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UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities and Exchange Act of 1934 Date of Report: April 22, 2010 Umpqua Holdings Corporation OREGON 000-25597 (Commission File Number) 93-1261319 One SW Columbia Street, Suite 1200 (503) 727-4100 Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 2.02 Results of Operations and Financial Condition. On April 22, 2010, Umpqua Holdings Corporation issued a press release announcing first quarter 2010 financial results. Attached hereto as
Exhibit 99.1 and filed (rather than furnished) is the earnings press release. Item 9.01 Financial Statements and Exhibits. (a) Not applicable. (b) Not applicable. (c) Not applicable. (d) Exhibits. 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 hereunto duly authorized. UMPQUA HOLDINGS CORPORATION Dated: April 22, 2010 By:/s/ Kenneth E. Roberts EXHIBIT 99.1 Contacts: Ray Davis President/CEO Umpqua Holdings Corporation 503-727-4101 Umpqua Holdings Corporation UMPQUA HOLDINGS REPORTS FIRST QUARTER 2010 RESULTS First quarter net income of $9.7 million, up from prior year’s net loss of $15.2 million Repurchased the preferred stock and common stock warrant issued to the U.S. Treasury under the TARP CPP TARP redemption led to net loss available to common shareholders of $2.5 million, or $0.03 per share FDIC-assisted assumptions of EvergreenBank and Rainier Pacific Bank during first quarter of 2010 Raised $288 million net proceeds through a public offering of common and preferred stock Non-covered, non-performing assets declined 6% during the first quarter, to 1.99% of total assets PORTLAND, Ore. – April 22, 2010 – Umpqua Holdings Corporation (NASDAQ: UMPQ), parent company of Umpqua Bank and Umpqua Investments, Inc. today announced first quarter 2010 net income of $9.7 million, compared to a net loss of $15.2 million for the same period in the prior year. Including preferred stock dividends of $12.2 million, the net loss available to common shareholders for the first quarter of 2010 was $2.5 million, or $0.03 per diluted common share, compared to a net loss available to common shareholders of $18.4 million, or $0.31 per diluted common share for the same period in the prior year. Operating loss, defined as earnings available to common shareholders before gains or losses on junior subordinated debentures carried at fair value, net of tax, bargain purchase gains on acquisitions, net of tax, merger related expenses, net of tax, and goodwill impairment, was $10.1 million, or $0.11 per diluted common share for the first quarter of 2010, compared to an operating loss of $18.7 million, or $0.31 per diluted common share for the same period in the prior year. Operating income or loss is considered a “non-GAAP” financial measure. More information regarding this measurement and reconciliation to the comparable GAAP measurement is provided under the heading Non-GAAP Financial Measures b
elow. Significant financial statement items for the first quarter of 2010 include: · Provision for loan losses of $42.1 million, a 39% decrease on a sequential quarter basis, and a 29% decrease from the same period in the prior year; · Total net charge-offs of $39.0 million, a 39% decrease on a sequential quarter basis, and a 35% decrease from the same period in the prior year; · The allowance for credit losses increased from 1.81% to 1.91% of non-covered total loans during the first quarter; · Non-covered, non-performing assets ended the quarter at $209.6 million, representing a decrease from 2.38% to 1.99% of total assets on a sequential quarter basis; · Total deposits increased $767 million, or 10%, on a sequential quarter basis and 21% over March 31, 2009. Organic deposit growth, excluding the effects of the acquisitions, was 2% on a sequential quarter basis, and 11% over March 31, 2009; Umpqua Holdings Corporation Announces First Quarter 2010 Results April 22, 2010 Page 2 of 23 · Net interest income of $87.1 million, an increase of 3% on a sequential quarter basis, and an increase of 15% over the same period in the prior year; · Net interest margin, on a tax equivalent basis, decreased two basis points on a sequential quarter basis to 4.04%, related to interest reversals on new non-accrual loans of $1.1 million, or 5 basis points; · The cost of interest bearing deposits for the first quarter of 2010 was 1.19%, a decrease of 16 basis points on a sequential quarter basis; · Bargain purchase gain of $8.5 million relating to the EvergreenBank acquisition; · Gain on fair value of junior subordinated debentures of $6.1 million; · Tangible common equity ratio of 7.82% as of March 31, 2010, with a proforma tangible common equity ratio of 9.84%, reflecting the conversion of the Common Stock Equivalents in April 2010; and · Total risk-based capital of 17.68%. This past quarter the company experienced meaningful improvement in our credit quality metrics as non-covered, non-performing assets once again dropped under 2%. We were also pleased to report that we exited the governments TARP program during the quarter while also accessing the public capital markets with a capital raise in February which netted the Company $288 million in additional capital, said Ray Davis, president and CEO of Umpqua Holdings Corporation. With the acquisitions of two Puget Sound financial institutions through FDIC-assisted transactions we have also greatly expanded our Washington state presence which now includes 27 stores and 3 commercial banking centers. FDIC-assisted acquisitions On January 22, 2010, the Washington Department of Financial Institutions closed EvergreenBank (Evergreen), Seattle, Washington and appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. That same date, Umpqua Bank assumed the banking operations of Evergreen from the FDIC under a whole bank purchase and assumption agreement with loss sharing. After purchase accounting fair value adjustments, Umpqua Bank acquired assets totaling $355 million, including $252 million of loans, and assumed liabilities of $347 million, including $286 million of deposits. The net assets acquired of $8 million represent a bargain purchase gain that is recognized in non-interest income. With this acquisition, Umpqua Bank added seven store locations in the greater Seattle, Washington market. On February 26, 2010, the Washington Department of Financial Institutions closed Rainier Pacific Bank (Rainier), Tacoma, Washington and appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. That same date, Umpqua Bank assumed the banking operations of Rainier from the FDIC under a whole bank purchase and assumption agreement with loss sharing. After purchase accounting fair value adjustments, Umpqua Bank acquired assets totaling $721 million, including $461 million of loans, and assumed $426 million of deposits. In connection with this acquisition the Company recorded $34 million in goodwill. With this acquisition, Umpqua Bank now operates fourteen additional store locations in Pierce County and surrounding areas. The loss sharing agreements for both acquisitions will substantially cover the future losses of the loan portfolios and other real estate owned acquired. We refer to the acquired loan portfolios and other real estate owned as covered loans and covered other real estate owned, respectively, and these are presented as separate line items in our consolidated balance sheet. Collectively these balances will be referred to as covered assets. The loss sharing agreements and acquisition-date fair value adjustments significantly mitigate the risk of future financial losses being recognized as a result of credit losses on the covered assets acquired. The acquisitions of Evergreen and Rainier have been immediately accretive to operating earnings per share. Evergreen has contributed operating earnings of approximately $1.5 million and Rainier has contributed operating earnings of approximately $0.8 million since their respective acquisition dates. We expect to integrate the systems and to complete the rebranding of the acquired banking locations to Umpqua standards in the second quarter of 2010. Umpqua Holdings Corporation Announces First Quarter 2010 Results April 22, 2010 Page 3 of 23 Please refer to table 7 on page 23 of this release for additional information related to the fair values of assets acquired and liabilities assumed with the Evergreen and Rainier acquisitions. Asset quality Non-covered loan portfolio Non-performing assets were $209.6 million, or 1.99% of total assets, as of March 31, 2010, compared to $223.6 million, or 2.38% of total assets as of December 31, 2009, and $159.5 million, or 1.82% of total assets as of March 31, 2009. Of this amount, $183.5 million represented non-accrual loans, $7.2 million represented loans past due greater than 90 days and still accruing interest, and $18.9 million was other real estate owned (OREO). The Company has aggressively charged-down impaired assets to their disposition values, and they are expected to be resolved at those levels, absent further declines in market prices. As of March 31, 2010, the non-performing assets of $209.6 million have been written down by 45%, or $172.3 million, from their original balance of $381.9 million. The provision for loan losses for the first quarter of 2010 was $42.1 million. Total net charge-offs for the first quarter of 2010 were $39.0 million. The annualized net charge-off rate of 2.66% for the first quarter represents a 36% decline in this rate as compared to the fourth quarter 2009. The allowance for credit losses increased to 1.91% of total loans as of March 31, 2010, compared to 1.81% of total loans as of December 31, 2009 and 1.58% of total loans as of March 31, 2009. Loans past due 30-89 days were $53.9 million, or 0.93% of total loans as of March 31, 2010, as compared to $41.5 million, or 0.69% of total loans as of December 31, 2009, and $89.7 million, or 1.47% of total loans as of March 31, 2009. Since 2007, the Company has been aggressively resolving problems arising from the current economic downturn. The following table recaps the Companys credit quality trends since the start of 2007 as it relates to the non-covered loan portfolio: Credit quality trends Non-covered loans (Dollars in thousands) Allowance Non-covered, Provision Net for credit losses non-performing for charge-offs to non-covered 30-89 days assets to loan loss (recoveries) loans % past due % total assets % Q1 2007 $83 $(90) 1.14% 0.17% 0.18% Q2 2007 3,413 31 1.17% 0.56% 0.59% Q3 2007 20,420 865 1.47% 0.99% 0.96% Q4 2007 17,814 21,188 1.42% 0.64% 1.18% Q1 2008 15,132 13,476 1.45% 1.13% 1.06% Q2 2008 25,137 37,976 1.22% 0.31% 1.25% Q3 2008 35,454 15,193 1.54% 1.16% 1.66% Q4 2008 31,955 30,072 1.58% 0.96% 1.88% Q1 2009 59,092 59,871 1.58% 1.47% 1.82% Q2 2009 29,331 26,047 1.63% 0.80% 1.73% Q3 2009 52,108 47,342 1.71% 0.76% 1.70% Q4 2009 68,593 64,072 1.81% 0.69% 2.38% Q1 2010 42,106 38,979 1.91% 0.93% 1.99% Total $400,638 $355,022 Non-covered construction loan portfolio Total non-covered construction loans as of March 31, 2010 were $555 million and decreased 10% from December 31, 2009, and decreased 35% from March 31, 2009. Within this portfolio, the residential
development loan segment was $202 million, or 3% of the total non-covered loan portfolio. Of this amount, $33 million represented non-performing loans, and $168 million represented performing loans, which were 3% of the total non-covered loan portfolio. The residential development loan segment has decreased $126.9 million, or 39%, since March 31, 2009.
(Date of earliest event reported)
(Exact Name of Registrant as Specified in Its Charter)
(State or Other Jurisdiction of Incorporation or Organization)
(I.R.S. Employer Identification Number)
Portland, Oregon 97258
(address of Principal Executive Offices)(Zip Code)
(Registrant's Telephone Number, Including Area Code)
(Registrant)
Kenneth E. Roberts
Assistant Secretary
FOR IMMEDIATE RELEASE
raydavis@umpquabank.com
Ron Farnsworth
EVP/Chief Financial Officer503-727-4108
ronfarnsworth@umpquabank.com
Umpqua Holdings Corporation Announces First Quarter 2010 Results
April 22, 2010
Page 4 of 23
The remaining $353 million in non-covered construction loans as of March 31, 2010 primarily represents commercial construction projects. Total non-covered non-performing commercial construction loans were $31.9 million at March 31, 2010 and $4.9 million were past due 30-89 days as of March 31, 2010.
Non-covered commercial real estate loan portfolio
The total non-covered term commercial real estate loan portfolio was $3.5 billion as of March 31, 2010. Of this total, $2.3 billion are non-owner occupied and $1.2 billion are owner occupied. Of the total term commercial real estate portfolio, $21.7 million, or 0.62%, are past due 30-89 days as of March 31, 2010. Of the total non-covered commercial real estate portfolio, 5% matures in 2010, 4% in 2011, 14% in years 2012-2013, and 21% in years 2014-2015. The remaining 56% of the portfolio matures in or after the year 2016.
The portfolio was conservatively underwritten at origination to a minimum debt service coverage ratio of 1.20, and as a result in many cases the loan-to-value was substantially less than our in-house maximum of 75%. This underwriting serves to protect against the low capitalization rate environment of the past several years.
During the past 12 months, the Company has completed several rounds of stress testing on the commercial real estate portfolio, focusing on items such as capitalization rate, interest rate and vacancy factors. The results of the stress testing showed no significant unidentified risks, unlike our experience in the residential development construction portfolio. However, given the economic climate, we expect any potential issues that may arise in this portfolio will result from individual loans within distinct geographic areas and not represent a systemic weakness. We believe are well positioned to manage the exposure and work with our customers until the economic climate improves.
Non-covered restructured loans
Restructured loans were $98.0 million as of March 31, 2010, down 27% from $134 million as of December 31, 2009. The decrease during the first quarter primarily resulted from reclassifications of loans previously restructured to non-accrual status. The Company will consider a loan for restructuring only if it is current on payments. The Company does not enter into restructurings on loans in non-performing status, and generally requires the customer to pledge additional collateral, maintain a minimum debt service coverage ratio of 1.0, and show substantial external sources of repayment prior to the Company agreeing to restructure.
Additional information
Additional tables can be found at the end of this earnings release covering the following aspects of the Company's non-covered loan portfolio, including: residential development loan trends by region, residential development loan stratification by size and by region, non-performing asset detail by type and by region, loans past due 30-89 days by type and by region, loans past due 30-89 days trends, and restructured loans by type and by region.
Asset quality Covered loan portfolio
Covered non-performing assets were $43.7 million, or 0.42% of total assets, as of March 31, 2010. Of this amount, $34.7 million represented non-accrual loans, and $9.0 million was OREO. These covered non-performing assets were written-down to their estimated fair value on their acquisition date, incorporating our estimate of future expected cash flows until the ultimate resolution of these credits. The estimated credit losses embedded in these acquired non-performing loan portfolios were based on managements and third-party consultants credit reviews of the portfolios performed during the due diligence process related to the Evergreen and Rainier transactions. To the extent actual or projected cash flows are less than originally estimated, additional provisions for loan losses on the covered loan portfolio will be recognized; however, these provisions would be mostly offset by a corresponding increase in the FDIC indemnification (loss sharing) asset.
Umpqua Holdings Corporation Announces First Quarter 2010 Results
April 22, 2010
Page 5 of 23
Net interest margin
The Company reported a tax equivalent net interest margin of 4.04% for the first quarter of 2010, compared to 4.06% for the fourth quarter of 2009, and 4.07% for the first quarter of 2009. The decrease in net interest margin resulted primarily from interest reversals of new non-accrual loans, a decline in non-covered loans outstanding, and the impact of holding much higher levels of interest bearing cash, partially offset by the declining costs of interest bearing deposits. Interest reversals on new non-accrual loans during the first quarter of 2010 were $1.1 million, negatively impacting the net interest margin by 5 basis points. Excluding the reversals of interest, the net interest margin would have been 4.09% during the quarter. The Company continues to drive down the cost of interest bearing deposits. As a result of these efforts, the cost of interest b earing deposits was 16 basis points lower than the fourth quarter of 2009 at 1.19%.
Mortgage banking revenue
The Company generated $3.5 million in total mortgage banking revenue during the first quarter of 2010, on closed loan volume of $127 million. As of March 31, 2010, the Company serviced $1.3 billion of mortgage loans for others, and the related mortgage servicing right asset was valued at $13.6 million, or 1.01% of the total serviced portfolio.
Fair value of junior subordinated debentures
The Company recognized a gain from the change in fair value of junior subordinated debentures of $6.1 million during the first quarter of 2010. The Company utilizes a pricing service along with internal models to determine the valuation of this liability. The majority of the fair value difference over par value relates to the $61.8 million of junior subordinated debentures issued in the third quarter of 2007, which carry interest rate spreads of 135 and 275 basis points over the 3 month LIBOR. As of March 31, 2010, the credit risk adjusted interest spread for potential new issuances was forecasted to be significantly higher than the contractual spread. The difference between these spreads creates the gain in fair value of the Companys junior subordinated debentures which results from their carrying amount compared to the estimated amount that would be paid to transfer the liability in an orderly transaction among market participants. The gain recognized in the current quarter results from the increase in the credit risk adjusted spread. The cumulative fair value adjustment will reverse and be recognized as a reduction in non-interest income over the remaining period to maturity of each related instrument. As of March 31, 2010, the total par value of junior subordinated debentures carried at fair value was $134.0 million, and the fair value was $79.6 million.
Non-interest expense
Total non-interest expense for the first quarter of 2010 was $69.9 million, compared to $72.5 million for the fourth quarter of 2009. Included in non-interest expense are several categories which are outside of the operational control of the Company, including FDIC deposit insurance assessments, gain or loss on other real estate owned, and infrequently occurring expenses such as merger related costs and goodwill impairments. Excluding these non-controllable or infrequently occurring items, the remaining non-interest expense items totaled $62.2 million for the first quarter of 2010, compared to $60.2 million for the fourth quarter of 2009. This increase related primarily to increases in variable expenses related to the assumption of Evergreens and Rainiers banking operations, and various other growth initiatives underway.
Total FDIC deposit insurance assessments during the first quarter of 2010 were $3.4 million. The increase over the prior period is a result of the deposit growth in the first quarter, largely resulting from the FDIC-assisted acquisitions of Evergreen and Rainier in the quarter.
Income taxes
The Company recorded an income tax benefit of $2.6 million in the first quarter of 2010, related to the benefit of tax-exempt investments, tax related credits, and other permanent differences.
Umpqua Holdings Corporation Announces First Quarter 2010 Results
April 22, 2010
Page 6 of 23
Balance sheet
Total consolidated assets as of March 31, 2010 were $10.5 billion, compared to $9.4 billion on December 31, 2009 and $8.8 billion a year ago. Total gross loans and leases (covered and non-covered), and deposits, were $6.5 billion and $8.2 billion, respectively, as of March 31, 2010, compared to $6.1 and $6.8 billion, respectively, as of March 31, 2009.
The following table presents the year-to-date 2010 organic growth rates, which excludes the effects of the Evergreen and Rainier FDIC-assisted acquisitions and the related run-off of assumed brokered time deposits which the Bank is not renewing upon maturity:
(dollars in thousands) |
Non-covered
|
Deposits |
Assets |
As reported, 3/31/10 |
$5,831,858 |
$8,207,267 |
$10,511,002 |
Less: 12/31/09 balances |
5,999,267 |
7,440,434 |
9,381,372 |
Total growth year-to-date |
(167,409) |
766,833 |
1,129,630 |
|
|
|
|
Less: Evergreen acquisition (1) |
-- |
272,142 |
355,298 |
Less: Rainier acquisition (1) |
-- |
416,430 |
721,161 |
Add back: run-off of assumed brokered time deposits not renewed |
-- |
35,200 |
35,200 |
Organic growth |
$(167,409) |
$113,416 |
$88,371 |
|
|
|
|
Annualized organic growth rate |
(11.3)% |
6.2% |
3.8% |
(1) Excludes run-off of non-brokered deposits occurring within the first quarter of acquisition. |
Total loans held for investment increased $529 million during the first quarter of 2010. This increase is principally attributable to the $713 million of covered loans assumed through the Evergreen and Rainier acquisitions, partially offset by charge-offs of $40 million and transfers to other real estate owned of $6 million. The remaining decline in loan balances represents loan payments in excess of disbursements.
Total deposits increased $767 million, or 10%, over the fourth quarter of 2010. The deposits acquired from the Evergreen and Rainier acquisitions included $134 million of brokered time deposits as of the acquisition date. The Bank is not renewing these brokered deposits as they mature. Excluding the impact of the deposits assumed and the run-off of brokered time deposits that have matured, total deposits increased $113 million in the first quarter, representing a 6.2% annualized organic growth rate.
Due to unattractive bond market conditions since the second half of 2009, the Company has been holding larger levels of interest bearing cash rather than investing in the bond market. At March 31, 2010, the Company had $895 million of interest bearing cash earning 0.25%, the target Federal Funds Rate. This excess balance sheet liquidity has been increased as investment security alternatives in the current market are unattractive given the historically low interest rate environment. The Company plans to hold this extra interest bearing cash position until the investment alternatives in the market improve from both a return and duration standpoint. Including secured off-balance sheet lines of credit, total available liquidity to the Company was $3.2 billion as of March 31, 2010, representing 30% of total assets and 39% of total deposits.
Capital
As of March 31, 2010, total shareholders equity was $1.6 billion, comprised of $198 million in preferred stock, and common equity available to common shareholders of $1.4 billion. Book value per common share was $15.16, tangible book value per common share was $8.05 and the ratio of tangible common equity to tangible assets was 7.82%.
Umpqua Holdings Corporation Announces First Quarter 2010 Results
April 22, 2010
Page 7 of 23
In February 2010, the Company completed an underwritten public offering raising $303.6 million by issuing 8,625,000 shares of the Companys common stock, including 1,125,000 shares pursuant to the underwriters over-allotment option, at a price of $11.00 per share; and 18,975,000 depository shares, including 2,475,000 depository shares pursuant to the underwriters over-allotment option, also at a price of $11.00 per share. The depository shares represent a 1/100th interest in a share of Umpqua Holdings Corporations preferred stock, Series B, common stock equivalent. The net proceeds to the Company after deducting underwriting discounts and commissions and offering expenses were approximately $288.2 million. The net proceeds from the common stock offering qualify and the net proceeds of the depository shares offering will (when converted into common stock) qualify, as tangible common equity and Tier 1 capital, and were used to redeem the preferred stock issued to the United States Department of the Treasury (U.S. Treasury) under the TARP Capital Purchase Program (CPP), to fund FDIC-assisted acquisition opportunities, and for general corporate purposes.
Preferred stock (Common Stock Equivalent Series B) of $198.3 million as of March 31, 2010 converted into common stock in April 2010, following the Company's annual shareholder meeting at which shareholders of the Company approved, among other items, an increase in authorized total common shares from 100 million to 200 million. Including this conversion, on a pro forma basis, the Company's tangible common equity ratio as of March 31, 2010 would have increased from 7.82% to 9.84%, compared to 8.27% as of December 31, 2009 and 6.36% as of March 31, 2009.
In February 2010, the Company repurchased all of the outstanding Fixed Rate Cumulative Perpetual Preferred Stock, Series A, issued to the U.S. Treasury under the TARP CPP for an aggregate purchase price of $214.2 million. As a result of the repurchase of the Series A preferred stock, the Company incurred a one-time deemed dividend of $9.7 million due to the accelerated amortization of the remaining issuance discount on the preferred stock. In March 2010, the Company repurchased the common stock warrant issued to the U.S. Treasury pursuant to the TARP CPP, for $4.5 million. The redemption of the preferred stock and repurchase of the common stock warrant represents full repayment of all TARP obligations and cancellation of all equity interests in the Company held by the U.S. Treasury.
The Companys estimated total risk-based capital ratio as of March 31, 2010 is 17.68%, and has increased from 17.16% as of December 31, 2009, and has increased from 14.38% as of March 31, 2009. Our total risk-based capital level is well in excess of the regulatory definition of well capitalized of 10.00%. This capital ratio as of March 31, 2010 is an estimate pending completion and filing of the Companys regulatory reports.
There were no repurchases of common stock during the first three months of 2010. The total remaining available common shares authorized for repurchase is approximately 1.5 million as of March 31, 2010.
Non-GAAP Financial Measures
In addition to results presented in accordance with generally accepted accounting principles in the United States of America (GAAP), this press release contains certain non-GAAP financial measures. Umpqua believes that certain non-GAAP financial measures provide investors with information useful in understanding Umpquas financial performance; however, readers of this report are urged to review these non-GAAP financial measures in conjunction with the GAAP results as reported.
Umpqua recognizes gains or losses on our junior subordinated debentures carried at fair value resulting from changes in interest rates and the estimated market credit risk adjusted spread that do not directly correlate with the Companys operating performance. Also, Umpqua incurs significant expenses related to the completion and integration of mergers and acquisitions. Additionally, we may recognize goodwill impairment losses that have no direct effect on the Companys or the Banks cash balances, liquidity, or regulatory capital ratios. Lastly, Umpqua may recognize one-time bargain purchase gains on certain FDIC-assisted acquisitions that are not reflective of Umpquas on-going earnings power. Accordingly, management believes that our operating results are best measured on a comparative basis excluding the impact of gains or losses on junior subordinated debentures measured at fair value, net of tax, merger-related expenses, net of tax, and other charges related to business combinations such as goodwill impairment charges or bargain purchase gains, net of tax. We define operating earnings as earnings available to common shareholders before gains or losses on junior subordinated debentures carried at fair value, net of tax, bargain purchase gains on acquisitions, net of tax, merger related expenses, net of tax, and goodwill impairment, and we calculate operating earnings per diluted share by dividing operating earnings by the same diluted share total used in determining diluted earnings per common share.
Umpqua Holdings Corporation Announces First Quarter 2010 Results
April 22, 2010
Page 8 of 23
The following table provides the reconciliation of loss available to common shareholders (GAAP) to operating loss (non-GAAP), and loss per diluted common share (GAAP) to operating loss per diluted share (non-GAAP) for the periods presented:
|
Quarter ended: |
Sequential Quarter |
Year over Year | ||
(Dollars in thousands, except per share data) |
3/31/10 |
12/31/09 |
3/31/09 |
% Change |
% Change |
Loss available to common shareholders |
$(2,482) |
$(29,924) |
$(18,448) |
(92)% |
(87)% |
Adjustments: |
|
|
|
|
|
Net (gain) loss on junior subordinated debentures carried at fair value, net of tax |
(3,653) |
2,215 |
(348) |
(265)% |
950% |
Bargain purchase gain on acquisitions, net of tax |
(5,074) |
-- |
-- |
nm |
nm |
Merger related expenses, net of tax |
1,144 |
-- |
120 |
nm |
853% |
Operating loss |
$(10,065) |
$(27,709) |
$(18,676) |
(64)% |
(46)% |
|
|
|
|
|
|
Loss per diluted share: |
|
|
|
|
|
Net loss available to common shareholders |
$(0.03) |
$(0.34) |
$(0.31) |
(91)% |
(90)% |
Operating loss |
$(0.11) |
$(0.32) |
$(0.31) |
(66)% |
(65)% |
Management believes "tangible common equity" and the "tangible common equity ratio" are meaningful measures of capital adequacy. Tangible common equity is calculated as total shareholders' equity less preferred stock and less goodwill and other intangible assets, net (excluding MSRs). In addition, tangible assets are total assets less goodwill and other intangible assets, net (excluding MSRs). The tangible common equity ratio is calculated as tangible common shareholders equity divided by tangible assets.
The following table provides reconciliations of ending shareholders equity (GAAP) to ending tangible common equity (non-GAAP), and ending assets (GAAP) to ending tangible assets (non-GAAP).
Dollars in thousands, except per share data |
3/31/10 |
12/31/09 |
3/31/09 |
|
|
|
|
Total shareholders' equity |
$1,646,858 |
$1,566,517 |
$1,469,844 |
Subtract: |
|
|
|
Preferred stock |
198,289 |
204,335 |
202,692 |
Goodwill and other intangible assets, net |
679,255 |
639,634 |
756,468 |
Tangible common shareholders' equity |
$769,314 |
$722,548 |
$510,684 |
|
|
|
|
Total assets |
$10,511,002 |
$9,381,372 |
$8,782,533 |
Subtract: |
|
|
|
Goodwill and other intangible assets, net |
679,255 |
639,634 |
756,468 |
Tangible assets |
$9,831,747 |
$8,741,738 |
$8,026,065 |
|
|
|
|
Common shares outstanding at period end |
95,527,427 |
86,785,588 |
60,198,057 |
|
|
|
|
Tangible common equity ratio |
7.82% |
8.27% |
6.36% |
Tangible book value per common share |
$8.05 |
$8.33 |
$8.48 |
Umpqua Holdings Corporation Announces First Quarter 2010 Results
April 22, 2010
Page 9 of 23
About Umpqua Holdings Corporation
Umpqua Holdings Corporation (NASDAQ: UMPQ) is the parent company of Umpqua Bank, an Oregon-based community bank recognized for its entrepreneurial approach, innovative use of technology, and distinctive banking solutions. Umpqua Bank has 176 locations between San Francisco, Calif., and Seattle, Wash., along the Oregon and Northern California Coast and in Central Oregon. Umpqua Holdings also owns a retail brokerage subsidiary, Umpqua Investments, Inc., which has locations in Umpqua Bank stores and in dedicated offices in Oregon. Umpqua Banks Private Bank Division serves high net worth individuals and non-profits providing customized financial solutions and offerings. Umpqua Holdings Corporation is headquartered in Portland, Ore. For more information, visit www.umpquaholdingscorp.com.
&nb sp;
Umpqua Holdings Corporation will conduct a quarterly earnings conference call Thursday, April 22, 2010, at 10:00 a.m. PDT (1:00 p.m. EDT) during which the Company will discuss first quarter results and provide an update on recent activities. There will be a question-and-answer session following the presentation. Shareholders, analysts and other interested parties are invited to join the call by dialing 800-784-9386 a few minutes before 10:00 a.m. The conference ID is 66260724. Information to be discussed in the teleconference will be available on the Companys Website prior to the call at www.umpquaholdingscorp.com. A rebroadcast can be found approximately two hours after the conference call by dialing 800-642-1687 with the conference ID noted above, or by visiting the Companys Website.
Forward-Looking Statements
This press release includes forward-looking statements within the meaning of the Safe-Harbor provisions of the Private Securities Litigation Reform Act of 1995, which management believes are a benefit to shareholders. These statements are necessarily subject to risk and uncertainty and actual results could differ materially due to various risk factors, including those set forth from time to time in our filings with the SEC. You should not place undue reliance on forward-looking statements and we undertake no obligation to update any such statements. In this press release we make forward-looking statements about our success in resolving remaining credit issues, the mitigating effect of FDIC loss sharing agreements, our expectation that any weakness in our CRE portfolio will arise from local market weakness and not a systemic weakness, conversion of the Ev ergreen and Rainier operating systems to our platform in Q2 2010, valuations of junior subordinated debentures and our plans to hold a large interest bearing cash position. Specific risks that could cause results to differ from the forward-looking statements are set forth in our filings with the SEC and include, without limitation, our inability to effectively manage problem credits, certain loan assets become ineligible for loss sharing, unanticipated deterioration in the commercial real estate loan portfolio, delays or problems in converting the operating systems of acquired banks and continued negative pressure on interest income associated with our large cash position.
Umpqua Holdings Corporation Announces First Quarter 2010 Results
April 22, 2010
Page 10 of 23
Umpqua Holdings Corporation | |||||
Consolidated Statements of Operations | |||||
(Unaudited) | |||||
|
Quarter Ended: | ||||
|
|
|
|
Sequential |
Year over |
|
|
|
|
Quarter |
Year |
Dollars in thousands, except per share data |
Mar 31, 2010 |
Dec 31, 2009 |
Mar 31, 2009 |
% Change |
% Change |
Interest income |
|
|
|
|
|
Loans and leases |
$90,708 |
$88,608 |
$88,173 |
2% |
3% |
Interest and dividends on investments: |
|
|
|
|
|
Taxable |
16,075 |
16,570 |
14,371 |
(3)% |
12% |
Exempt from federal income tax |
2,187 |
2,039 |
1,800 |
7% |
22% |
Temporary investments & interest bearing cash |
399 |
268 |
32 |
49% |
1147% |
Total interest income |
109,369 |
107,485 |
104,376 |
2% |
5% |
Interest expense |
|
|
|
|
|
Deposits |
18,789 |
20,190 |
24,463 |
(7)% |
(23)% |
Repurchase agreements and |
|
|
|
|
|
fed funds purchased |
123 |
153 |
184 |
(20)% |
(33)% |
Junior subordinated debentures |
1,885 |
1,957 |
2,560 |
(4)% |
(26)% |
Term debt |
1,520 |
641 |
1,756 |
137% |
(13)% |
Total interest expense |
22,317 |
22,941 |
28,963 |
(3)% |
(23)% |
Net interest income |
87,052 |
84,544 |
75,413 |
3% |
15% |
Provision for loan and lease losses |
42,106 |
68,593 |
59,092 |
(39)% |
(29)% |
Non-interest income |
|
|
|
|
|
Service charges |
8,365 |
8,392 |
7,701 |
0% |
9% |
Brokerage fees |
2,639 |
2,480 |
1,379 |
6% |
91% |
Mortgage banking revenue, net |
3,478 |
4,071 |
4,070 |
(15)% |
(15)% |
Net (loss) gain on investment securities |
(288) |
(600) |
35 |
(52)% |
(923)% |
Gain (loss) on junior subordinated debentures |
|
|
|
|
|
carried at fair value |
6,088 |
(3,691) |
580 |
(265)% |
950% |
Bargain purchase gain on acquisitions |
8,456 |
-- |
-- |
nm |
nm |
Change in FDIC indemnification asset |
610 |
-- |
-- |
nm |
nm |
Other income |
2,718 |
2,372 |
1,752 |
15% |
55% |
Total non-interest income |
32,066 |
13,024 |
15,517 |
146% |
107% |
Non-interest expense |
|
|
|
|
|
Salaries and benefits |
36,240 |
32,153 |
31,073 |
13% |
17% |
Occupancy and equipment |
10,676 |
10,407 |
9,621 |
3% |
11% |
Intangible amortization |
1,308 |
2,122 |
1,362 |
(38)% |
(4)% |
FDIC assessments |
3,444 |
3,180 |
2,625 |
8% |
31% |
Net loss on other real estate owned |
2,311 |
9,094 |
2,299 |
(75)% |
1% |
Merger related expenses |
1,906 |
-- |
200 |
nm |
853% |
Other |
13,986 |
15,544 |
12,771 |
(10)% |
10% |
Total non-interest expense |
69,871 |
72,500 |
59,951 |
(4)% |
17% |
(Loss) income before (benefit from) provision for income taxes |
7,141 |
(43,525) |
(28,113) |
(116)% |
(125)% |
(Benefit from) provision for income taxes |
(2,584) |
(16,843) |
(12,864) |
(85)% |
(80)% |
Net income (loss) |
9,725 |
(26,682) |
(15,249) |
(136)% |
(164)% |
|
|
|
|
|
|
Dividends and undistributed earnings |
|
|
|
|
|
allocated to participating securities |
15 |
8 |
8 |
88% |
88% |
Preferred stock dividend |
12,192 |
3,234 |
3,191 |
277% |
282% |
Net (loss) earnings available to common shareholders |
$(2,482) |
$(29,924) |
$(18,448) |
(92)% |
(87)% |
|
|
|
|
|
|
Weighted average shares outstanding |
92,176,174 |
86,782,397 |
60,175,868 |
6% |
53% |
Weighted average diluted shares outstanding |
92,176,174 |
86,782,397 |
60,175,868 |
6% |
53% |
(Loss) earnings per common share Basic |
$(0.03) |
$(0.34) |
$(0.31) |
(91)% |
(90)% |
(Loss) earnings per common share Diluted |
$(0.03) |
$(0.34) |
$(0.31) |
(91)% |
(90)% |
nm = not meaningful
|
Umpqua Holdings Corporation Announces First Quarter 2010 Results
April 22, 2010
Page 11 of 23
Umpqua Holdings Corporation | |||||
Consolidated Balance Sheets | |||||
(Unaudited) | |||||
|
|
|
|
Sequential |
Year over |
|
|
|
|
Quarter |
Year |
Dollars in thousands, except per share data |
Mar 31, 2010 |
Dec 31, 2009 |
Mar 31, 2009 |
% Change |
% Change |
Assets: |
|
|
|
|
|
Cash and due from banks, non-interest bearing |
$125.909 |
$113,353 |
$119,817 |
11% |
5% |
Cash and due from banks, interest bearing |
895,905 |
491,462 |
16,218 |
82% |
nm |
Temporary investments |
600 |
598 |
70,565 |
0% |
(99)% |
Investment securities: |
|
|
|
|
|
Trading |
2,047 |
2,273 |
1,485 |
(10)% |
38% |
Available for sale |
1,782,744 |
1,795,616 |
1,435,293 |
(1)% |
24% |
Held to maturity |
6,062 |
6,061 |
13,783 |
0% |
(56)% |
Loans held for sale |
34,068 |
33,715 |
34,013 |
1% |
0% |
Non-covered loans and leases |
5,831,858 |
5,999,267 |
6,082,480 |
(3)% |
(4)% |
Less: Allowance for loan and lease losses |
(110,784) |
(107,657) |
(95,086) |
3% |
17% |
Loans and leases, net |
5,721,074 |
5,891,610 |
5,987,394 |
(3)% |
(4)% |
Covered loans and leases |
696,782 |
-- |
-- |
nm |
nm |
Restricted equity securities |
31,996 |
15,211 |
16,491 |
110% |
94% |
Premises and equipment, net |
101,686 |
103,266 |
103,712 |
(2)% |
(2)% |
Mortgage servicing rights, at fair value |
13,628 |
12,625 |
8,732 |
8% |
56% |
Goodwill and other intangibles, net |
679,255 |
639,634 |
756,468 |
6% |
(10)% |
Non-covered other real estate owned |
18,872 |
24,566 |
32,766 |
(23)% |
(42)% |
Covered other real estate owned |
8,995 |
-- |
-- |
nm |
nm |
FDIC indemnification asset |
147,206 |
-- |
-- |
nm |
nm |
Other assets |
244,173 |
251,382 |
185,796 |
(3)% |
31% |
Total assets |
$10,511,002 |
$9,381,372 |
$8,782,533 |
12% |
20% |
|
|
|
|
|
|
Liabilities: |
|
|
|
|
|
Deposits |
$8,207,222 |
$7,440,434 |
$6,792,534 |
10% |
21% |
Securities sold under agreements to repurchase |
42,043 |
45,180 |
50,274 |
(7)% |
(16)% |
Term debt |
363,828 |
76,274 |
206,458 |
377% |
76% |
Junior subordinated debentures, at fair value |
79,563 |
85,666 |
91,682 |
(7)% |
(13)% |
Junior subordinated debentures, at amortized cost |
103,108 |
103,188 |
103,430 |
0% |
0% |
Other liabilities |
68,380 |
64,113 |
68,311 |
7% |
0% |
Total liabilities |
8,864,144 |
7,814,855 |
7,312,689 |
13% |
21% |
|
|
|
|
|
|
Shareholders' equity: |
|
|
|
|
|
Preferred stock |
198,289 |
204,335 |
202,692 |
(3)% |
(2)% |
Common stock |
1,339,627 |
1,253,288 |
1,006,199 |
7% |
33% |
Retained earnings |
75,344 |
83,939 |
243,447 |
(10)% |
(69)% |
Accumulated other comprehensive income |
33,598 |
24,955 |
17,506 |
35% |
92% |
Total shareholders' equity |
1,646,858 |
1,566,517 |
1,469,844 |
5% |
12% |
Total liabilities and shareholders' equity |
$10,511,002 |
$9,381,372 |
$8,782,533 |
12% |
20% |
|
|
|
|
|
|
Common shares outstanding at period end |
95,527,427 |
86,785,588 |
60,198,057 |
10% |
59% |
Book value per common share |
$15.16 |
$15.70 |
$21.05 |
(3)% |
(28)% |
Tangible book value per common share |
$8.05 |
$8.33 |
$8.48 |
(3)% |
(5)% |
Tangible equity - common |
$769,314 |
$722,548 |
$510,684 |
6% |
51% |
Tangible common equity to tangible assets |
7.82% |
8.27% |
6.36% |
|
|
nm = not meaningful |
|
|
|
|
|
Umpqua Holdings Corporation Announces First Quarter 2010 Results
April 22, 2010
Page 12 of 23
Umpqua Holdings Corporation | |||||||||||
Non-covered Loan & Lease Portfolio | |||||||||||
(Unaudited) | |||||||||||
|
|
|
|
|
|
|
Sequential |
Year over | |||
Dollars in thousands |
Mar 31, 2010 |
|
Dec 31, 2009 |
|
Mar 31, 2009 |
|
Quarter |
Year | |||
|
Amount |
Mix |
|
Amount |
Mix |
|
Amount |
Mix |
|
% Change |
% Change |
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate |
$3,519,965 |
60% |
|
$3,523,104 |
59% |
|
$3,268,762 |
54% |
|
0% |
8% |
Residential real estate |
451,628 |
8% |
|
443,731 |
7% |
|
431,592 |
7% |
|
2% |
5% |
Construction |
554,688 |
10% |
|
618,974 |
10% |
|
855,697 |
14% |
|
(10)% |
(35)% |
Total real estate |
4,526,281 |
78% |
|
4,585,809 |
76% |
|
4,556,051 |
75% |
|
(1)% |
(1)% |
Commercial |
1,252,418 |
21% |
|
1,354,469 |
23% |
|
1,458,792 |
24% |
|
(8)% |
(14)% |
Leases |
32,740 |
1% |
|
34,528 |
1% |
|
39,953 |
1% |
|
(5)% |
(18)% |
Installment and other |
31,451 |
1% |
|
35,863 |
1% |
|
38,360 |
1% |
|
(12)% |
(18)% |
Deferred loan fees, net |
(11,032) |
0% |
|
(11,402) |
0% |
|
(10,676) |
0% |
|
(3)% |
3% |
Total loans and leases |
$5,831,858 |
100% |
|
$5,999,267 |
100% |
|
$6,082,480 |
100% |
|
(3)% |
(4)% |
|
|
|
|
|
|
|
|
|
|
|
|
Umpqua Holdings Corporation | |||||||||||
Covered Loan & Lease Portfolio | |||||||||||
(Unaudited) | |||||||||||
|
|
|
|
|
|
|
|
| |||
Dollars in thousands |
Mar 31, 2010 |
|
|
|
|
|
|
| |||
|
Amount |
Mix |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate |
$469,385 |
68% |
|
|
|
|
|
|
|
|
|
Residential real estate |
118,033 |
17% |
|
|
|
|
|
|
|
|
|
Construction |
51,251 |
7% |
|
|
|
|
|
|
|
|
|
Total real estate |
638,669 |
92% |
|
|
|
|
|
|
|
|
|
Commercial |
43,854 |
6% |
|
|
|
|
|
|
|
|
|
Leases |
-- |
0% |
|
|
|
|
|
|
|
|
|
Installment and other |
14,316 |
2% |
|
|
|
|
|
|
|
|
|
Deferred loan fees, net |
(57) |
0% |
|
|
|
|
|
|
|
|
|
Total loans and leases |
$696,782 |
100% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Covered loan & lease portfolio balances represent the loan portfolios acquired through the assumption of EvergreenBank on January 22, 2010, and Rainier Pacific Bank on February 26, 2010, from the FDIC through whole bank purchase and assumption agreements with loss sharing.
Umpqua Holdings Corporation Announces First Quarter 2010 Results
April 22, 2010
Page 13 of 23
Umpqua Holdings Corporation | |||||||||||||||
Deposits by Type/Core Deposits | |||||||||||||||
(Unaudited) | |||||||||||||||
|
|
|
|
|
|
|
Sequential |
Year over | |||||||
Dollars in thousands |
Mar 31, 2010 |
|
Dec 31, 2009 |
|
Mar 31, 2009 |
|
Quarter |
Year | |||||||
|
Amount |
Mix |
|
Amount |
Mix |
|
Amount |
Mix |
|
% Change |
% Change | ||||
Demand, non-interest bearing |
$1,472,408 |
18% |
|
$1,398,332 |
19% |
|
$1,292,512 |
19% |
|
5% |
14% | ||||
Demand, interest bearing |
3,690,025 |
45% |
|
3,388,696 |
46% |
|
2,902,691 |
43% |
|
9% |
27% | ||||
Savings |
342,883 |
4% |
|
297,293 |
4% |
|
295,895 |
4% |
|
15% |
16% | ||||
Time |
2,701,906 |
33% |
|
2,356,113 |
32% |
|
2,301,436 |
34% |
|
15% |
17% | ||||
Total deposits |
$8,207,222 |
100% |
|
$7,440,434 |
100% |
|
$6,792,534 |
100% |
|
10% |
21% | ||||
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total core deposits-ending (1) |
$6,405,105 |
78% |
|
$5,837,024 |
78% |
|
$5,490,094 |
81% |
|
10% |
17% | ||||
|
|
|
|
|
|
|
|
|
|
|
| ||||
Number of open accounts: |
|
|
|
|
|
|
|
|
|
|
| ||||
Demand, non-interest bearing |
177,152 |
|
|
157,199 |
|
|
150,191 |
|
|
13% |
18% | ||||
Demand, interest bearing |
70,082 |
|
|
62,883 |
|
|
61,133 |
|
|
11% |
15% | ||||
Savings |
95,367 |
|
|
74,884 |
|
|
70,966 |
|
|
27% |
34% | ||||
Time |
40,269 |
|
|
34,249 |
|
|
33,654 |
|
|
18% |
20% | ||||
Total |
382,870 |
|
|
329,215 |
|
|
315,944 |
|
|
16% |
21% | ||||
|
|
|
|
|
|
|
|
|
|
|
| ||||
Average balance per account: |
|
|
|
|
|
|
|
|
|
|
| ||||
Demand, non-interest bearing |
$8.3 |
|
|
$8.9 |
|
|
$8.6 |
|
|
|
| ||||
Demand, interest bearing |
52.7 |
|
|
53.9 |
|
|
47.5 |
|
|
|
| ||||
Savings |
3.6 |
|
|
4.0 |
|
|
4.2 |
|
|
|
| ||||
Time |
67.1 |
|
|
68.8 |
|
|
68.4 |
|
|
|
| ||||
Total |
21.4 |
|
|
22.6 |
|
|
21.5 |
|
|
|
| ||||
(1) Core deposits are defined as total deposits less time deposits greater than $100,000. | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||
Umpqua Holdings Corporation Announces First Quarter 2010 Results
April 22, 2010
Page 14 of 23
Umpqua Holdings Corporation | |||||
Credit Quality Non-performing Assets | |||||
(Unaudited) | |||||
|
|
|
|
Sequential |
Year over |
|
|
Quarter Ended |
|
Quarter |
Year |
Dollars in thousands |
Mar 31, 2010 |
Dec 31, 2009 |
Mar 31, 2009 |
% Change |
% Change |
|
|
|
|
|
|
|
|
|
|
|
|
Non-covered non-performing assets: |
|
|
|
|
|
Non-covered loans on non-accrual status |
$183,510 |
$193,118 |
$112,949 |
(5)% |
62% |
Non-covered loans past due 90+ days & accruing |
7,200 |
5,909 |
13,780 |
22% |
(48)% |
Total non-performing loans |
190,710 |
199,027 |
126,729 |
(4)% |
50% |
Non-covered other real estate owned |
18,872 |
24,566 |
32,766 |
(23)% |
(42)% |
Total non-covered non-performing assets |
$209,582 |
$223,593 |
$159,495 |
(6)% |
31% |
|
|
|
|
|
|
Performing restructured loans |
$97,971 |
$134,439 |
$43,390 |
(27)% |
126% |
|
|
|
|
|
|
Past due 30-89 days |
$53,947 |
$41,458 |
$89,699 |
30% |
(40)% |
Past due 30-89 days to total loans and leases |
0.93% |
0.69% |
1.47% |
|
|
|
|
|
|
|
|
Non-covered non-performing loans to |
|
|
|
|
|
non-covered loans and leases |
3.27% |
3.32% |
2.08% |
|
|
Non-covered non-performing assets to total assets |
1.99% |
2.38% |
1.82% |
|
|
|
|
|
|
|
|
Covered non-performing assets: |
|
|
|
|
|
Covered loans on non-accrual status |
$34,676 |
$-- |
$-- |
nm |
nm |
Total non-performing loans |
34,676 |
-- |
-- |
nm |
nm |
Covered other real estate owned |
8,995 |
-- |
-- |
nm |
nm |
Total covered non-performing assets |
$43,671 |
$-- |
$-- |
nm |
nm |
|
|
|
|
|
|
Covered non-performing loans to |
|
|
|
|
|
covered loans and leases |
4.98% |
-- |
-- |
|
|
Covered non-performing assets to total assets |
0.42% |
-- |
-- |
|
|
|
|
|
|
|
|
Total non-performing assets: |
|
|
|
|
|
Loans on non-accrual status |
$218,186 |
$193,118 |
$112,949 |
13% |
93% |
Loans past due 90+ days & accruing |
7,200 |
5,909 |
13,780 |
22% |
(48)% |
Total non-performing loans |
225,386 |
199,027 |
126,729 |
13% |
78% |
Other real estate owned |
27,867 |
24,566 |
32,766 |
13% |
(15)% |
Total non-performing assets |
$253,253 |
$223,593 |
$159,495 |
13% |
59% |
|
|
|
|
|
|
Non-performing loans to loans and leases |
3.45% |
3.32% |
2.08% |
|
|
Non-performing assets to total assets |
2.41% |
2.38% |
1.82% |
|
|
Umpqua Holdings Corporation Announces First Quarter 2010 Results
April 22, 2010
Page 15 of 23
Umpqua Holdings Corporation | |||||
Credit Quality Allowance for Credit Losses | |||||
(Unaudited) | |||||
|
|
|
|
Sequential |
Year over |
|
|
Quarter Ended |
|
Quarter |
Year |
Dollars in thousands |
Mar 31, 2010 |
Dec 31, 2009 |
Mar 31, 2009 |
% Change |
% Change |
Allowance for credit losses: |
|
|
|
|
|
Balance beginning of period |
$107,657 |
$103,136 |
$95,865 |
|
|
Provision for loan and lease losses |
42,106 |
68,593 |
59,092 |
(39)% |
(29)% |
|
|
|
|
|
|
Charge-offs |
(39,759) |
(65,502) |
(60,414) |
(39)% |
(34)% |
Recoveries |
780 |
1,430 |
543 |
(45)% |
44% |
Net charge-offs |
(38,979) |
(64,072) |
(59,871) |
(39)% |
(35)% |
|
|
|
|
|
|
Total allowance for loan and lease losses |
110,784 |
107,657 |
95,086 |
3% |
17% |
|
|
|
|
|
|
Reserve for unfunded commitments |
765 |
731 |
935 |
|
|
Total allowance for credit losses |
$111,549 |
$108,388 |
$96,021 |
3% |
16% |
|
|
|
|
|
|
Net charge-offs to average non-covered |
|
|
|
|
|
loans and leases (annualized) |
2.66% |
4.19% |
3.96% |
|
|
Recoveries to gross charge-offs |
1.96% |
2.18% |
0.90% |
|
|
Allowance for credit losses to non-covered |
|
|
|
|
|
loans and leases |
1.91% |
1.81% |
1.58% |
|
|
Umpqua Holdings Corporation Announces First Quarter 2010 Results
April 22, 2010
Page 16 of 23
Umpqua Holdings Corporation | |||||
Selected Ratios | |||||
(Unaudited) | |||||
|
|
Sequential |
Year over | ||
|
Quarter Ended: |
Quarter |
Year | ||
|
Mar 31, 2010 |
Dec 31, 2009 |
Mar 31, 2009 |
Change |
Change |
Net interest spread: |
|
|
|
|
|
Yield on non-covered loans and leases |
5.75% |
5.75% |
5.79% |
(0.00) |
(0.04) |
Yield on covered loans and leases |
6.97% |
N/A |
N/A |
nm |
nm |
Yield on taxable investments |
3.99% |
4.03% |
4.83% |
(0.04) |
(0.84) |
Yield on tax-exempt investments (1) |
5.84% |
5.81% |
5.79% |
0.03 |
0.05 |
Yield on temporary investments & interest bearing cash |
0.24% |
0.28% |
0.25% |
(0.04) |
(0.01) |
Total yield on earning assets (1) |
5.07% |
5.15% |
5.61% |
(0.08) |
(0.54) |
|
|
|
|
|
|
Cost of interest bearing deposits |
1.19% |
1.35% |
1.82% |
(0.16) |
(0.63) |
Cost of securities sold under agreements |
|
|
|
|
|
to repurchase and fed funds purchased |
1.02% |
1.09% |
1.26% |
(0.07) |
(0.24) |
Cost of term debt |
3.41% |
3.33% |
3.45% |
0.08 |
(0.04) |
Cost of junior subordinated debentures |
4.05% |
4.19% |
5.30% |
(0.14) |
(1.25) |
Total cost of interest bearing liabilities |
1.33% |
1.45% |
1.99% |
(0.12) |
(0.66) |
|
|
|
|
|
|
Net interest spread (1) |
3.74% |
3.70% |
3.62% |
0.04 |
0.12 |
Net interest margin Consolidated (1) |
4.04% |
4.06% |
4.07% |
(0.02) |
(0.03) |
|
|
|
|
|
|
Net interest margin Bank (1) |
4.12% |
4.15% |
4.20% |
(0.03) |
(0.08) |
|
|
|
|
|
|
As reported (GAAP): |
|
|
|
|
|
Return on average assets |
(0.10)% |
(1.27)% |
(0.86)% |
1.17 |
0.76 |
Return on average tangible assets |
(0.11)% |
(1.37)% |
(0.94)% |
1.26 |
0.83 |
Return on average common equity |
(0.71)% |
(8.41)% |
(5.80)% |
7.70 |
5.09 |
Return on average tangible common equity |
(1.30)% |
(15.39)% |
(14.07)% |
14.09 |
12.77 |
Efficiency ratio Consolidated |
58.15% |
73.57% |
65.32% |
(15.42) |
(7.17) |
Efficiency ratio Bank |
58.53% |
67.99% |
62.41% |
(9.46) |
(3.88) |
|
|
|
|
|
|
Operating basis (non-GAAP): (2) |
|
|
|
|
|
Return on average assets |
(0.41)% |
(1.18)% |
(0.87)% |
0.77 |
0.46 |
Return on average tangible assets |
(0.44)% |
(1.26)% |
(0.95)% |
0.82 |
0.51 |
Return on average common equity |
(2.86)% |
(7.78)% |
(5.88)% |
4.92 |
3.02 |
Return on average tangible common equity |
(5.27)% |
(14.25)% |
(14.24)% |
8.98 |
8.97 |
Efficiency ratio Consolidated |
64.35% |
70.91% |
65.51% |
(6.56) |
(1.16) |
Efficiency ratio Bank |
61.44% |
67.99% |
62.20% |
(6.55) |
(0.76) |
|
|
|
|
|
|
(1) Tax exempt interest has been adjusted to a taxable equivalent basis using a 35% tax rate. | |||||
(2) Operating earnings is calculated as earnings available to common shareholders excluding gain (loss) on junior subordinated
| |||||
|
Umpqua Holdings Corporation Announces First Quarter 2010 Results
April 22, 2010
Page 17 of 23
Umpqua Holdings Corporation | |||||
Average Balances | |||||
(Unaudited) | |||||
|
|
Sequential |
Year over | ||
|
Quarter Ended: |
Quarter |
Year | ||
Dollars in thousands |
Mar 31, 2010 |
Dec 31, 2009 |
Mar 31, 2009 |
% Change |
% Change |
|
|
|
|
|
|
Temporary investments & interest bearing cash |
$678,930 |
$384,492 |
$52,063 |
77% |
1204% |
Investment securities, taxable |
1,610,407 |
1,645,629 |
1,188,859 |
(2)% |
35% |
Investment securities, tax-exempt |
221,405 |
207,984 |
183,581 |
6% |
21% |
Loans held for sale |
24,141 |
43,662 |
44,226 |
(45)% |
(45)% |
Non-covered loans and leases |
5,934,805 |
6,072,606 |
6,135,710 |
(2)% |
(3)% |
Covered loans and leases |
363,967 |
N/A |
N/A |
N/A |
N/A |
Total earning assets |
8,833,655 |
8,354,373 |
7,604,439 |
6% |
16% |
Goodwill & other intangible assets, net |
653,336 |
640,995 |
757,055 |
2% |
(14)% |
Total assets |
9,977,816 |
9,332,737 |
8,713,845 |
7% |
15% |
|
|
|
|
|
|
Non-interest bearing demand deposits |
1,448,668 |
1,392,988 |
1,251,971 |
4% |
16% |
Interest bearing deposits |
6,389,091 |
5,943,110 |
5,450,614 |
8% |
17% |
Total deposits |
7,837,759 |
7,336,098 |
6,702,585 |
7% |
17% |
Interest bearing liabilities |
6,807,375 |
6,260,408 |
5,911,972 |
9% |
15% |
|
|
|
|
|
|
Shareholders equity - common |
1,427,352 |
1,412,324 |
1,288,744 |
1% |
11% |
Tangible common equity (1) |
774,016 |
771,329 |
531,689 |
0% |
46% |
(1) Average tangible common equity is a non-GAAP financial measure. Average tangible common equity is calculated as average
common shareholders equity less average goodwill and other intangible assets, net (excluding MSRs).
Umpqua Holdings Corporation Announces First Quarter 2010 Results
April 22, 2010
Page 18 of 23
Umpqua Holdings Corporation | |||||
Mortgage Banking Activity | |||||
(unaudited) | |||||
|
|
Sequential |
Year over | ||
|
Quarter Ended: |
Quarter |
Year | ||
Dollars in thousands |
Mar 31, 2010 |
Dec 31, 2009 |
Mar 31, 2009 |
% Change |
% Change |
|
|
|
|
|
|
Mortgage Servicing Rights (MSR): |
|
|
|
|
|
Mortgage loans serviced for others |
$1,345,550 |
$1,277,832 |
$1,038,715 |
5% |
30% |
MSR Asset, at fair value |
$13,628 |
$12,625 |
$8,732 |
8% |
56% |
|
|
|
|
|
|
MSR as % of serviced portfolio |
1.01% |
0.99% |
0.84% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage Banking Revenue: |
|
|
|
|
|
Origination and sale |
$2,704 |
$3,804 |
$4,857 |
(29)% |
(44)% |
Servicing |
903 |
805 |
654 |
12% |
38% |
Change in fair value of MSR asset |
(129) |
(538) |
(1,441) |
(76)% |
(91)% |
Total Mortgage Banking Revenue |
$3,478 |
$4,071 |
$4,070 |
(15)% |
(15)% |
|
|
|
|
|
|
|
|
|
|
|
|
Closed loan volume |
$127,314 |
$172,303 |
$191,713 |
(26)% |
(34)% |
|
|
|
|
|
|
nm = not meaningful
Umpqua Holdings Corporation Announces First Quarter 2010 Results
April 22, 2010
Page 19 of 23
Additional tables
The following tables present additional detail covering the following aspects of the Company's non-covered loan portfolio, and other significant transactions occurring during the quarter.
· Table 1 Non-covered residential development loan trends by region
· Table 2 Non-covered residential development loan stratification by size and by region
· Table 3 Non-covered, non-performing asset detail by type and by region
· Table 4 Non-covered loans past due 30-89 days by type and by region
· Table 5 Non-covered loans past due 30-89 days trends
· Table 6 Non-covered restructured loans by type and by region
· Table 7 Fair values of assets acquired and liabilities assumed through FDIC-assisted transactions
Umpqua Holdings Corporation Announces First Quarter 2010 Results
April 22, 2010
Page 20 of 23
The following is a geographic distribution of the non-covered residential development portfolio as of March 31, 2010, December 31, 2009 and March 31, 2009:
Table 1- Non-covered residential development loan trends by region | ||||||
(Dollars in thousands) |
|
Non- |
| |||
|
|
|
|
% change |
performing |
Performing |
|
Balance |
Balance |
Balance |
from |
loans |
Loans |
|
3/31/09 |
12/31/09 |
3/31/10 |
3/31/09 |
3/31/10 |
3/31/10 |
Northwest Oregon |
$120,460 |
$88,762 |
$81,409 |
(32)% |
$1,389 |
$80,020 |
Central Oregon |
20,951 |
9,059 |
4,962 |
(76)% |
936 |
4,026 |
Southern Oregon |
29,738 |
19,006 |
17,149 |
(42)% |
4,145 |
13,004 |
Washington |
26,514 |
8,616 |
8,462 |
(68)% |
-- |
8,462 |
Greater Sacramento |
92,744 |
74,993 |
67,676 |
(27)% |
19,011 |
48,665 |
Northern California |
38,266 |
25,373 |
22,140 |
(42)% |
7,829 |
14,311 |
Total |
$328,673 |
$225,809 |
$201,798 |
(39)% |
$33,310 |
$168,488 |
% of total loan portfolio |
5% |
4% |
3% |
|
|
3% |
|
|
|
|
|
|
|
Quarter change $ |
$(55,486) |
$(32,674) |
$(24,011) |
|
|
|
Quarter change % |
(14)% |
(13)% |
(11)% |
|
|
|
The following is a stratification by size and region of the remaining non-covered performing residential development loans as of March 31, 2010:
Table 2 Non-covered residential development loan stratification by size and by region | ||||||||
(Dollars in thousands) |
|
|
|
| ||||
|
|
$250k |
$1 million |
$3 million |
$5 million |
|
| |
|
$250k |
to |
to |
to |
to |
$10 million |
| |
|
and less |
$1 million |
$3 million |
$5 million |
$10 million |
and greater |
Total | |
Northwest Oregon |
$4,717 |
$10,150 |
$19,628 |
$14,672 |
$16,134 |
$14,719 |
$80,020 | |
Central Oregon |
512 |
1,051 |
2,463 |
-- |
-- |
-- |
4,026 | |
Southern Oregon |
1,090 |
6,728 |
5,186 |
-- |
-- |
-- |
13,004 | |
Washington |
-- |
687 |
7,775 |
-- |
-- |
-- |
8,462 | |
Greater Sacramento |
3,961 |
5,359 |
2,073 |
4,817 |
11,455 |
21,000 |
48,665 | |
Northern California |
1,265 |
2,575 |
10,471 |
-- |
-- |
-- |
14,311 | |
Total |
$11,545 |
$26,550 |
$47,596 |
$19,489 |
$27,589 |
$35,719 |
$168,488 | |
% of Total |
7% |
16% |
28% |
12% |
16% |
21% |
100% | |
Umpqua Holdings Corporation Announces First Quarter 2010 Results
April 22, 2010
Page 21 of 23
The following is a distribution of non-covered, non-performing assets by type and by region as of March 31, 2010:
Table 3 - Non-covered, non-performing asset detail by type and by region | ||||||||||
(Dollars in thousands) |
|
|
| |||||||
|
Northwest |
Central |
Southern |
|
Greater |
Northern |
| |||
|
Oregon |
Oregon |
Oregon |
Washington |
Sacramento |
California |
Total | |||
Non-accrual loans: |
|
|
|
|
|
|
| |||
Residential development |
$1,389 |
$936 |
$4,145 |
$-- |
$19,011 |
$7,829 |
$33,310 | |||
Commercial construction |
10,267 |
-- |
-- |
2,676 |
14,896 |
4,059 |
31,898 | |||
Commercial real estate |
25,233 |
3,857 |
3,858 |
-- |
15,114 |
18,011 |
66,073 | |||
Commercial |
23,667 |
3,635 |
811 |
13,113 |
264 |
10,739 |
52,229 | |||
Other |
-- |
-- |
-- |
-- |
-- |
-- |
-- | |||
Total non-accrual loans |
$60,556 |
$8,428 |
$8,814 |
$15,789 |
$49,285 |
$40,638 |
$183,510 | |||
|
|
|
|
|
|
|
| |||
Loans 90 days past due: |
|
|
|
|
|
|
| |||
Residential development |
$-- |
$-- |
$-- |
$-- |
$-- |
$-- |
$-- | |||
Commercial construction |
-- |
-- |
-- |
-- |
-- |
-- |
-- | |||
Commercial real estate |
-- |
-- |
-- |
-- |
203 |
448 |
651 | |||
Commercial |
-- |
-- |
-- |
-- |
51 |
121 |
172 | |||
Other |
6,192 |
-- |
-- |
-- |
185 |
-- |
6,377 | |||
Total 90 days past due |
$6,192 |
$-- |
$-- |
$-- |
$439 |
$569 |
$7,200 | |||
|
|
|
|
|
|
|
| |||
Total non-performing loans |
$66,748 |
$8,428 |
$8,814 |
$15,789 |
$49,724 |
$41,207 |
$190,710 | |||
|
|
|
|
|
|
|
| |||
Other real estate owned: |
|
|
|
|
|
|
| |||
Residential development |
$636 |
$4,320 |
$968 |
$1,457 |
$2,674 |
$566 |
$10,621 | |||
Commercial construction |
359 |
978 |
-- |
426 |
2,426 |
-- |
4,189 | |||
Commercial real estate |
821 |
-- |
348 |
-- |
651 |
-- |
1,820 | |||
Commercial |
191 |
867 |
-- |
-- |
-- |
117 |
1,175 | |||
Other |
1,067 |
-- |
-- |
-- |
-- |
-- |
1,067 | |||
Total OREO |
$3,074 |
$6,165 |
$1,316 |
$1,883 |
$5,751 |
$683 |
$18,872 | |||
|
|
|
|
|
|
|
| |||
Total non-performing assets |
$69,822 |
$14,593 |
$10,130 |
$17,672 |
$55,475 |
$41,890 |
$209,582 | |||
% of total |
33% |
7% |
5% |
8% |
27% |
20% |
100% | |||
|
|
|
|
|
|
|
| |||
The Company has aggressively charged-down impaired assets to their disposition values. As of March 31, 2010, the non-covered, non-performing assets of $209.6 million have been written down by 45%, or $172.3 million, from their original balance of $381.9 million.
Umpqua Holdings Corporation Announces First Quarter 2010 Results
April 22, 2010
Page 22 of 23
The following is a distribution of non-covered loans past due 30-89 days by loan type by region as of March 31, 2010:
Table 4 Non-covered loans past due 30-89 days by type and by region | ||||||||||
(Dollars in thousands) |
|
|
| |||||||
|
Northwest |
Central |
Southern |
|
Greater |
Northern |
| |||
|
Oregon |
Oregon |
Oregon |
Washington |
Sacramento |
California |
Total | |||
Loans 30-89 days past due: |
|
|
|
|
|
|
| |||
Residential development |
$13,583 |
$-- |
$-- |
$-- |
$-- |
$-- |
$13,583 | |||
Commercial construction |
4,751 |
-- |
-- |
-- |
-- |
110 |
4,861 | |||
Commercial real estate |
10,467 |
231 |
655 |
-- |
2,237 |
8,082 |
21,672 | |||
Commercial |
4,462 |
465 |
156 |
200 |
1,212 |
1,811 |
8,306 | |||
Other |
3,951 |
-- |
-- |
-- |
1,574 |
-- |
5,525 | |||
Total 30-89 days past due |
$37,214 |
$696 |
$811 |
$200 |
$5,023 |
$10,003 |
$53,947 | |||
Table 5 Non-covered loans past due 30-89 days trends | |||||
(Dollars in thousands) |
|
|
|
Sequential |
Year |
|
|
|
|
Quarter |
Over Year |
|
3/31/10 |
12/31/09 |
3/31/09 |
% Change |
% Change |
Loans 30-89 days past due: |
|
|
|
|
|
Residential development |
$13,583 |
$8,950 |
$17,740 |
52% |
(23)% |
Commercial construction |
4,861 |
1,235 |
2,120 |
294% |
129% |
Commercial real estate |
21,672 |
18,645 |
16,697 |
16% |
30% |
Commercial |
8,306 |
8,385 |
49,446 |
(1)% |
(83)% |
Other |
5,525 |
4,243 |
3,696 |
30% |
49% |
Total 30-89 days past due |
$53,947 |
$41,458 |
$89,699 |
30% |
(40)% |
The following is a distribution of non-covered restructured loans by loan type by region as of March 31, 2010:
Table 6 Non-covered restructured loans by type and by region | ||||||||||
(Dollars in thousands) |
|
|
| |||||||
|
Northwest |
Central |
Southern |
|
Greater |
Northern |
| |||
|
Oregon |
Oregon |
Oregon |
Washington |
Sacramento |
California |
Total | |||
Restructured loans, accrual basis: |
|
|
|
|
|
|
| |||
Residential development |
$26,476 |
$-- |
$305 |
$7,775 |
$32,814 |
$-- |
$67,370 | |||
Commercial construction |
-- |
-- |
-- |
-- |
-- |
-- |
-- | |||
Commercial real estate |
5,263 |
-- |
5,788 |
-- |
9,723 |
3,830 |
24,604 | |||
Commercial |
189 |
-- |
-- |
-- |
53 |
1,239 |
1,481 | |||
Other |
4,481 |
-- |
-- |
-- |
35 |
-- |
4,516 | |||
Total restructured loans |
$36,409 |
$-- |
$6,093 |
$7,775 |
$42,625 |
$5,069 |
$97,971 | |||
Umpqua Holdings Corporation Announces First Quarter 2010 Results
April 22, 2010
Page 23 of 23
The following table summarizes the purchase price allocation, including the estimated fair values of the assets acquired and liabilities assumed from the FDIC-assisted assumption of EvergreenBank and Rainier Pacific Bank, at the date of acquisition. The fair values are preliminary estimates and are subject to refinement. Additionally, the Company has the option to purchase the owned and assume the leased bank premises, furniture and equipment at fair value. These purchase options expire 90 days following the assumption date. The Company has not yet determined which assets we will assume, and therefore, these balances are not yet reflected in the table below.
Table 7 Fair values of assets acquired and liabilities assumed through FDIC-assisted transactions | |||
(Dollars in thousands) |
|
|
|
|
EvergreenBank |
Rainier |
|
January 22, 2010 |
February 26, 2010 |
Assets Acquired: |
|
|
Cash and equivalents |
$18,919 |
$94,067 |
Investment securities |
3,850 |
26,478 |
Covered loans |
251,528 |
461,417 |
Premises and equipment |
- |
17 |
Restricted equity securities |
3,073 |
13,712 |
Goodwill |
- |
34,317 |
Other intangible assets |
440 |
6,253 |
Mortgage servicing rights |
- |
62 |
Covered other real estate owned |
2,421 |
6,580 |
FDIC indemnification asset |
73,774 |
72,821 |
Other assets |
1,293 |
5,437 |
Total assets acquired |
$355,298 |
$721,161 |
|
|
|
Liabilities Assumed: |
|
|
Deposits |
$285,775 |
$425,758 |
Term debt |
60,813 |
294,063 |
Other liabilities |
254 |
1,340 |
Total liabilities assumed |
$346,842 |
$721,161 |
|
|
|
Net assets acquired/bargain purchase gain |
$8,456 |
$ - |
|
|
|
# # #