Good morning, and welcome to the People's Utah Bancorp Fourth Quarter Earnings Release Conference call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Mark Olson, Chief Financial Officer. Please go ahead.

Good morning. Thank you for joining us today to review our fourth quarter and year-end 2017 financial performance. Joining me this morning on the call is Len Williams, President and Chief Executive Officer for People's Utah Bancorp. Our comments today will refer to the financial results included in our earnings announcement released last night. To obtain a copy of the earnings release, please visit our website at www.peoplesutah.com. Our earnings release contains forward-looking statements. All such statements other than statements of historical fact are forward-looking statements. Such statements involve inherent risks and uncertainties, many of which are difficult to predict and beyond the control of the Company. We caution readers that a number of important factors could cause actual results to differ materially from those expressed in/or implied or projected for such forward-looking statements. These forward-looking statements are intended to be covered by the Safe Harbor for forward-looking statements provided by the Private Securities Litigation Reform Act of 1995. Forward-looking statements speak only as of the date they are made and we assume no duty to update such statements. I will now turn the call over to Len Williams.

Thank you, Mark. Good morning and thank you for joining us on the call today. Mark and I are pleased to speak with you in our new roles within the organization. Before I begin my prepared remarks, on behalf of the entire team at People's Utah Bancorp and the Bank, I want to sincerely thank both Rick Beard and Wolfgang Muelleck for their years of service and for the successes the Company has achieved as a result of their exceptional leadership. We wish them both the very best in their retirement, and we look forward to their continued involvement with the Bank as Board of Directors. We've had an eventful fourth quarter as we successfully completed the acquisition, conversion, and integration of the 7 Utah Banner branch locations. The 7 branches acquired are strategically located in strong growth markets in Utah, including Salt Lake City, Provo, South Jordan, Woods Cross, Orem, Salem, and Springville. The Woods Cross and Orem branches have been successfully consolidated into our existing Bank of American Fork, Bountiful and Orem branches, respectively, which significantly increased the size of these two branches. We are operating these acquired branches under the name of Bank of American Fork, a division of People's Intermountain Bank. To date, both acquired loans and deposits have met or exceeded our retention expectations. In addition, we successfully completed the acquisition, conversion, and integration of Town & Country Bank located in St. George, Utah. We are operating this location under the name of People's Town & Country Bank, the division of People’s Intermountain Bank. We believe these in-market transactions strengthen our standing as the largest community bank in Utah and bolster our market presence along the I-15 corridor in the Intermountain West region with our nearest community competitor being approximately half our size. We are…

Thank you, Len. Net income was $0.6 million or $0.03 per diluted common share for the fourth quarter of 2017, compared with $6.2 million or $0.34 per diluted common share for the third quarter of 2017 and $6.5 million or $0.36 per diluted common share for the fourth quarter a year-ago. For all of 2017, net income was $19.8 million or $1.08 per diluted common share compared with $23.6 million or $1.30 per diluted common share in 2016. Our fourth quarter results were impacted by two large non-recurring items. First, cost associated with the acquisition of the Utah branches of Banner Bank and the merger of Town & Country Bank, and second the one-time write-down of our deferred income tax assets, resulting from the reduction of corporate income tax rate under the Tax Cuts and Jobs Act signed into law in December. During the fourth quarter, we recorded $4.1 million in costs related to these two transactions. For the year, we recorded $4.8 million of acquisition costs. Of the total acquisition related costs recorded year-to-date, $2.8 million were related to costs incurred by us, while $2 million was related to merger cost incurred by Town & Country that we agreed to pay as part of the total purchase price of the merger. Total acquisition related costs incurred year-to-date include to the following. $1.8 million in IT termination and conversion costs, $1.2 million in payroll related costs associated with terminated employees, including severance costs, $0.7 million in legal fees, $0.5 million in investment banking fees and $0.5 million in other costs including lease termination costs and costs related to premises and equipment, we eliminated as well as new equipment purchases. On December 22, 2017, the President of the United States signed into law, the Tax Cuts and Jobs Act, which amends…

Thank you, Mark. We're pleased with our financial performance for 2017 and we're optimistic for the growth opportunities that our new acquisitions provide and we continue to look for in-market acquisition opportunities to even further improve our market penetration. We are excess to our customers, who we serve and for our outstanding associates within this organization, who provide excellent service and who have worked so diligently to successfully complete these two successive transactions. Our associates are actively engaged in making our vision of being the most distinguished provider of financial services in Utah and adjacent markets are reality. Thank you for joining us today. At this point, I will now open up the lines for questions.

We will now begin the question-and-answer session. [Operator Instructions] The first question comes from Andrew Liesch with Sandler O'Neill. Please go ahead.

Hey, good morning, everyone. This is actually Thomas Gallagher on for Andrew.

Good morning, Thomas.

Good morning, Thomas.

So I just to get started the strong organic loan growth in the year. We were wondering, what types of loans help support that growth?

Yes, we've had a combination with bringing the Banner group on significantly increased our C&I portfolio. They brought in more C&I than real estate which has typically been the bulk of the business at PUB. It was a mix. At the end of the year, we've had a very calm fall and winter so far. So construction season didn't back off the way it has in the past. So there was a mix to measure the two. Most of it is real estate and it's a mix of residential construction, some owner occupied stuff and C&I.

Okay, great. Thank you. And to follow-up on that, with the two deals integrated, what is reasonable loan growth outlook for 2018 somewhere in the high single-digits?

Yes, we don't really provide guidance there, but that’s – our market continues to grow and expectations here is still high, so that’s probably not far off.

Okay, great. Thank you. And then just looking at the TCE ratio, it's still high, near 11%. It's likely to continue to increase throughout the year. We were just wondering when you would be ready to complete more acquisitions to deploy this capital.

Well, our team did a phenomenal job integrating the last two. The tax scenario going forward provides again additional opportunity for us to look at deals. I would say there's nothing imminent at this point, but our eyes are open now.

Okay, great. And have there been any conversations with potential sellers?

Nothing outside of the norm. We have conversations on a regular basis with a lot of folks, but there's – like I said, there's nothing in the hopper that's imminent.

Okay. And then cash balances from our position, it looks like cash and equivalent – cash equivalent balances declined during the quarter. And we're just wondering is there a percentage of assets you'd prefer to manage cash out or is the $51 million level reasonable?

That $51 million is reasonable.

Okay. Thank you. That's all my questions. I'll step back from here.

Thank you, Thomas.

Thank you, Thomas.

[Operator Instructions] The next question comes from Don Worthington with Raymond James. Please go ahead.

Thank you.

Hey, Don. Welcome to the family.

Yes. Good to be here.

Hi, Don.

Hey, good morning. Just a couple questions, in terms of mortgage banking revenue, what’s your outlook for that going forward, say relative to this quarter?

Yes. It continues to defy us a little bit. We actually expected a decrease in the fourth quarter and it went the other direction. I think weather and construction completion has helped us, so we don't look at a serious tail off yet, but I would guess over time due to the dry up of refinance business, we would expect over time for that to slow a little bit.

Okay, great. And then are there any more one-time merger costs that would trickle over into this quarter from the…?

Yes. We expect that there will be some merger cost trickling into the first quarter. But we not at any magnitude that we saw in the fourth quarter of course, but there will be some.

Yes. The internal requirement was that we got them all into the fourth quarter, obviously there will be a little trickle over, but I don't think it'll be significant.

Okay, great. All right. Thank you.

Thank you.

Thank you, Don.

I do have one question from Jeff Rulis with D.A. Davidson. Please go ahead.

Hi, Jeff.

Hi, Jeff.

This is actually Jeff Pusich on for Jeff Rulis this morning, a little confusing there.

All good.

Yes. So in terms of margin, I was just wondering if you guys could provide some color on how much accretion by basis points impacted your net interest margin, just kind of so we can look at a more core number for the third and fourth quarter?

Sure. Jeff, as mentioned in the call, less than 2 basis points of our margin was in accretion – adjustments or accretion accounting. And the reason for that is we had short duration loans that we recorded at premium versus the longer duration loans that had discounts on them. But we do expect that we will see positive impacts from accretion accounting going forward not significant, but we will see some positive effects going forward.

All right. Awesome. Thanks for that. And then just kind of moving on to the expense side of things, I was just wondering if we can expect the more normalized expense run rate moving into 2018. I know you guys said there's a little bit of expenses in costs less from the merger, but I was just wondering if you add any more color on that.

We continue to work that pretty closely. There is a little bit of carryover for some assistance in the final integration, and then we will more normalize internal operations as we go forward. So we expect throughout the year that will continue to normalize.

All right. Awesome. Well, yes, all my other questions have been answered, so I'll step back in the queue.

Thank you.

Thanks Jeff. End of Q&A

This concludes our question-and-answer session. I would like to turn the conference back over to Len Williams for any closing remarks.

Great. Thank you, Gary, and thank you all for joining us today. We appreciate your interest in our Company, and we appreciate the questions that you offer. If you have questions offline, don't hesitate giving Mark or myself a call at anytime. Thank you so much.

Thank you.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.