EX-99.1 2 f8kuhc3qex991.htm EXHIBIT 99.1 f8kuhc3qex991.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 IMPROVED THIRD QUARTER 2010 RESULTS

Third quarter 2010 net income of $0.07 per diluted share, operating income of $0.08 per diluted share

Non-covered, non-performing assets declined to 1.59% of total assets

Deposits increased $743 million, or 9%, over prior quarter

 

PORTLAND, Ore. – October 21, 2010 – Umpqua Holdings Corporation (NASDAQ: UMPQ), parent company of Umpqua Bank and Umpqua Investments, Inc. today announced third quarter 2010 net earnings available to common shareholders of $8.2 million, or $0.07 per diluted common share, compared to a net loss available to common shareholders of $10.4 million, or $0.14 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 $9.5 million, or $0.08 per diluted common share for the third quarter of 2010, compared to an operating loss of $11.0 million, or $0.15 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 third quarter of 2010 include:

·         Non-covered, non-performing assets ended the quarter at 1.59% of total assets, the lowest level in over two years;

·         Provision for non-covered loan losses of $24.2 million, a 19% decrease, and total net charge-offs of $30.0 million, a 13% increase, on a sequential quarter basis.  Net charge-offs exceeded the provision for non-covered loan losses during the quarter because impairment reserves established in the prior quarter were charged off in the current quarter;

·         The allowance for credit losses ended the quarter at 1.91% of non-covered total loans and lease;

·         Total deposits increased $743 million, or 9%, on a sequential quarter basis due to organic growth during the quarter; 

·         Net interest margin, on a tax equivalent basis, increased 37 basis points to 4.42%, related to covered loan payoffs ahead of expectations, with a corresponding offset to the change in FDIC indemnification asset in other non-interest income;

·         The cost of interest bearing deposits for the third quarter of 2010 was 1.08%, a decrease of 2 basis points on a sequential quarter basis;

·         Tangible common equity ratio decreased to 8.95%, resulting from the growth in total assets; and,

·         Total risk-based capital of 17.52%, and Tier 1 common to risk weighted asset ratio of 13.1%.

 

 

Umpqua Holdings Corporation Announces Third Quarter 2010 Results

October 21, 2010

Page 2 of 23

 

 

“The results from this past quarter once again attest to the strength of the core growth strategy of Umpqua as organic deposit growth exceeded $700 million. We are also pleased to report that for the third quarter in a row, our credit professionals lowered our non-covered, non-performing assets, which are now down to 1.59% of total assets,” said Ray Davis CEO of Umpqua Holdings Corporation. “We believe the actions management has taken over the last several quarters have positioned the Company for continued growth.”

 

FDIC-assisted acquisitions

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.  In the second quarter of 2010, Umpqua Bank assumed the banking operations of Nevada Security Bank (“Nevada Security”), Reno, Nevada.  The operations of Evergreen and Rainier (combined), and Nevada Security, have contributed operating earnings of $7.5 million and $1.2 million, respectively, since their assumptions.  The operating systems of all three institutions have been converted onto Umpqua’s platform. 

 

Asset quality – Non-covered loan portfolio

Non-performing assets were $183.6 million, or 1.59% of total assets, as of September 30, 2010, compared to $205.5 million, or 1.90% of total assets as of June 30, 2010, and $156.0 million, or 1.70% of total assets as of September 30, 2009.  Of this amount, as of September 30, 2010, $139.7 million represented non-accrual loans, $11.9 million represented loans past due greater than 90 days and still accruing interest, and $32.0 million was other real estate owned (“OREO”).

 

The Company has aggressively charged-down impaired assets to their disposition values, and the assets are expected to be resolved at those levels, absent further declines in market prices.  As of September 30, 2010, the non-performing assets of $183.6 million have been written down by 39%, or $118.8 million, from their original balance of $302.4 million.

 

The provision for loan losses for the third quarter of 2010 was $24.2 million, the lowest level of provision since the second quarter of 2008, due to improving credit quality of the loan portfolio.  Total net charge-offs for the third quarter of 2010 were $30.0 million, reducing the allowance for credit losses to 1.91% of non-covered loans and leases at September 30, 2010, as compared to 2.00% of total non-covered loans as of June 30, 2010 and 1.71% of total non-covered loans as of September 30, 2009.  Net charge-offs exceeded the provision for loan losses during the third quarter of 2010, related to impairment reserves established in the prior quarter being charged off in the current quarter.  The annualized net charge-off rate for the third quarter of 2010 was 2.08%.

 

Loans past due 30-89 days were $80.2 million, or 1.41% of non-covered loans and leases as of September 30, 2010, as compared to $40.1 million, or 0.70% as of June 30, 2010, and $46.1 million, or 0.76% as of September 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: 

 

 

Umpqua Holdings Corporation Announces Third Quarter 2010 Results

October 21, 2010

Page 3 of 23

 

 

  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%

Q3 2010

24,228

30,044

1.91%

1.41%

1.59%

Total

$454,633

$411,703

 

 

 

 

 

 

 

 

 

 

Non-covered construction loan portfolio

Total non-covered construction loans as of September 30, 2010 were $463 million, representing a decrease of 7% since June 30, 2010, and a decrease of 38% from September 30, 2009.  Within this portfolio, the residential development loan segment was $160 million, or 3% of the total non-covered loan portfolio.  Of this amount, $30 million represented non-performing loans, and $130 million represented performing loans.  The residential development loan segment has decreased $98 million, or 38%, since September 30, 2009. 

 

The remaining $303 million in non-covered construction loans as of September 30, 2010 primarily represents commercial construction projects.  Total non-covered, non-performing commercial construction loans were $26.4 million at September 30, 2010, and $5.5 million were past due 30-89 days as of September 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 September 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, $38.7 million, or 1.11%, are past due 30-89 days as of September 30, 2010.  Of the total non-covered commercial real estate portfolio, 7% matures in 2010-2011, 13% in years 2012-2013, and 21% in years 2014-2015.  The remaining 59% 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 two years, 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.

 

 

 

Umpqua Holdings Corporation Announces Third Quarter 2010 Results

October 21, 2010

Page 4 of 23

 

 

Non-covered restructured loans

Restructured loans on accrual status were $75.6 million as of September 30, 2010, down 6% from $80.5 million as of June 30, 2010, and down 59% from $182.2 million as of September 30, 2009.  The decrease during the third quarter primarily resulted from payments received, and the decrease from the same period in the prior year 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: 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 on accrual status by type and by region.

 

Asset quality – Covered loan portfolio

Covered non-performing assets were $54.5 million, or 0.47% of total assets, as of September 30, 2010, as compared to $87.1 million, or 0.80% of total assets, as of June 30, 2010. Of the amount at September 30, 2010, $24.2 million represented non-accrual loans and $30.3 million was OREO.  The reduction in covered non-performing assets in the current quarter primarily resulted from the reclassification of some Evergreen and Rainier impaired loan pools into accrual status.  As cash flows and other assets have been received in excess of original estimates, the carrying value of these impaired loan pools have decreased and the total expected cash flows associated with the pool have increased, resulting in accretable yield.  It is important to note that at this time, the difference between the cash flows related to principal expected to be received and the carrying value of these loan pools is the only amount included in accretable yield and available to be recognized into interest income, and that the contractual interest income on the underlying loans has not been included in our estimation of expected future cash flows to be received, or considered to be accretable yield of the pool, as the loans are considered non-performing. 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 recognized within non-interest income. 

 

Net interest margin

The Company reported a tax equivalent net interest margin of 4.42% for the third quarter of 2010, compared to 4.05% for the second quarter of 2010, and 4.05% for the third quarter of 2009.  The increase in net interest margin on a sequential quarter basis resulted primarily from an increase in average covered loans outstanding, increased yield on the covered loan portfolio as a result of payoffs ahead of expectations and declining costs of interest bearing deposits, partially offset by interest reversals of new non-accrual loans, a decline in non-covered loans outstanding, the impact of holding much higher levels of interest bearing cash, and the purchase of short-term, low-yielding investment securities during the quarter.  The increase in net interest margin related to covered loan yields was offset by a corresponding decrease to the change in FDIC indemnification asset in other non-interest income.  Interest reversals on new non-accrual loans during the third quarter of 2010 were $0.6 million, negatively impacting the net interest margin by 2 basis points.  Excluding the reversals of interest, the net interest margin would have been 4.44% during the quarter.  For the twelfth consecutive quarter, the Company has continued to reduce the cost of interest bearing deposits.  As a result of these efforts, the cost of interest bearing deposits was 1.08%, 2 basis points lower than the second quarter of 2010 and 42 basis points lower than the third quarter of 2009.

 

 

Umpqua Holdings Corporation Announces Third Quarter 2010 Results

October 21, 2010

Page 5 of 23

 

 

Mortgage banking revenue

The Company generated a record $7.1 million in total mortgage banking revenue during the third quarter of 2010, on closed loan volume of $232 million.  In the third quarter of 2010, the Company recognized a decline in the fair value of the mortgage servicing right assets of $1.1 million resulting from the historically low market for mortgage interest rates.  Income from the origination and sale of mortgage loans was $7.2 million in the third quarter, representing an 82% increase on a sequential quarter basis.  As of September 30, 2010, the Company serviced $1.5 billion of mortgage loans for others, and the related mortgage servicing right asset was valued at $13.5 million, or 0.91% of the total serviced portfolio principal balance.

 

Fair value of junior subordinated debentures

The Company recognized a $0.6 million loss from the change in fair value of junior subordinated debentures during the third quarter of 2010.  The Company utilizes 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 September 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.  Because these instruments are no longer being originated in the market, the quarterly fair value adjustments are not likely to be volatile in the future, and the cumulative fair value adjustment will continue to reverse and be recognized as a reduction in non-interest income over the remaining period to maturity of each related instrument.  As of September 30, 2010, the total par value of junior subordinated debentures carried at fair value was $134.0 million, and the fair value was $80.1 million.

 

Non-interest expense

Total non-interest expense for the third quarter of 2010 was $85.2 million, compared to $74.8 million for the second quarter of 2010 and $68.3 million for the third 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 $79.9 million for the third quarter of 2010, compared to $70.1 million for the second quarter of 2010 and $56.4 million for the third quarter of 2009.  Approximately $4.75 million of other expense in the third quarter of 2010 is considered non-recurring, relating primarily to professional fees and severance costs.  The remaining increase related primarily to increases in variable expenses related to the Mortgage Banking Division’s production in the quarter, and the assumption of Evergreen’s, Rainier’s and Nevada Security’s banking operations, higher loan collection and OREO management expense, as well as various other growth initiatives underway.

 

Total FDIC deposit insurance assessments during the third quarter of 2010 were $3.9 million. The increase over the prior period of $3.6 million is a result of the deposit growth in the third quarter and a full quarter of outstanding deposits related to the Nevada Security FDIC-assisted acquisition.

 

Income taxes

The Company recorded a provision for income taxes of $2.2 million in the third quarter of 2010.  The change in the effective income tax rate in the quarter reflects the effects of permanent differences on our taxable income year to date.

 

 

 

Umpqua Holdings Corporation Announces Third Quarter 2010 Results

October 21, 2010

Page 6 of 23

 

Balance sheet

Total consolidated assets as of September 30, 2010 were $11.5 billion, compared to $10.8 billion on June 30, 2010 and $9.2 billion a year ago.  Total gross loans and leases (covered and non-covered), and deposits, were $6.5 billion and $9.3 billion, respectively, as of September 30, 2010, compared to $6.1 billion and $7.2 billion, respectively, as of September 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:

 

 

(Dollars in thousands)

Non-covered

loans and leases

Deposits

Assets

As reported, 9/30/10

 $5,698,267

 $9,301,340

 $11,532,971

Less: 12/31/09 balances

    5,999,267

    7,440,434

    9,381,372

   Total growth year-to-date

(301,000)

1,860,906

2,151,598

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

--

102,871

102,871

   Organic growth

 $(301,000)

 $846,876

 $740,402

 

 

 

 

Annualized organic growth rate

    (6.7)%

   15.2%

     10.6%

 

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

 

Total loans held for investment (including covered and non-covered) decreased $58 million during the third quarter of 2010. This decrease is principally attributable to non-covered charge-offs and transfers to other real estate owned.

 

Total deposits increased $743 million, or 9%, during the third quarter of 2010.  Total deposits have increased $1.9 billion, or 25%, 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 dates.  The Bank is not renewing these brokered deposits as they mature. Excluding the impact of the deposits assumed in acquisitions of and the run-off of brokered time deposits that have matured, total deposits increased $846 million in 2010, representing a 15.2% 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 all excess liquidity into the bond market.  At September 30, 2010, the Company had $934 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. However, in the third quarter of 2010 we did purchase short duration government-sponsored investment securities to match and offset the interest expense associated with the growth in deposits during the quarter. The Company plans to hold an 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 $4.8 billion as of September 30, 2010, representing 42% of total assets and 51% of total deposits.

 

Capital

As of September 30, 2010, total shareholders’ equity was $1.65 billion, comprised entirely of common equity.  Book value per common share was $14.42, tangible book value per common share was $8.48 and the ratio of tangible common equity to tangible assets was 8.95%. 

 

 

 

Umpqua Holdings Corporation Announces Third Quarter 2010 Results

October 21, 2010

Page 7 of 23

 

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. 

 

The Company’s estimated total risk-based capital ratio as of September 30, 2010 is 17.52%.  This represents a slight decrease from June 30, 2010, as a result asset growth during the quarter.  Our total risk-based capital level is well in excess of the regulatory definition of “well-capitalized” of 10.00%.  The Company’s estimated Tier 1 common to risk weighted assets ratio is 13.1% as of September 30, 2010.  These capital ratios as of September 30, 2010 are estimates 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)

Sep 30, 2010

Jun 30, 2010

Sep 30, 2009

% Change

% Change

 

 

 

 

 

 

Net earnings (loss) available to common

   shareholders

$8,173

$3,447

$(10,376)

137%

(179)%

Adjustments:

 

 

 

 

 

     Net loss (gain) on junior subordinated debentures

        carried at fair value, net of tax (1)

332

--

(589)

nm

(156)%

     Merger related expenses, net of tax (1)

986

1,301

--

(24)%

nm

Operating earnings (loss)

$9,491

$4,748

$(10,965)

100%

(187)%

 

 

 

 

 

 

Earnings (loss) per diluted share:

 

 

 

 

 

Earnings (loss) available to common shareholders

    $0.07

    $0.03

    $(0.14)

133%

(150)%

Operating earnings (loss)

    $0.08

    $0.04

    $(0.15)

100%

(153)%

 

 

 

Umpqua Holdings Corporation Announces Third Quarter 2010 Results

October 21, 2010

Page 8 of 23

 

 

 

 

 

 

 

 

Nine Months Ended:

Year over Year

(Dollars in thousands, except per share data)

Sep 30, 2010

Sep 30, 2009

% Change

 

 

 

 

Net earnings (loss) available to common

   shareholders

$9,138

$(136,338)

(107)%

Adjustments:

 

 

 

     Net gain on junior subordinated debentures

        carried at fair value, net of tax (1)

(3,320)

(6,104)

(46)%

     Bargain purchase gain on acquisitions, net of tax (1)

(5,074)

--

nm

     Goodwill impairment

--

111,952

(100)%

     Merger related expenses, net of tax (1)

3,431

164

1992%

Operating earnings (loss)

$4,175

$(30,326)

(114)%

 

 

 

 

Earnings (loss) per diluted share:

 

 

 

Earnings (loss) available to common shareholders

    $0.09

    $(2.10)

(104)%

Operating earnings (loss)

    $0.04

    $(0.47)

(109)%

 

(1)     Income tax effect of pro forma operating earnings adjustments at 40%.

 

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)

Sep 30, 2010

Jun 30, 2010

Sep 30, 2009

 

 

 

 

Total shareholders' equity

    $1,651,714

    $1,654,053

$1,606,150

Subtract:

 

 

 

   Preferred stock

         --

         --

203,779

   Goodwill and other intangible assets, net

         680,893

         682,249

641,759

Tangible common shareholders' equity

       $970,821

       $971,804

$760,612

 

 

 

 

Total assets

    $11,532,971

    $10,827,268

$9,204,346

Subtract:

 

 

 

   Goodwill and other intangible assets, net

         680,893

         682,249

641,759

Tangible assets

 $10,852,078

    $10,145,019

$8,562,587

 

 

 

 

Common shares outstanding at period end

114,531,514

    114,524,973

86,780,559

 

 

 

 

Tangible common equity ratio

8.95%

       9.58%

       8.88%

Tangible book value per common share

 $8.48

       $8.49

        $8.76

 

 

 

Umpqua Holdings Corporation Announces Third Quarter 2010 Results

October 21, 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 183 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 Thursday, October 21, 2010, at 10:00 a.m. PDT (1:00 p.m. EDT) during which the Company will discuss third 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 “14703182.”  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.      

 

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 credits at the estimated disposition value of related collateral, 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, 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, unanticipated further declines in real estate values, certain loan assets become ineligible for loss sharing, unanticipated deterioration in the commercial real estate loan portfolio, and continued negative pressure on interest income associated with our large cash position.

 

 

Umpqua Holdings Corporation Announces Third Quarter 2010 Results

October 21, 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)

Sep 30, 2010

Jun 30, 2010

Sep 30, 2009

% Change

% Change

Interest income

 

 

 

 

 

  Loans and leases

           $112,652

           $97,240

           $89,474

16%

26%

  Interest and dividends on investments:

 

 

 

 

 

     Taxable

 17,421

                 15,569 

                 15,365 

12%

13%

     Exempt from federal income tax

2,221

                 2,247

                 2,020

(1)%

10%

     Dividends

6

3

22

100%

(73)%

  Temporary investments & interest bearing cash

646

                    545

                  207

19%

212%

    Total interest income

132,946

             115,604

             107,088

15%

24%

 

Interest expense

 

 

 

 

 

  Deposits

19,913

               18,463

               22,132

8%

(10)%

  Repurchase agreements and

 

 

 

 

 

    fed funds purchased

136

                    123

163

11%

(17)%

  Junior subordinated debentures

2,047

                 1,939

2,114

6%

(3)%

  Term debt

2,533

                 2,779

917

(9)%

176%

    Total interest expense

24,629

               23,304

25,326

6%

(3)%

Net interest income

108,317

               92,300

81,762

17%

32%

Provision for non-covered loan and lease losses

24,228

                 29,767

52,108

(19)%

(54)%

Provision for covered loan and lease losses

667

--

--

nm

nm

Non-interest income

 

 

 

 

 

  Service charges

8,756

                 9,585

                 8,542

(9)%

3%

  Brokerage fees

2,609

                 3,139

1,993

(17)%

31%

  Mortgage banking revenue, net

7,138

              3,209

4,288

122%

66%

  Net gain on investment securities

2,287

             --

               158

nm

1347%

  (Loss) gain on junior subordinated debentures

 

 

                 

       

   

      carried at fair value

(554)

              --

              982

nm

(156)%

  Change in FDIC indemnification asset

(11,948)

                      263

                    --

nm

nm

  Other income

3,845

                 2,367

1,962

        62%

96%

Total non-interest income

12,133

               18,563

17,925

(35)%

(32)%

Non-interest expense

 

 

 

 

 

  Salaries and benefits

42,964

               39,604

               31,583

8%

36%

  Occupancy and equipment

11,448

                 11,472

9,937

0%

15%

  Intangible amortization

1,356

1,368

1,319

(1)%

3%

  FDIC assessments

3,910

3,555

3,321

        10%

18%

  Net (gain) loss on other real estate owned

(317)

(952)

8,641

(67)%

(104)%

  Merger related expenses

1,643

2,169

--

(24)%

nm

  Other

24,166

17,617

13,548

37%

78%

Total non-interest expense

85,170

74,833

68,349

14%

25%

Income (loss) before provision for (benefit from)

     income taxes

10,385

6,263

               (20,770)

66%

(150)%

Provision for (benefit from) income taxes

2,194

2,800

(13,626)

(22)%

(116)%

   Net income (loss)

8,191

3,463

             (7,144)

137%

(215)%

 

 

 

 

 

 

Dividends and undistributed earnings

 

 

 

 

 

   allocated to participating securities

18

16

               7

13%

157%

Preferred stock dividend

--

--

3,225

(100)%

(100)%

Net earnings (loss) available to common

   shareholders

$8,173

$3,447

$(10,376)

(137)%

(179)%

 

 

 

 

 

 

Weighted average shares outstanding

114,527,619

110,134,674

74,084,640 

4%

55%

Weighted average diluted shares outstanding

114,760,063

114,733,357

        74,084,640

0%

55%

Earnings (loss) per common share – basic

                $0.07

                $0.03

                $(0.14)

133%

(150)%

Earnings (loss) per common share – diluted

                $0.07

                $0.03

                $(0.14)

133%

(150)%

nm = not meaningful

 

 

 

 

Umpqua Holdings Corporation Announces Third Quarter 2010 Results

October 21, 2010

Page 11 of 23

 

 

Umpqua Holdings Corporation

Consolidated Statements of Operations

(Unaudited)

 

 

 

 

 

 

Nine Months Ended:

 

 

(Dollars in thousands, except per share data)

Sep 30, 2010

Sep 30, 2009

% Change

Interest income

 

 

 

  Loans and leases

           $300,600

                 $266,587

13%

  Interest and dividends on investments:

 

 

 

     Taxable

49,065

                     43,625

12%

     Exempt from federal income tax

6,655

                       5,755

16%

     Dividends

9

22

(59)%

  Temporary investments & interest bearing cash

1,590

258

516%

    Total interest income

357,919

                 316,247

13%

 

Interest expense

 

 

 

  Deposits

57,165

                 68,552

(17)%

  Repurchase agreements and

 

 

 

    fed funds purchased

382

                       527

(28)%

  Junior subordinated debentures

5,871

                      7,069

(17)%

  Term debt

6,832

                       3,935

74%

    Total interest expense

70,250

                     80,083

(12)%

Net interest income

287,669

                  236,164

22%

Provision for non-covered loan and lease losses

96,101

                    140,531

(32)%

Provision for covered loan and lease losses

 667

--

nm

Non-interest income

 

 

 

  Service charges

26,706

                     24,565

9%

  Brokerage fees

8,387

                      5,117

64%

  Mortgage banking revenue, net

13,825

                    14,617

(5)%

  Net gain (loss) on investment securities

1,999

                     (1,077)

(286)%

  Gain on junior subordinated debentures

 

 

       

      carried at fair value

5,534

                     10,173

(46)%

  Bargain purchase gain on acquisitions

8,456

                    --

nm

  Change in FDIC indemnification asset

(11,075)

                    --

nm

  Other income

8,930

                       7,097

26%

Total non-interest income

62,762

                     60,492

4%

Non-interest expense

 

 

 

  Salaries and benefits

118,808

                  94,697

25%

  Occupancy and equipment

33,596

                    29,266

15%

  Intangible amortization

4,032

                      4,043

0%

  FDIC assessments

10,909

12,645

(14)%

  Net  loss on other real estate owned

1,042

14,110

(93)%

  Goodwill impairment

--

111,952

(100)%

  Merger related expenses

5,718

273

1995%

  Other

55,769

               39,917

40%

Total non-interest expense

229,874

306,903

(25)%

Income (loss) before provision for (benefit from)

     income taxes

23,789

              (150,778)

(116)%

Provision for (benefit from) income taxes

2,410

                   (24,094)

(110)%

   Net income (loss)

21,379

          (126,684)

(117)%

 

 

 

 

Dividends and undistributed earnings

 

 

 

   allocated to participating securities

49

22

123%

Preferred stock dividend

12,192

9,632

27%

Net earnings (loss) available to common shareholders

$9,138

$(136,338)

(107)%

 

 

 

 

Weighted average shares outstanding

105,694,696

              64,878,125

63%

Weighted average diluted shares outstanding

105,923,776

             64,878,125

63%

Earnings (loss) per common share – basic

                $0.09

                   $(2.10)

(104)%

Earnings (loss) per common share – diluted

                $0.09

                     $(2.10)

(104)%

 

 

Umpqua Holdings Corporation Announces Third Quarter 2010 Results

October 21, 2010

Page 12 of 23

 

 

 

Umpqua Holdings Corporation

Consolidated Balance Sheets

(Unaudited)

 

 

 

 

Sequential

Year over

 

 

 

 

Quarter

Year

(Dollars in thousands, except per share data)

Sep 30, 2010

Jun 30, 2010

Sep 30, 2009

% Change

% Change

Assets:

 

 

 

 

 

  Cash and due from banks, non-interest bearing

              $124,633

              $143,098

              $108,768

(13)%

15%

  Cash and due from banks, interest bearing

933.911

818,186

              261,642

14%

257%

  Temporary investments

5,496

9,296

                  575

(41)%

856%

  Investment securities:

 

 

 

 

 

     Trading

2,155

1,743

                    1,912

24%

13%

     Available for sale

2,599,263

1,933,647

               1,848,482

34%

41%

     Held to maturity

5,108

5,493

                   6,211

(7)%

(18)%

  Loans held for sale

57,407

40,114

                    23,614

43%

143%

  Non-covered loans and leases

5,698,267

5,726,673

               6,071,042

0%

(6)%

  Less:  Allowance for loan and lease losses

(108,098)

(113,914)

              (103,136)

(5)%

5%

    Loans and leases, net

5,590,169

5,612,759

            5,967,906

0%

(6)%

  Covered loans and leases

840,469

870,238

--

(3)%

nm

  Restricted equity securities

34,665

34,855

                    15,211

(1)%

128%

  Premises and equipment, net

133,728

128,586

                  101,883

4%

31%

  Mortgage servicing rights, at fair value

13,454

12,895

                  11,552

4%

16%

  Goodwill and other intangibles, net

680,893

682,249

                  641,759

0%

6%

  Non-covered other real estate owned

32,024

25,653

                    26,705

25%

20%

  Covered other real estate owned

30,348

28,290

--

7%

nm

  FDIC indemnification asset

217,696

246,983

--

(12)%

nm

  Other assets

231,552

233,183

                  188,126

(1)%

23%

Total assets

           $11,532,971

           $10,827,268

           $9,204,346

7%

25%

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

  Deposits

             $9,301,340

             $8,558,744

             $7,215,821

9%

29%

  Securities sold under agreements to repurchase

55,333

44,715

50,031

24%

11%

  Term debt

268,256

291,505

76,329

(8)%

251%

  Junior subordinated debentures, at fair value

80,146

79,590

81,992

1%

(2)%

  Junior subordinated debentures, at amortized cost

102,946

103,027

103,269

0%

0%

  Other liabilities

73,236

95,634

70,754

(23)%

4%

    Total liabilities

9,881,257

9,173,215

               7,598,196

8%

30%

 

 

 

 

 

 

Shareholders' equity:

 

 

 

 

 

  Preferred stock

--

--

203,779

nm

(100)%

  Common stock

1,540,029

1,538,793

1,252,786

0%

23%

  Retained earnings

75,502

73,062

118,204

3%

(36)%

  Accumulated other comprehensive income

36,183

42,198

31,381

(14)%

15%

    Total shareholders' equity

1,651,714

1,654,053

1,606,150

0%

3%

Total liabilities and shareholders' equity

           $11,532,971

           $10,827,268

           $9,204,346

7%

25%

 

 

 

 

 

 

Common shares outstanding at period end

114,531,514

114,524,973

            86,780,559

0%

32%

Book value per common share

                 $14.42

                 $14.44

                 $16.16

0%

(11)%

Tangible book value per common share

                   $8.48

                   $8.49

                   $8.76

0%

(3)%

Tangible equity - common

             $970,821

             $971,804

             $760,612

0%

28%

Tangible common equity to tangible assets

8.95%

9.58%

8.88%

 

 

nm = not meaningful

 

 

 

 

 

 

 

 

Umpqua Holdings Corporation Announces Third Quarter 2010 Results

October 21, 2010

Page 13 of 23

 

 

Umpqua Holdings Corporation

Non-covered Loan & Lease Portfolio

(Unaudited)

 

 

 

 

 

 

 

Sequential

Year over

(Dollars in thousands)

Sep 30, 2010

 

Jun 30, 2010

 

Sep 30, 2009

 

Quarter

Year

 

Amount

Mix

 

Amount

Mix

 

Amount

Mix

 

% Change

% Change

Non-covered loans & leases:

 

 

 

 

 

 

 

 

 

 

 

  Commercial real estate

$3,491,819

61%

 

$3,496,374

61%

 

$3,438,923

57%

 

0%

2%

  Residential real estate

462,515

8%

 

456,357

8%

 

441,613

7%

 

1%

5%

  Construction

462,801

8%

 

495,456

9%

 

748,337

12%

 

(7)%

(38)%

    Total real estate

4,417,135

78%

 

4,448,187

78%

 

4,628,873

76%

 

(1)%

(5)%

  Commercial

1,223,012

21%

 

1,223,927

21%

 

1,381,549

23%

 

0%

(11)%

  Leases

32,428

1%

 

32,375

1%

 

36,720

1%

 

0%

(12)%

  Installment and other

36,624

1%

 

33,188

1%

 

34,883

1%

 

10%

5%

  Deferred loan fees, net

(10,932)

0%

 

(11,004)

0%

 

(10,933)

0%

 

(1)%

0%

     Total

$5,698,267

100%

 

$5,726,673

100%

 

$6,071,042

100%

 

0%

(6)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Umpqua Holdings Corporation

Covered Loan & Lease Portfolio

(Unaudited)

 

 

 

 

 

Sequential

 

(Dollars in thousands)

Sep 30, 2010

 

Jun 30, 2010

 

Quarter

 

 

Amount

Mix

 

Amount

Mix

 

% Change

 

Covered loans & leases:

 

 

 

 

 

 

 

 

  Commercial real estate

$589,540

70%

 

$591,814

68%

 

0%

 

  Residential real estate

81,237

10%

 

84,187

10%

 

(4)%

 

  Construction

57,250

7%

 

73,963

8%

 

(23)%

 

    Total real estate

728,027

87%

 

749,964

86%

 

(3)%

 

  Commercial

100,284

12%

 

107,860

12%

 

(7)%

 

  Installment and other

12,158

1%

 

12,414

1%

 

(2)%

 

     Total

$840,469

100%

 

$870,238

100%

 

(3)%

 

 

 

 

 

 

 

 

 

 

 

 

 

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 Third Quarter 2010 Results

October 21, 2010

Page 14 of 23

 

 

 

Umpqua Holdings Corporation

Deposits by Type/Core Deposits

(Unaudited)

 

 

 

 

 

 

 

Sequential

Year over

(Dollars in thousands)

Sep 30, 2010

 

Jun 30, 2010

 

Sep 30, 2009

 

Quarter

Year

 

Amount

Mix

 

Amount

Mix

 

Amount

Mix

 

% Change

% Change

Deposits:

 

 

 

 

 

 

 

 

 

 

 

  Demand, non-interest bearing

$1,578,717

17%

 

$1,509,222

18%

 

$1,337,280

19%

 

5%

18%

  Demand, interest bearing

4,178,332

45%

 

3,789,122

44%

 

3,185,128

44%

 

10%

31%

  Savings

348,700

4%

 

355,428

4%

 

294,482

4%

 

(2)%

18%

  Time

3,195,591

34%

 

2,904,972

34%

 

2,398,931

33%

 

10%

33%

     Total

$9,301,340

100%

 

$8,558,744

100%

 

$7,215,821

100%

 

9%

29%

 

 

 

 

 

 

 

 

 

 

 

 

Total core deposits-ending (1)

$7,055,676

76%

 

$6,697,773

78%

 

$5,834,655

81%

 

5%

21%

 

 

 

 

 

 

 

 

 

 

 

 

Number of open accounts:

 

 

 

 

 

 

 

 

 

 

 

  Demand, non-interest bearing

183,018

 

 

180,499

 

 

156,659

 

 

1%

17%

  Demand, interest bearing

76,202

 

 

71,537

 

 

63,483

 

 

7%

20%

  Savings

87,611

 

 

96,019

 

 

74,421

 

 

(9)%

18%

  Time

44,020

 

 

41,882

 

 

35,495

 

 

5%

24%

     Total

390,851

 

 

389,937

 

 

330,058

 

 

0%

18%

 

 

 

 

 

 

 

 

 

 

 

 

Average balance per account:

 

 

 

 

 

 

 

 

 

 

 

  Demand, non-interest bearing

$8.6

 

 

$8.4

 

 

$8.5

 

 

 

 

  Demand, interest bearing

54.8

 

 

53.0

 

 

50.2

 

 

 

 

  Savings

4

 

 

3.7

 

 

4.0

 

 

 

 

  Time

72.6

 

 

69.4

 

 

67.6

 

 

 

 

     Total

23.8

 

 

21.9

 

 

21.9

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Umpqua Holdings Corporation Announces Third Quarter 2010 Results

October 21, 2010

Page 15 of 23

 

 

Umpqua Holdings Corporation

Credit Quality – Non-performing Assets

 (Unaudited)

 

 

 

 

Sequential

Year over

 

 

Quarter Ended

 

Quarter

Year

(Dollars in thousands)

Sep 30, 2010

Jun 30, 2010

Sep 30, 2009

% Change

% Change

 

 

 

 

 

 

Non-covered, non-performing assets:

 

 

 

 

 

  Non-covered loans on non-accrual status

$139,696

$170,636

$123,714

(18)%

13%

  Non-covered loans past due 90+ days & accruing   

11,882

9,213

5,614

29%

112%

    Total non-performing loans

151,578

179,849

129,328

(16)%

17%

  Non-covered other real estate owned

32,024

25,653

26,705

25%

20%

    Total

$183,602

$205,502

$156,033

(11)%

18%

 

 

 

 

 

 

Performing restructured loans

$75,577

$80,534

$182,199

(6)%

(59)%

 

 

 

 

 

 

Past due 30-89 days

$80,186

$40,135

$46,069

100%

74%

Past due 30-89 days to total loans and leases

1.41%

0.70%

0.76%

 

 

 

 

 

 

 

 

  Non-covered, non-performing loans to

 

 

 

 

 

    non-covered loans and leases

2.66%

3.14%

2.13%

 

 

  Non-covered, non-performing assets to total assets

1.59%

1.90%

1.70%

 

 

 

 

 

 

 

 

Covered non-performing assets:

 

 

 

 

 

  Covered loans on non-accrual status

$24,160

$58,814

$--

(59)%

nm

    Total non-performing loans

24,160

58,814

--

(59)%

nm

  Covered other real estate owned

30,348

28,290

--

7%

nm

    Total

$54,508

$87,104

$--

(37)%

nm

 

 

 

 

 

 

  Covered non-performing loans to

 

 

 

 

 

    covered loans and leases

2.87%

6.76%

--

 

 

  Covered non-performing assets to total assets

0.47%

0.80%

--

 

 

 

 

 

 

 

 

Total non-performing assets:

 

 

 

 

 

  Loans on non-accrual status

$163,856

$229,450

$123,714

(29)%

32%

  Loans past due 90+ days & accruing   

11,882

9,213

5,614

29%

112%

    Total non-performing loans

175,738

238,663

129,328

(26)%

36%

  Other real estate owned

62,372

53,943

26,705

16%

134%

    Total

$238,110

$292,606

$156,033

(19)%

53%

 

 

 

 

 

 

  Non-performing loans to loans and leases

2.69%

3.62%

2.13%

 

 

  Non-performing assets to total assets

2.06%

2.70%

1.70%

 

 

 

 

 

Umpqua Holdings Corporation Announces Third Quarter 2010 Results

October 21, 2010

Page 16 of 23

 

 

 

Umpqua Holdings Corporation

Credit Quality – Allowance for Non-covered Credit Losses

 (Unaudited)

 

 

 

 

Sequential

Year over

 

 

Quarter Ended

 

Quarter

Year

(Dollars in thousands)

Sep 30, 2010

Jun 30, 2010

Sep 30, 2009

% Change

% Change

Allowance for non-covered credit losses:

 

 

 

 

 

  Balance beginning of period

$113,914

$110,784

$98,370

 

 

      Provision for non-covered loan and

          lease losses

24,228

29,767

52,108

(19)%

(54)%

 

 

 

 

 

 

  Charge-offs

(31,418)

(31,554)

(48,443)

0%

(35)%

  Recoveries

1,374

4,917

1,101

(72)%

25%

      Net charge-offs

(30,044)

(26,637)

(47,342)

13%

(37)%

 

 

 

 

 

 

  Total allowance for non-covered loan and

          lease losses

108,098

113,914

103,136

(5)%

5%

 

 

 

 

 

 

  Reserve for unfunded commitments

797

735

841

 

 

      Total allowance for non-covered

          credit losses

$108,895

$114,649

$103,977

(5)%

5%

 

 

 

 

 

 

Net charge-offs to average non-covered

 

 

 

 

 

  loans and leases (annualized)

2.08%

1.84%

3.07%

 

 

Recoveries to gross charge-offs

4.37%

15.58%

2.27%

 

 

Allowance for credit losses to non-covered

 

 

 

 

 

  loans and leases

1.91%

2.00%

1.71%

 

 

 

 

 

 

 

 

 

Nine Months Ended:

 

(Dollars in thousands)

Sep 30, 2010

Sep 30, 2009

% Change

Allowance for non-covered credit losses:

 

 

 

  Balance beginning of period

$107,657

$95,865

 

      Provision for non-covered loan and

          lease losses

96,101

140,531

(32)%

 

 

 

 

  Charge-offs

(102,731)

(135,365)

(24)%

  Recoveries

7,071

2,105

236%

      Net charge-offs

(95,660)

(133,260)

(28)%

 

 

 

 

  Total allowance for non-covered loan and

          lease losses

108,098

103,136

5%

 

 

 

 

  Reserve for unfunded commitments

797

841

 

      Total allowance for non-covered

          credit losses

$108,895

$103,977

5%

 

 

 

 

Net charge-offs to average non-covered

 

 

 

  loans and leases (annualized)

2.20%

2.91%

 

Recoveries to gross charge-offs

6.88%

1.56%

 

 

 

 

Umpqua Holdings Corporation Announces Third Quarter 2010 Results

October 21, 2010

Page 17 of 23

 

 

Umpqua Holdings Corporation

Selected Ratios

(Unaudited)

 

 

Sequential

Year over

 

Quarter Ended:

Quarter

Year

 

Sep 30, 2010

Jun 30, 2010

Sep 30, 2009

Change

Change

Net interest spread:

 

 

 

 

 

  Yield on non-covered loans and leases

5.77%

5.82%

5.77%

(0.05)

0.00

  Yield on covered loans and leases

13.49%

7.27%

N/A

6.22

nm

  Yield on taxable investments

3.51%

3.83%

4.22%

(0.32)

(0.71)

  Yield on tax-exempt investments (1)

5.71%

5.75%

5.86%

(0.04)

(0.15)

  Yield on temporary investments & interest bearing cash

0.26%

0.26%

0.28%

0.00

(0.02)

    Total yield on earning assets (1)

5.41%

5.07%

5.29%

0.34

0.12

 

 

 

 

 

 

  Cost of interest bearing deposits

1.08%

1.10%

1.50%

(0.02)

(0.42)

  Cost of securities sold under agreements

 

 

 

 

 

      to repurchase and fed funds purchased

1.01%

1.02%

1.08%

(0.01)

(0.07)

  Cost of term debt

3.57%

3.54%

3.68%

0.03

(0.11)

  Cost of junior subordinated debentures

4.45%

4.26%

4.50%

0.19

(0.05)

    Total cost of interest bearing liabilities

1.24%

1.28%

1.62%

(0.04)

(0.38)

 

 

 

 

 

 

Net interest spread (1)

4.17%

3.79%

3.67%

0.38

0.50

     Net interest margin – Consolidated (1)

4.42%

4.05%

4.05%

0.37

0.37

 

 

 

 

 

 

     Net interest margin – Bank (1)

4.49%

4.13%

4.15%

0.36

0.34

 

 

 

 

 

 

As reported (GAAP):

 

 

 

 

 

Return on average assets

0.29%

0.13%

(0.45)%

0.16

0.74

Return on average tangible assets

0.31%

0.14%

(0.49)%

0.17

0.80

Return on average common equity

1.95%

0.86%

(3.19)%

1.09

5.14

Return on average tangible common equity

3.31%

1.48%

(6.34)%

1.83

9.65

Efficiency ratio – Consolidated

70.09%

66.85%

67.91%

3.24

2.18

Efficiency ratio – Bank

67.07%

64.18%

65.21%

2.89

1.86

 

 

 

 

 

 

Operating basis (non-GAAP): (2)

 

 

 

 

 

Return on average assets

0.34%

0.18%

(0.48)%

0.16

0.82

Return on average tangible assets

0.36%

0.19%

(0.51)%

0.17

0.87

Return on average common equity

2.26%

1.18%

(3.37)%

1.08

5.63

Return on average tangible common equity

3.84%

2.04%

(6.70)%

1.80

10.54

Efficiency ratio – Consolidated

68.42%

64.91%

68.58%

3.51

(0.16)

Efficiency ratio – Bank

65.72%

62.22%

65.21%

3.50

0.51

 

 

 

 

 

 

(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 Third Quarter 2010 Results

October 21, 2010

Page 18 of 23

 

 

Umpqua Holdings Corporation

 

Selected Ratios

 

(Unaudited)

 

 

 

 

 

Nine months Ended:

 

 

 

Sep 30, 2010

Sep 30, 2009

Change

 

 

Net interest spread:

 

 

 

 

  Yield on non-covered loans and leases

5.78%

5.79%

(0.01)

 

  Yield on covered loans and leases

10.00%

N/A

nm

 

  Yield on taxable investments

3.76%

4.48%

(0.72)

 

  Yield on tax-exempt investments (1)

5.76%

5.80%

(0.04)

 

  Yield on temporary investments & interest bearing cash

0.25%

0.27%

(0.02)

 

    Total yield on earning assets (1)

5.19%

5.48%

(0.29)

 

 

 

 

 

 

  Cost of interest bearing deposits

1.12%

1.63%

(0.51)

 

  Cost of securities sold under agreements

 

 

 

 

      to repurchase and fed funds purchased

1.02%

1.13%

(0.11)

 

  Cost of term debt

3.52%

3.56%

(0.04)

 

  Cost of junior subordinated debentures

4.25%

4.92%

(0.67)

 

    Total cost of interest bearing liabilities

1.28%

1.78%

(0.50)

 

 

 

 

 

 

Net interest spread (1)

3.91%

3.70%

0.21

 

     Net interest margin – Consolidated (1)

4.18%

4.11%

0.07

 

 

 

 

 

 

     Net interest margin – Bank (1)

4.26%

4.22%

0.04

 

 

 

 

 

 

As reported (GAAP):

 

 

 

 

Return on average assets

0.12%

(2.06)%

2.18

 

Return on average tangible assets

0.12%

(2.24)%

2.36

 

Return on average common equity

0.78%

(14.20)%

14.98

 

Return on average tangible common equity

1.36%

(32.21)%

33.57

 

Efficiency ratio – Consolidated

65.00%

102.51%

(37.51)

 

Efficiency ratio – Bank

63.35%

102.79%

(39.44)

 

 

 

 

 

 

Operating basis (non-GAAP): (2)

 

 

 

 

Return on average assets

0.05%

(0.46)%

0.51

 

Return on average tangible assets

0.06%

(0.50)%

0.56

 

Return on average common equity

0.36%

(3.16)%

3.52

 

Return on average tangible common equity

0.62%

(7.16)%

7.78

 

Efficiency ratio – Consolidated

66.00%

67.31%

(1.31)

 

Efficiency ratio – Bank

63.24%

64.06%

(0.82)

 

 

 

 

 

 

 

(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 Third Quarter 2010 Results

October 21, 2010

Page 19 of 23

 

 

Umpqua Holdings Corporation

Average Balances

(Unaudited)

 

 

Sequential

Year over

 

Quarter Ended:

Quarter

Year

(Dollars in thousands)

Sep 30, 2010

Jun 30, 2010

Sep 30, 2009

% Change

% Change

 

 

 

 

 

 

  Temporary investments & interest bearing cash

$993,092

$849,112

$291,214

17%

241%

  Investment securities, taxable

1,984,672

1,628,195

1,458,333

22%

36%

  Investment securities, tax-exempt

230,815

231,675

203,676

0%

13%

  Loans held for sale

45,933

41,183

39,915

12%

15%

  Non-covered loans and leases

5,718,584

5,792,010

6,111,146

(1)%

(6)%

  Covered loans and leases

847,704

698,538

--

21%

nm

     Total earning assets

9,820,800

9,240,714

8,104,284

6%

21%

  Goodwill & other intangible assets, net

681,476

676,301

642,315

1%

6%

  Total assets

11,160,521

10,467,967

9,100,407

7%

23%

 

 

 

 

 

 

  Non-interest bearing demand deposits

1,565,525

1,475,852

1,325,328

6%

18%

  Interest bearing deposits

7,345,073

6,735,665

5,866,098

9%

25%

  Total deposits

8,891,598

8,211,517

7,191,426

9%

24%

  Interest bearing liabilities

7,863,059

7,281,191

6,211,237

8%

27%

 

 

 

 

 

 

  Shareholders’ equity - common

1,661,701

1,608,872

1,291,218

3%

29%

  Tangible common equity (1)

980,225

932,571

648,903

5%

51%

 

 

 

 

 

Nine Months Ended:

 

(Dollars in thousands)

Sep 30, 2010

Sep 30, 2009

% Change

 

 

 

 

  Temporary investments & interest bearing cash

$841,529

$129,118

552%

  Investment securities, taxable

1,742,463

1,299,791

34%

  Investment securities, tax-exempt

228,000

195,492

17%

  Loans held for sale

37,166

41,789

(11)%

  Non-covered loans and leases

5,814,340

6,114,133

(5)%

  Covered loans and leases

638,293

--

nm

     Total earning assets

9,301,791

7,780,323

20%

  Goodwill & other intangible assets, net

670,492

717,509

(7)%

  Total assets

10,539,767

8,854,682

19%

 

 

 

 

  Non-interest bearing demand deposits

1,497,110

1,294,005

16%

  Interest bearing deposits

6,826,779

5,607,089

22%

  Total deposits

8,323,889

6,901,094

21%

  Interest bearing liabilities

7,321,076

6,009,594

22%

 

 

 

 

  Shareholders’ equity - common

1,566,833

1,283,476

22%

  Tangible common equity (1)

896,341

565,967

58%

 

 

(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 Third Quarter 2010 Results

October 21, 2010

Page 20 of 23

 

 

Umpqua Holdings Corporation

Mortgage Banking Activity

(unaudited)

 

 

Sequential

Year over

 

Quarter Ended:

Quarter

Year

(Dollars in thousands)

Sep 30, 2010

Jun 30, 2010

Sep 30, 2009

% Change

% Change

 

 

 

 

 

 

Mortgage Servicing Rights (MSR):

 

 

 

 

 

  Mortgage loans serviced for others

$1,471,759

$1,400,120

$1,205,528

5%

22%

  MSR Asset, at fair value

13,454

12,895

11,552

4%

16%

 

 

 

 

 

 

  MSR as % of serviced portfolio

0.91%

0.92%

0.96%

 

 

 

 

 

 

 

 

Mortgage Banking Revenue:

 

 

 

 

 

  Origination and sale

$7,188

$3,947

$4,294

82%

67%

  Servicing

1,007

934

796

8%

27%

  Change in fair value of MSR asset

(1,057)

(1,672)

(802)

(37)%

32%

     Total

$7,138

$3,209

$4,288

122%

66%

 

 

 

 

 

 

 

 

 

 

 

 

Closed loan volume

$231,952

$145,085

$158,957

60%

46%

 

 

 

 

 

 

 

 

 

Nine Months Ended:

 

 

 

(Dollars in thousands)

Sep 30, 2010

Sep 30, 2009

% Change

 

 

 

 

 

 

 

 

Mortgage Banking Revenue:

 

 

 

 

 

  Origination and sale

$13,839

$15,040

(8)%

 

 

  Servicing

2,844

2,188

30%

 

 

  Change in fair value of MSR asset

(2,858)

(2,611)

9%

 

 

     Total

$13,825

$14,617

(5)%

 

 

 

 

 

 

 

 

Closed loan volume

$504,352

$584,693

(14)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Umpqua Holdings Corporation Announces Third Quarter 2010 Results

October 21, 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.

 

·         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 on accrual status by type and by region

 

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

 

9/30/09

6/30/10

9/30/10

9/30/09

9/30/10

9/30/10

Northwest Oregon

$93,745

$75,373

$69,129

(26)%

$8,353

$60,776

Central Oregon

13,753

4,107

4,079

(70)%

109

3,970

Southern Oregon

21,852

13,440

8,774

(60)%

2,840

5,934

Washington

17,690

7,723

7,570

(57)%

1,260

6,310

Greater Sacramento

80,107

54,710

52,761

(34)%

13,063

39,698

Northern California

31,336

20,653

18,072

(42)%

4,453

13,619

   Total

$258,483

$176,006

$160,385

(38)%

$30,078

$130,307

% of total non-covered

   loan portfolio

4%

3%

3%

 

 

2%

 

 

 

 

 

 

 

Quarter change $

$(42,807)

$(25,792)

$(15,621)

 

 

 

Quarter change %

(14)%

(13)%

(9)%

 

 

 

 

 

The following is a stratification by size and region of the remaining non-covered performing residential development loans as of September 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

$2,189

$8,569

$10,141

$10,277

$15,049

$14,551

$60,776

Central Oregon

500

1,037

2,433

--

--

--

3,970

Southern Oregon

1,187

3,647

1,100

--

--

--

5,934

Washington

487

352

5,471

--

--

--

6,310

Greater Sacramento

3,649

4,175

1,894

4,817

11,455

13,708

39,698

Northern California

1,329

2,413

9,877

--

--

--

13,619

   Total

$9,341

$20,193

$30,916

$15,094

$26,504

$28,259

$130,307

   % of Total

7%

15%

24%

12%

20%

22%

100%

 

 

 

 

Umpqua Holdings Corporation Announces Third Quarter 2010 Results

October 21, 2010

Page 22 of 23

 

 

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

$8,353

$109

$1,809

$1,260

$13,063

$4,453

$29,047

   Commercial construction

12,926

--

--

2,115

11,238

109

26,388

   Commercial real estate

24,629

3,373

1,938

--

6,539

9,125

45,604

   Commercial

8,721

3,178

992

7,835

9,619

8,312

38,657

   Other

--

--

--

--

--

--

--

      Total

$54,629

$6,660

$4,739

$11,210

$40,459

$21,999

$139,696

 

 

 

 

 

 

 

 

Loans 90 days past due:

 

 

 

 

 

 

 

   Residential development

$--

$--

$1,031

$--

$--

$--

$1,031

   Commercial construction

--

--

--

--

--

--

--

   Commercial real estate

--

--

--

--

2,753

--

2,753

   Commercial

1,284

--

--

--

--

67

1,351

   Other

5,717

--

--

100

930

--

6,747

      Total

$7,001

$--

$1,031

$100

$3,683

$67

$11,882

 

 

 

 

 

 

 

 

  Total non-performing loans

$61,630

$6,660

$5,770

$11,310

$44,142

$22,066

$151,578

 

 

 

 

 

 

 

 

Other real estate owned:

 

 

 

 

 

 

 

   Residential development

$888

$3,049

$968

$1,074

$1,648

$1,325

$8,952

   Commercial construction

3,442

586

--

426

4,592

--

9,046

   Commercial real estate

5,647

--

635

--

2,988

1,675

10,945

   Commercial

--

758

--

--

--

50

808

   Other

2,273

--

--

--

--

--

2,273

      Total

$12,250

$4,393

$1,603

$1,500

$9,228

$3,050

$32,024

 

 

 

 

 

 

 

 

Total non-performing assets

$73,880

$11,053

$7,373

$12,810

$53,370

$25,116

$183,602

% of total

40%

6%

4%

7%

29%

14%

100%

 

 

 

 

 

 

 

 

The Company has aggressively charged-down impaired assets to their disposition values. As of September 30, 2010, the non-performing assets of $183.6 million have been written down by 39%, or $118.8 million, from their original balance of $302.4 million.

 

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

$9,176

$--

$1,178

$--

$282

$2,858

$13,494

 

   Commercial construction

2,608

--

789

--

2,094

--

5,491

 

   Commercial real estate

14,874

2,514

--

2,074

10,011

9,275

38,748

 

   Commercial

1,654

--

298

6,104

5,040

3,369

16,465

 

   Other

5,323

--

--

204

461

--

5,988

 

     Total

$33,635

$2,514

$2,265

$8,382

$17,888

$15,502

$80,186

 

 

 

 

Umpqua Holdings Corporation Announces Third Quarter 2010 Results

October 21, 2010

Page 23 of 23

 

 

 

 

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

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

Sequential

Year

 

 

 

 

Quarter

Over Year

 

Sep 30, 2010

Jun 30, 2010

Sep 30, 2009

% Change

% Change

Loans 30-89 days past due:

 

 

 

 

   Residential development

$13,494

$763

$8,766

1669%

54%

   Commercial construction

5,491

903

9,361

508%

(41)%

   Commercial real estate

38,748

22,923

14,405

69%

169%

   Commercial

16,465

9,173

10,294

79%

60%

   Other

5,988

6,373

3,243

(6)%

85%

     Total

$80,186

$40,135

$46,069

100%

74%

 

The following is a distribution of non-covered restructured loans by loan type by region as of September 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

$19,026

$--

$--

$5,471

$25,343

$--

$49,840

   Commercial construction

--

--

--

--

--

--

--

   Commercial real estate

--

--

3,899

--

12,448

3,686

20,033

   Commercial

--

--

--

--

--

1,215

1,215

   Other

4,454

--

--

--

35

--

4,489

     Total

$23,480

$--

$3,899

$5,471

$37,826

$4,901

$75,577

 

 

 

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