months ended June 30, 2018 to 0.35% from 0.21% in the comparable period 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 $3.5 million for the six months ended June 30, 2018 compared with $1.1 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, and a $1.5 million increase in specific reserves on classified loans.  The Company incurred net recoveries of $0.5 million in the six months ended June 30, 2018 compared with net charge-offs of $0.5 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:

	Six Months Ended
	June 30,		June 30,			$ Better /			% Better /
(Dollars in thousands)	2018		2017			(Worse)			(Worse)
Mortgage banking	$	3,143	$	3,939		$	(796	)		-20.2	%
Card processing		1,522		1,287			235			18.3	%
Service charges on deposit accounts		1,377		1,114			263			23.6	%
Net gain (loss) on sale of investment securities		335		(10	)		345			3450.0	%
Other operating		1,407		1,099			308			28.0	%
Total non-interest income	$	7,784	$	7,429		$	355			4.8	%

Noninterest income was $7.8 million for the six months ended June 30, 2018 compared with $7.4 million the same period a year ago.   The increase was primarily due to gain on sale of securities, 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:

	Six Months Ended
	June 30,		June 30,		$ Better /			% Better /
(Dollars in thousands)	2018		2017		(Worse)			(Worse)
Salaries and employee benefits	$	20,619	$	15,729	$	(4,890	)		-31.1	%
Occupancy, equipment and depreciation		2,954		2,205		(749	)		-34.0	%
Data processing		1,933		1,336		(597	)		-44.7	%
Marketing and advertising		767		611		(156	)		-25.5	%
FDIC premiums		628		256		(372	)		-145.3	%
Acquisition-related costs		350		175		(175	)		-100.0	%
Other		4,620		3,437		(1,183	)		-34.4	%
Total non-interest expense	$	31,871	$	23,749	$	(8,122	)		-34.2	%

Non-interest expense was $31.9 million for the six months ended June 30, 2018 compared with $23.7 million for the same period of 2017.  Non-interest expense for the six months ended June 30, 2018 increased as a result of $4.9 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 $0.7 million of higher occupancy, equipment and depreciation costs associated with the net increase of five branches from these transactions, and $0.6 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 52.50% for the six months ended June 30, 2018 compared with 53.75% for the same period of 2017.

Income Tax Expense. We recorded an income tax expense of $5.8 million for the six months ended June 30, 2018 compared with $6.3 million for the same period in 2017. The effective tax rate for the six months ended June 30, 2018 was 23.1% compared with 32.7% in the corresponding three months of 2017. The tax rate for the six months ended June 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.

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Financial Condition

Total assets were $2.16 billion at June 30, 2018, a 1.8% increase compared with December 31, 2017. Total loans held for investment were $1.69 billion at June 30, 2018, an increase of 4.0% from December 31, 2017. Total deposits were $1.78 billion at June 30, 2018, a decrease of 1.8% compared with December 31, 2017.

Loans

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

	June 30,			December 31,
(Dollars in thousands)	2018			2017
Loans held for sale	$	11,058		$	10,871
Loans held for investment:
Commercial real estate loans:
Real estate term	$	842,352		$	784,148
Construction and land development		373,845			369,590
Total commercial real estate loans		1,216,197			1,153,738
Commercial and industrial loans		310,228			294,085
Consumer loans:
Residential and home equity		153,084			158,591
Consumer and other		16,978			25,591
Total consumer loans		170,062			184,182
Total gross loans		1,696,487			1,632,005
Net deferred loan fees		(4,528	)		(4,561	)
Total loans held for investment		1,691,959			1,627,444
Allowance for loan losses		(22,308	)		(18,303	)
Total loans held for investment, net	$	1,669,651		$	1,609,141

	June 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		22.0	%		22.6	%
Total commercial real estate loans		71.7	%		70.7	%
Commercial and industrial loans		18.3	%		18.0	%
Consumer loans:
Residential and home equity		9.0	%		9.7	%
Consumer and other		1.0	%		1.6	%
Total consumer loans		10.0	%		11.3	%
Total loans held for investment		100.0	%		100.0	%

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.

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Contractual maturities at June 30, 2018 were as follows:

										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	$	118,894		$	198,520	$	524,938	$	842,352	$	117,637	$	605,821
Construction and land development		294,087			47,292		32,466		373,845		24,062		55,696
Total commercial real estate loans		412,981			245,812		557,404		1,216,197		141,699		661,517
Commercial and industrial loans		121,232			141,357		47,639		310,228		104,144		84,852
Consumer loans:
Residential and home equity		18,734			34,124		100,226		153,084		17,434		116,916
Consumer and other		6,961			7,898		2,119		16,978		9,459		558
Total consumer loans		25,695			42,022		102,345		170,062		26,893		117,474
Total gross loans held for investment	$	559,908	(1)	$	429,191	$	707,388	$	1,696,487	$	272,736	$	863,843	(1)

⁽¹⁾ The sum of adjustable rate loans maturing after one year and total loans maturing within one year is $1.4 billion or 83.9% of total loans at June 30, 2018.

Concentrations. As of June 30, 2018, in management’s judgment, a concentration of loans existed in real estate related loans. At that date, real estate related loans comprised 80.7% of total loans held for investment, of which 49.7% are real estate term loans, 22.0% are construction and land development loans, and 9.0% 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 18.3% at June 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.

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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:

	June 30,			December 31,
(Dollars in thousands)	2018			2017
Non-accrual loans, not troubled-debt restructured
Real estate term	$	1,580		$	-
Construction and land development		320			-
Commercial and industrial		1,539			223
Residential and home equity		728			-
Consumer and other		39			-
Total non-accrual, not troubled-debt restructured loans		4,206			223
Troubled-debt restructured loans non-accrual
Real estate term		1,556			-
Construction and land development		-			-
Commercial and industrial		195			-
Residential and home equity		-			-
Consumer and other		-			-
Total troubled-debt restructured, non-accrual loans		1,751			-
Total non-accrual loans (1)		5,957			223
Accruing loans past due 90 days or more		336			1
Total non-performing loans (NPL)		6,293			224
OREO		-			994
Total non-performing assets (NPA) (2)	$	6,293		$	1,218
Accruing troubled debt restructured loans	$	2,495		$	3,307
Non-accrual troubled debt restructured loans		1,751			-
Total troubled debt restructured loans	$	4,246		$	3,307
Selected ratios:
NPL to total loans		0.52	%		0.18	%
NPA to total assets		0.40	%		0.18	%

⁽¹⁾ We estimate that approximately $222,000 and $185,000 of interest income would have been recognized on loans accounted for on a non-accrual basis for the six months ended June 30, 2018 and the year ended December 31, 2017, respectively, had such loans performed pursuant to contractual terms.

⁽²⁾ Non-performing assets as of June 30, 2018 and December 31, 2017 have not been reduced by U.S. government guarantees of $1.2 million and $16,000, respectively.  

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 $4.2 million and $3.6 million at June 30, 2018 and December 31, 2017, respectively. Our TDR loans are considered impaired loans of which $1.75 million and $296,000 at June 30, 2018 and December 31, 2017, respectively, are designated as non-accrual.

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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:

	Six Months Ended
	June 30,			June 30,
(Dollars in thousands)	2018			2017
Balance, beginning of period	$	994		$	245
Additions		-			468
Write-downs		-			-
Sales		(994	)		(245	)
Balance, end of period	$	-		$	468

Allowance for Loan Losses

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.

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

	Three Months Ended						Six Months Ended
	June 30,			June 30,			June 30,			June 30,
(Dollars in thousands)	2018			2017			2018			2017
Allowance for loan losses:
Beginning balance	$	20,731		$	16,644		$	18,303		$	16,715
Loans charged off:
Real estate term		-			(350	)		-			(350	)
Construction and land development		-			-			-			-
Commercial and industrial		(97	)		(114	)		(290	)		(272	)
Residential and home equity		-			-			-			(338	)
Consumer and other		(107	)		(48	)		(172	)		(113	)
Total charge-offs		(204	)		(512	)		(462	)		(1,073	)
Recoveries:
Real estate term		-			177			12			181
Construction and land development		46			-			71			79
Commercial and industrial		173			39			689			77
Residential and home equity		54			2			81			140
Consumer and other		33			21			89			52
Total recoveries		306			239			942			529
Net loan (charge-offs) recoveries		102			(273	)		480			(544	)
Provision for loan losses		1,475			900			3,525			1,100
Ending balance	$	22,308		$	17,271		$	22,308		$	17,271
Loans held for investment	$	1,691,959		$	1,201,391		$	1,691,959		$	1,201,391
Average loans		1,713,248			1,177,402			1,688,022			1,156,661
Non-performing loans		8,649			7,611			8,649			7,611
Selected ratios:
Net loan charge-offs (recoveries) to average loans		-0.02	%		0.09	%		-0.06	%		0.09	%
Provision for loan losses to average loans		0.35	%		0.31	%		0.42	%		0.19	%
Allowance for loan losses to loans held for investment		1.32	%		1.44	%		1.32	%		1.44	%

The allowance for loan losses to loans held for investment was 1.32% at June 30, 2018 compared with 1.44% at June 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 $9.7 million at June 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.

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

	June 30,		December 31,
(Dollars in thousands)	2018		2017
Commercial real estate loans:
Real estate term	$	9,028	$	6,706
Construction and land development		6,789		6,309
Total commercial real estate loans		15,817		13,015
Commercial and industrial loans		5,780		4,314
Consumer loans:
Residential and home equity		659		815
Consumer and other		52		159
Total consumer loans		711		974
Total	$	22,308	$	18,303

Investments

Investment securities were $304.6 million at June 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 June 30, 2018, we held no investment securities from any issuer which totaled over 10% of our shareholders’ equity.

The carrying value of our portfolio of investment securities was as follows:

	June 30,		December 31,
(Dollars in thousands)	2018		2017
Available-for-sale securities: (Fair Value)
U.S. Government agencies	$	48,036	$	48,504
Municipal securities		11,992		13,454
Mortgage-backed securities		171,901		195,262
Corporate securities		4,770		5,836
Total		236,699		263,056
Held-to-maturity securities: (Amortized Cost)
Municipal securities		67,922		74,654
Total investment securities	$	304,621	$	337,710

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:

Investment securities maturities as of June 30, 2018:

						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	$	-		0.00	%	$	48,953		1.54	%	$	-		0.00	%	$	-		0.00	%	$	48,953		1.54	%
Municipal securities		2,528		3.56	%		5,589		2.81	%		3,860		2.14	%		-		0.00	%		11,977		2.76	%
Mortgage-backed securities		-		0.00	%		19,198		1.56	%		45,297		1.88	%		112,865		2.29	%		177,360		2.10	%
Other securities		-		0.00	%		2,000		3.36	%		3,000		4.00	%		-		0.00	%		5,000		3.75	%
Total		2,528		3.56	%		75,740		1.69	%		52,157		2.02	%		112,865		2.29	%		243,290		2.06	%
Held-to-maturity securities:
Municipal securities		8,388		1.37	%		38,735		1.65	%		15,153		1.98	%		5,646		2.40	%		67,922		1.75	%
Total investment securities	$	10,916		1.88	%	$	114,475		1.67	%	$	67,310		2.01	%	$	118,511		2.29	%	$	311,212		1.99	%

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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.

Deposits

Total deposits were $1.78 billion at June 30, 2018 and $1.81 billion at December 31, 2017. The slight decrease in total deposits is attributed primarily to approximately $27.0 million in deposit run-off from the merged Town & Country Bank. Non-interest bearing demand deposits were $646.6 million, or 36.3% of total deposits at June 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:

	Six months ended					Six months ended
	June 30, 2018					June 30, 2017
	Average		Average			Average		Average
(Dollars in thousands)	Balance		Rate			Balance		Rate
Non-interest bearing deposits	$	635,503		0.00	%	$	442,861		0.00	%
Interest bearing deposits:
Interest bearing demand and savings		725,774		0.26	%		660,026		0.27	%
Money market		215,946		0.31	%		171,221		0.21	%
Certificates of deposit less than $250,000		156,549		0.87	%		128,322		0.46	%
Certificates of deposit greater than or equal to $250,000		36,156		1.41	%		25,809		1.06	%
Total interest bearing deposits		1,134,425		0.39	%		985,378		0.30	%
Total	$	1,769,928		0.25	%	$	1,428,239		0.21	%

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

	June 30,
(Dollars in thousands)	2018
Due in three months or less	$	3,102
Due in over three months through six months		4,506
Due in over six months through twelve months		4,120
Due in over twelve months		21,154
Total	$	32,882

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

Shareholders’ equity totaled $271.6 million at June 30, 2018, an increase of $14.2 million or 5.5% since December 31, 2017. The increase in shareholders’ equity for the six months ended June 30, 2018 was primarily due to an increase of $1.1 million in additional paid in capital from exercises of stock options, share-based compensation, and net income of $19.5 million for the period less dividends paid of $3.5 million.

Dividends of $0.19 per share were declared during the six months ended June 30, 2018 representing 18.2% of the net income for the same period. We announced a quarterly dividend of $0.11 per share on July 26, 2018, payable on August 13, 2018 for

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shareholders’ of record on August 6, 2018.  Future cash dividends will depend on a variety of factors, including net income, capital, asset quality, general economic conditions, and regulatory considerations.

Capital Resources

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%.

The following table sets forth our capital ratios.

	Basel III
	Regulatory
	Requirements -
	Well Capitalized			PUB
	(Greater than or			Actual as of			Actual as of			Actual as of
	Equal to Stated			June 30,			December 31,			June 30,
	Percentage)			2018			2017			2017
Common equity tier 1 capital		6.50	%		13.97	%		13.51	%		18.55	%
Tier 1 risk-based capital		8.00	%		13.97	%		13.51	%		18.55	%
Total risk-based capital		10.00	%		15.22	%		14.67	%		19.82	%
Tier 1 leverage capital ratio		5.00	%		11.48	%		11.46	%		14.15	%

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

Off-Balance Sheet Arrangements

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

			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	$	587,699	$	377,727	$	109,928	$	17,777	$	82,267
Standby letters of credit		28,892		28,892		-		-		-
Credit cards		22,045		22,045		-		-		-
Total	$	638,636	$	428,664	$	109,928	$	17,777	$	82,267

Contractual Obligations

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

			Payments Due by Period
					One to		Three to		After
			Less than		Three		Five		Five
Contractual Obligations (Dollars in thousands)	Total		One Year		Years		Years		Years
Time certificates of deposit	$	180,594	$	90,529	$	50,808	$	32,173	$	7,084
Deposits without stated maturity		1,601,346		1,601,346		-		-		-
Short-term borrowings		90,000		90,000		-		-		-
Total	$	1,871,940	$	1,781,875	$	50,808	$	32,173	$	7,084

44

Liquidity

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 $514.0 million at June 30, 2018, which is secured by various real estate loans pledged as collateral totaling $584.6 million and investment securities of $145.8 million.  Additionally, we have a borrowing line with the Federal Reserve Bank of $24.5 million which is secured by $25.4 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 June 30, 2018, we had approximately $114.1 million in net liquid assets comprised of $51.4 million in cash and cash equivalents, including interest bearing deposits of $17.9 million and federal funds sold of $0.9 million, $236.7 million in available for sale investment securities and $11.1 million in loans held for sale, less $186.0 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 June 30, 2018, we had outstanding loan commitments of $587.7 million, credit card commitments of  $22.0 million and outstanding letters of credit of $28.9 million. We anticipate that we will have sufficient funds available to meet current loan commitments.

Net cash provided from financing activities for the six months ended June 30, 2018 was $14.5 million, principally from increases in short-term borrowings offset by a decrease in deposit balances and dividends paid to shareholders during the period.  

Item 3. Quantitative and Qualitative Disclosures about Market Risk

The Company’s assessment of market risk at June 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.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

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 June 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.

Changes in Internal Controls

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 six months ended June 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.

45

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

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.

Item 1A. Risk Factors

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.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Not Applicable

Item 3. Defaults upon Senior Securities

Not Applicable

Item 4. Mine Safety Disclosures

Not Applicable

Item 5. Other Information

None

46

Item 6. Exhibits

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 June 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

47

SIGNATURES

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 August 9, 2018

PEOPLE’S UTAH BANCORP

/s/ Len E. Williams

Len E. Williams

President and Chief Executive Officer

(Principal Executive Officer)

/s/ Mark K. Olson

Mark K. Olson

Executive Vice President and Chief Financial Officer

(Principal Financial Officer)

48

EX-31.1

Exhibit 31.1

CERTIFICATION OF PERIODIC REPORT UNDER SECTION 302 OF THE

SARBANES-OXLEY ACT OF 2002

I, Len E. Williams, certify that:

1. I have reviewed this quarterly report on Form 10-Q of People’s Utah Bancorp.

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

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

EX-31.2

Exhibit 31.2

CERTIFICATION OF PERIODIC REPORT UNDER SECTION 302 OF THE

SARBANES-OXLEY ACT OF 2002

I, Mark K. Olson, certify that:

1. I have reviewed this quarterly report on Form 10-Q of People’s Utah Bancorp.

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

August 9, 2018	/s/ Mark K. Olson
	Mark K. Olson
	Executive Vice President and Chief Financial Officer (Principal Financial Officer)

EX-32

Exhibit 32

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of People’s Utah Bancorp (the “Company”) on Form 10-Q for the period ended June 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:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

August 9, 2018	/s/ Len E. Williams
	Len E. Williams
	President and Chief Executive Officer (Principal Executive Officer)
August 9, 2018	/s/ Mark K. Olson
	Mark K. Olson
	EVP and Chief Financial Officer (Principal Financial Officer)

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2018	Jul. 31, 2018
Document And Entity Information [Abstract]
Entity Registrant Name	People's Utah Bancorp
Entity Central Index Key	0001636286
Document Type	10-Q
Document Period End Date	Jun. 30, 2018
Amendment Flag	false
Document Fiscal Year Focus	2018
Trading Symbol	PUB
Document Fiscal Period Focus	Q2
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		18,705,736

XML

UNAUDITED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Cash and cash equivalents:
Cash and due from banks	$ 33,484	$ 36,235
Interest bearing deposits	17,930	13,158
Federal funds sold	908	1,634
Total cash and cash equivalents	52,322	51,027
Investment securities:
Available-for-sale, at fair value	236,699	263,056
Held-to-maturity, at historical cost	67,922	74,654
Total investment securities	304,621	337,710
Non-marketable equity securities	6,151	3,706
Loans held for sale	11,058	10,871
Loans:
Loans held for investment	1,691,959	1,627,444
Allowance for loan losses	(22,308)	(18,303)
Total loans held for investment, net	1,669,651	1,609,141
Premises and equipment, net	29,335	30,399
Goodwill	25,673	26,008
Bank-owned life insurance	26,120	23,566
Deferred income tax assets	10,764	8,827
Accrued interest receivable	7,658	7,594
Other intangibles	3,633	3,854
Other real estate owned		994
Other assets	14,784	9,832
Total assets	2,161,770	2,123,529
Deposits:
Non-interest bearing deposits	646,574	641,124
Interest bearing deposits	1,135,366	1,173,508
Total deposits	1,781,940	1,814,632
Short-term borrowings	90,000	40,000
Accrued interest payable	369	353
Other liabilities	17,862	11,126
Total liabilities	1,890,171	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; 18,683,883 and 18,511,797 shares issued and outstanding as of June 30, 2018 and December 31, 2017, respectively	187	185
Additional paid-in capital	85,620	84,532
Retained earnings	190,735	174,804
Accumulated other comprehensive loss	(4,943)	(2,103)
Total shareholders’ equity	271,599	257,418
Total liabilities and shareholders’ equity	$ 2,161,770	$ 2,123,529

XML

UNAUDITED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Jun. 30, 2018	Dec. 31, 2017
Statement Of Financial Position [Abstract]
Preferred shares, par value	$ 0.01	$ 0.01
Preferred shares, authorized	3,000,000	3,000,000
Preferred shares, issued	0	0
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	30,000,000	30,000,000
Common stock, shares issued	18,683,883	18,511,797
Common stock, shares outstanding	18,683,883	18,511,797

XML

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Interest income
Interest and fees on loans	$ 27,073	$ 17,923	$ 52,856	$ 34,767
Interest and dividends on investments	1,683	1,802	3,339	3,507
Total interest income	28,756	19,725	56,195	38,274
Interest expense	1,778	749	3,273	1,515
Net interest income	26,978	18,976	52,922	36,759
Provision for loan losses	1,475	900	3,525	1,100
Net interest income after provision for loan losses	25,503	18,076	49,397	35,659
Non-interest income
Mortgage banking	1,505	1,960	3,143	3,939
Card processing	799	692	1,522	1,287
Service charges on deposit accounts	704	578	1,377	1,114
Net gain (loss) on sale of investment securities	333	1	335	(10)
Other operating	725	606	1,407	1,099
Total non-interest income	4,066	3,837	7,784	7,429
Non-interest expense
Salaries and employee benefits	10,196	7,762	20,619	15,729
Occupancy, equipment and depreciation	1,411	1,088	2,954	2,205
Data processing	1,063	661	1,933	1,336
Marketing and advertising	321	349	767	611
FDIC premiums	299	130	628	256
Acquisition-related costs	1	175	350	175
Other	2,532	1,670	4,620	3,437
Total non-interest expense	15,823	11,835	31,871	23,749
Income before income tax expense	13,746	10,078	25,310	19,339
Income tax expense	3,279	3,584	5,839	6,324
Net income	$ 10,467	$ 6,494	$ 19,471	$ 13,015
Earnings per common share:
Basic	$ 0.56	$ 0.36	$ 1.04	$ 0.73
Diluted	$ 0.55	$ 0.35	$ 1.03	$ 0.71
Weighted average common shares outstanding:
Basic	18,679,908	17,937,926	18,639,397	17,911,125
Diluted	18,989,176	18,351,531	18,963,549	18,334,028

XML

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Statement Of Income And Comprehensive Income [Abstract]
Net income	$ 10,467	$ 6,494	$ 19,471	$ 13,015
Other comprehensive income
Unrealized holding (losses)/gains on securities available-for-sale	(1,319)	375	(3,787)	438
Income tax benefit/(expense)	330	(143)	947	(168)
Unrealized holding (losses)/gains on securities available-for-sale, net of tax	(989)	232	(2,840)	270
Total comprehensive income	$ 9,478	$ 6,726	$ 16,631	$ 13,285

XML

UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - USD ($) $ in Thousands	Total	Common Shares	Additional Paid-in Capital	Retained Earnings	Accumulated Other Comprehensive Income (Loss)
Balance, beginning at Dec. 31, 2016	$ 228,517	$ 178	$ 68,657	$ 160,692	$ (1,010)
Balance, beginning, Shares at Dec. 31, 2016		17,819,538
Comprehensive income	13,285			13,015	270
Cash dividends	(2,867)			(2,867)
Share-based compensation	218		218
Exercise of stock options	749	$ 1	748
Exercise of stock options, Shares		128,809
Balance, ending at Jun. 30, 2017	239,902	$ 179	69,623	170,840	(740)
Balance, ending, Shares at Jun. 30, 2017		17,948,347
Balance, beginning at Dec. 31, 2017	$ 257,418	$ 185	84,532	174,804	(2,103)
Balance, beginning, Shares at Dec. 31, 2017	18,511,797	18,511,797
Comprehensive income	$ 16,631			19,471	(2,840)
Cash dividends	(3,540)			(3,540)
Share-based compensation	370		370
Exercise of stock options	720	$ 2	718
Exercise of stock options, Shares		172,086
Balance, ending at Jun. 30, 2018	$ 271,599	$ 187	$ 85,620	$ 190,735	$ (4,943)
Balance, ending, Shares at Jun. 30, 2018	18,683,883	18,683,883

XML

UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Parenthetical) - $ / shares	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Statement Of Stockholders Equity [Abstract]
Cash dividends per share	$ 0.19	$ 0.16

XML

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Cash flows from operating activities:
Net income	$ 19,471	$ 13,015
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses	3,525	1,100
Depreciation and amortization	1,538	1,267
Deferred income taxes	(990)	(214)
Net amortization of securities discounts and premiums	1,312	1,501
Increase in cash surrender value of bank owned life insurance	(304)	(256)
Share-based compensation	370	218
Gain on sale of loans held for sale	(2,047)	(2,838)
Originations of loans held for sale	(108,638)	(115,621)
Proceeds from sale of loans held for sale	110,498	131,630
Net changes in:
Accrued interest receivable	(64)	(59)
Other assets	(4,611)	517
Accrued interest payable	16	(36)
Other liabilities	6,736	4,964
Net cash provided by operating activities	26,812	35,188
Cash flows from investing activities:
Net change in loans held for investment	(63,290)	(82,558)
Purchase of available-for-sale securities		(24,599)
Purchase of held-to-maturity securities		(12,198)
Proceeds from maturities/sales of available-for-sale securities	21,645	34,350
Proceeds from maturities of held-to-maturity securities	6,345	7,939
Purchase of bank-owned life insurance	(2,250)
Purchase of premises and equipment	(448)	(2,758)
Proceeds from sale of other real estate owned, net of improvements	438	302
Net change of non-marketable equity securities	(2,445)	(132)
Net cash used in investing activities	(40,005)	(79,654)
Cash flows from financing activities:
Net (decrease) increase in deposits	(32,692)	35,978
Proceeds related to exercise of stock options	720	749
Net change in short-term borrowings	50,000	103
Cash dividends paid	(3,540)	(2,867)
Net cash provided by financing activities	14,488	33,963
Net change in cash and cash equivalents	1,295	(10,503)
Cash and cash equivalents, beginning of period	51,027	67,938
Cash and cash equivalents, end of period	52,322	57,435
Supplemental disclosures of cash flow information:
Cash paid for interest	3,257	1,551
Income taxes paid	6,869	6,217
Supplemental disclosures of non-cash investing transactions:
Reclassifications from loans to other real estate owned		468
Unrealized gains / (losses) on securities available-for-sale	(3,787)	$ 438
Measurement period adjustment to goodwill	$ (335)

XML

Basis of Presentation

6 Months Ended

Jun. 30, 2018

Basis Of Presentation [Abstract]

Basis of Presentation

Note 1 — Basis of Presentation

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 six months ended June 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”).

Note 1 — Basis of Presentation – Continued

Earnings per common share have been computed based on the following:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
(Dollars in thousands, except share and per share data)	2018		2017		2018		2017
Numerator
Net income	$	10,467	$	6,494	$	19,471	$	13,015
Denominator
Weighted-average number of common shares outstanding		18,679,908		17,937,926		18,639,397		17,911,125
Incremental shares assumed for stock options and RSUs		309,268		413,605		324,152		422,903
Weighted-average number of dilutive shares outstanding		18,989,176		18,351,531		18,963,549		18,334,028
Basic earnings per common share	$	0.56	$	0.36	$	1.04	$	0.73
Diluted earnings per common share	$	0.55	$	0.35	$	1.03	$	0.71

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 February 2018, the FASB issued ASU 2018-02, Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.  This ASU gives businesses the option of reclassifying to retained earnings the so-called “stranded tax effects” left in accumulated other comprehensive income (“AOCI”) because of the reduction to the corporate income tax rate.  The amendments are effective for all organizations for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years.  Early adoption is permitted.  The FASB said that businesses and organizations should apply the amendments either in the period of adoption or retrospectively to each period in which the effect of the change in the tax rate is recognized.  The Company early adopted this ASU on December 31, 2017.

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 January 2017, FASB issued ASU 2017-04, "Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment." The ASU removes the requirement to compare the implied fair value of goodwill with its carrying value as required in Step 2 of the goodwill impairment test. Under the ASU, registrants would perform their goodwill impairment test and recognize an impairment charge for any amount the carrying value exceeds the reporting unit's fair value, but limited by the amount of goodwill allocated to that reporting unit. This ASU is effective for interim and annual reporting periods beginning after December 15, 2019. Early adoption is permitted for all entities after January 1, 2017. The Company early adopted this ASU on December 31, 2017 and adoption did not have a material effect on the Company's Consolidated Financial Statements.

In January 2017, FASB issued ASU 2017-03, "Accounting Changes and Error Corrections (Topic 250) and Investments-Equity Method and Joint Ventures (Topic 323)." The ASU amends the Codification for SEC staff announcements made at recent Emerging Issues Task Force (EITF) meetings. The SEC guidance that specifically relates to our Consolidated Financial Statements was from the September 2016 meeting, where the SEC staff expressed their expectations about the extent of disclosures registrants should make about the effects of the new FASB guidance as well as any amendments issued prior to adoption, on revenue (ASU 2014-09), leases (ASU 2016-02) and credit losses on financial instruments (ASU 2016-13) in accordance with SAB Topic 11.M. Registrants are required to disclose the effect that recently issued accounting standards will have on their financial statements when adopted in a future period. In cases where a registrant cannot reasonably estimate the impact of the adoption, then additional qualitative disclosures should be considered. The ASU incorporates these SEC staff views into ASC 250 and adds references to that guidance in the transition paragraphs of each of the three new standards. The Company has adopted the amendments in this ASU and appropriate disclosures have been included in this Note for each recently issued accounting standard.

Note 1 — Basis of Presentation – Continued

In December 2016, FASB issued ASU No. 2016-19, "Technical Corrections and Improvements" and ASU 2016-20, "Technical Corrections and Improvements to Topic 606: Revenue from Contracts with Customers." On November 10, 2010, FASB added a standing project that will facilitate the FASB Accounting Standards Codification ("Codification”) updates for technical corrections, clarifications, and improvements. These amendments are referred to as Technical Corrections and Improvements. Maintenance updates include non-substantive corrections to the Codification, such as editorial corrections, various link-related changes, and changes to source fragment information. These updates contain amendments that will affect a wide variety of Topics in the Codification. The amendments in these ASUs will apply to all reporting entities within the scope of the affected accounting guidance and generally fall into one of four categories: amendments related to differences between original guidance and the Codification, guidance clarification and reference corrections, simplification, and minor improvements. In summary, the amendments represent changes to clarify the Codification, correct unintended application of guidance, or make minor improvements to the Codification that are not expected to have a significant effect on current accounting practice. Transition guidance varies based on the amendments in the ASUs. The amendments that require transition guidance are effective for fiscal years and interim reporting periods after December 15, 2016. Early adoption is permitted including adoption in an interim period. All other amendments are effective upon the issuance of these ASUs. Neither ASU 2016-19 nor ASU 2016-20 had a material impact on the Company's Consolidated Financial Statements.

In August 2016, the FASB issued ASU No. 2016-15, "Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments." The ASU amends the guidance on the classification of certain cash receipts and payments in the statement of cash flows and is intended to reduce the diversity in practice. This ASU is effective for interim and annual reporting periods beginning after December 15, 2017. Early adoption is permitted for all entities beginning after December 15, 2017, including interim periods within those fiscal years. The adoption of ASU 2016-15 on January 1, 2018 did not 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 January 2016, the FASB issued ASU 2016-01, "Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities." The ASU amends the guidance in GAAP on the classification and measurement of financial instruments. The ASU includes the following changes: i) equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income; (ii) requires the use of exit price notion when measuring the fair value of financial instruments for disclosure purposes; (iii) requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (i.e. securities or loans and receivables) on the balance sheet or the accompanying notes to the financial statements; (iv) allows an equity investment that does not have readily determinable fair values, to be measured at cost minus impairment (if any), plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer; (v) eliminates the requirement to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet, and requires a reporting organization to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk (also referred to as “own credit”) when the organization has elected to measure the liability at fair value in accordance with the fair value option for financial instruments; (vi) requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (i.e. securities or loans and receivables) on the balance sheet or in the accompanying notes to the financial statements; and (vii) clarifies that a valuation allowance on a deferred tax asset related to available-for-sale securities should be evaluated in combination with the organization’s other deferred tax assets. This ASU is effective for interim and annual periods beginning after December 15, 2017. The Company adopted ASU No. 2016-01 effective January 1, 2018, and the adoption did not have a material impact on the Company's Consolidated Financial Statements.

Note 1 — Basis of Presentation – Continued

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 $1.2 million of expenses for the six months ended June 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, $1.0 million of card processing related expenses for the six months ended June 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 six months ended June 30, 2018 and 2017:

	Six Months Ended							Six Months Ended
	June 30, 2018							June 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	$	1,522	$	2,749	$	(1,227	)	$	1,287	$	2,332	$	(1,045	)
Service charges on deposit accounts		1,377		1,377		-			1,114		1,114		-
Non-interest Expense
Card Processing	$	-	$	1,227	$	(1,227	)	$	-	$	1,045	$	(1,045	)

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Investment Securities

6 Months Ended

Jun. 30, 2018

Investments Debt And Equity Securities [Abstract]

Investment Securities

Note 2 — Investment Securities

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 June 30, 2018
U.S. Government-sponsored securities	$	48,953	$	-	$	(327	)	$	(590	)	$	48,036
Municipal securities		11,977		107		(65	)		(27	)		11,992
Mortgage-backed securities		177,360		27		(2,376	)		(3,110	)		171,901
Corporate securities		5,000		-		(12	)		(218	)		4,770
	$	243,290	$	134	$	(2,780	)	$	(3,945	)	$	236,699
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:

					Gross Unrealized Losses
					Less			12
			Gross		Than			Months
	Amortized		Unrealized		12			or			Fair
(Dollars in thousands)	Cost		Gains		Months			Longer			Value
As of June 30, 2018
Municipal securities	$	67,922	$	17	$	(543	)	$	(337	)	$	67,059
As of December 31, 2017
Municipal securities	$	74,654	$	167	$	(293	)	$	(227	)	$	74,301

Note 2 — Investment Securities – continued

At June 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:

	June 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	$	14,628	$	(327	)	$	33,407	$	(590	)	$	48,035	$	(917	)
Municipal securities		4,783		(65	)		810		(27	)		5,593		(92	)
Mortgage-backed securities		80,778		(2,376	)		88,267		(3,110	)		169,045		(5,486	)
Corporate securities		1,987		(12	)		2,783		(218	)		4,770		(230	)
	$	102,176	$	(2,780	)	$	125,267	$	(3,945	)	$	227,443	$	(6,725	)
Held-to Maturity
Municipal securities	$	48,014	$	(543	)	$	9,196	$	(337	)	$	57,210	$	(880	)
	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 June 30, 2018, by contractual maturity, are as follows:

	Available-For-Sale				Held-To-Maturity
	Amortized		Fair		Amortized		Fair
(Dollars in thousands)	Cost		Value		Cost		Value
Securities maturing in:
One year or less	$	2,528	$	2,545	$	8,388	$	8,370
After one year through five years		75,740		74,398		38,735		38,430
After five years through ten years		52,157		50,523		15,153		14,725
After ten years		112,865		109,233		5,646		5,534
	$	243,290	$	236,699	$	67,922	$	67,059

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 June 30, 2018, the Company held 327 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.

Note 2 — Investment Securities – continued

The Company had sales of available-for-sale securities totaling $500,000 during the six months ended June 30, 2018, which resulted in a net gain of $335,000.  There were no sales of available-for-sale securities for the six months ended June 30, 2017. There were no available-for-sale securities in a nonaccrual status at June 30, 2018 or December 31, 2017.

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

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Loans and Allowance for Loan Losses

6 Months Ended

Jun. 30, 2018

Receivables [Abstract]

Loans and Allowance for Loan Losses

Note 3 — Loans and Allowance for Loan Losses

Loans are summarized as follows:

	June 30,			December 31,
(Dollars in thousands)	2018			2017
Loans held for investment:
Commercial real estate loans:
Real estate term	$	842,352		$	784,148
Construction and land development		373,845			369,590
Total commercial real estate loans		1,216,197			1,153,738
Commercial and industrial loans		310,228			294,085
Consumer loans:
Residential and home equity		153,084			158,591
Consumer and other		16,978			25,591
Total consumer loans		170,062			184,182
Total gross loans		1,696,487			1,632,005
Net deferred loan fees		(4,528	)		(4,561	)
Total loans held for investment		1,691,959			1,627,444
Allowance for loan losses		(22,308	)		(18,303	)
Total loans held for investment, net	$	1,669,651		$	1,609,141

Changes in the allowance for loan losses (“ALLL”) are as follows:

	Three Months Ended June 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	$	7,249	$	6,808		$	5,962		$	642		$	70		$	20,731
Additions: Provisions for loan losses		1,779		(65	)		(258	)		(37	)		56			1,475
Deductions:
Gross loan charge-offs		-		-			(97	)		-			(107	)		(204	)
Recoveries		-		46			173			54			33			306
Net loan (charge-offs) / recoveries		-		46			76			54			(74	)		102
Balance at end of period	$	9,028	$	6,789		$	5,780		$	659		$	52		$	22,308

Note 3 — Loans and Allowance for Loan Losses – Continued

	Three Months Ended June 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	$	7,149		$	4,683	$	4,222		$	529		$	61		$	16,644
Additions: Provisions for loan losses		181			394		342			(28	)		11			900
Deductions:
Gross loan charge-offs		(350	)		-		(114	)		-			(48	)		(512	)
Recoveries		177			-		39			2			21			239
Net loan (charge-offs) / recoveries		(173	)		-		(75	)		2			(27	)		(273	)
Balance at end of period	$	7,157		$	5,077	$	4,489		$	503		$	45		$	17,271

	Six Months Ended June 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		2,310		409		1,067			(237	)		(24	)		3,525
Deductions:
Gross loan charge-offs		-		-		(290	)		-			(172	)		(462	)
Recoveries		12		71		689			81			89			942
Net loan (charge-offs) / recoveries		12		71		399			81			(83	)		480
Balance at end of period	$	9,028	$	6,789	$	5,780		$	659		$	52		$	22,308

	Six Months Ended June 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		556			(451	)		966			84			(55	)		1,100
Deductions:
Gross loan charge-offs		(350	)		-			(272	)		(338	)		(113	)		(1,073	)
Recoveries		181			79			77			140			52			529
Net loan (charge-offs) / recoveries		(169	)		79			(195	)		(198	)		(61	)		(544	)
Balance at end of period	$	7,157		$	5,077		$	4,489		$	503		$	45		$	17,271

Note 3 — Loans and Allowance for Loan Losses – Continued

Non-accrual loans are summarized as follows:

	June 30,		December 31,
(Dollars in thousands)	2018		2017
Non-accrual loans, not troubled debt restructured:
Real estate term	$	1,580	$	-
Construction and land development		320		-
Commercial and industrial		1,539		223
Residential and home equity		728		-
Consumer and other		39		-
Total non-accrual loans, not troubled debt restructured		4,206		223
Troubled debt restructured loans, non-accrual:
Real estate term		1,556		-
Construction and land development		-		-
Commercial and industrial		195		-
Residential and home equity		-		-
Consumer and other		-		-
Total troubled debt restructured loans, non-accrual		1,751		-
Total non-accrual loans	$	5,957	$	223

Troubled debt restructured loans are summarized as follows:

	June 30,		December 31,
(Dollars in thousands)	2018		2017
Accruing troubled debt restructured loans	$	2,495	$	3,307
Non-accrual troubled debt restructured loans		1,751		-
Total troubled debt restructured loans	$	4,246	$	3,307

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 $1.8 million were classified as TDR’s during the six months ended June 30, 2018.  No new TDRs occurred during the six months ended June 30, 2017.  In addition, there were no TDRs which incurred a payment default within twelve months of the restructure date during the six-month periods ended June 30, 2018 and 2017.

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

	June 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	$	836,191	$	2,659	$	-	$	3,136	$	5,795	$	366	$	842,352
Construction and land development		367,187		5,920		-		320		6,240		418		373,845
Total commercial real estate		1,203,378		8,579		-		3,456		12,035		784		1,216,197
Commercial and industrial		299,280		1,932		322		1,734		3,988		6,960		310,228
Consumer:
Residential and home equity		151,450		906		-		728		1,634		-		153,084
Consumer and other		16,684		241		14		39		294		-		16,978
Total consumer		168,134		1,147		14		767		1,928		-		170,062
Total gross loans	$	1,670,792	$	11,658	$	336	$	5,957	$	17,951	$	7,744	$	1,696,487

Note 3 — Loans and Allowance for Loan Losses – Continued

	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	$	780,895	$	2,243	$	-	$	-	$	2,243	$	1,010	$	784,148
Construction and land development		361,845		7,095		-		-		7,095		650		369,590
Total commercial real estate		1,142,740		9,338		-		-		9,338		1,660		1,153,738
Commercial and industrial		282,638		4,210		-		223		4,433		7,014		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

Credit Quality Indicators:

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:

	June 30, 2018
			Special						Total		Total
(Dollars in thousands)	Pass		Mention		Substandard		Doubtful		Loans		Allowance
Commercial real estate:
Real estate term	$	813,802	$	18,401	$	10,149	$	-	$	842,352	$	9,028
Construction and land development		370,273		1,614		1,958		-		373,845		6,789
Total commercial real estate		1,184,075		20,015		12,107		-		1,216,197		15,817
Commercial and industrial		287,284		5,707		17,237		-		310,228		5,780
Consumer loans:
Residential and home equity		148,554		1,497		3,033		-		153,084		659
Consumer and other		16,863		46		57		12		16,978		52
Total consumer		165,417		1,543		3,090		12		170,062		711
Total	$	1,636,776	$	27,265	$	32,434	$	12	$	1,696,487	$	22,308

Note 3 — Loans and Allowance for Loan Losses – Continued

	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:

	June 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	$	372	$	-	$	877	$	3	$	-	$	1,252
Collectively evaluated for impairment		8,656		6,789		4,551		656		52		20,704
Purchased credit-impaired loans		-		-		352		-		-		352
Total	$	9,028	$	6,789	$	5,780	$	659	$	52	$	22,308
Outstanding loan balances:
Individually evaluated for impairment	$	8,750	$	1,549	$	9,453	$	2,638	$	-	$	22,390
Collectively evaluated for impairment		833,236		371,878		293,815		150,446		16,978		1,666,353
Purchased credit-impaired loans		366		418		6,960		-		-		7,744
Total gross loans	$	842,352	$	373,845	$	310,228	$	153,084	$	16,978	$	1,696,487

	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		776,947		366,372		285,027		157,441		25,591		1,611,378
Purchased credit-impaired loans		1,010		650		7,014		-		-		8,674
Total gross loans	$	784,148	$	369,590	$	294,085	$	158,591	$	25,591	$	1,632,005

Note 3 — Loans and Allowance for Loan Losses – Continued

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

	June 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	$	11,916	$	7,695	$	1,055	$	8,750	$	372
Construction and land development		2,191		1,549		-		1,549		-
Total commercial real estate		14,107		9,244		1,055		10,299		372
Commercial and industrial		10,887		3,208		6,245		9,453		877
Consumer loans:
Residential and home equity		2,638		2,374		264		2,638		3
Consumer and other		-		-		-		-		-
Total consumer		2,638		2,374		264		2,638		3
Total	$	27,632	$	14,826	$	7,564	$	22,390	$	1,252

	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

The interest income recognized on impaired loans was as follows:  

	Three Months Ended
	June 30, 2018				June 30, 2017
	Average		Interest		Average		Interest
	Recorded		Income		Recorded		Income
(Dollars in thousands)	Investment		Recognition		Investment		Recognition
Commercial real estate:
Real estate term	$	6,312	$	43	$	4,734	$	6
Construction and land development		2,033		35		2,872		32
Total commercial real estate		8,345		78		7,606		38
Commercial and industrial		7,822		87		4,280		36
Consumer loans:
Residential and home equity		2,086		22		850		10
Consumer and other		-		-		-		-
Total consumer		2,086		22		850		10
Total	$	18,253	$	187	$	12,736	$	84

Note 3 — Loans and Allowance for Loan Losses – Continued

	Six Months Ended
	June 30, 2018				June 30, 2017
	Average		Interest		Average		Interest
	Recorded		Income		Recorded		Income
(Dollars in thousands)	Investment		Recognition		Investment		Recognition
Commercial real estate:
Real estate term	$	7,471	$	146	$	5,316	$	36
Construction and land development		2,058		74		2,660		63
Total commercial real estate		9,529		220		7,976		99
Commercial and industrial		5,749		128		4,365		90
Consumer loans:
Residential and home equity		1,894		43		1,055		23
Consumer and other		-		-		-		-
Total consumer		1,894		43		1,055		23
Total	$	17,172	$	391	$	13,396	$	212

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 $10.7 million at June 30, 2018 and $12.4 million at December 31, 2017. The carrying balance of PCI loans was $7.7 million at June 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 six months ended June 30, 2018, and 2017:

	Six Months Ended
	June 30,
(Dollars in thousands)	2018			2017
Balance, beginning of period	$	8,536		$	573
Accretion to interest income		(1,943	)		(18	)
Reclassification from non-accretable discount		189			9
Balance, end of period	$	6,782		$	564

As of June 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 $3.8 million and $3.4 million as of June 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 June 30, 2018, and December 31, 2017, respectively.  Deposits from affiliates were $8.2 million and $7.1 million as of June 30, 2018 and December 31, 2017, respectively.

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2018

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

Note 4 — Commitments and Contingencies

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.

Contractual amounts of off-balance sheet financial instruments were as follows:

	June 30,		December 31,
(Dollars in thousands)	2018		2017
Commitments to extend credit, including unsecured    commitments of $16,481 and $13,625 as of June 30, 2018    and December 31, 2017, respectively	$	587,699	$	637,029
Stand-by letters of credit and bond commitments, including    unsecured commitments of $455 and $440 as of    June 30, 2018 and December 31, 2017, respectively		28,892		27,943
Unused credit card lines, all unsecured		22,045		24,949

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.

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Fair Value

6 Months Ended

Jun. 30, 2018

Fair Value Disclosures [Abstract]

Fair Value

Note 5 — Fair Value

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:

• Level 1 – Quoted prices in active markets for identical instruments. An active market is a market in which transactions occur with sufficient frequency and volume to provide pricing information on an ongoing basis. A quoted price in an active market provides the most reliable evidence of fair value and shall be used to measure fair value whenever available

• Level 2 – Observable inputs other than Level 1 including quoted prices in active markets for similar instruments, quoted prices in less active markets for identical or similar instruments, or other observable inputs that can be corroborated by observable market data.

• Level 3 – Unobservable inputs supported by little or no market activity for financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation; also includes observable inputs from non-binding single dealer quotes not corroborated by observable market data. In developing Level 3 measurements, management incorporates whatever market data might be available and uses discounted cash flow models where appropriate. These calculations include projections of future cash flows, including appropriate default and loss assumptions, and market based discount rates.  

Note 5 — Fair Value - Continued

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 were valued at 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 June 30, 2018 and December 31, 2017:

			June 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	$	52,322	$	52,322	$	51,027	$	51,027
Securities - available-for-sale		2		236,699		236,699		263,056		263,056
Securities - held-to-maturity		2		67,922		67,059		74,654		74,301
Non-marketable securities		2		6,151		6,151		3,706		3,706
Loans held for sale		2		11,058		11,058		10,871		10,871
Loans held for investment		3		1,669,651		1,664,262		1,609,141		1,607,388
Bank-owned life insurance		1		26,120		26,120		23,566		23,566
Financial Liabilities:
Total deposits		2	$	1,781,940	$	1,556,471	$	1,814,632	$	1,596,966
Short-term borrowings		2		90,000		90,000		40,000		40,000

Note 5 — Fair Value - Continued

Assets measured on a recurring and non-recurring basis are as follows:

(Dollars in thousands)	Level 1		Level 2		Level 3		Total
As of June 30, 2018
Fair valued on a recurring basis:
Investment securities available-for-sale	$	-	$	236,699	$	-	$	236,699
Fair valued on a non-recurring basis:
Impaired loans		-		-		6,312		6,312
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

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Income Taxes

6 Months Ended

Jun. 30, 2018

Income Tax Disclosure [Abstract]

Income Taxes

Note 6 — Income Taxes

Income tax expense was $3.3 million and $3.6 million for the three months ended June 30, 2018 and 2017, respectively. The Company’s effective tax rate for the second quarter of 2018 was 23.9% compared with 35.6% in the second quarter of 2017. The tax rate in the second 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.     

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Regulatory Capital Matters

6 Months Ended

Jun. 30, 2018

Banking And Thrift [Abstract]

Regulatory Capital Matters

Note 7 — Regulatory Capital Matters

The consolidated Tier 1 Leverage ratio increased from 11.46% at December 31, 2017 to 11.48% as of June 30, 2018. Federal Reserve Board Regulations require maintenance of certain minimum reserve balances based on certain average deposits which as of June 30, 2018 and December 31, 2017 were $17.0 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.

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Incentive Share-Based Plan and Other Employee Benefits

6 Months Ended

Jun. 30, 2018

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Incentive Share-Based Plan and Other Employee Benefits

Note 8 — Incentive Share-Based Plan and Other Employee Benefits

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 six months ended June 30, 2018, the Company granted options for the purchase of 26,400 common shares, which have a weighted average exercise price of $31.42 per share and a weighted average fair value as of the date of grant of $3.3944 per share.  Additionally, the Company granted 27,788 restricted stock units (“RSU”) at a weighted-average fair value of $30.30 per unit.  The options and RSU’s generally vest over periods from one to three years. The Company recorded share-based compensation expense of $370,000 and $218,000 for the six months ended June 30, 2018 and 2017, respectively.

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Acquisition Related Measurement Period Adjustments

6 Months Ended

Jun. 30, 2018

Business Combinations [Abstract]

Acquisition Related Measurement Period Adjustments

Note 9 — Acquisition Related Measurement Period Adjustments

During the six months ended June 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.

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Basis of Presentation (Policies)

6 Months Ended

Jun. 30, 2018

Basis Of Presentation [Abstract]

Nature of Operations and Basis of Consolidation

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 six months ended June 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

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”).

Note 1 — Basis of Presentation – Continued

Earnings per common share have been computed based on the following:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
(Dollars in thousands, except share and per share data)	2018		2017		2018		2017
Numerator
Net income	$	10,467	$	6,494	$	19,471	$	13,015
Denominator
Weighted-average number of common shares outstanding		18,679,908		17,937,926		18,639,397		17,911,125
Incremental shares assumed for stock options and RSUs		309,268		413,605		324,152		422,903
Weighted-average number of dilutive shares outstanding		18,989,176		18,351,531		18,963,549		18,334,028
Basic earnings per common share	$	0.56	$	0.36	$	1.04	$	0.73
Diluted earnings per common share	$	0.55	$	0.35	$	1.03	$	0.71

Reclassifications

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

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 February 2018, the FASB issued ASU 2018-02, Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.  This ASU gives businesses the option of reclassifying to retained earnings the so-called “stranded tax effects” left in accumulated other comprehensive income (“AOCI”) because of the reduction to the corporate income tax rate.  The amendments are effective for all organizations for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years.  Early adoption is permitted.  The FASB said that businesses and organizations should apply the amendments either in the period of adoption or retrospectively to each period in which the effect of the change in the tax rate is recognized.  The Company early adopted this ASU on December 31, 2017.

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 January 2017, FASB issued ASU 2017-04, "Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment." The ASU removes the requirement to compare the implied fair value of goodwill with its carrying value as required in Step 2 of the goodwill impairment test. Under the ASU, registrants would perform their goodwill impairment test and recognize an impairment charge for any amount the carrying value exceeds the reporting unit's fair value, but limited by the amount of goodwill allocated to that reporting unit. This ASU is effective for interim and annual reporting periods beginning after December 15, 2019. Early adoption is permitted for all entities after January 1, 2017. The Company early adopted this ASU on December 31, 2017 and adoption did not have a material effect on the Company's Consolidated Financial Statements.

In January 2017, FASB issued ASU 2017-03, "Accounting Changes and Error Corrections (Topic 250) and Investments-Equity Method and Joint Ventures (Topic 323)." The ASU amends the Codification for SEC staff announcements made at recent Emerging Issues Task Force (EITF) meetings. The SEC guidance that specifically relates to our Consolidated Financial Statements was from the September 2016 meeting, where the SEC staff expressed their expectations about the extent of disclosures registrants should make about the effects of the new FASB guidance as well as any amendments issued prior to adoption, on revenue (ASU 2014-09), leases (ASU 2016-02) and credit losses on financial instruments (ASU 2016-13) in accordance with SAB Topic 11.M. Registrants are required to disclose the effect that recently issued accounting standards will have on their financial statements when adopted in a future period. In cases where a registrant cannot reasonably estimate the impact of the adoption, then additional qualitative disclosures should be considered. The ASU incorporates these SEC staff views into ASC 250 and adds references to that guidance in the transition paragraphs of each of the three new standards. The Company has adopted the amendments in this ASU and appropriate disclosures have been included in this Note for each recently issued accounting standard.

Note 1 — Basis of Presentation – Continued

In December 2016, FASB issued ASU No. 2016-19, "Technical Corrections and Improvements" and ASU 2016-20, "Technical Corrections and Improvements to Topic 606: Revenue from Contracts with Customers." On November 10, 2010, FASB added a standing project that will facilitate the FASB Accounting Standards Codification ("Codification”) updates for technical corrections, clarifications, and improvements. These amendments are referred to as Technical Corrections and Improvements. Maintenance updates include non-substantive corrections to the Codification, such as editorial corrections, various link-related changes, and changes to source fragment information. These updates contain amendments that will affect a wide variety of Topics in the Codification. The amendments in these ASUs will apply to all reporting entities within the scope of the affected accounting guidance and generally fall into one of four categories: amendments related to differences between original guidance and the Codification, guidance clarification and reference corrections, simplification, and minor improvements. In summary, the amendments represent changes to clarify the Codification, correct unintended application of guidance, or make minor improvements to the Codification that are not expected to have a significant effect on current accounting practice. Transition guidance varies based on the amendments in the ASUs. The amendments that require transition guidance are effective for fiscal years and interim reporting periods after December 15, 2016. Early adoption is permitted including adoption in an interim period. All other amendments are effective upon the issuance of these ASUs. Neither ASU 2016-19 nor ASU 2016-20 had a material impact on the Company's Consolidated Financial Statements.

In August 2016, the FASB issued ASU No. 2016-15, "Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments." The ASU amends the guidance on the classification of certain cash receipts and payments in the statement of cash flows and is intended to reduce the diversity in practice. This ASU is effective for interim and annual reporting periods beginning after December 15, 2017. Early adoption is permitted for all entities beginning after December 15, 2017, including interim periods within those fiscal years. The adoption of ASU 2016-15 on January 1, 2018 did not 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 January 2016, the FASB issued ASU 2016-01, "Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities." The ASU amends the guidance in GAAP on the classification and measurement of financial instruments. The ASU includes the following changes: i) equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income; (ii) requires the use of exit price notion when measuring the fair value of financial instruments for disclosure purposes; (iii) requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (i.e. securities or loans and receivables) on the balance sheet or the accompanying notes to the financial statements; (iv) allows an equity investment that does not have readily determinable fair values, to be measured at cost minus impairment (if any), plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer; (v) eliminates the requirement to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet, and requires a reporting organization to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk (also referred to as “own credit”) when the organization has elected to measure the liability at fair value in accordance with the fair value option for financial instruments; (vi) requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (i.e. securities or loans and receivables) on the balance sheet or in the accompanying notes to the financial statements; and (vii) clarifies that a valuation allowance on a deferred tax asset related to available-for-sale securities should be evaluated in combination with the organization’s other deferred tax assets. This ASU is effective for interim and annual periods beginning after December 15, 2017. The Company adopted ASU No. 2016-01 effective January 1, 2018, and the adoption did not have a material impact on the Company's Consolidated Financial Statements.

Note 1 — Basis of Presentation – Continued

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 $1.2 million of expenses for the six months ended June 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, $1.0 million of card processing related expenses for the six months ended June 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 six months ended June 30, 2018 and 2017:

	Six Months Ended							Six Months Ended
	June 30, 2018							June 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	$	1,522	$	2,749	$	(1,227	)	$	1,287	$	2,332	$	(1,045	)
Service charges on deposit accounts		1,377		1,377		-			1,114		1,114		-
Non-interest Expense
Card Processing	$	-	$	1,227	$	(1,227	)	$	-	$	1,045	$	(1,045	)

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Basis of Presentation (Tables)

6 Months Ended

Jun. 30, 2018

Basis Of Presentation [Abstract]

Schedule of Earnings Per Common Share

Earnings per common share have been computed based on the following:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
(Dollars in thousands, except share and per share data)	2018		2017		2018		2017
Numerator
Net income	$	10,467	$	6,494	$	19,471	$	13,015
Denominator
Weighted-average number of common shares outstanding		18,679,908		17,937,926		18,639,397		17,911,125
Incremental shares assumed for stock options and RSUs		309,268		413,605		324,152		422,903
Weighted-average number of dilutive shares outstanding		18,989,176		18,351,531		18,963,549		18,334,028
Basic earnings per common share	$	0.56	$	0.36	$	1.04	$	0.73
Diluted earnings per common share	$	0.55	$	0.35	$	1.03	$	0.71

Impact of Adopting New Revenue Standard on Statement of Income

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

	Six Months Ended							Six Months Ended
	June 30, 2018							June 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	$	1,522	$	2,749	$	(1,227	)	$	1,287	$	2,332	$	(1,045	)
Service charges on deposit accounts		1,377		1,377		-			1,114		1,114		-
Non-interest Expense
Card Processing	$	-	$	1,227	$	(1,227	)	$	-	$	1,045	$	(1,045	)

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Investment Securities (Tables)

6 Months Ended

Jun. 30, 2018

Investments Debt And Equity Securities [Abstract]

Summary of Amortized Cost and Estimated Fair Value of Investment Securities Available for Sale

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 June 30, 2018
U.S. Government-sponsored securities	$	48,953	$	-	$	(327	)	$	(590	)	$	48,036
Municipal securities		11,977		107		(65	)		(27	)		11,992
Mortgage-backed securities		177,360		27		(2,376	)		(3,110	)		171,901
Corporate securities		5,000		-		(12	)		(218	)		4,770
	$	243,290	$	134	$	(2,780	)	$	(3,945	)	$	236,699
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

Summary of Amortized Cost and Estimated Fair Value of Investment Securities Held-to-Maturity

Amortized cost and estimated fair value of investment securities held-to-maturity are 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 June 30, 2018
Municipal securities	$	67,922	$	17	$	(543	)	$	(337	)	$	67,059
As of December 31, 2017
Municipal securities	$	74,654	$	167	$	(293	)	$	(227	)	$	74,301

Summary of Gross Unrealized Losses and Fair Value for Securities Available-for-Sale and Held-to-Maturity

At June 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:

	June 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	$	14,628	$	(327	)	$	33,407	$	(590	)	$	48,035	$	(917	)
Municipal securities		4,783		(65	)		810		(27	)		5,593		(92	)
Mortgage-backed securities		80,778		(2,376	)		88,267		(3,110	)		169,045		(5,486	)
Corporate securities		1,987		(12	)		2,783		(218	)		4,770		(230	)
	$	102,176	$	(2,780	)	$	125,267	$	(3,945	)	$	227,443	$	(6,725	)
Held-to Maturity
Municipal securities	$	48,014	$	(543	)	$	9,196	$	(337	)	$	57,210	$	(880	)
	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	)

Amortized Cost and Estimated Fair Value of Investment Securities that are Available-for-Sale and Held-to-Maturity by Contractual Maturity

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

	Available-For-Sale				Held-To-Maturity
	Amortized		Fair		Amortized		Fair
(Dollars in thousands)	Cost		Value		Cost		Value
Securities maturing in:
One year or less	$	2,528	$	2,545	$	8,388	$	8,370
After one year through five years		75,740		74,398		38,735		38,430
After five years through ten years		52,157		50,523		15,153		14,725
After ten years		112,865		109,233		5,646		5,534
	$	243,290	$	236,699	$	67,922	$	67,059

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Loans and Allowance for Loan Losses (Tables)

6 Months Ended

Jun. 30, 2018

Receivables [Abstract]

Summary of Loans

Loans are summarized as follows:

	June 30,			December 31,
(Dollars in thousands)	2018			2017
Loans held for investment:
Commercial real estate loans:
Real estate term	$	842,352		$	784,148
Construction and land development		373,845			369,590
Total commercial real estate loans		1,216,197			1,153,738
Commercial and industrial loans		310,228			294,085
Consumer loans:
Residential and home equity		153,084			158,591
Consumer and other		16,978			25,591
Total consumer loans		170,062			184,182
Total gross loans		1,696,487			1,632,005
Net deferred loan fees		(4,528	)		(4,561	)
Total loans held for investment		1,691,959			1,627,444
Allowance for loan losses		(22,308	)		(18,303	)
Total loans held for investment, net	$	1,669,651		$	1,609,141

Summary of Changes in Allowance for Loan Losses

Changes in the allowance for loan losses (“ALLL”) are as follows:

	Three Months Ended June 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	$	7,249	$	6,808		$	5,962		$	642		$	70		$	20,731
Additions: Provisions for loan losses		1,779		(65	)		(258	)		(37	)		56			1,475
Deductions:
Gross loan charge-offs		-		-			(97	)		-			(107	)		(204	)
Recoveries		-		46			173			54			33			306
Net loan (charge-offs) / recoveries		-		46			76			54			(74	)		102
Balance at end of period	$	9,028	$	6,789		$	5,780		$	659		$	52		$	22,308

Note 3 — Loans and Allowance for Loan Losses – Continued

	Three Months Ended June 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	$	7,149		$	4,683	$	4,222		$	529		$	61		$	16,644
Additions: Provisions for loan losses		181			394		342			(28	)		11			900
Deductions:
Gross loan charge-offs		(350	)		-		(114	)		-			(48	)		(512	)
Recoveries		177			-		39			2			21			239
Net loan (charge-offs) / recoveries		(173	)		-		(75	)		2			(27	)		(273	)
Balance at end of period	$	7,157		$	5,077	$	4,489		$	503		$	45		$	17,271

	Six Months Ended June 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		2,310		409		1,067			(237	)		(24	)		3,525
Deductions:
Gross loan charge-offs		-		-		(290	)		-			(172	)		(462	)
Recoveries		12		71		689			81			89			942
Net loan (charge-offs) / recoveries		12		71		399			81			(83	)		480
Balance at end of period	$	9,028	$	6,789	$	5,780		$	659		$	52		$	22,308

	Six Months Ended June 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		556			(451	)		966			84			(55	)		1,100
Deductions:
Gross loan charge-offs		(350	)		-			(272	)		(338	)		(113	)		(1,073	)
Recoveries		181			79			77			140			52			529
Net loan (charge-offs) / recoveries		(169	)		79			(195	)		(198	)		(61	)		(544	)
Balance at end of period	$	7,157		$	5,077		$	4,489		$	503		$	45		$	17,271

Summary of Nonaccrual Loans

Non-accrual loans are summarized as follows:

	June 30,		December 31,
(Dollars in thousands)	2018		2017
Non-accrual loans, not troubled debt restructured:
Real estate term	$	1,580	$	-
Construction and land development		320		-
Commercial and industrial		1,539		223
Residential and home equity		728		-
Consumer and other		39		-
Total non-accrual loans, not troubled debt restructured		4,206		223
Troubled debt restructured loans, non-accrual:
Real estate term		1,556		-
Construction and land development		-		-
Commercial and industrial		195		-
Residential and home equity		-		-
Consumer and other		-		-
Total troubled debt restructured loans, non-accrual		1,751		-
Total non-accrual loans	$	5,957	$	223

Summary of Troubled Debt Restructured Loans

Troubled debt restructured loans are summarized as follows:

	June 30,		December 31,
(Dollars in thousands)	2018		2017
Accruing troubled debt restructured loans	$	2,495	$	3,307
Non-accrual troubled debt restructured loans		1,751		-
Total troubled debt restructured loans	$	4,246	$	3,307

Summary of Current and Past Due Loans Held For Investment (Accruing And Non-Accruing)

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

	June 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	$	836,191	$	2,659	$	-	$	3,136	$	5,795	$	366	$	842,352
Construction and land development		367,187		5,920		-		320		6,240		418		373,845
Total commercial real estate		1,203,378		8,579		-		3,456		12,035		784		1,216,197
Commercial and industrial		299,280		1,932		322		1,734		3,988		6,960		310,228
Consumer:
Residential and home equity		151,450		906		-		728		1,634		-		153,084
Consumer and other		16,684		241		14		39		294		-		16,978
Total consumer		168,134		1,147		14		767		1,928		-		170,062
Total gross loans	$	1,670,792	$	11,658	$	336	$	5,957	$	17,951	$	7,744	$	1,696,487

Note 3 — Loans and Allowance for Loan Losses – Continued

	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	$	780,895	$	2,243	$	-	$	-	$	2,243	$	1,010	$	784,148
Construction and land development		361,845		7,095		-		-		7,095		650		369,590
Total commercial real estate		1,142,740		9,338		-		-		9,338		1,660		1,153,738
Commercial and industrial		282,638		4,210		-		223		4,433		7,014		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

Summary of Outstanding Loan Balances (Accruing and Non - Accruing) Categorized by Credit Quality Indicators

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

	June 30, 2018
			Special						Total		Total
(Dollars in thousands)	Pass		Mention		Substandard		Doubtful		Loans		Allowance
Commercial real estate:
Real estate term	$	813,802	$	18,401	$	10,149	$	-	$	842,352	$	9,028
Construction and land development		370,273		1,614		1,958		-		373,845		6,789
Total commercial real estate		1,184,075		20,015		12,107		-		1,216,197		15,817
Commercial and industrial		287,284		5,707		17,237		-		310,228		5,780
Consumer loans:
Residential and home equity		148,554		1,497		3,033		-		153,084		659
Consumer and other		16,863		46		57		12		16,978		52
Total consumer		165,417		1,543		3,090		12		170,062		711
Total	$	1,636,776	$	27,265	$	32,434	$	12	$	1,696,487	$	22,308

Note 3 — Loans and Allowance for Loan Losses – Continued

	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

Summary of Information On Impaired Loans, Excluding Purchased Credit Impaired ("PCI") Loans

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

	June 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	$	372	$	-	$	877	$	3	$	-	$	1,252
Collectively evaluated for impairment		8,656		6,789		4,551		656		52		20,704
Purchased credit-impaired loans		-		-		352		-		-		352
Total	$	9,028	$	6,789	$	5,780	$	659	$	52	$	22,308
Outstanding loan balances:
Individually evaluated for impairment	$	8,750	$	1,549	$	9,453	$	2,638	$	-	$	22,390
Collectively evaluated for impairment		833,236		371,878		293,815		150,446		16,978		1,666,353
Purchased credit-impaired loans		366		418		6,960		-		-		7,744
Total gross loans	$	842,352	$	373,845	$	310,228	$	153,084	$	16,978	$	1,696,487

	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		776,947		366,372		285,027		157,441		25,591		1,611,378
Purchased credit-impaired loans		1,010		650		7,014		-		-		8,674
Total gross loans	$	784,148	$	369,590	$	294,085	$	158,591	$	25,591	$	1,632,005

Note 3 — Loans and Allowance for Loan Losses – Continued

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

	June 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	$	11,916	$	7,695	$	1,055	$	8,750	$	372
Construction and land development		2,191		1,549		-		1,549		-
Total commercial real estate		14,107		9,244		1,055		10,299		372
Commercial and industrial		10,887		3,208		6,245		9,453		877
Consumer loans:
Residential and home equity		2,638		2,374		264		2,638		3
Consumer and other		-		-		-		-		-
Total consumer		2,638		2,374		264		2,638		3
Total	$	27,632	$	14,826	$	7,564	$	22,390	$	1,252

	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

The interest income recognized on impaired loans was as follows:  

	Three Months Ended
	June 30, 2018				June 30, 2017
	Average		Interest		Average		Interest
	Recorded		Income		Recorded		Income
(Dollars in thousands)	Investment		Recognition		Investment		Recognition
Commercial real estate:
Real estate term	$	6,312	$	43	$	4,734	$	6
Construction and land development		2,033		35		2,872		32
Total commercial real estate		8,345		78		7,606		38
Commercial and industrial		7,822		87		4,280		36
Consumer loans:
Residential and home equity		2,086		22		850		10
Consumer and other		-		-		-		-
Total consumer		2,086		22		850		10
Total	$	18,253	$	187	$	12,736	$	84

Note 3 — Loans and Allowance for Loan Losses – Continued

	Six Months Ended
	June 30, 2018				June 30, 2017
	Average		Interest		Average		Interest
	Recorded		Income		Recorded		Income
(Dollars in thousands)	Investment		Recognition		Investment		Recognition
Commercial real estate:
Real estate term	$	7,471	$	146	$	5,316	$	36
Construction and land development		2,058		74		2,660		63
Total commercial real estate		9,529		220		7,976		99
Commercial and industrial		5,749		128		4,365		90
Consumer loans:
Residential and home equity		1,894		43		1,055		23
Consumer and other		-		-		-		-
Total consumer		1,894		43		1,055		23
Total	$	17,172	$	391	$	13,396	$	212

Changes in Accretable Yield for PCI Loans

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

	Six Months Ended
	June 30,
(Dollars in thousands)	2018			2017
Balance, beginning of period	$	8,536		$	573
Accretion to interest income		(1,943	)		(18	)
Reclassification from non-accretable discount		189			9
Balance, end of period	$	6,782		$	564

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Commitments and Contingencies (Tables)

6 Months Ended

Jun. 30, 2018

Commitments And Contingencies Disclosure [Abstract]

Summary of Contractual Amounts of Off-balance Sheet Financial Instruments

Contractual amounts of off-balance sheet financial instruments were as follows:

	June 30,		December 31,
(Dollars in thousands)	2018		2017
Commitments to extend credit, including unsecured    commitments of $16,481 and $13,625 as of June 30, 2018    and December 31, 2017, respectively	$	587,699	$	637,029
Stand-by letters of credit and bond commitments, including    unsecured commitments of $455 and $440 as of    June 30, 2018 and December 31, 2017, respectively		28,892		27,943
Unused credit card lines, all unsecured		22,045		24,949

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Fair Value (Tables)

6 Months Ended

Jun. 30, 2018

Fair Value Disclosures [Abstract]

Summary of Estimated Fair Values of Financial Instruments

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

			June 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	$	52,322	$	52,322	$	51,027	$	51,027
Securities - available-for-sale		2		236,699		236,699		263,056		263,056
Securities - held-to-maturity		2		67,922		67,059		74,654		74,301
Non-marketable securities		2		6,151		6,151		3,706		3,706
Loans held for sale		2		11,058		11,058		10,871		10,871
Loans held for investment		3		1,669,651		1,664,262		1,609,141		1,607,388
Bank-owned life insurance		1		26,120		26,120		23,566		23,566
Financial Liabilities:
Total deposits		2	$	1,781,940	$	1,556,471	$	1,814,632	$	1,596,966
Short-term borrowings		2		90,000		90,000		40,000		40,000

Summary of Asset Measured on Recurring and Non-recurring Basic at Fair Value

Assets measured on a recurring and non-recurring basis are as follows:

(Dollars in thousands)	Level 1		Level 2		Level 3		Total
As of June 30, 2018
Fair valued on a recurring basis:
Investment securities available-for-sale	$	-	$	236,699	$	-	$	236,699
Fair valued on a non-recurring basis:
Impaired loans		-		-		6,312		6,312
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

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Basis of Presentation - Additional Information (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2018 USD ($) Branch Division	Jun. 30, 2017 USD ($)
Basis Of Presentation [Line Items]
Revenue, Practical Expedient, Incremental Cost of Obtaining Contract [true false]	true
Balance without Adoption of ASC 606 | Topic 606
Basis Of Presentation [Line Items]
Card processing | $	$ 1,227	$ 1,045
People's Intermountain Bank
Basis Of Presentation [Line Items]
Number of retail branches | Branch	26
Number of banking divisions | Division	3

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Basis of Presentation - Schedule of Earnings Per Common Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Numerator
Net income	$ 10,467	$ 6,494	$ 19,471	$ 13,015
Denominator
Weighted-average number of common shares outstanding	18,679,908	17,937,926	18,639,397	17,911,125
Incremental shares assumed for stock options and RSUs	309,268	413,605	324,152	422,903
Weighted-average number of dilutive shares outstanding	18,989,176	18,351,531	18,963,549	18,334,028
Basic earnings per common share	$ 0.56	$ 0.36	$ 1.04	$ 0.73
Diluted earnings per common share	$ 0.55	$ 0.35	$ 1.03	$ 0.71

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Basis of Presentation - Impact of Adopting New Revenue Standard on Statement of Income (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Non-interest income
Card processing	$ 799	$ 692	$ 1,522	$ 1,287
Service charges on deposit accounts	$ 704	$ 578	1,377	1,114
Balance without Adoption of ASC 606 | Topic 606
Non-interest income
Card processing			2,749	2,332
Service charges on deposit accounts			1,377	1,114
Non-interest expense
Card processing			1,227	1,045
Effect of Change | Topic 606
Non-interest income
Card processing			(1,227)	(1,045)
Non-interest expense
Card processing			$ (1,227)	$ (1,045)

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Investment Securities - Summary of Amortized Cost and Estimated Fair Value of Investment Securities Available for Sale (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Schedule Of Available For Sale Securities [Line Items]
Available-For-Sale, Amortized Cost	$ 243,290	$ 265,860
Available-For-Sale, Gross Unrealized Gains	134	841
Available-For-Sale, Gross Unrealized Losses, Less Than 12 Months	(2,780)	(1,173)
Available-For-Sale, Gross Unrealized Losses, 12 Months or Longer	(3,945)	(2,472)
Available-For-Sale, Fair Value	236,699	263,056
U.S. Government Sponsored Securities
Schedule Of Available For Sale Securities [Line Items]
Available-For-Sale, Amortized Cost	48,953	48,950
Available-For-Sale, Gross Unrealized Gains		13
Available-For-Sale, Gross Unrealized Losses, Less Than 12 Months	(327)	(6)
Available-For-Sale, Gross Unrealized Losses, 12 Months or Longer	(590)	(453)
Available-For-Sale, Fair Value	48,036	48,504
Mortgage-backed Securities
Schedule Of Available For Sale Securities [Line Items]
Available-For-Sale, Amortized Cost	177,360	198,100
Available-For-Sale, Gross Unrealized Gains	27	71
Available-For-Sale, Gross Unrealized Losses, Less Than 12 Months	(2,376)	(1,145)
Available-For-Sale, Gross Unrealized Losses, 12 Months or Longer	(3,110)	(1,764)
Available-For-Sale, Fair Value	171,901	195,262
Municipal Securities
Schedule Of Available For Sale Securities [Line Items]
Available-For-Sale, Amortized Cost	11,977	13,310
Available-For-Sale, Gross Unrealized Gains	107	184
Available-For-Sale, Gross Unrealized Losses, Less Than 12 Months	(65)	(22)
Available-For-Sale, Gross Unrealized Losses, 12 Months or Longer	(27)	(18)
Available-For-Sale, Fair Value	11,992	13,454
Corporate Securities
Schedule Of Available For Sale Securities [Line Items]
Available-For-Sale, Amortized Cost	5,000	5,500
Available-For-Sale, Gross Unrealized Gains		573
Available-For-Sale, Gross Unrealized Losses, Less Than 12 Months	(12)
Available-For-Sale, Gross Unrealized Losses, 12 Months or Longer	(218)	(237)
Available-For-Sale, Fair Value	$ 4,770	$ 5,836

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Investment Securities - Summary of Amortized Cost and Estimated Fair Value of Investment Securities Held-to-Maturity (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Schedule Of Held To Maturity Securities [Line Items]
Held-To-Maturity, Amortized Cost	$ 67,922	$ 74,654
Held-To-Maturity, Fair Value	67,059
Municipal Securities
Schedule Of Held To Maturity Securities [Line Items]
Held-To-Maturity, Amortized Cost	67,922	74,654
Held-To-Maturity, Gross Unrealized Gains	17	167
Held-To-Maturity, Gross Unrealized Losses, Less Than 12 Months	(543)	(293)
Held-To-Maturity, Gross Unrealized Losses, 12 Months or Longer	(337)	(227)
Held-To-Maturity, Fair Value	$ 67,059	$ 74,301

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Investment Securities - Summary of Gross Unrealized Losses and Fair Value for Securities Available-for-Sale and Held-to-Maturity (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Available-for-Sale and Held-to-Maturity Securities Continuous Unrealized Loss Position [Line Items]
Available-for-Sale, Less Than 12 Months, Fair Value	$ 102,176	$ 121,488
Available-for-Sale, 12 Months or More, Fair Value	125,267	111,995
Available-for-Sale, Fair Value, Total	227,443	233,483
Available-for-Sale, Less Than 12 Months, Unrealized Losses	(2,780)	(1,173)
Available-for-Sale, 12 Months or More, Unrealized Losses	(3,945)	(2,472)
Available-for-Sale, Unrealized Losses, Total	(6,725)	(3,645)
Municipal Securities
Available-for-Sale and Held-to-Maturity Securities Continuous Unrealized Loss Position [Line Items]
Available-for-Sale, Less Than 12 Months, Fair Value	4,783	3,523
Available-for-Sale, 12 Months or More, Fair Value	810	830
Available-for-Sale, Fair Value, Total	5,593	4,353
Available-for-Sale, Less Than 12 Months, Unrealized Losses	(65)	(22)
Available-for-Sale, 12 Months or More, Unrealized Losses	(27)	(18)
Available-for-Sale, Unrealized Losses, Total	(92)	(40)
Held-to Maturity, Less Than 12 Months, Fair Value	48,014	39,380
Held-to Maturity, 12 Months or More, Fair Value	9,196	10,389
Held-to Maturity, Fair Value, Total	57,210	49,769
Held-To-Maturity, Gross Unrealized Losses, Less Than 12 Months	(543)	(293)
Held-To-Maturity, Gross Unrealized Losses, 12 Months or Longer	(337)	(227)
Held-to Maturity, Unrealized Losses, Total	(880)	(520)
Corporate Securities
Available-for-Sale and Held-to-Maturity Securities Continuous Unrealized Loss Position [Line Items]
Available-for-Sale, Less Than 12 Months, Fair Value	1,987
Available-for-Sale, 12 Months or More, Fair Value	2,783	4,763
Available-for-Sale, Fair Value, Total	4,770	4,763
Available-for-Sale, Less Than 12 Months, Unrealized Losses	(12)
Available-for-Sale, 12 Months or More, Unrealized Losses	(218)	(237)
Available-for-Sale, Unrealized Losses, Total	(230)	(237)
U.S. Government Sponsored Securities
Available-for-Sale and Held-to-Maturity Securities Continuous Unrealized Loss Position [Line Items]
Available-for-Sale, Less Than 12 Months, Fair Value	14,628	5,087
Available-for-Sale, 12 Months or More, Fair Value	33,407	33,543
Available-for-Sale, Fair Value, Total	48,035	38,630
Available-for-Sale, Less Than 12 Months, Unrealized Losses	(327)	(6)
Available-for-Sale, 12 Months or More, Unrealized Losses	(590)	(453)
Available-for-Sale, Unrealized Losses, Total	(917)	(459)
Mortgage-backed Securities
Available-for-Sale and Held-to-Maturity Securities Continuous Unrealized Loss Position [Line Items]
Available-for-Sale, Less Than 12 Months, Fair Value	80,778	112,878
Available-for-Sale, 12 Months or More, Fair Value	88,267	72,859
Available-for-Sale, Fair Value, Total	169,045	185,737
Available-for-Sale, Less Than 12 Months, Unrealized Losses	(2,376)	(1,145)
Available-for-Sale, 12 Months or More, Unrealized Losses	(3,110)	(1,764)
Available-for-Sale, Unrealized Losses, Total	$ (5,486)	$ (2,909)

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Investment Securities - Amortized Cost and Estimated Fair Value of Investment Securities that are Available-for-Sale and Held-to-Maturity by Contractual Maturity (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Available-For-Sale Securities by Maturity, Amortized Cost
Available-For-Sale, Securities maturing in one year or less, Amortized cost	$ 2,528
Available-For-Sale, Securities maturing in After one year through five years, Amortized cost	75,740
Available-For-Sale, Securities maturing in After five years through ten years, Amortized cost	52,157
Available-For-Sale, Securities maturing in After ten years, Amortized cost	112,865
Available-For-Sale, Amortized Cost	243,290	$ 265,860
Available-For-Sale Securities by Maturity, Fair Value
Available-For-Sale, Securities maturing in one year or less, Fair Value	2,545
Available-For-Sale, Securities maturing in After one year through five years, Fair Value	74,398
Available-For-Sale, Securities maturing in After five years through ten years, Fair Value	50,523
Available-For-Sale, Securities maturing in After ten years, Fair Value	109,233
Available-For-Sale, Fair Value	236,699	263,056
Held-To-Maturity Securities by Maturity, Amortized Cost
Held-To-Maturity, Securities maturing in one year or less, Amortized Cost	8,388
Held-To-Maturity, Securities maturing in After one year through five years, Amortized Cost	38,735
Held-To-Maturity, Securities maturing in After five years through ten years, Amortized Cost	15,153
Held-To-Maturity, Securities maturing in After ten years, Amortized Cost	5,646
Held-To-Maturity, Amortized Cost	67,922	$ 74,654
Held-To-Maturity Securities by Maturity, Fair Value
Held-To-Maturity, Securities maturing in one year or less, Fair Value	8,370
Held-To-Maturity, Securities maturing in After one year through five years, Fair Value	38,430
Held-To-Maturity, Securities maturing in After five years through ten years, Fair Value	14,725
Held-To-Maturity, Securities maturing in After ten years, Fair Value	5,534
Held-To-Maturity, Fair Value	$ 67,059

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Investment Securities - Additional Information (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2018 USD ($) Securities	Jun. 30, 2017 USD ($)	Jun. 30, 2018 USD ($) Securities	Jun. 30, 2017 USD ($)	Dec. 31, 2017 Securities
Investments Debt And Equity Securities [Abstract]
Number of investment securities with fair value less than amortized cost | Securities	327		327		304
Sales of available-for-sale securities			$ 500,000	$ 0
Net gain in sales of available-for-sale securities	$ 333,000	$ 1,000	$ 335,000	(10,000)
Available-for-sale securities in a nonaccrual status | Securities	0		0		0
Sales of held-to-maturity securities			$ 0	204,000
Net loss in sales of held-to-maturity securities				$ (13,000)
Held-to-maturity securities in a nonaccrual status | Securities	0		0		0

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Loans and Allowance for Loan Losses - Summary of Loans (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2016
Accounts Notes And Loans Receivable [Line Items]
Total gross loans	$ 1,696,487		$ 1,632,005
Net deferred loan fees	(4,528)		(4,561)
Total loans held for investment	1,691,959		1,627,444
Allowance for loan losses	(22,308)	$ (20,731)	(18,303)	$ (17,271)	$ (16,644)	$ (16,715)
Total loans held for investment, net	1,669,651		1,609,141
Real Estate Term
Accounts Notes And Loans Receivable [Line Items]
Total gross loans	842,352		784,148
Allowance for loan losses	(9,028)	(7,249)	(6,706)	(7,157)	(7,149)	(6,770)
Construction and Land Development
Accounts Notes And Loans Receivable [Line Items]
Total gross loans	373,845		369,590
Allowance for loan losses	(6,789)	(6,808)	(6,309)	(5,077)	(4,683)	(5,449)
Residential and Home Equity
Accounts Notes And Loans Receivable [Line Items]
Total gross loans	153,084		158,591
Allowance for loan losses	(659)	(642)	(815)	(503)	(529)	(617)
Consumer and Other
Accounts Notes And Loans Receivable [Line Items]
Total gross loans	16,978		25,591
Allowance for loan losses	(52)	(70)	(159)	(45)	(61)	(161)
Commercial Real Estate
Accounts Notes And Loans Receivable [Line Items]
Total gross loans	1,216,197		1,153,738
Allowance for loan losses	(15,817)		(13,015)
Commercial Real Estate | Real Estate Term
Accounts Notes And Loans Receivable [Line Items]
Total gross loans	842,352		784,148
Allowance for loan losses	(9,028)		(6,706)
Commercial Real Estate | Construction and Land Development
Accounts Notes And Loans Receivable [Line Items]
Total gross loans	373,845		369,590
Allowance for loan losses	(6,789)		(6,309)
Commercial and Industrial
Accounts Notes And Loans Receivable [Line Items]
Total gross loans	310,228		294,085
Allowance for loan losses	(5,780)	$ (5,962)	(4,314)	$ (4,489)	$ (4,222)	$ (3,718)
Consumer
Accounts Notes And Loans Receivable [Line Items]
Total gross loans	170,062		184,182
Allowance for loan losses	(711)		(974)
Consumer | Residential and Home Equity
Accounts Notes And Loans Receivable [Line Items]
Total gross loans	153,084		158,591
Allowance for loan losses	(659)		(815)
Consumer | Consumer and Other
Accounts Notes And Loans Receivable [Line Items]
Total gross loans	16,978		25,591
Allowance for loan losses	$ (52)		$ (159)

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Loans and Allowance for Loan Losses - Summary of Changes in Allowance for Loan Losses (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Financing Receivable Allowance For Credit Losses [Line Items]
Balance at beginning of period	$ 20,731	$ 16,644	$ 18,303	$ 16,715
Provision for loan losses	1,475	900	3,525	1,100
Gross loan charge-offs	(204)	(512)	(462)	(1,073)
Recoveries	306	239	942	529
Net loan (charge-offs) / recoveries	102	(273)	480	(544)
Balance at end of period	22,308	17,271	22,308	17,271
Real Estate Term
Financing Receivable Allowance For Credit Losses [Line Items]
Balance at beginning of period	7,249	7,149	6,706	6,770
Provision for loan losses	1,779	181	2,310	556
Gross loan charge-offs		(350)		(350)
Recoveries		177	12	181
Net loan (charge-offs) / recoveries		(173)	12	(169)
Balance at end of period	9,028	7,157	9,028	7,157
Construction and Land Development
Financing Receivable Allowance For Credit Losses [Line Items]
Balance at beginning of period	6,808	4,683	6,309	5,449
Provision for loan losses	(65)	394	409	(451)
Recoveries	46		71	79
Net loan (charge-offs) / recoveries	46		71	79
Balance at end of period	6,789	5,077	6,789	5,077
Residential and Home Equity
Financing Receivable Allowance For Credit Losses [Line Items]
Balance at beginning of period	642	529	815	617
Provision for loan losses	(37)	(28)	(237)	84
Gross loan charge-offs				(338)
Recoveries	54	2	81	140
Net loan (charge-offs) / recoveries	54	2	81	(198)
Balance at end of period	659	503	659	503
Consumer and Other
Financing Receivable Allowance For Credit Losses [Line Items]
Balance at beginning of period	70	61	159	161
Provision for loan losses	56	11	(24)	(55)
Gross loan charge-offs	(107)	(48)	(172)	(113)
Recoveries	33	21	89	52
Net loan (charge-offs) / recoveries	(74)	(27)	(83)	(61)
Balance at end of period	52	45	52	45
Commercial and Industrial
Financing Receivable Allowance For Credit Losses [Line Items]
Balance at beginning of period	5,962	4,222	4,314	3,718
Provision for loan losses	(258)	342	1,067	966
Gross loan charge-offs	(97)	(114)	(290)	(272)
Recoveries	173	39	689	77
Net loan (charge-offs) / recoveries	76	(75)	399	(195)
Balance at end of period	$ 5,780	$ 4,489	$ 5,780	$ 4,489

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Loans and Allowance for Loan Losses - Summary of Non Accrual Loans (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Financing Receivable Allowance For Credit Losses [Line Items]
Non-accrual loans, not troubled debt restructured	$ 4,206	$ 223
Troubled debt restructured loans, non-accrual	1,751
Total non-accrual loans	5,957	223
Real Estate Term
Financing Receivable Allowance For Credit Losses [Line Items]
Non-accrual loans, not troubled debt restructured	1,580
Troubled debt restructured loans, non-accrual	1,556
Construction and Land Development
Financing Receivable Allowance For Credit Losses [Line Items]
Non-accrual loans, not troubled debt restructured	320
Commercial and Industrial Loans
Financing Receivable Allowance For Credit Losses [Line Items]
Non-accrual loans, not troubled debt restructured	1,539	$ 223
Troubled debt restructured loans, non-accrual	195
Residential and Home Equity
Financing Receivable Allowance For Credit Losses [Line Items]
Non-accrual loans, not troubled debt restructured	728
Consumer and Other
Financing Receivable Allowance For Credit Losses [Line Items]
Non-accrual loans, not troubled debt restructured	$ 39

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Loans and Allowance for Loan Losses - Summary of Troubled Debt Restructured Loans (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Loans And Leases Receivable Disclosure [Abstract]
Accruing troubled debt restructured loans	$ 2,495	$ 3,307
Non-accrual troubled debt restructured loans	1,751
Total troubled debt restructured loans	$ 4,246	$ 3,307

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Loans and Allowance for Loan Losses - Additional Information (Details) - USD ($)	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017
Related Party Transaction [Line Items]
TDRs Loans	$ 1,800,000	$ 0
Troubled debt restructuring payment deafult period	12 months
TDRs payment default	$ 0	$ 0
Outstanding contractual unpaid principal balance, excluding acquisiiton accounting adjustments	10,700,000		$ 12,400,000
Carrying balance of PCI loans	7,700,000		8,700,000
Non-accretable difference between the contractually required payments and cash flows expected to be collected	3,000,000		3,700,000
Available lines of credit for loans and credit cards to affiliates	1,300,000		330,000
Deposits from affiliates	8,200,000		7,100,000
Affiliates
Related Party Transaction [Line Items]
Outstanding loans with affiliates	$ 3,800,000		$ 3,400,000

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Loans and Allowance for Loan Losses - Summary of Current and Past Due Loans Held For Investment (Accruing And Non-Accruing) (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Financing Receivable Recorded Investment Past Due [Line Items]
Current	$ 1,670,792	$ 1,607,064
30-89 Days Past Due	11,658	16,043
90+ Days Past Due	336	1
Non-accrual	5,957	223
Total Past-Due	17,951	16,267
Purchased Credit Impaired	7,744	8,674
Total loans	1,696,487	1,632,005
Real Estate Term
Financing Receivable Recorded Investment Past Due [Line Items]
Purchased Credit Impaired	366	1,010
Total loans	842,352	784,148
Construction and Land Development
Financing Receivable Recorded Investment Past Due [Line Items]
Purchased Credit Impaired	418	650
Total loans	373,845	369,590
Residential and Home Equity
Financing Receivable Recorded Investment Past Due [Line Items]
Total loans	153,084	158,591
Consumer and Other
Financing Receivable Recorded Investment Past Due [Line Items]
Total loans	16,978	25,591
Commercial Real Estate
Financing Receivable Recorded Investment Past Due [Line Items]
Current	1,203,378	1,142,740
30-89 Days Past Due	8,579	9,338
Non-accrual	3,456
Total Past-Due	12,035	9,338
Purchased Credit Impaired	784	1,660
Total loans	1,216,197	1,153,738
Commercial Real Estate | Real Estate Term
Financing Receivable Recorded Investment Past Due [Line Items]
Current	836,191	780,895
30-89 Days Past Due	2,659	2,243
Non-accrual	3,136
Total Past-Due	5,795	2,243
Purchased Credit Impaired	366	1,010
Total loans	842,352	784,148
Commercial Real Estate | Construction and Land Development
Financing Receivable Recorded Investment Past Due [Line Items]
Current	367,187	361,845
30-89 Days Past Due	5,920	7,095
Non-accrual	320
Total Past-Due	6,240	7,095
Purchased Credit Impaired	418	650
Total loans	373,845	369,590
Commercial and Industrial
Financing Receivable Recorded Investment Past Due [Line Items]
Current	299,280	282,638
30-89 Days Past Due	1,932	4,210
90+ Days Past Due	322
Non-accrual	1,734	223
Total Past-Due	3,988	4,433
Purchased Credit Impaired	6,960	7,014
Total loans	310,228	294,085
Consumer
Financing Receivable Recorded Investment Past Due [Line Items]
Current	168,134	181,686
30-89 Days Past Due	1,147	2,495
90+ Days Past Due	14	1
Non-accrual	767
Total Past-Due	1,928	2,496
Total loans	170,062	184,182
Consumer | Residential and Home Equity
Financing Receivable Recorded Investment Past Due [Line Items]
Current	151,450	156,379
30-89 Days Past Due	906	2,212
Non-accrual	728
Total Past-Due	1,634	2,212
Total loans	153,084	158,591
Consumer | Consumer and Other
Financing Receivable Recorded Investment Past Due [Line Items]
Current	16,684	25,307
30-89 Days Past Due	241	283
90+ Days Past Due	14	1
Non-accrual	39
Total Past-Due	294	284
Total loans	$ 16,978	$ 25,591

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Loans and Allowance for Loan Losses - Summary of Outstanding Loan Balances (Accruing and Non - Accruing) Categorized by Credit Quality Indicators (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2016
Financing Receivable Allowance For Credit Losses [Line Items]
Total Loans	$ 1,696,487		$ 1,632,005
Total Allowance	22,308	$ 20,731	18,303	$ 17,271	$ 16,644	$ 16,715
Real Estate Term
Financing Receivable Allowance For Credit Losses [Line Items]
Total Loans	842,352		784,148
Total Allowance	9,028	7,249	6,706	7,157	7,149	6,770
Construction and Land Development
Financing Receivable Allowance For Credit Losses [Line Items]
Total Loans	373,845		369,590
Total Allowance	6,789	6,808	6,309	5,077	4,683	5,449
Residential and Home Equity
Financing Receivable Allowance For Credit Losses [Line Items]
Total Loans	153,084		158,591
Total Allowance	659	642	815	503	529	617
Consumer and Other
Financing Receivable Allowance For Credit Losses [Line Items]
Total Loans	16,978		25,591
Total Allowance	52	70	159	45	61	161
Commercial Real Estate
Financing Receivable Allowance For Credit Losses [Line Items]
Total Loans	1,216,197		1,153,738
Total Allowance	15,817		13,015
Commercial Real Estate | Real Estate Term
Financing Receivable Allowance For Credit Losses [Line Items]
Total Loans	842,352		784,148
Total Allowance	9,028		6,706
Commercial Real Estate | Construction and Land Development
Financing Receivable Allowance For Credit Losses [Line Items]
Total Loans	373,845		369,590
Total Allowance	6,789		6,309
Commercial and Industrial
Financing Receivable Allowance For Credit Losses [Line Items]
Total Loans	310,228		294,085
Total Allowance	5,780	$ 5,962	4,314	$ 4,489	$ 4,222	$ 3,718
Consumer
Financing Receivable Allowance For Credit Losses [Line Items]
Total Loans	170,062		184,182
Total Allowance	711		974
Consumer | Residential and Home Equity
Financing Receivable Allowance For Credit Losses [Line Items]
Total Loans	153,084		158,591
Total Allowance	659		815
Consumer | Consumer and Other
Financing Receivable Allowance For Credit Losses [Line Items]
Total Loans	16,978		25,591
Total Allowance	52		159
Pass
Financing Receivable Allowance For Credit Losses [Line Items]
Total Loans	1,636,776		1,570,090
Pass | Commercial Real Estate
Financing Receivable Allowance For Credit Losses [Line Items]
Total Loans	1,184,075		1,117,341
Pass | Commercial Real Estate | Real Estate Term
Financing Receivable Allowance For Credit Losses [Line Items]
Total Loans	813,802		758,575
Pass | Commercial Real Estate | Construction and Land Development
Financing Receivable Allowance For Credit Losses [Line Items]
Total Loans	370,273		358,766
Pass | Commercial and Industrial
Financing Receivable Allowance For Credit Losses [Line Items]
Total Loans	287,284		274,535
Pass | Consumer
Financing Receivable Allowance For Credit Losses [Line Items]
Total Loans	165,417		178,214
Pass | Consumer | Residential and Home Equity
Financing Receivable Allowance For Credit Losses [Line Items]
Total Loans	148,554		152,753
Pass | Consumer | Consumer and Other
Financing Receivable Allowance For Credit Losses [Line Items]
Total Loans	16,863		25,461
Special Mention
Financing Receivable Allowance For Credit Losses [Line Items]
Total Loans	27,265		37,704
Special Mention | Commercial Real Estate
Financing Receivable Allowance For Credit Losses [Line Items]
Total Loans	20,015		20,282
Special Mention | Commercial Real Estate | Real Estate Term
Financing Receivable Allowance For Credit Losses [Line Items]
Total Loans	18,401		13,055
Special Mention | Commercial Real Estate | Construction and Land Development
Financing Receivable Allowance For Credit Losses [Line Items]
Total Loans	1,614		7,227
Special Mention | Commercial and Industrial
Financing Receivable Allowance For Credit Losses [Line Items]
Total Loans	5,707		13,464
Special Mention | Consumer
Financing Receivable Allowance For Credit Losses [Line Items]
Total Loans	1,543		3,958
Special Mention | Consumer | Residential and Home Equity
Financing Receivable Allowance For Credit Losses [Line Items]
Total Loans	1,497		3,913
Special Mention | Consumer | Consumer and Other
Financing Receivable Allowance For Credit Losses [Line Items]
Total Loans	46		45
Substandard
Financing Receivable Allowance For Credit Losses [Line Items]
Total Loans	32,434		24,198
Substandard | Commercial Real Estate
Financing Receivable Allowance For Credit Losses [Line Items]
Total Loans	12,107		16,115
Substandard | Commercial Real Estate | Real Estate Term
Financing Receivable Allowance For Credit Losses [Line Items]
Total Loans	10,149		12,518
Substandard | Commercial Real Estate | Construction and Land Development
Financing Receivable Allowance For Credit Losses [Line Items]
Total Loans	1,958		3,597
Substandard | Commercial and Industrial
Financing Receivable Allowance For Credit Losses [Line Items]
Total Loans	17,237		6,086
Substandard | Consumer
Financing Receivable Allowance For Credit Losses [Line Items]
Total Loans	3,090		1,997
Substandard | Consumer | Residential and Home Equity
Financing Receivable Allowance For Credit Losses [Line Items]
Total Loans	3,033		1,925
Substandard | Consumer | Consumer and Other
Financing Receivable Allowance For Credit Losses [Line Items]
Total Loans	57		72
Doubtful
Financing Receivable Allowance For Credit Losses [Line Items]
Total Loans	12		13
Doubtful | Consumer
Financing Receivable Allowance For Credit Losses [Line Items]
Total Loans	12		13
Doubtful | Consumer | Consumer and Other
Financing Receivable Allowance For Credit Losses [Line Items]
Total Loans	$ 12		$ 13

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Loans and Allowance for Loan Losses - Summary of ALLL And Outstanding Loan Balances According To The Company's Impairment Method (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2016
Financing Receivable Allowance For Credit Losses [Line Items]
Allowance for loan losses, Individually evaluated for impairment	$ 1,252		$ 145
Allowance for loan losses, Collectively evaluated for impairment	20,704		18,158
Allowance for loan losses, Purchased credit-impaired loans	352
Allowance for loan losses, Total	22,308	$ 20,731	18,303	$ 17,271	$ 16,644	$ 16,715
Outstanding loan balances, Individually evaluated for impairment	22,390		11,953
Outstanding loan balances, Collectively evaluated for impairment	1,666,353		1,611,378
Outstanding loan balances, Purchased credit-impaired loans	7,744		8,674
Total loans	1,696,487		1,632,005
Real Estate Term
Financing Receivable Allowance For Credit Losses [Line Items]
Allowance for loan losses, Individually evaluated for impairment	372
Allowance for loan losses, Collectively evaluated for impairment	8,656		6,706
Allowance for loan losses, Total	9,028	7,249	6,706	7,157	7,149	6,770
Outstanding loan balances, Individually evaluated for impairment	8,750		6,191
Outstanding loan balances, Collectively evaluated for impairment	833,236		776,947
Outstanding loan balances, Purchased credit-impaired loans	366		1,010
Total loans	842,352		784,148
Construction and Land Development
Financing Receivable Allowance For Credit Losses [Line Items]
Allowance for loan losses, Individually evaluated for impairment			3
Allowance for loan losses, Collectively evaluated for impairment	6,789		6,306
Allowance for loan losses, Total	6,789	6,808	6,309	5,077	4,683	5,449
Outstanding loan balances, Individually evaluated for impairment	1,549		2,568
Outstanding loan balances, Collectively evaluated for impairment	371,878		366,372
Outstanding loan balances, Purchased credit-impaired loans	418		650
Total loans	373,845		369,590
Residential and Home Equity
Financing Receivable Allowance For Credit Losses [Line Items]
Allowance for loan losses, Individually evaluated for impairment	3		101
Allowance for loan losses, Collectively evaluated for impairment	656		714
Allowance for loan losses, Total	659	642	815	503	529	617
Outstanding loan balances, Individually evaluated for impairment	2,638		1,150
Outstanding loan balances, Collectively evaluated for impairment	150,446		157,441
Total loans	153,084		158,591
Consumer and Other
Financing Receivable Allowance For Credit Losses [Line Items]
Allowance for loan losses, Collectively evaluated for impairment	52		159
Allowance for loan losses, Total	52	70	159	45	61	161
Outstanding loan balances, Collectively evaluated for impairment	16,978		25,591
Total loans	16,978		25,591
Commercial and Industrial
Financing Receivable Allowance For Credit Losses [Line Items]
Allowance for loan losses, Individually evaluated for impairment	877		41
Allowance for loan losses, Collectively evaluated for impairment	4,551		4,273
Allowance for loan losses, Purchased credit-impaired loans	352
Allowance for loan losses, Total	5,780	$ 5,962	4,314	$ 4,489	$ 4,222	$ 3,718
Outstanding loan balances, Individually evaluated for impairment	9,453		2,044
Outstanding loan balances, Collectively evaluated for impairment	293,815		285,027
Outstanding loan balances, Purchased credit-impaired loans	6,960		7,014
Total loans	$ 310,228		$ 294,085

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Loans and Allowance for Loan Losses - Summary of Information On Impaired Loans, Excluding Purchased Credit Impaired ("PCI") Loans (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Financing Receivable Impaired [Line Items]
Unpaid Principal Balance	$ 27,632	$ 17,929
Recorded investment With No Allowance	14,826	10,068
Recorded investment With Allowance	7,564	1,885
Total Recorded Investment	22,390	11,953
Related Allowance	1,252	145
Commercial Real Estate
Financing Receivable Impaired [Line Items]
Unpaid Principal Balance	14,107	10,575
Recorded investment With No Allowance	9,244	8,563
Recorded investment With Allowance	1,055	196
Total Recorded Investment	10,299	8,759
Related Allowance	372	3
Commercial Real Estate | Real Estate Term
Financing Receivable Impaired [Line Items]
Unpaid Principal Balance	11,916	7,090
Recorded investment With No Allowance	7,695	6,191
Recorded investment With Allowance	1,055
Total Recorded Investment	8,750	6,191
Related Allowance	372
Commercial Real Estate | Construction and Land Development
Financing Receivable Impaired [Line Items]
Unpaid Principal Balance	2,191	3,485
Recorded investment With No Allowance	1,549	2,372
Recorded investment With Allowance		196
Total Recorded Investment	1,549	2,568
Related Allowance		3
Commercial and Industrial
Financing Receivable Impaired [Line Items]
Unpaid Principal Balance	10,887	6,204
Recorded investment With No Allowance	3,208	1,276
Recorded investment With Allowance	6,245	768
Total Recorded Investment	9,453	2,044
Related Allowance	877	41
Consumer
Financing Receivable Impaired [Line Items]
Unpaid Principal Balance	2,638	1,150
Recorded investment With No Allowance	2,374	229
Recorded investment With Allowance	264	921
Total Recorded Investment	2,638	1,150
Related Allowance	3	101
Consumer | Residential and Home Equity
Financing Receivable Impaired [Line Items]
Unpaid Principal Balance	2,638	1,150
Recorded investment With No Allowance	2,374	229
Recorded investment With Allowance	264	921
Total Recorded Investment	2,638	1,150
Related Allowance	$ 3	$ 101

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Loans and Allowance for Loan Losses - Summary of Interest Income Recognized on Impaired Loans (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Financing Receivable Impaired [Line Items]
Average Recorded Investment	$ 18,253	$ 12,736	$ 17,172	$ 13,396
Interest Income Recognition	187	84	391	212
Commercial Real Estate
Financing Receivable Impaired [Line Items]
Average Recorded Investment	8,345	7,606	9,529	7,976
Interest Income Recognition	78	38	220	99
Commercial Real Estate | Real Estate Term
Financing Receivable Impaired [Line Items]
Average Recorded Investment	6,312	4,734	7,471	5,316
Interest Income Recognition	43	6	146	36
Commercial Real Estate | Construction and Land Development
Financing Receivable Impaired [Line Items]
Average Recorded Investment	2,033	2,872	2,058	2,660
Interest Income Recognition	35	32	74	63
Commercial and Industrial
Financing Receivable Impaired [Line Items]
Average Recorded Investment	7,822	4,280	5,749	4,365
Interest Income Recognition	87	36	128	90
Consumer
Financing Receivable Impaired [Line Items]
Average Recorded Investment	2,086	850	1,894	1,055
Interest Income Recognition	22	10	43	23
Consumer | Residential and Home Equity
Financing Receivable Impaired [Line Items]
Average Recorded Investment	2,086	850	1,894	1,055
Interest Income Recognition	$ 22	$ 10	$ 43	$ 23

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Loans and Allowance for Loan Losses - Changes in Accretable Yield for PCI Loans (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Accretable Yield Movement Schedule [Roll Forward]
Balance, beginning of period	$ 8,536	$ 573
Accretion to interest income	(1,943)	(18)
Reclassification from non-accretable discount	189	9
Balance, end of period	$ 6,782	$ 564

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Commitments and Contingencies - Summary of Contractual Amounts of Off-balance Sheet Financial Instruments (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Commitments to Extend Credit
Commitments And Contingencies [Line Items]
Off-balance sheet financial instrument, contractual amount	$ 587,699	$ 637,029
Stand-by Letters of Credit and Bond Commitments
Commitments And Contingencies [Line Items]
Off-balance sheet financial instrument, contractual amount	28,892	27,943
Unused Credit Card Lines, All Unsecured
Commitments And Contingencies [Line Items]
Off-balance sheet financial instrument, contractual amount	$ 22,045	$ 24,949

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Commitments and Contingencies - Summary of Contractual Amounts of Off-balance Sheet Financial Instruments (Parenthetical) (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Unsecured Commitments Included in Commitments to Extend Credit
Commitments And Contingencies [Line Items]
Off-balance sheet financial instrument, contractual amount	$ 16,481	$ 13,625
Unsecured Commitments Included in Stand-by Letters of Credit and Bond Commitments
Commitments And Contingencies [Line Items]
Off-balance sheet financial instrument, contractual amount	$ 455	$ 440

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Fair Value - Summary of Estimated Fair Values of Financial Instruments (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Financial Assets:
Securities - available-for-sale	$ 236,699	$ 263,056
Securities - held-to-maturity	67,059
Carrying Value | Level 1
Financial Assets:
Cash and cash equivalents	52,322	51,027
Bank-owned life insurance	26,120	23,566
Carrying Value | Level 2
Financial Assets:
Securities - available-for-sale	236,699	263,056
Securities - held-to-maturity	67,922	74,654
Non-marketable securities	6,151	3,706
Loans held for sale	11,058	10,871
Financial Liabilities:
Total deposits	1,781,940	1,814,632
Short-term borrowings	90,000	40,000
Carrying Value | Level 3
Financial Assets:
Loans held for investment	1,669,651	1,609,141
Estimated Fair Value | Level 1
Financial Assets:
Cash and cash equivalents	52,322	51,027
Bank-owned life insurance	26,120	23,566
Estimated Fair Value | Level 2
Financial Assets:
Securities - available-for-sale	236,699	263,056
Securities - held-to-maturity	67,059	74,301
Non-marketable securities	6,151	3,706
Loans held for sale	11,058	10,871
Financial Liabilities:
Total deposits	1,556,471	1,596,966
Short-term borrowings	90,000	40,000
Estimated Fair Value | Level 3
Financial Assets:
Loans held for investment	$ 1,664,262	$ 1,607,388

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Fair Value - Summary of Asset Measured at Fair Value (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Fair Valued on a Recurring Basis
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investment securities available-for-sale	$ 236,699	$ 263,056
Fair Valued on a Non-Recurring Basis
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Impaired loans	6,312	1,740
Level 2 | Fair Valued on a Recurring Basis
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investment securities available-for-sale	236,699	263,056
Level 3 | Fair Valued on a Non-Recurring Basis
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Impaired loans	$ 6,312	$ 1,740

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Income Taxes - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Income Taxes [Line Items]
Income tax expense	$ 3,279	$ 3,584	$ 5,839	$ 6,324
Effective tax rate	23.90%	35.60%
Federal statutory rate	21.00%
Utah
Income Taxes [Line Items]
State corporation tax rate	4.95%

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Regulatory Capital Matters - Additional Information (Details) - USD ($) $ in Millions	Jun. 30, 2018	Dec. 31, 2017
Banking And Thrift [Abstract]
Consolidated Tier 1 Leverage ratio	11.48%	11.46%
Minimum reserve balances on average deposits	$ 17.0	$ 19.0

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Incentive Share-Based Plan and Other Employee Benefits - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2014
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Options issued to purchase common shares	26,400
Exercise price of common shares	$ 31.42
Fair value as of date of grant per share	$ 3.3944
Options
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based compensation expense	$ 370	$ 218
Restricted Stock Units
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Restricted stock units granted	27,788
Fair value of restricted stock units	$ 30.30
Share-Based Incentive Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Maximum number of shares available for issuance under the plan			800,000
Maximum | Options
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Vesting period	3 years
Maximum | Restricted Stock Units
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Vesting period	3 years
Maximum | Share-Based Incentive Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based awards granted term			10 years
Minimum [Member] | Options
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Vesting period	1 year
Minimum [Member] | Restricted Stock Units
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Vesting period	1 year

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Acquisition Related Measurement Period Adjustments - Additional Information (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2018 USD ($)
Business Combinations [Abstract]
Acquisition related measurement period adjustments to goodwill	$ 335