EX-99.1 2 f8kuhc2qeaex991.htm EXHIBIT 99.1 f8kuhc2qeaex991.htm - Generated by SEC Publisher for SEC Filing

EXHIBIT 99.1

 

 

 

FOR IMMEDIATE RELEASE     

Contacts:
Ray Davis 
President/CEO 
Umpqua Holdings Corporation  
503-727-4101 
raydavis@umpquabank.com


Ron Farnsworth
EVP/Chief Financial Officer
Umpqua Holdings Corporation
503-727-4108
ronfarnsworth@umpquabank.com


UMPQUA HOLDINGS REPORTS STRONGER SECOND QUARTER 2010 RESULTS

Second quarter 2010 net income of $0.03 per diluted share, operating income of $0.04 per diluted share

Non-covered, non-performing assets declined to 1.90% of total assets

Allowance for credit losses increased to 2.00% of non-covered loans

FDIC-assisted assumption of Nevada Security Bank, Reno, Nevada during second quarter of 2010

 

PORTLAND, Ore. – July 27, 2010 – Umpqua Holdings Corporation (NASDAQ: UMPQ), parent company of Umpqua Bank and Umpqua Investments, Inc. today announced second quarter 2010 net earnings available to common shareholders of $3.4 million, or $0.03 per diluted common share, compared to a net loss available to common shareholders of $107.5 million, or $1.79 per diluted common share, for the same period in the prior year. 

 

Operating income, 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 $4.7 million, or $0.04 per diluted common share for the second quarter of 2010, compared to an operating loss of $0.7 million, or $0.01 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 below.

 

Significant financial statement items for the second quarter of 2010 include:

·         Provision for loan losses of $29.8 million, a 29% decrease, and total net charge-offs of $26.6 million, a 32% decrease, on a sequential quarter basis;

·         The allowance for credit losses increased to 2.00% of non-covered total loans;

·         Non-covered, non-performing assets ended the quarter at 1.90% of total assets;

·         Total deposits increased $352 million, or 4%, on a sequential quarter basis and 26% over June 30, 2009; 

·         Net interest income of $92.3 million, an increase of 6% on a sequential quarter basis, and an increase of 17% over the same period in the prior year;

·         Net interest margin, on a tax equivalent basis, remained stable at 4.05%;

·         The cost of interest bearing deposits for the second quarter of 2010 was 1.10%, a decrease of 9 basis points on a sequential quarter basis;

·         Tangible common equity ratio increased from 7.82% to 9.54% during the quarter, resulting from the conversion of preferred stock into common equity;

·         Total risk-based capital of 17.60%.

 

Umpqua Holdings Corporation Announces Second Quarter 2010 Results

July 27, 2010

Page 2 of 23

 

“This past quarter the company experienced continued improvement in our credit quality metrics resulting in improved operating earnings. We remain aggressive in resolving non-performing assets at this stage of the credit cycle, and will continue to position Umpqua for improved performance in the future,” said Ray Davis, president and CEO of Umpqua Holdings Corporation. “We also are pleased to have acquired the banking operations of Nevada Security Bank in Reno, Nevada, adding a new state to the Company’s footprint.”

 

FDIC-assisted acquisitions

On June 18, 2010, the Nevada State Financial Institutions Division closed Nevada Security Bank (“Nevada Security”), Reno, Nevada and appointed the Federal Deposit Insurance Corporation (“FDIC”) as receiver. That same date, Umpqua Bank assumed the banking operations of Nevada Security 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 $438 million, including $209 million of loans, and assumed deposit liabilities of $437 million. With this acquisition, Umpqua Bank added five store locations, including three in Reno, Nevada, one in Incline Village, Nevada, and one in Roseville, California. 

 

We believe the loss sharing agreement for this acquisition substantially covers the future losses of the loan portfolio and other real estate owned acquired. We refer to the acquired loan portfolio 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 acquisition of Nevada Security has been immediately accretive to operating earnings per share. Nevada Security has contributed operating earnings of approximately $0.2 million since acquisition. We expect to complete the rebranding of the acquired banking locations in the third quarter of 2010 and integrate the systems by the fourth quarter of 2010. 

 

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 Nevada Security acquisition.

 

In the first quarter of 2010, Umpqua Bank assumed the banking operations of EvergreenBank (“Evergreen”) and Rainier Pacific Bank (“Rainier”), both located in the greater Seattle-Tacoma area of Washington.  The operations of Evergreen and Rainier have contributed operating earnings of $1.4 million and $2.0 million, respectively, in the second quarter of 2010, and $3.0 million and $2.7 million, respectively, since their assumptions.  The operating systems of both institutions have been converted onto Umpqua’s platform. 

 

Asset quality – Non-covered loan portfolio

Non-performing assets were $205.5 million, or 1.90% of total assets, as of June 30, 2010, compared to $209.6 million, or 1.99% of total assets as of March 31, 2010, and $150.0 million, or 1.73% of total assets as of June 30, 2009.  Of this amount, $170.6 million represented non-accrual loans, $9.2 million represented loans past due greater than 90 days and still accruing interest, and $25.7 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 June 30, 2010, the non-performing assets of $205.5 million have been written down by 43%, or $154.3 million, from their original balance of $359.8 million.

 

The provision for loan losses for the second quarter of 2010 was $29.8 million.  Total net charge-offs for the second quarter of 2010 were $26.6 million, resulting in a reserve build of the allowance for credit losses to 2.00% of non-covered loans and leases at June 30, 2010, as compared to 1.91% of total non-covered loans as of March 31, 2010 and 1.63% of total non-covered loans as of June 30, 2009.  The annualized net charge-off rate of 1.84% for the second quarter represents a 31% decline in this rate as compared to the first quarter 2010.

 

Umpqua Holdings Corporation Announces Second Quarter 2010 Results

July 27, 2010

Page 3 of 23

 

Loans past due 30-89 days were $40.1 million, or 0.70% of non-covered loans and leases as of June 30, 2010, as compared to $53.9 million, or 0.93% as of March 31, 2010, and $48.8 million, or 0.80% as of June 30, 2009.

 

Since 2007, the Company has been aggressively resolving problems arising from the current economic downturn.  The following table recaps the Company’s credit quality trends since the second quarter 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 %

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%

Q2 2010

29,767

26,637

2.00%

0.70%

1.90%

Total

$430,322

$381,749

 

 

 

 

 

 

 

 

 

Non-covered construction loan portfolio

Total non-covered construction loans as of June 30, 2010 were $495 million, representing a decrease of 11% from December 31, 2009, and a decrease of 38% from June 30, 2009.  Within this portfolio, the residential development loan segment was $176 million, or 3% of the total non-covered loan portfolio.  Of this amount, $33 million represented non-performing loans, and $143 million represented performing loans.  The residential development loan segment has decreased $125 million, or 42%, since June 30, 2009. 

 

The remaining $319 million in non-covered construction loans as of June 30, 2010 primarily represents commercial construction projects.  Total non-covered non-performing commercial construction loans were $26.0 million at June 30, 2010, and $0.9 million were past due 30-89 days as of June 30, 2010.

 

Non-covered commercial real estate loan portfolio

The total non-covered term commercial real estate loan portfolio was $3.5 billion as of June 30, 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, $22.9 million, or 0.66%, are past due 30-89 days as of June 30, 2010.  Of the total non-covered commercial real estate portfolio, 4% matures in 2010, 4% in 2011, 14% in years 2012-2013, and 21% in years 2014-2015.  The remaining 57% 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.

 

 

Umpqua Holdings Corporation Announces Second Quarter 2010 Results

July 27, 2010

Page 4 of 23

 

During the past 18 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 we are well positioned to manage the exposure and work with our customers until the economic climate improves.

 

Non-covered restructured loans

Restructured loans on accrual status were $80.5 million as of June 30, 2010, down 18% from $98.0 million as of March 31, 2010, and down 36% from $126.0 million as of June 30, 2009.  The decrease during the second quarter primarily resulted from payments received and 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 related to asset quality

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 $87.1 million, or 0.80% of total assets, as of June 30, 2010. Of this amount, $58.8 million represented non-accrual loans, and $28.3 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 management’s and third-party consultants’ credit reviews of the portfolios performed during the due diligence process related to the Evergreen, Rainier and Nevada Security 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 recorded in non-interest income. 

 

Net interest margin

The Company reported a tax equivalent net interest margin of 4.05% for the second quarter of 2010, compared to 4.04% for the first quarter of 2010, and 4.20% for the second quarter of 2009.  The increase in net interest margin on a sequential quarter basis resulted primarily from an increase in average covered loans outstanding and declining costs of interest bearing deposits, partially offset by 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.  Interest reversals on new non-accrual loans during the second quarter of 2010 were $0.7 million, negatively impacting the net interest margin by 3 basis points.  Excluding the reversals of interest, the net interest margin would have been 4.08% 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 bearing deposits was 1.10%, 9 basis points lower than the first quarter of 2010 and 50 basis points lower than the second quarter of 2009.

 

Mortgage banking revenue

The Company generated $3.2 million in total mortgage banking revenue during the second quarter of 2010, on closed loan volume of $145 million.  In the second quarter of 2010 the Company recognized a decline in the fair value of the mortgage servicing right assets of $1.7 million resulting from the historically low market mortgage interest rates.  Income from the origination and sale of mortgage loans was $3.9 million in the second quarter, representing a 46% increase on a sequential quarter basis.  As of June 30, 2010, the Company serviced $1.4 billion of mortgage loans for others, and the related mortgage servicing right asset was valued at $12.9 million, or 0.92% of the total serviced portfolio principal balance.

 

Umpqua Holdings Corporation Announces Second Quarter 2010 Results

July 27, 2010

Page 5 of 23

 

Fair value of junior subordinated debentures

The Company recognized no change in fair value of junior subordinated debentures during the second 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 June 30, 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 Company’s 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 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 June 30, 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 second quarter of 2010 was $74.8 million, compared to $69.9 million for the first quarter of 2010 and $178.6 million for the second 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 $70.1 million for the second quarter of 2010, compared to $62.2 million for the first quarter of 2010 and $56.7 million for the second quarter of 2009.  The increase related primarily to increases in variable expenses related to the assumption of Evergreen’s, Rainier’s and Nevada Security’s banking operations, as well as various other growth initiatives underway.

 

Total FDIC deposit insurance assessments during the second quarter of 2010 were $3.6 million. The increase over the prior period is a result of the deposit growth in the second quarter, largely resulting from the three FDIC-assisted acquisitions completed in 2010. The FDIC deposit insurance assessment for the second quarter of 2009 includes a $4.0 million special assessment imposed by the FDIC in efforts to rebuild the Deposit Insurance Fund.

 

Income taxes

The Company recorded a provision for income taxes of $2.8 million in the second quarter of 2010.  The increase in the effective income tax rate in the quarter reflects the effects of permanent differences on our taxable income year to date.

 

Balance sheet

Total consolidated assets as of June 30, 2010 were $10.8 billion, compared to $10.5 billion on March 31, 2010 and $8.7 billion a year ago.  Total gross loans and leases (covered and non-covered), and deposits, were $6.6 billion and $8.6 billion, respectively, as of June 30, 2010, compared to $6.1 billion and $6.8 billion, respectively, as of June 30, 2009. 

 

The following table presents the year-to-date 2010 organic growth rates, which excludes the effects of the Evergreen, Rainier and Nevada Security FDIC-assisted acquisitions and the related run-off of assumed brokered time deposits, which the Bank is not renewing upon maturity:

 

Umpqua Holdings Corporation Announces Second Quarter 2010 Results

July 27, 2010

Page 6 of 23

 

 

(Dollars in thousands)

Non-covered

loans and leases

Deposits

Assets

As reported, 6/30/10

 $5,726,673

 $8,558,744

 $10,827,268

Less: 12/31/09 balances

    5,999,267

    7,440,434

    9,381,372

   Total growth year-to-date

(272,594)

1,118,310

1,445,895

Less:

 

 

 

 

   Evergreen acquisition (1)

--

       272,142

       355,298

   Rainier Pacific acquisition (1)

--

416,430

721,174

   Nevada Security acquisition (1)

--

428,329

437,595

Add back:

   Run-off of assumed brokered time

     deposits not renewed

--

81,799

81,799

   Organic growth

 $(272,594)

 $83,208

 $13,627

 

 

 

 

Annualized organic growth rate

    (9.2)%

   2.3%

     0.3%

 

(1)       Excludes run-off of non-brokered deposits occurring in the quarter of acquisition.

 

Total loans held for investment increased $68 million during the second quarter of 2010. This increase is principally attributable to the $209 million of covered loans assumed through the Nevada Security acquisition, partially offset by charge-offs of $32 million and transfers to other real estate owned of $15 million. The remaining decline in loan balances represents loan payments in excess of disbursements.

 

Total deposits increased $352 million, or 4%, over the first quarter of 2010, attributable to the assumption of Nevada Security in June.  Total deposits have increased $1.1 billion or 15%, since December 31, 2009.  The deposits acquired from the Evergreen, Rainier and Nevada Security acquisitions included $135 million of brokered time deposits as of their respective 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 $83 million in 2010, representing a 2.3% 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 June 30, 2010, the Company had $818 million of interest bearing cash earning 0.25%, the target Federal Funds Rate.  This excess balance sheet liquidity has increased since the prior year as investment security alternatives in the current market are unattractive given the historically low interest rate environment. The Company plans to hold increased interest bearing cash position relative to historical levels 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 $3.9 billion as of June 30, 2010, representing 36% of total assets and 46% of total deposits.

 

Capital

As of June 30, 2010, total shareholders’ equity was $1.7 billion, comprised entirely of common equity.  Book value per common share was $14.44, tangible book value per common share was $8.45 and the ratio of tangible common equity to tangible assets was 9.54%. 

 

In April 2010, the Company’s preferred stock (Common Stock Equivalent Series B) of $198.3 million converted into common stock 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. 

 

 

Umpqua Holdings Corporation Announces Second Quarter 2010 Results

July 27, 2010

Page 7 of 23

 

The Company’s estimated total risk-based capital ratio as of June 30, 2010 is 17.60%.  This represents a slight decrease from the 17.77% as of March 31, 2010 as a result of the Nevada Security acquisition.  The total risk-based capital ratio has increased from 14.27% as of June 30, 2009 as a result of two successful capital raises  completed subsequent to the second quarter of 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 June 30, 2010 is an estimate pending completion and filing of the Company’s regulatory reports. 

 

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 Umpqua’s 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 Company’s 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 Company’s or the Bank’s 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 Umpqua’s 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 (loss) 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 (loss) per diluted share by dividing operating earnings by the same diluted share total used in determining diluted earnings per common share.

 

The following table provides the reconciliation of earnings (loss) available to common shareholders (GAAP) to operating earnings (loss) (non-GAAP), and earnings (loss) per diluted common share (GAAP) to operating earnings (loss) per diluted share (non-GAAP) for the periods presented:

 

 

Quarter ended:

Sequential Quarter

Year over Year

 (Dollars in thousands, except per share data)

Jun 30, 2010

Mar 31, 2010

Jun 30, 2009

% Change

% Change

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings (loss) available to common

   shareholders

$3,447

$(2,482)

$(107,514)

(239)%

(103)%

Adjustments:

 

 

 

 

 

     Net gain on junior subordinated debentures

        carried at fair value, net of tax

--

(3,653)

(5,167)

(100)%

(100)%

     Bargain purchase gain on acquisitions, net of tax

--

(5,074)

--

(100)%

nm

     Goodwill impairment   

--

--

111,952

(100)%

(100)%

     Merger related expenses, net of tax

1,301

1,144

44

14%

2857%

Operating earnings (loss)

$4,748

$(10,065)

$(685)

(147)%

(793)%

 

 

 

 

 

 

Earnings (loss) per diluted share:

 

 

 

 

 

Earnings (loss) available to common shareholders

    $0.03

    $(0.03)

    $(1.79)

(200)%

(102)%

Operating earnings (loss)

    $0.04

    $(0.11)

    $(0.01)

(136)%

(500)%

 

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.

 

 

Umpqua Holdings Corporation Announces Second Quarter 2010 Results

July 27, 2010

Page 8 of 23

 

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)

Jun 30, 2010

Mar 31, 2010

Jun 30, 2009

 

 

 

 

Total shareholders' equity

    $1,654,053

    $1,646,858

$1,356,423

Subtract:

 

 

 

   Preferred stock

         --

         198,289

203,231

   Goodwill and other intangible assets, net

         686,447

         679,679

643,080

Tangible common shareholders' equity

       $967,606

       $768,890

$510,112

 

 

 

 

Total assets

    $10,827,268

    $10,511,015

$8,656,677

Subtract:

 

 

 

   Goodwill and other intangible assets, net

         686,447

         679,679

643,080

Tangible assets

 $10,140,821

    $9,831,336

$8,013,597

 

 

 

 

Common shares outstanding at period end

114,524,973

    95,527,427

60,237,042

 

 

 

 

Tangible common equity ratio

9.54%

       7.82%

       6.37%

Tangible book value per common share

 $8.45

       $8.05

        $8.47

 

 

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 184 locations between San Francisco, Calif., and Seattle, Wash., along the Oregon and Northern California Coast, Central Oregon and Northern Nevada. 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 Bank’s 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.

 

    

Umpqua Holdings Corporation will conduct a quarterly earnings conference call Tuesday, July 27, 2010, at 10:00 a.m. PDT (1:00 p.m. EDT) during which the Company will discuss second 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 800-752-8363 a few minutes before 10:00 a.m.  The conference ID is “82132563.”  Information to be discussed in the teleconference will be available on the Company’s 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 Company’s Website.      

 

 

 

Umpqua Holdings Corporation Announces Second Quarter 2010 Results

July 27, 2010

Page 9 of 23

 

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, growth plans in the northern Nevada market, conversion of the Nevada Security operating systems to our platform in the fourth quarter of 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, collateral values fall below projected disposition values, 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 Second Quarter 2010 Results

July 27, 2010

Page 10 of 23

Umpqua Holdings Corporation

 

Consolidated Statements of Operations

 

(Unaudited)

 

 

 

Sequential

Year over

 

 

Quarter Ended:

Quarter

Year

 

(Dollars in thousands, except per share data)

Jun 30, 2010

Mar 31, 2010

Jun 30, 2009

% Change

% Change

 

Interest income

 

 

 

 

 

 

  Loans and leases

           $97,240

           $90,708

           $88,940

7%

9%

 

  Interest and dividends on investments:

 

 

 

 

 

 

     Taxable

 15,569

                 16,075 

                 13,889 

(3)%

12%

 

     Exempt from federal income tax

2,247

                 2,187

                 1,935

3%

16%

 

     Dividends

3

--

--

nm

nm

 

  Temporary investments & interest bearing cash

                    545

                    399

                  19

37%

2768%

 

    Total interest income

             115,604

             109,369

             104,783

6%

10%

 

 

Interest expense

 

 

 

 

 

 

  Deposits

18,463

               18,789

               21,957

(2)%

(16)%

 

  Repurchase agreements and

 

 

 

 

 

 

    fed funds purchased

                    123

                    123

180

0%

(32)%

 

  Junior subordinated debentures

                 1,939

                 1,885

2,395

3%

(19)%

 

  Term debt

                 2,779

                 1,520

1,262

83%

120%

 

    Total interest expense

               23,304

               22,317

25,794

4%

(10)%

 

Net interest income

               92,300

               87,052

78,989

6%

17%

 

Provision for loan and lease losses

                 29,767

                 42,106

29,331

(29)%

1%

 

Non-interest income

 

 

 

 

 

 

  Service charges

9,585

                 8,365

                 8,322

15%

15%

 

  Brokerage fees

3,139

                 2,639

1,745

19%

80%

 

  Mortgage banking revenue, net

3,209

              3,478

6,259

(8)%

(49)%

 

  Net loss on investment securities

--

             (288)

               (1,270)

(100)%

(100)%

 

  Gain on junior subordinated debentures

 

 

                 

       

   

 

      carried at fair value

--

              6,088

              8,611

(100)%

(100)%

 

  Bargain purchase gain on acquisitions

--

                      8,456

                    --

(100)%

nm

 

  Change in FDIC indemnification asset

263

                      610

                    --

(57)%

nm

 

  Other income

2,367

                 2,718

3,383

(13)%

(30)%

 

Total non-interest income

18,563

               32,066

27,050

(42)%

(31)%

 

Non-interest expense

 

 

 

 

 

 

  Salaries and benefits

39,604

               36,240

               32,041

9%

24%

 

  Occupancy and equipment

11,472

                 10,676

9,708

7%

18%

 

  Intangible amortization

1,368

                 1,308

1,362

5%

0%

 

  FDIC assessments

3,555

                 3,444

6,699

3%

(47)%

 

  Net (gain) loss on other real estate owned

(952)

              2,311

3,170

(141)%

(130)%

 

  Goodwill impairment

--

--

111,952

(100)%

(100)%

 

  Merger related expenses

2,169

                 1,906

73

14%

2871%

 

  Other

17,617

               13,986

13,598

26%

30%

 

Total non-interest expense

74,833

               69,871

178,603

7%

(58)%

 

Income (loss) before provision for (benefit from)

     income taxes

6,263

           7,141

               (101,895)

(12)%

(106)%

 

Provision for (benefit from) income taxes

2,800

             (2,584)

2,396

(208)%

17%

 

   Net income (loss)

3,463

         9,725

             (104,291)

(64)%

(103)%

 

 

 

 

 

 

 

 

Dividends and undistributed earnings

 

 

 

 

 

 

   allocated to participating securities

16

               15

               7

7%

129%

 

Preferred stock dividend

--

12,192

3,216

(100)%

(100)%

 

Net earnings (loss) available to common

   shareholders

$3,447

$(2,482)

$(107,514)

(239)%

(103)%

 

 

 

 

 

 

 

 

Weighted average shares outstanding

110,134,674

        92,176,174

60,221,023 

19%

83%

 

Weighted average diluted shares outstanding

114,733,357

        92,176,174

        60,221,023

24%

91%

 

Earnings (loss) per common share – basic

                $0.03

                $(0.03)

                $(1.79)

(200)%

(102)%

 

Earnings (loss) per common share – diluted

                $0.03

                $(0.03)

                $(1.79)

(200)%

(102)%

 

nm = not meaningful

 

Umpqua Holdings Corporation Announces Second Quarter 2010 Results

July 27, 2010

Page 11 of 23

 

 

Umpqua Holdings Corporation

 

Consolidated Statements of Operations

 

(Unaudited)

 

 

 

 

 

 

 

Six Months Ended:

 

 

(Dollars in thousands, except per share data)

Jun 30, 2010

Jun 30, 2009

% Change

 

Interest income

 

 

 

 

  Loans and leases

           $187,948

                 $177,113

6%

 

  Interest and dividends on investments:

 

 

 

 

     Taxable

31,644

                     28,260

12%

 

     Exempt from federal income tax

4,434

                       3,735

19%

 

     Dividends

3

--

nm

 

  Temporary investments & interest bearing cash

944

                            51

1751%

 

    Total interest income

224,973

                 209,159

8%

 

 

Interest expense

 

 

 

 

  Deposits

37,252

                 46,420

(20)%

 

  Repurchase agreements and

 

 

 

 

    fed funds purchased

246

                       364

(32)%

 

  Junior subordinated debentures

3,824

                      4,955

(23)%

 

  Term debt

4,299

                       3,018

42%

 

    Total interest expense

45,621

                     54,757

(17)%

 

Net interest income

179,352

                  154,402

16%

 

Provision for loan and lease losses

71,873

                    88,423

(19)%

 

Non-interest income

 

 

 

 

  Service charges

17,950

                     16,023

12%

 

  Brokerage fees

5,778

                      3,124

85%

 

  Mortgage banking revenue, net

6,687

                    10,329

(35)%

 

  Net loss on investment securities

             (288)

                     (1,235)

(77)%

 

  Gain on junior subordinated debentures

 

 

       

 

      carried at fair value

              6,088

                     9,191

(34)%

 

  Bargain purchase gain on acquisitions

8,456

                    --

nm

 

  Change in FDIC indemnification asset

873

                    --

nm

 

  Other income

5,085

                       5,135

(1)%

 

Total non-interest income

50,629

                     42,567

19%

 

Non-interest expense

 

 

 

 

  Salaries and benefits

75,844

                  63,114

20%

 

  Occupancy and equipment

22,148

                    19,329

15%

 

  Intangible amortization

2,676

                      2,724

(2)%

 

  FDIC assessments

6,999

9,324

(25)%

 

  Net (gain) loss on other real estate owned

1,359

5,469

(75)%

 

  Goodwill impairment

--

111,952

(100)%

 

  Merger related expenses

4,075

273

1393%

 

  Other

31,603

               26,369

20%

 

Total non-interest expense

144,704

238,554

(39)%

 

Income (loss) before provision for (benefit from)

     income taxes

13,404

              (130,008)

(110)%

 

Provision for (benefit from) income taxes

216

                   (10,468)

(102)%

 

   Net income (loss)

13,188

          (119,540)

(111)%

 

 

 

 

 

 

Dividends and undistributed earnings

 

 

 

 

   allocated to participating securities

31

15

107%

 

Preferred stock dividend

12,192

6,407

90%

 

Net earnings (loss) available to common shareholders

$965

$(125,962)

(101)%

 

 

 

 

 

 

Weighted average shares outstanding

101,205,033

              60,198,570

68%

 

Weighted average diluted shares outstanding

101,434,758

             60,198,570

69%

 

Earnings (loss) per common share – basic

                $0.01

                   $(2.09)

(100)%

 

Earnings (loss) per common share – diluted

                $0.01

                     $(2.09)

(100)%

 

nm = not meaningful

 

 

 

 

 

 

Umpqua Holdings Corporation Announces Second Quarter 2010 Results

July 27, 2010

Page 12 of 23

 

 

Umpqua Holdings Corporation

Consolidated Balance Sheets

(Unaudited)

 

 

 

 

Sequential

Year over

 

 

 

 

Quarter

Year

(Dollars in thousands, except per share data)

Jun 30, 2010

Mar 31, 2010

Jun 30, 2009

% Change

% Change

Assets:

 

 

 

 

 

  Cash and due from banks, non-interest bearing

              $143,098

              $125,909

              $115,476

14%

24%

  Cash and due from banks, interest bearing

818,186

895,905

              15,878

(9)%

5053%

  Temporary investments

9,296

600

                  962

1449%

866%

  Investment securities:

 

 

 

 

 

     Trading

1,743

2,047

                    2,247

(15)%

(22)%

     Available for sale

1,933,647

1,782,744

               1,465,342

8%

32%

     Held to maturity

5,493

6,062

                   6,344

(9)%

(13)%

  Loans held for sale

40,114

34,068

                    52,863

18%

(24)%

  Non-covered loans and leases

5,726,673

5,831,858

               6,093,957

(2)%

(6)%

  Less:  Allowance for loan and lease losses

(113,914)

              (110,784)

              (98,370)

3%

16%

    Loans and leases, net

5,612,759

            5,721,074

            5,995,587

(2)%

(6)%

  Covered loans and leases

865,175

691,618

--

25%

nm

  Restricted equity securities

34,855

                    31,996

                    16,491

9%

111%

  Premises and equipment, net

128,586

                  101,686

                  103,553

26%

24%

  Mortgage servicing rights, at fair value

12,895

                  13,628

                  10,631

(5)%

21%

  Goodwill and other intangibles, net

686,447

                  679,679

                  643,080

1%

7%

  Non-covered other real estate owned

25,653

                    18,872

                    36,030

36%

(29)%

  Covered other real estate owned

28,290

               8,995

--

215%

nm

  FDIC indemnification asset

247,848

152,440

--

63%

nm

  Other assets

233,183

243,692

                  192,193

(4)%

21%

Total assets

           $10,827,268

           $10,511,015

           $8,656,677

3%

25%

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

  Deposits

             $8,558,744

             $8,207,235

             $6,814,705

4%

26%

  Securities sold under agreements to repurchase

44,715

42,043

56,358

6%

(21)%

  Fed funds purchased

--

--

66,000

nm

(100)%

  Term debt

291,505

363,828

106,396

(20)%

174%

  Junior subordinated debentures, at fair value

79,590

79,563

83,036

0%

(4)%

  Junior subordinated debentures, at amortized cost

103,027

                  103,108

103,349

0%

0%

  Other liabilities

95,634

                    68,380

70,410

40%

36%

    Total liabilities

9,173,215

8,864,157

               7,300,254

3%

26%

 

 

 

 

 

 

Shareholders' equity:

 

 

 

 

 

  Preferred stock

--

198,289

203,231

(100)%

(100)%

  Common stock

1,538,793

1,339,627

1,006,660

15%

53%

  Retained earnings

73,062

75,344

132,923

(3)%

(45)%

  Accumulated other comprehensive income

42,198

33,598

13,609

26%

210%

    Total shareholders' equity

1,654,053

             1,646,858

1,356,423

0%

22%

Total liabilities and shareholders' equity

           $10,827,268

           $10,511,015

           $8,656,677

3%

25%

 

 

 

 

 

 

Common shares outstanding at period end

114,524,973

            95,527,427

            60,237,042

20%

90%

Book value per common share

                 $14.44

                 $15.16

                 $19.14

(5)%

(25)%

Tangible book value per common share

                   $8.45

                   $8.05

                   $8.47

5%

0%

Tangible equity - common

             $967,606

             $768,890

             $510,112

26%

90%

Tangible common equity to tangible assets

9.54%

7.82%

6.37%

 

 

nm = not meaningful

 

 

 

 

 

 

   

 

Umpqua Holdings Corporation Announces Second Quarter 2010 Results

July 27, 2010

Page 13 of 23

 

 

  

Umpqua Holdings Corporation

 

Non-covered Loan & Lease Portfolio

 

(Unaudited)

 

 

 

 

 

 

 

 

Sequential

Year over

 

(Dollars in thousands)

Jun 30, 2010

 

Mar 31, 2010

 

Jun 30, 2009

 

Quarter

Year

 

 

Amount

Mix

 

Amount

Mix

 

Amount

Mix

 

% Change

% Change

 

Non-covered loans & leases:

 

 

 

 

 

 

 

 

 

 

 

 

  Commercial real estate

$3,496,374

61%

 

$3,519,965

60%

 

$3,373,624

55%

 

(1)%

4%

 

  Residential real estate

456,357

8%

 

451,628

8%

 

429,775

7%

 

1%

6%

 

  Construction

495,456

9%

 

554,688

10%

 

797,352

13%

 

(11)%

(38)%

 

    Total real estate

4,448,187

78%

 

4,526,281

78%

 

4,600,751

75%

 

(2)%

(3)%

 

  Commercial

1,223,927

21%

 

1,252,418

21%

 

1,429,856

23%

 

(2)%

(14)%

 

  Leases

32,375

1%

 

32,740

1%

 

37,806

1%

 

(1)%

(14)%

 

  Installment and other

33,188

1%

 

31,451

1%

 

36,314

1%

 

6%

(9)%

 

  Deferred loan fees, net

(11,004)

0%

 

(11,032)

0%

 

(10,770)

0%

 

0%

2%

 

     Total

$5,726,673

100%

 

$5,831,858

100%

 

$6,093,957

100%

 

(2)%

(6)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Umpqua Holdings Corporation

Covered Loan & Lease Portfolio

(Unaudited)

 

 

 

 

 

Sequential

(Dollars in thousands)

Jun 30, 2010

 

Mar 31, 2010

 

Quarter

 

Amount

Mix

 

Amount

Mix

 

% Change

Covered loans & leases:

 

 

 

 

 

 

 

  Commercial real estate

$586,899

68%

 

$469,385

68%

 

25%

  Residential real estate

84,011

10%

 

118,033

17%

 

(29)%

  Construction

73,771

9%

 

46,087

7%

 

60%

    Total real estate

744,681

86%

 

633,505

92%

 

18%

  Commercial

108,123

12%

 

43,854

6%

 

147%

  Installment and other

12,413

1%

 

14,316

2%

 

(13)%

  Deferred loan fees, net

(42)

0%

 

(57)

0%

 

(26)%

     Total

$865,175

100%

 

$691,618

100%

 

25%

 

 

 

 

 

 

 

 

Covered loan & lease portfolio balances represent the loan portfolios acquired through the assumption of EvergreenBank on January 22, 2010, Rainier Pacific Bank on February 26, 2010, and Nevada Security Bank on June 18, 2010, from the FDIC through whole bank purchase and assumption agreements with loss sharing.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Umpqua Holdings Corporation Announces Second Quarter 2010 Results

July 27, 2010

Page 14 of 23

 

 

 

Umpqua Holdings Corporation

Deposits by Type/Core Deposits

(Unaudited)

 

 

 

 

 

 

 

Sequential

Year over

(Dollars in thousands)

Jun 30, 2010

 

Mar 31, 2010

 

Jun 30, 2009

 

Quarter

Year

 

Amount

Mix

 

Amount

Mix

 

Amount

Mix

 

% Change

% Change

Deposits:

 

 

 

 

 

 

 

 

 

 

 

  Demand, non-interest bearing

$1,509,222

18%

 

$1,472,408

18%

 

$1,316,648

19%

 

3%

15%

  Demand, interest bearing

3,789,122

44%

 

3,690,025

45%

 

2,875,843

43%

 

3%

32%

  Savings

355,428

4%

 

342,883

4%

 

293,972

4%

 

4%

21%

  Time

2,904,972

34%

 

2,701,919

33%

 

2,328,242

34%

 

8%

25%

     Total

$8,558,744

100%

 

$8,207,235

100%

 

$6,814,705

100%

 

4%

26%

 

 

 

 

 

 

 

 

 

 

 

 

Total core deposits-ending (1)

$6,697,773

78%

 

$6,405,118

78%

 

$5,465,814

80%

 

5%

23%

 

 

 

 

 

 

 

 

 

 

 

 

Number of open accounts:

 

 

 

 

 

 

 

 

 

 

 

  Demand, non-interest bearing

180,499

 

 

177,152

 

 

152,251

 

 

2%

19%

  Demand, interest bearing

71,537

 

 

70,082

 

 

61,199

 

 

2%

17%

  Savings

96,019

 

 

95,367

 

 

72,381

 

 

1%

33%

  Time

41,882

 

 

40,269

 

 

33,475

 

 

4%

25%

     Total

389,937

 

 

382,870

 

 

319,306

 

 

2%

22%

 

 

 

 

 

 

 

 

 

 

 

 

Average balance per account:

 

 

 

 

 

 

 

 

 

 

 

  Demand, non-interest bearing

$8.4

 

 

$8.3

 

 

$8.6

 

 

 

 

  Demand, interest bearing

53.0

 

 

52.7

 

 

47.0

 

 

 

 

  Savings

3.7

 

 

3.6

 

 

4.1

 

 

 

 

  Time

69.4

 

 

67.1

 

 

69.6

 

 

 

 

     Total

21.9

 

 

21.4

 

 

21.3

 

 

 

 

 

(1)  Core deposits are defined as total deposits less time deposits greater than $100,000.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Umpqua Holdings Corporation Announces Second Quarter 2010 Results

July 27, 2010

Page 15 of 23

 

 

 

Umpqua Holdings Corporation

Credit Quality – Non-performing Assets

 (Unaudited)

 

 

 

 

Sequential

Year over

 

 

Quarter Ended

 

Quarter

Year

(Dollars in thousands)

Jun 30, 2010

Mar 31, 2010

Jun 30, 2009

% Change

% Change

 

 

 

 

 

 

 

 

 

 

 

 

Non-covered non-performing assets:

 

 

 

 

 

  Non-covered loans on non-accrual status

$170,636

$183,510

$104,726

(7)%

63%

  Non-covered loans past due 90+ days & accruing   

9,213

7,200

9,207

28%

0%

    Total non-performing loans

179,849

190,710

113,933

(6)%

58%

  Non-covered other real estate owned

25,653

18,872

36,030

36%

(29)%

    Total

$205,502

$209,582

$149,963

(2)%

37%

 

 

 

 

 

 

Performing restructured loans

$80,534

$97,971

$126,040

(18)%

(36)%

 

 

 

 

 

 

Past due 30-89 days

$40,135

$53,947

$48,755

(26)%

(18)%

Past due 30-89 days to total loans and leases

0.70%

0.93%

0.80%

 

 

 

 

 

 

 

 

  Non-covered non-performing loans to

 

 

 

 

 

    non-covered loans and leases

3.14%

3.27%

1.87%

 

 

  Non-covered non-performing assets to total assets

1.90%

1.99%

1.73%

 

 

 

 

 

 

 

 

Covered non-performing assets:

 

 

 

 

 

  Covered loans on non-accrual status

$58,814

$37,031

$--

59%

nm

    Total non-performing loans

58,814

37,031

--

59%

nm

  Covered other real estate owned

28,290

8,995

--

215%

nm

    Total

$87,104

$46,026

$--

89%

nm

 

 

 

 

 

 

  Covered non-performing loans to

 

 

 

 

 

    covered loans and leases

6.80%

5.35%

--

 

 

  Covered non-performing assets to total assets

0.80%

0.44%

--

 

 

 

 

 

 

 

 

Total non-performing assets:

 

 

 

 

 

  Loans on non-accrual status

$229,450

$220,541

$104,726

4%

119%

  Loans past due 90+ days & accruing   

9,213

7,200

9,207

28%

0%

    Total non-performing loans

238,663

227,741

113,933

5%

109%

  Other real estate owned

53,943

27,867

36,030

94%

50%

    Total

$292,606

$255,608

$149,963

14%

95%

 

 

 

 

 

 

  Non-performing loans to loans and leases

3.62%

3.49%

1.87%

 

 

  Non-performing assets to total assets

2.70%

2.43%

1.73%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Umpqua Holdings Corporation Announces Second Quarter 2010 Results

July 27, 2010

Page 16 of 23

 

 

 

 

Umpqua Holdings Corporation

Credit Quality – Allowance for Credit Losses

 (Unaudited)

 

 

 

 

Sequential

Year over

 

 

Quarter Ended

 

Quarter

Year

(Dollars in thousands)

Jun 30, 2010

Mar 31, 2010

Jun 30, 2009

% Change

% Change

Allowance for credit losses:

 

 

 

 

 

  Balance beginning of period

$110,784

$107,657

$95,086

 

 

      Provision for loan and lease losses

29,767

42,106

29,331

(29)%

1%

 

 

 

 

 

 

  Charge-offs

(31,554)

(39,759)

(26,508)

(21)%

19%

  Recoveries

4,917

780

461

530%

967%

      Net charge-offs

(26,637)

(38,979)

(26,047)

(32)%

2%

 

 

 

 

 

 

  Total allowance for loan and lease losses

113,914

110,784

98,370

3%

16%

 

 

 

 

 

 

  Reserve for unfunded commitments

735

765

860

 

 

      Total allowance for credit losses

$114,649

$111,549

$99,230

3%

16%

 

 

 

 

 

 

Net charge-offs to average non-covered

 

 

 

 

 

  loans and leases (annualized)

1.84%

2.66%

1.71%

 

 

Recoveries to gross charge-offs

15.58%

1.96%

1.74%

 

 

Allowance for credit losses to non-covered

 

 

 

 

 

  loans and leases

2.00%

1.91%

1.63%

 

 

 

 

 

 

 

 

 

Six Months Ended:

 

(Dollars in thousands)

Jun 30, 2010

Jun 30, 2009

% Change

Allowance for credit losses:

 

 

 

  Balance beginning of period

$107,657

$95,865

 

      Provision for loan and lease losses

71,873

88,423

(19)%

 

 

 

 

  Charge-offs

(71,313)

(86,922)

(18)%

  Recoveries

5,697

1,004

467%

      Net charge-offs

(65,616)

(85,918)

(24)%

 

 

 

 

  Total allowance for loan and lease losses

113,914

98,370

16%

 

 

 

 

  Reserve for unfunded commitments

735

860

 

      Total allowance for credit losses

$114,649

$99,230

16%

 

 

 

 

Net charge-offs to average non-covered

 

 

 

  loans and leases (annualized)

2.26%

2.83%

 

Recoveries to gross charge-offs

7.99%

1.16%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Umpqua Holdings Corporation Announces Second Quarter 2010 Results

July 27, 2010

Page 17 of 23

 

 

 

 

Umpqua Holdings Corporation

Selected Ratios

(Unaudited)

 

 

Sequential

Year over

 

Quarter Ended:

Quarter

Year

 

Jun 30, 2010

Mar 31, 2010

Jun 30, 2009

Change

Change

Net interest spread:

 

 

 

 

 

  Yield on non-covered loans and leases

5.82%

5.75%

5.81%

0.07

0.01

  Yield on covered loans and leases

7.27%

6.98%

N/A

0.29

nm

  Yield on taxable investments

3.83%

3.99%

4.45%

(0.16)

(0.62)

  Yield on tax-exempt investments (1)

5.75%

5.84%

5.75%

(0.09)

0.00

  Yield on temporary investments & interest bearing cash

0.26%

0.24%

0.18%

0.02

0.08

    Total yield on earning assets (1)

5.07%

5.07%

5.56%

0.00

(0.49)

 

 

 

 

 

 

  Cost of interest bearing deposits

1.10%

1.19%

1.60%

(0.09)

(0.50)

  Cost of securities sold under agreements

 

 

 

 

 

      to repurchase and fed funds purchased

1.02%

1.02%

1.06%

0.00

(0.04)

  Cost of term debt

3.54%

3.41%

3.63%

0.13

(0.09)

  Cost of junior subordinated debentures

4.26%

4.05%

4.93%

0.21

(0.67)

    Total cost of interest bearing liabilities

1.28%

1.33%

1.75%

(0.05)

(0.47)

 

 

 

 

 

 

Net interest spread (1)

3.79%

3.74%

3.81%

0.05

(0.02)

     Net interest margin – Consolidated (1)

4.05%

4.04%

4.20%

0.01

(0.15)

 

 

 

 

 

 

     Net interest margin – Bank (1)

4.13%

4.12%

4.33%

0.01

(0.20)

 

 

 

 

 

 

As reported (GAAP):

 

 

 

 

 

Return on average assets

0.13%

(0.10)%

(4.93)%

0.23

5.06

Return on average tangible assets

0.14%

(0.11)%

(5.40)%

0.25

5.54

Return on average common equity

0.86%

(0.71)%

(33.94)%

1.57

34.80

Return on average tangible common equity

1.48%

(1.30)%

(83.54)%

2.78

85.05

Efficiency ratio – Consolidated

66.85%

58.15%

166.97%

8.70

(100.12)

Efficiency ratio – Bank

64.18%

58.53%

179.36%

5.65

(115.18)

 

 

 

 

 

 

Operating basis (non-GAAP): (2)

 

 

 

 

 

Return on average assets

0.18%

(0.41)%

(0.03)%

0.59

0.21

Return on average tangible assets

0.19%

(0.44)%

(0.03)%

0.63

0.22

Return on average common equity

1.18%

(2.86)%

(0.22)%

4.04

1.40

Return on average tangible common equity

2.04%

(5.27)%

(0.53)%

7.31

2.57

Efficiency ratio – Consolidated

64.91%

64.35%

67.69%

0.56

(2.78)

Efficiency ratio – Bank

62.22%

61.44%

64.63%

0.78

(2.41)

 

 

 

 

 

 

(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 debentures carried at fair value, net of tax,
bargain purchase gain on acquisitions, net of tax, goodwill impairment, and merger related expenses, net of tax.

 

 

 

 

 

 

 

 

 

 

 

Umpqua Holdings Corporation Announces Second Quarter 2010 Results

July 27, 2010

Page 18 of 23

 

 

 

 

Umpqua Holdings Corporation

 

Selected Ratios

 

(Unaudited)

 

 

 

 

 

Six months Ended:

 

 

 

Jun 30, 2010

Jun 30, 2009

Change

 

 

Net interest spread:

 

 

 

 

  Yield on non-covered loans and leases

5.78%

5.80%

(0.02)

 

  Yield on covered loans and leases

7.17%

N/A

nm

 

  Yield on taxable investments

3.91%

4.64%

(0.73)

 

  Yield on tax-exempt investments (1)

5.80%

5.77%

0.03

 

  Yield on temporary investments & interest bearing cash

0.25%

0.22%

0.03

 

    Total yield on earning assets (1)

5.07%

5.59%

(0.52)

 

 

 

 

 

 

  Cost of interest bearing deposits

1.14%

1.71%

(0.57)

 

  Cost of securities sold under agreements

 

 

 

 

      to repurchase and fed funds purchased

1.02%

1.15%

(0.13)

 

  Cost of term debt

3.49%

3.52%

(0.03)

 

  Cost of junior subordinated debentures

4.15%

5.12%

(0.97)

 

    Total cost of interest bearing liabilities

1.31%

1.87%

(0.56)

 

 

 

 

 

 

Net interest spread (1)

3.76%

3.72%

0.04

 

     Net interest margin – Consolidated (1)

4.05%

4.14%

(0.09)

 

 

 

 

 

 

     Net interest margin – Bank (1)

4.13%

4.26%

(0.13)

 

 

 

 

 

 

As reported (GAAP):

 

 

 

 

Return on average assets

0.02%

(2.91)%

2.93

 

Return on average tangible assets

0.02%

(3.19)%

3.21

 

Return on average common equity

0.13%

(19.85)%

19.98

 

Return on average tangible common equity

0.23%

(48.49)%

48.72

 

Efficiency ratio – Consolidated

62.34%

120.03%

(57.69)

 

Efficiency ratio – Bank

61.33%

122.52%

(61.19)

 

 

 

 

 

 

Operating basis (non-GAAP): (2)

 

 

 

 

Return on average assets

(0.10)%

(0.45)%

0.35

 

Return on average tangible assets

(0.11)%

(0.49)%

0.38

 

Return on average common equity

(0.71)%

(3.05)%

2.34

 

Return on average tangible common equity

(1.26)%

(7.45)%

6.19

 

Efficiency ratio – Consolidated

64.64%

66.64%

(2.00)

 

Efficiency ratio – Bank

61.84%

63.45%

(1.61)

 

 

 

 

 

 

 

(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 debentures carried at fair value, net of tax,
bargain purchase gain on acquisitions, net of tax, goodwill impairment, and merger related expenses, net of tax.

 

Umpqua Holdings Corporation Announces Second Quarter 2010 Results

July 27, 2010

Page 19 of 23

 

 

Umpqua Holdings Corporation

Average Balances

(Unaudited)

 

 

Sequential

Year over

 

Quarter Ended:

Quarter

Year

(Dollars in thousands)

Jun 30, 2010

Mar 31, 2010

Jun 30, 2009

% Change

% Change

 

 

 

 

 

 

  Temporary investments & interest bearing cash

$849,112

$678,930

$41,449

25%

1949%

  Investment securities, taxable

1,628,195

1,610,407

1,249,218

1%

30%

  Investment securities, tax-exempt

231,675

221,405

198,999

5%

16%

  Loans held for sale

41,183

24,141

41,273

71%

0%

  Non-covered loans and leases

5,792,010

5,934,805

6,095,815

(2)%

(5)%

  Covered loans and leases

697,871

363,315

--

92%

nm

     Total earning assets

9,240,046

8,833,003

7,626,754

5%

21%

  Goodwill & other intangible assets, net

676,855

653,390

754,417

4%

(10)%

  Total assets

10,467,967

9,977,816

8,745,547

5%

20%

 

 

 

 

 

 

  Non-interest bearing demand deposits

1,475,852

1,448,668

1,303,909

2%

13%

  Interest bearing deposits

6,735,665

6,389,093

5,499,990

5%

22%

  Total deposits

8,211,517

7,837,761

6,803,899

5%

21%

  Interest bearing liabilities

7,281,191

6,807,375

5,902,284

7%

23%

 

 

 

 

 

 

  Shareholders’ equity - common

1,608,872

1,427,352

1,270,439

13%

27%

  Tangible common equity (1)

932,017

773,962

516,022

20%

81%

 

 

 

 

 

Six Months Ended:

 

(Dollars in thousands)

Jun 30, 2010

Jun 30, 2009

% Change

 

 

 

 

  Temporary investments & interest bearing cash

$764,491

$46,727

1536%

  Investment securities, taxable

1,619,351

1,219,205

33%

  Investment securities, tax-exempt

226,569

191,333

18%

  Loans held for sale

32,709

42,741

(23)%

  Non-covered loans and leases

5,863,012

6,115,652

(4)%

  Covered loans and leases

531,517

--

nm

     Total earning assets

9,037,649

7,615,658

19%

  Goodwill & other intangible assets, net

665,187

755,728

(12)%

  Total assets

10,224,246

8,729,784

17%

 

 

 

 

  Non-interest bearing demand deposits

1,462,335

1,278,083

14%

  Interest bearing deposits

6,563,336

5,475,438

20%

  Total deposits

8,025,671

6,753,521

19%

  Interest bearing liabilities

7,045,592

5,907,101

19%

 

 

 

 

  Shareholders’ equity - common

1,518,614

1,279,541

19%

  Tangible common equity (1)

853,427

523,813

63%

 

 

(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 Second Quarter 2010 Results

July 27, 2010

Page 20 of 23

 

 

Umpqua Holdings Corporation

Mortgage Banking Activity

(unaudited)

 

 

Sequential

Year over

 

Quarter Ended:

Quarter

Year

(Dollars in thousands)

Jun 30, 2010

Mar 31, 2010

Jun 30, 2009

% Change

% Change

 

 

 

 

 

 

Mortgage Servicing Rights (MSR):

 

 

 

 

 

  Mortgage loans serviced for others

$1,400,120

$1,345,550

$1,122,891

4%

25%

  MSR Asset, at fair value

$12,895

$13,628

$10,631

(5)%

21%

 

 

 

 

 

 

  MSR as % of serviced portfolio

0.92%

1.01%

0.95%

 

 

 

 

 

 

 

 

Mortgage Banking Revenue:

 

 

 

 

 

  Origination and sale

$3,947

$2,704

$5,889

46%

(33)%

  Servicing

934

903

738

3%

27%

  Change in fair value of MSR asset

(1,672)

(129)

(368)

1196%

354%

     Total

$3,209

$3,478

$6,259

(8)%

(49)%

 

 

 

 

 

 

 

 

 

 

 

 

Closed loan volume

$145,085

$127,314

$234,023

14%

(38)%

 

 

 

 

 

 

 

 

 

Six Months Ended:

 

 

 

(Dollars in thousands)

Jun 30, 2010

Jun 30, 2009

% Change

 

 

 

 

 

 

 

 

Mortgage Banking Revenue:

 

 

 

 

 

  Origination and sale

$6,651

$10,746

(38)%

 

 

  Servicing

1,837

1,392

32%

 

 

  Change in fair value of MSR asset

(1,801)

(1,809)

0%

 

 

     Total

$6,687

$10,329

(35)%

 

 

 

 

 

 

 

 

Closed loan volume

$272,400

$425,736

(36)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Umpqua Holdings Corporation Announces Second Quarter 2010 Results

July 27, 2010

Page 21 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

 

 

The following is a geographic distribution of the non-covered residential development portfolio as of June 30, 2010, March 31, 2010 and June 30, 2009:

 

Table 1- Non-covered residential development loan trends by region   

(Dollars in thousands)

 

Non-

 

 

 

 

 

% change

performing

Performing

 

Balance

Balance

Balance

   from

loans

  Loans

 

6/30/09

3/31/10

6/30/10

6/30/09

6/30/10

6/30/10

Northwest Oregon

$120,076

$81,409

$75,373

(37)%

$7,799

$67,574

Central Oregon

15,493

4,962

4,107

(73)%

109

3,998

Southern Oregon

26,561

17,149

13,440

(49)%

2,366

11,074

Washington

24,744

8,462

7,723

(69)%

1,497

6,226

Greater Sacramento

84,522

67,676

54,710

(35)%

13,730

40,980

Northern California

29,894

22,140

20,653

(31)%

7,108

13,545

   Total

$301,290

$201,798

$176,006

(42)%

$32,609

$143,397

% of total non-covered

   loan portfolio

5%

4%

3%

 

 

3%

 

 

 

 

 

 

 

Quarter change $

$(27,383)

$(24,011)

$(25,792)

 

 

 

Quarter change %

(8)%

(11)%

(13)%

 

 

 

 

 

The following is a stratification by size and region of the remaining non-covered performing residential development loans as of June 30, 2010:

 

Table 2 – Non-covered residential development loan stratification by size and by region

(Dollars in thousands)

 

 

 

 

 

 

$250k

$1 million

$3 million

$5 million

$10 million

 

 

$250k

to

to

to

to

and

 

 

and less

$1 million

$3 million

$5 million

$10 million

Greater

Total

Northwest Oregon

$2,555

$8,755

$11,881

$13,613

$16,134

$14,636

$67,574

Central Oregon

506

1,044

2,448

--

--

--

3,998

Southern Oregon

1,424

4,857

4,793

--

--

--

11,074

Washington

352

356

5,518

--

--

--

6,226

Greater Sacramento

3,894

4,702

1,894

4,817

11,455

14,218

40,980

Northern California

1,483

2,179

9,883

--

--

--

13,545

   Total

$10,214

$21,893

$36,417

$18,430

$27,589

$28,854

$143,397

   % of Total

7%

15%

26%

13%

19%

20%

100%

 

 

 

Umpqua Holdings Corporation Announces Second Quarter 2010 Results

July 27, 2010

Page 22 of 23

 

The following is a distribution of non-covered, non-performing assets by type and by region as of June 30, 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

$7,628

$109

$2,366

$1,497

$13,730

$7,108

$32,438

   Commercial construction

12,976

--

--

2,197

10,793

--

25,966

   Commercial real estate

25,233

3,906

4,245

--

13,867

13,948

61,199

   Commercial

15,602

3,201

745

11,247

9,555

10,683

51,033

   Other

--

--

--

--

--

--

--

      Total

$61,439

$7,216

$7,356

$14,941

$47,945

$31,739

$170,636

 

 

 

 

 

 

 

 

Loans 90 days past due:

 

 

 

 

 

 

 

   Residential development

$171

$--

$--

$--

$--

$--

$171

   Commercial construction

--

--

--

--

--

--

--

   Commercial real estate

--

--

--

--

544

1,052

1,596

   Commercial

--

--

--

--

96

99

195

   Other

5,752

--

--

2

1,497

--

7,251

      Total

$5,923

$--

$--

$2

$2,137

$1,151

$9,213

 

 

 

 

 

 

 

 

  Total non-performing loans

$67,362

$7,216

$7,356

$14,943

$50,082

$32,890

$179,849

 

 

 

 

 

 

 

 

Other real estate owned:

 

 

 

 

 

 

 

   Residential development

$476

$3,065

$720

$1,074

$1,897

$278

$7,510

   Commercial construction

--

586

--

426

4,841

3,465

9,318

   Commercial real estate

2,318

--

348

--

3,639

--

6,305

   Commercial

--

758

--

--

--

95

853

   Other

1,667

--

--

--

--

--

1,667

      Total

$4,461

$4,409

$1,068

$1,500

$10,377

$3,838

$25,653

 

 

 

 

 

 

 

 

Total non-performing assets

$71,823

$11,625

$8,424

$16,443

$60,459

$36,728

$205,502

% of total

35%

6%

4%

8%

29%

18%

100%

 

 

 

 

 

 

 

 

The Company has aggressively charged-down impaired assets to their disposition values. As of June 30, 2010, the non-performing assets of $205.5 million have been written down by 43%, or $154.3 million, from their original balance of $359.8 million.

 

The following is a distribution of non-covered loans past due 30-89 days by loan type by region as of June 30, 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

$--

$--

$268

$--

$495

$--

$763

 

   Commercial construction

--

--

--

--

903

--

903

 

   Commercial real estate

14,817

1,819

1,031

1,898

1,760

1,598

22,923

 

   Commercial

5,204

--

1,256

250

1,099

1,364

9,173

 

   Other

4,730

--

--

300

1,343

--

6,373

 

     Total

$24,751

$1,819

$2,555

$2,448

$5,600

$2,962

$40,135

 

 

 

 

 

Table 5 –Non-covered loans past due 30-89 days trends

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

Sequential

Year

 

 

 

 

Quarter

Over Year

 

Jun 30, 2010

Mar 31, 2010

Jun 30, 2009

% Change

% Change

Loans 30-89 days past due:

 

 

 

 

   Residential development

$763

$13,583

$11,096

(94)%

(93)%

   Commercial construction

903

4,861

--

(81)%

nm

   Commercial real estate

22,923

21,672

25,712

6%

(11)%

   Commercial

9,173

8,306

8,594

10%

7%

   Other

6,373

5,525

3,353

15%

90%

     Total

$40,135

$53,947

$48,755

(26)%

(18)%

 

Umpqua Holdings Corporation Announces Second Quarter 2010 Results

July 27, 2010

Page 23 of 23

 

The following is a distribution of non-covered restructured loans by loan type by region as of June 30, 2010:

 

Table 6 – Non-covered restructured loans on accrual status 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

$20,111

$--

$--

$5,518

$25,853

$--

$51,482

   Commercial construction

--

--

--

--

--

--

--

   Commercial real estate

3,985

--

5,786

--

9,691

3,826

23,288

   Commercial

--

--

--

--

26

1,236

1,262

   Other

4,467

--

--

--

35

--

4,502

     Total

$28,563

$--

$5,786

$5,518

$35,605

$5,062

$80,534

 

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 Nevada Security 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)

 

 

 

 

Nevada

 

 

Security Bank

 

 

June 18, 2010

 

Assets Acquired:

 

 

Cash and equivalents

 $66,060

 

Investment securities

22,626

 

Covered loans

209,442

 

Premises and equipment

50

 

Restricted equity securities

2,951

 

Goodwill

12,970

 

Other intangible assets

322

 

Covered other real estate owned

17,938

 

FDIC indemnification asset

101,910

 

Other assets

3,326

 

 Total assets acquired

 $437,595

 

 

 

 

Liabilities Assumed:

 

 

Deposits

 $437,299

 

Other liabilities

296

 

 Total liabilities assumed

$437,595

 

 

# # #