UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities and Exchange Act of 1934
Date of Report: April 21, 2011
(Date of earliest event reported)
Umpqua Holdings Corporation
(Exact Name of
Registrant as Specified in Its Charter)
OREGON |
000-25597 (Commission File Number) |
93-1261319 |
One SW Columbia Street, Suite 1200
Portland, Oregon 97258
(address of
Principal Executive Offices)(Zip Code)
(503) 727-4100
(Registrant's
Telephone Number, Including Area Code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition.
On April 21, 2011, Umpqua Holdings Corporation issued a press release announcing first quarter 2011 financial results. The release is attached hereto as Exhibit 99.1.
Item 9.01 Financial Statements and Exhibits.
|
(a) |
Not applicable. |
|
(b) |
Not applicable. |
|
(c) |
Not applicable. |
|
(d) |
Exhibits. |
|
|
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
|
UMPQUA
HOLDINGS CORPORATION
|
Dated: April 21, 2011 |
By:/s/
Andrew H. Ognall |
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 FIRST QUARTER 2011 RESULTS
First quarter 2011 net income and operating income of $0.12 per diluted share
Non-covered, non-performing assets at 1.53% of total assets
Non-covered provision for loan and lease losses of $15.0 million, the lowest quarterly level since 2007
Non-interest bearing demand deposits increased 3% on a sequential quarter basis
Non-covered commercial & industrial loans increased $14 million, or 1%, over prior quarter
PORTLAND, Ore. – Apr. 21, 2011 – Umpqua Holdings Corporation (NASDAQ: UMPQ), parent company of Umpqua Bank and Umpqua Investments Inc. today announced first quarter 2011 net earnings available to common shareholders of $13.4 million, or $0.12 per diluted common share, compared to a net loss available to common shareholders of $3.7 million, or $0.04 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 $13.8 million, or $0.12 per diluted common share for the first quarter of 2011, compared to an operating loss of $10.1 million, or $0.11 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 first quarter of 2011 include:
· Net interest margin increases to 4.23% due to larger investment portfolio balances, increased yields on the covered loan portfolio, and decreased cost of interest bearing liabilities;
· Non-covered, non-performing assets remained stable at 1.53% of total assets;
· Provision for non-covered loan losses of $15.0 million, a 14% decrease, and total net charge-offs of $19.1 million, a 19% decrease, on a sequential quarter basis. Net charge-offs exceeded the provision for non-covered loan losses during the quarter due to improving credit quality of the loan portfolio and specific reserves from the previous quarter which were charged off in the first quarter;
· The allowance for credit losses ended the quarter at 1.75% of non-covered total loans and leases;
· Provision for covered loan losses of $7.3 million, mostly offset by a corresponding gain in the FDIC indemnification asset;
· Loss on other real estate owned of $3.8 million, compared to a loss of $4.9 million for the fourth quarter of 2010;
Umpqua Holdings Corporation Announces First Quarter Results
April 21, 2011
Page 2 of 22
· Non-covered loans ended the quarter at $5.63 billion, a decline of $26.6 million, or 0.5%, on a sequential quarter basis;
· The cost of interest bearing deposits for the first quarter of 2011 was 0.83%, a decrease of 14 basis points on a sequential quarter basis;
· Opened Debt Capital Markets Group to enhance available credit product offerings to commercial clientele, including interest rate swap products and loan syndications;
· Tangible common equity ratio of 8.93%; and
· Total risk-based capital of 17.53%, and tier 1 common to risk weighted asset ratio of 13.17%.
“This quarter’s results demonstrate the Company’s strong position as loan production and earnings momentum are building, as a result of management’s success positioning the Bank for continued growth,” said Ray Davis, CEO of Umpqua Holdings Corporation. “Umpqua has emerged from this difficult economic period and challenging credit cycle with a stronger balance sheet. This financial strength provides us the flexibility to continue pursuing strategic growth opportunities that will build shareholder value over time.”
Asset quality – Non-covered loan portfolio
Non-performing assets were $177.0 million, or 1.53% of total assets, as of March 31, 2011, compared to $178.0 million, or 1.53% of total assets as of December 31, 2010, and $209.6 million, or 1.99% of total assets as of March 31, 2010. Of this amount, as of March 31, 2011, $136.1 million represented non-accrual loans, $6.3 million represented loans past due greater than 90 days and still accruing interest, and $34.5 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 March 31, 2011, the non-performing assets of $177.0 million have been written down by 41%, or $121.1 million, from their current par balance of $298.1 million.
The provision for loan losses for the first quarter of 2011 was $15.0 million, the lowest level of provision since the second quarter of 2007, due to improving credit quality of the loan portfolio and stabilization of non-performing loans. Total net charge-offs for the first quarter of 2011 were $19.1 million, reducing the allowance for credit losses to 1.75% of non-covered loans and leases at March 31, 2011, as compared to 1.82% of total non-covered loans as of December 31, 2010 and 1.91% of total non-covered loans as of March 31, 2010. The annualized net charge-off rate for the first quarter of 2011 was 1.38%.
Non-covered loans past due 30 to 89 days were $70.7 million, or 1.25% of non-covered loans and leases as of March 31, 2011, as compared to $48.2 million, or 0.85% as of December 31, 2010, and $53.9 million, or 0.93% as of March 31, 2010.
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 First Quarter Results
April 21, 2011
Page 3 of 22
Credit quality trends – Non-covered loans
(Dollars in thousands)
|
Allowance |
|
Non-covered, | ||
|
Provision |
|
for credit losses |
|
non-performing |
|
for |
Net |
to non-covered |
30-89 days |
assets to |
|
loan loss |
charge-offs |
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% |
Q4 2010 |
17,567 |
23,744 |
1.82% |
0.85% |
1.53% |
Q1 2011 |
15,030 |
19,118 |
1.75% |
1.25% |
1.53% |
Total |
$487,147 |
$454,655 |
|
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Non-covered construction loan portfolio
Total non-covered construction loans continued to decline in the quarter to $367 million as of March 31, 2011, representing a decrease of 11% since December 31, 2010, and a decrease of 34% from March 31, 2010. Within this portfolio, the residential development loan segment was $132 million, or 2% of the total non-covered loan portfolio. Of this amount, $34 million represented non-performing loans, and $98 million represented performing loans. The residential development loan segment has decreased $70 million, or 35%, since March 31, 2010.
The remaining $235 million in non-covered construction loans as of March 31, 2011 primarily represents commercial construction projects. Total non-covered, non-performing commercial construction loans were $19.7 million at March 31, 2011, and $5.5 million were past due 30 to 89 days as of March 31, 2011.
Non-covered commercial real estate loan portfolio
The total non-covered term commercial real estate loan portfolio was $3.5 billion as of March 31, 2011. Of this total, $2.24 billion are non-owner occupied and $1.25 billion are owner occupied. Of the total term commercial real estate portfolio, $55.1 million were on non-accrual status, and $32.8 million, or 0.94%, are past due 30-89 days as of March 31, 2011. Of the total non-covered commercial real estate portfolio, 8% matures in 2011-2012, 17% in years 2013-2014, and 24% in years 2015-2016. The remaining 51% of the portfolio matures in or after the year 2017.
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 rates, interest rates and vacancy factors. The results of the stress testing showed no significant unidentified risks, unlike our experience in the residential development construction portfolio. As we remain in a difficult economic environment, we anticipate that some borrowers will struggle, but that potential issues within the commercial real estate portfolio will result from individual loans within distinct geographic areas and not represent a systemic weakness in the portfolio.
Umpqua Holdings Corporation Announces First Quarter Results
April 21, 2011
Page 4 of 22
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 $67.5 million as of March 31, 2011, down 20% from $84.4 million as of December 31, 2010, and down 31% from $98.0 million as of March 31, 2010. The decrease during the first quarter primarily resulted from the reclassification of certain commercial real estate relationships previously restructured to non-accrual status. 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 to 89 days by type and by region, loans past due 30 to 89 days trends, and restructured loans on accrual status by type and by region.
Asset quality – Covered loan portfolio
Covered non-performing assets were $29.5 million, or 0.26% of total assets, as of March 31, 2011, as compared to $29.9 million, or 0.26% of total assets, as of December 31, 2010. The amount at March 31, 2011 represents OREO. In conjunction with the guidance governing the accounting for purchased loan portfolios with evidence of credit deterioration subsequent to origination, the covered loans acquired have been assembled into pools of loans. As a result, individual loans underlying the loan pools are not reported as non-performing. Rather, accretable yield of the pool is recognized to the extent pool level expected future cash flows discounted at the effective rate exceed the carrying value of the pool. To the extent discounted expected future cash flows are less than the carrying value of the pool, provisions for covered credit losses are recognized as a charge to earnings, but the adjusted carrying value of loan pool continues to accrete income at the effective rate.
As of acquisition date, covered non-performing assets were written-down to their estimated fair value, 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 due diligence. 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. To the extent actual or projected cash flows are more than originally estimated, the increase in cash flows is prospectively recognized in interest income; however, the increase in interest income would be offset by a corresponding decrease 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 4.23% for the first quarter of 2011, as compared to 4.14% for the fourth quarter of 2010, and 4.04% for the first quarter of 2010. The increase in net interest margin in the current quarter over the prior quarter resulted primarily from investing excess interest bearing cash into the investment portfolio and declining costs of interest bearing deposits, partially offset by an increase in interest and fee reversals on non-accrual loans and a decline in loans outstanding. The increase in net interest margin in the current quarter over the same quarter of the prior year resulted from investing excess interest bearing cash into the investment portfolio, an increase in covered loans outstanding, increased yield on the covered loan portfolio as a result of payoffs ahead of
Umpqua Holdings Corporation Announces First Quarter Results
April 21, 2011
Page 5 of 22
Loan disposal related activities within the covered loan portfolio, either through loans being paid off in full or transferred to OREO, result in gains within covered loan interest income to the extent assets received in satisfaction of debt (such as cash or the net realizable value of OREO received) exceeds the allocated carrying value of the loan disposed of from the pool. Loan disposal activities contributed $7.6 million of interest income in the first quarter of 2011, as compared to $13.3 million in the fourth quarter of 2010 and none in the first quarter of 2010. While dispositions of covered loans positively impact net interest margin, we recognize a corresponding decrease to the change in FDIC indemnification asset at the incremental loss-sharing rate within other non-interest income. Excluding the impact of covered loan disposal gains, consolidated net interest margin would have been 3.93% for the current quarter, 3.64% for the prior quarter, and 4.04% in the same quarter of the prior year.
Interest and fee reversals on non-accrual loans during the first quarter of 2011 were $1.3 million, negatively impacting the net interest margin by 5 basis points, as compared to $0.9 million for the fourth quarter of 2010 and $1.1 million in the first quarter of 2010. Excluding the impact of loan disposal gains and interest and fee reversals on non-accrual loans, net interest margin would have been 3.98% for the first quarter of 2011, 3.67% for the fourth quarter of 2010 and 4.09% for the first quarter of 2010.
For the fourteenth 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 0.83%, 14 basis points lower than the fourth quarter of 2010 and 36 basis points lower than the first quarter of 2010.
Mortgage banking revenue
The Company recorded $5.3 million in total mortgage banking revenue during the first quarter of 2011, on closed loan volume of $167 million. In the first quarter of 2011, the Company recognized a decrease in the fair value of the mortgage servicing right assets of $0.2 million. The decline primarily related to the passage of time as the market for mortgage interest rates has remained stable throughout the quarter. Income from the origination and sale of mortgage loans was $4.3 million in the first quarter, representing a 60% increase over the same quarter of the prior year. As of March 31, 2011, the Company serviced $1.7 billion of mortgage loans for others, and the related mortgage servicing right asset is valued at $15.6 million, or 0.92% of the total serviced portfolio principal balance.
Fair value of junior subordinated debentures
The Company recognized a $0.5 million loss from the change in fair value of junior subordinated debentures during the first quarter of 2011. 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 March 31, 2011, the credit risk adjusted interest spread for potential new issuances was estimated to be significantly higher than the contractual spread. The difference between these spreads has created a cumulative 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 difficult to estimate, but are not likely to be volatile in the future, and the cumulative fair value adjustment will continue to reverse over time and be recognized as a reduction in non-interest income over the remaining period to maturity of each related instrument. As of March 31, 2011, the total par value of junior subordinated debentures carried at fair value was $134.0 million, and the fair value was $81.2 million.
Umpqua Holdings Corporation Announces First Quarter Results
April 21, 2011
Page 6 of 22
Non-interest expense
Total non-interest expense for the first quarter of 2011 was $84.2 million, compared to $87.9 million for the fourth quarter of 2010 and $69.9 million for the first quarter of 2010. Included in non-interest expense are several categories which are outside of the operational control of the Company or depend on changes in market values, including FDIC deposit insurance assessments and gain or loss on other real estate owned, as well as infrequently occurring expenses such as merger related costs. Excluding these non-controllable or infrequently occurring items, the remaining non-interest expense items totaled $76.4 million for the first quarter of 2011, compared to $77.8 million for the fourth quarter of 2010 and $62.2 million for the first quarter of 2010. The decline in non-interest expense from the prior quarter results from cost control measures related to compensation and other expenses. The increase over the same period prior year relates to the assumption of Evergreen’s, Rainier’s and Nevada Security’s banking operations, increases in variable expenses related to the mortgage banking division’s production, higher loan collection and OREO management expenses, and investment in various infrastructure and growth initiatives.
During the first quarter of 2011, the Company incurred loan collection and OREO management expense of $4.8 million, compared to $5.0 million for the fourth quarter of 2010, and $1.7 million for the first quarter of 2010. Mortgage production related expense was $4.3 million in the first quarter of 2011, compared to $4.9 million in the fourth quarter of 2010, and $3.1 million for the first quarter of 2010. Total FDIC deposit insurance assessments during the first quarter of 2011 were $3.9 million. The decrease as compared to the prior quarter’s assessment of $4.2 million is a result of the seasonal decline in average deposit balances that typically occurs in the first quarter of the year and termination of the special assessment for the Bank’s participations in the Transaction Account Guarantee Program of the FDIC.
Income taxes
The Company recorded a provision for income taxes of $6.5 million in the first quarter of 2011, representing an effective tax rate of 32.6%. The change 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 March 31, 2011 were $11.6 billion, compared to $11.7 billion on December 31, 2010 and $10.5 billion a year ago. Total gross loans and leases (covered and non-covered), and deposits, were $6.4 billion and $9.3 billion, respectively, as of March 31, 2011, as compared to $6.4 billion and $9.4 billion, respectively, as of December 31, 2010, and $6.5 billion and $8.2 billion, respectively, as of March 31, 2010.
Total loans held for investment (including covered and non-covered) decreased $70.9 million during the first quarter of 2011. This decrease is principally attributable to non-covered charge-offs, paydowns on the covered loans, and transfers to other real estate owned. Excluding non-covered charge-offs of $20.9 million, the non-covered loan portfolio decreased only $5.7 million in the current quarter.
Total deposits decreased $141 million, or 1%, during the first quarter of 2011, which is consistent with the seasonal drop in deposits that typically occurs in the first quarter of any given year. Of this amount, $164 million of the decrease relates to the run-off of higher cost time deposits. Despite the decline in total deposits in the quarter, non-interest bearing deposits increased $55 million, or 3%, and low cost savings accounts increased $21 million, or 6%, on a sequential quarter basis. Total deposits have increased $1.1 billion, or 13%, since March 31, 2010.
Due to the significant amount of liquidity in the banking system and generally 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 March 31, 2011, the Company had $515 million of interest bearing cash earning 0.25%, the target Federal Funds Rate. This on balance sheet liquidity has declined since the prior year as investment security yields in the current
Umpqua Holdings Corporation Announces First Quarter Results
April 21, 2011
Page 7 of 22
Capital
As of March 31, 2011, total shareholders’ equity was $1.65 billion, comprised entirely of common equity. Book value per common share was $14.41, tangible book value per common share was $8.47 and the ratio of tangible common equity to tangible assets was 8.93% (see explanation and reconciliation of these items in the Non-GAAP Financial Measures section below).
The Company’s estimated total risk-based capital ratio as of March 31, 2011 is 17.53%. This represents a slight decrease from December 31, 2010, as a result of the increased investment portfolio during the quarter. Our total risk-based capital level is substantially 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 13.17% as of March 31, 2011. These capital ratios as of March 31, 2011 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.
Umpqua Holdings Corporation Announces First Quarter Results
April 21, 2011
Page 8 of 22
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) |
Mar 31, 2011 |
Dec 31, 2010 |
Mar 31, 2010 |
% Change |
% Change |
|
|
|
|
|
|
Net earnings (loss) available to common shareholders |
$13,405 |
$8,140 |
$(3,693) |
65% |
(463)% |
Adjustments: |
|
|
|
|
|
Net loss (gain) on junior subordinated debentures carried at fair value, net of tax (1) |
325 |
332 |
(3,653) |
(2)% |
(109)% |
Bargain purchase gain on acquisition, net of tax |
-- |
-- |
(3,862) |
nm |
(100)% |
Merger related expenses, net of tax (1) |
109 |
574 |
1,144 |
(81)% |
(90)% |
Operating earnings (loss) |
$13,839 |
$9,046 |
$(10,064) |
53% |
(238)% |
|
|
|
|
|
|
Earnings (loss) per diluted share: |
|
|
|
|
|
Earnings (loss) available to common shareholders |
$0.12 |
$0.07 |
$(0.04) |
71% |
(400)% |
Operating earnings (loss) |
$0.12 |
$0.08 |
$(0.11) |
50% |
(209)% |
|
|
|
|
|
|
(1) Income tax effect of pro forma operating earnings adjustments at 40%. |
Management believes pre-tax, pre-credit cost operating income is a useful financial measure because it enables investors to assess the Company’s ability to generate income and capital to cover credit losses through a credit cycle. Management uses this measure to evaluate core operating results exclusive of credit costs, which are often market driven or outside of the Company’s control, to monitor how we are growing core pre-tax income of the Company over time, through organic growth and acquisitions. Pre-tax, pre-credit cost operating income is calculated starting with operating earnings (as defined above) and adding back operating provision for income taxes, preferred stock dividends, earnings allocated to participating securities, provision for loan and lease losses, net gains or losses on other real estate owned and credit related external workout costs. For covered losses and expenses that are subject to loss-share, we have also deducted the associated gain recognized on FDIC indemnification asset.
The following table provides the reconciliation of operating earnings (loss) (non-GAAP) to pre-tax, pre-credit cost operating income (non-GAAP) for the periods presented (the reconciliation of earnings (loss) available to common shareholders (GAAP) to operating earnings (loss) (non-GAAP) is provided in the preceding tables):
|
Quarter ended: |
Sequential Quarter |
Year over Year | ||
(Dollars in thousands, except per share data) |
Mar 31, 2011 |
Dec 31, 2010 |
Mar 31, 2010 |
% Change |
% Change |
|
|
|
|
|
|
Operating earnings (loss) |
$13,839 |
$9,046 |
$(10,064) |
53% |
(238)% |
Adjustments: |
|
|
|
|
|
Provision for non-covered loan and lease losses |
15,030 |
17,567 |
42,106 |
(14)% |
(64)% |
Provision for covered loan and lease losses |
7,268 |
4,484 |
-- |
62% |
nm |
Non-covered net loss on other real estate owned |
2,833 |
4,555 |
2,311 |
(38)% |
23% |
Covered net loss on other real estate owned |
951 |
328 |
-- |
190% |
nm |
Non-covered loan & OREO workout cost |
2,488 |
3,242 |
1,638 |
(23)% |
52% |
Covered loan & OREO workout cost |
2,354 |
1,749 |
92 |
35% |
nm% |
Covered losses impact on FDIC indemnification asset |
(8,458) |
(4,849) |
(87) |
74% |
nm% |
Operating provision for (benefit from) income taxes |
6,810 |
4,807 |
(7,640) |
42% |
(189)% |
Dividends and undistributed earnings allocated to participating securities |
62 |
18 |
15 |
244% |
313% |
Preferred stock dividends |
-- |
-- |
12,192 |
100% |
(100)% |
Pre-tax, pre-credit cost operating income |
$43,177 |
$40,948 |
$40,563 |
5% |
6% |
|
|
|
|
|
|
Umpqua Holdings Corporation Announces First Quarter Results
April 21, 2011
Page 9 of 22
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) |
Mar 31, 2011 |
Dec 31, 2010 |
Mar 31, 2010 |
|
|
|
|
|
|
Total shareholders' equity |
$1,651,427 |
$1,642,574 |
$1,645,647 |
|
Subtract: |
|
|
|
|
Preferred stock |
-- |
-- |
198,289 |
|
Goodwill and other intangible assets, net |
680,922 |
681,969 |
680,482 |
|
Tangible common shareholders' equity |
$970,505 |
$960,605 |
$766,876 |
|
|
|
|
|
|
Total assets |
$11,550,728 |
$11,668,710 |
$10,509,804 |
|
Subtract: |
|
|
|
|
Goodwill and other intangible assets, net |
680,922 |
681,969 |
680,482 |
|
Tangible assets |
$10,869,806 |
$10,986,741 |
$9,829,322 |
|
|
|
|
|
|
Common shares outstanding at period end |
114,642,471 |
114,536,814 |
95,527,427 |
|
|
|
|
|
|
Tangible common equity ratio |
8.93% |
8.74% |
7.80% |
|
Tangible book value per common share |
$8.47 |
$8.39 |
$8.03 |
Umpqua Holdings Corporation Announces First Quarter Results
April 21, 2011
Page 10 of 22
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, California, and Seattle, Washington, 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, April 21, 2011, at 10:00 a.m. PDT (1:00 p.m. EDT) during which the company will discuss first quarter results and provide an update on recent activities. There will be a question-and-answer session following the presentation. Shareholders, analysts and other interested parties are invited to join the call by dialing 800-752-8363 a few minutes before 10:00 a.m. The conference ID is “55946376.” A re-broadcast will be available approximately two hours after the conference call by dialing 800-642-1687 or by visiting www.umpquaholdingscorp.com. Information to be discussed in the teleconference will be available on the company’s website in the morning prior to the call.
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 improved loan production, earnings momentum, the prospects for strategic growth that will build shareholder value, our success in resolving remaining credits at the estimated disposition value of related collateral, the mitigating effect of FDIC loss sharing agreements on the covered loan portfolio, 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, relative to historical levels. 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, unanticipated weakness in loan demand, deterioration in the economy, material reductions in revenue or material increases in expenses, lack of strategic growth opportunities or our failure to execute on those opportunities, our stock trades at historically low earnings multiples, our inability to effectively manage problem credits, unanticipated further declines in real estate values, certain loan assets becoming 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 First Quarter Results
April 21, 2011
Page 11 of 22
Umpqua Holdings Corporation | |||||
Consolidated Statements of Operations | |||||
(Unaudited) | |||||
|
|
Sequential |
Year over | ||
|
Quarter Ended: |
Quarter |
Year | ||
(Dollars in thousands, except per share data) |
Mar 31, 2011 |
Dec 31, 2010 |
Mar 31, 2010 |
% Change |
% Change |
Interest income |
|
|
|
|
|
Loans and leases |
$101,588 |
$109,532 |
$90,708 |
(7)% |
12% |
Interest and dividends on investments: |
|
|
|
|
|
Taxable |
22,043 |
18,323 |
16,075 |
20% |
37% |
Exempt from federal income tax |
2,165 |
2,184 |
2,187 |
(1)% |
(1)% |
Dividends |
3 |
5 |
-- |
(40)% |
100% |
Temporary investments & interest bearing cash |
401 |
633 |
399 |
(37)% |
1% |
Total interest income |
126,200 |
130,677 |
109,369 |
(3)% |
15% |
Interest expense |
|
|
|
|
|
Deposits |
15,666 |
19,076 |
18,789 |
(18)% |
(17)% |
Repurchase agreements and |
|
|
|
|
|
fed funds purchased |
122 |
135 |
123 |
(10)% |
(1)% |
Junior subordinated debentures |
1,913 |
1,954 |
1,885 |
(2)% |
1% |
Term debt |
2,289 |
2,397 |
1,520 |
(5)% |
51% |
Total interest expense |
19,990 |
23,562 |
22,317 |
(15)% |
(10)% |
Net interest income |
106,210 |
107,115 |
87,052 |
(1)% |
22% |
Provision for non-covered loan and lease losses |
15,030 |
17,567 |
42,106 |
(14)% |
(64)% |
Provision for covered loan and lease losses |
7,268 |
4,484 |
-- |
62% |
nm |
Non-interest income |
|
|
|
|
|
Service charges |
7,821 |
8,168 |
8,365 |
(4)% |
(7)% |
Brokerage fees |
3,377 |
3,274 |
2,639 |
3% |
28% |
Mortgage banking revenue, net |
5,275 |
7,389 |
3,478 |
(29)% |
52% |
Net loss on investment securities |
(25) |
(87) |
(288) |
(71)% |
(91)% |
(Loss) gain on junior subordinated debentures |
|
|
|
|
|
carried at fair value |
(542) |
(554) |
6,088 |
(2)% |
(109)% |
Bargain purchase gain on acquisitions |
-- |
-- |
6,437 |
nm |
(100)% |
Change in FDIC indemnification asset |
1,597 |
(5,370) |
610 |
(130)% |
162% |
Other income |
2,774 |
2,341 |
2,718 |
18% |
2% |
Total non-interest income |
20,277 |
15,161 |
30,047 |
34% |
(33)% |
Non-interest expense |
|
|
|
|
|
Salaries and benefits |
44,610 |
44,067 |
36,240 |
1% |
23% |
Occupancy and equipment |
12,517 |
12,344 |
10,676 |
1% |
17% |
Intangible amortization |
1,251 |
1,357 |
1,308 |
(8)% |
(4)% |
FDIC assessments |
3,873 |
4,186 |
3,444 |
(7)% |
12% |
Net loss on other real estate owned |
3,784 |
4,883 |
2,311 |
(23)% |
64% |
Merger related expenses |
181 |
957 |
1,906 |
(81)% |
(91)% |
Other |
17,985 |
20,070 |
13,986 |
(10)% |
29% |
Total non-interest expense |
84,201 |
87,864 |
69,871 |
(4)% |
21% |
Income before provision for (benefit from) income taxes |
19,988 |
12,361 |
5,122 |
62% |
290% |
Provision for (benefit from) income taxes |
6,521 |
4,203 |
(3,392) |
55% |
(292)% |
Net income |
13,467 |
8,158 |
8,514 |
65% |
58% |
Dividends and undistributed earnings |
|
|
|
|
|
allocated to participating securities |
62 |
18 |
15 |
244% |
313% |
Preferred stock dividend |
-- |
-- |
12,192 |
nm |
(100)% |
Net earnings (loss) available to common shareholders |
$13,405 |
$8,140 |
$(3,693) |
65% |
(463)% |
|
|
|
|
|
|
Weighted average shares outstanding |
114,575,556 |
114,533,505 |
92,176,174 |
0% |
24% |
Weighted average diluted shares outstanding |
114,746,218 |
114,773,205 |
92,176,174 |
0% |
24% |
Earnings (loss) per common share – basic |
$0.12 |
$0.07 |
$(0.04) |
71% |
(400)% |
Earnings (loss) per common share – diluted |
$0.12 |
$0.07 |
$(0.04) |
71% |
(400)% |
nm = not meaningful
|
Umpqua Holdings Corporation Announces First Quarter Results
April 21, 2011
Page 12 of 22
Umpqua Holdings Corporation
Consolidated Balance Sheets | |||||
(Unaudited) | |||||
|
|
|
|
Sequential |
Year over |
|
|
|
|
Quarter |
Year |
(Dollars in thousands, except per share data) |
Mar 31, 2011 |
Dec 31, 2010 |
Mar 31, 2010 |
% Change |
% Change |
Assets: |
|
|
|
|
|
Cash and due from banks, non-interest bearing |
$123,975 |
$111,946 |
$125,908 |
11% |
(2)% |
Cash and due from banks, interest bearing |
515,429 |
891,634 |
895,905 |
(42)% |
(42)% |
Temporary investments |
559 |
545 |
600 |
3% |
(7)% |
Investment securities: |
|
|
|
|
|
Trading |
2,572 |
3,024 |
2,047 |
(15)% |
26% |
Available for sale |
3,285,219 |
2,919,180 |
1,782,744 |
13% |
84% |
Held to maturity |
4,634 |
4,762 |
6,062 |
(3)% |
(24)% |
Loans held for sale |
52,655 |
75,626 |
34,068 |
(30)% |
55% |
Non-covered loans and leases |
5,632,363 |
5,658,987 |
5,831,858 |
0% |
(3)% |
Less: Allowance for loan and lease losses |
(97,833) |
(101,921) |
(110,784) |
(4)% |
(12)% |
Loans and leases, net |
5,534,530 |
5,557,066 |
5,721,074 |
0% |
(3)% |
Covered loans and leases, net |
741,630 |
785,898 |
691,618 |
(6)% |
7% |
Restricted equity securities |
34,295 |
34,475 |
31,996 |
(1)% |
7% |
Premises and equipment, net |
139,539 |
136,599 |
101,686 |
2% |
37% |
Mortgage servicing rights, at fair value |
15,605 |
14,454 |
13,628 |
8% |
15% |
Goodwill and other intangibles, net |
680,922 |
681,969 |
680,482 |
0% |
0% |
Non-covered other real estate owned |
34,512 |
32,791 |
18,872 |
5% |
83% |
Covered other real estate owned |
29,531 |
29,863 |
8,995 |
(1)% |
228% |
FDIC indemnification asset |
131,505 |
146,413 |
141,955 |
(10)% |
(7)% |
Other assets |
223,616 |
242,465 |
252,164 |
(8)% |
(11)% |
Total assets |
$11,550,728 |
$11,668,710 |
$10,509,804 |
(1)% |
10% |
|
|
|
|
|
|
Liabilities: |
|
|
|
|
|
Deposits |
$9,292,672 |
$9,433,805 |
$8,207,235 |
(1)% |
13% |
Securities sold under agreements to repurchase |
93,425 |
73,759 |
42,043 |
27% |
122% |
Term debt |
257,240 |
262,760 |
363,828 |
(2)% |
(29)% |
Junior subordinated debentures, at fair value |
81,220 |
80,688 |
79,563 |
1% |
2% |
Junior subordinated debentures, at amortized cost |
102,785 |
102,866 |
103,108 |
0% |
0% |
Other liabilities |
71,959 |
72,258 |
68,380 |
0% |
5% |
Total liabilities |
9,899,301 |
10,026,136 |
8,864,157 |
(1)% |
12% |
|
|
|
|
|
|
Shareholders' equity: |
|
|
|
|
|
Preferred stock |
-- |
-- |
198,289 |
100% |
(100)% |
Common stock |
1,541,539 |
1,540,928 |
1,339,627 |
0% |
15% |
Retained earnings |
84,405 |
76,701 |
74,133 |
10% |
14% |
Accumulated other comprehensive income |
25,483 |
24,945 |
33,598 |
2% |
(24)% |
Total shareholders' equity |
1,651,427 |
1,642,574 |
1,645,647 |
1% |
0% |
Total liabilities and shareholders' equity |
$11,550,728 |
$11,668,710 |
$10,509,804 |
(1)% |
10% |
|
|
|
|
|
|
Common shares outstanding at period end |
114,642,471 |
114,536,814 |
95,527,427 |
0% |
20% |
Book value per common share |
$14.41 |
$14.34 |
$15.15 |
0% |
(5)% |
Tangible book value per common share |
$8.47 |
$8.39 |
$8.03 |
1% |
5% |
Tangible equity - common |
$970,505 |
$960,605 |
$766,876 |
1% |
27% |
Tangible common equity to tangible assets |
8.93% |
8.74% |
7.80% |
|
|
nm = not meaningful |
|
|
|
|
|
Umpqua Holdings Corporation Announces First Quarter Results
April 21, 2011
Page 13 of 22
Umpqua Holdings Corporation | |||||||||||
Non-covered Loan & Lease Portfolio | |||||||||||
(Unaudited) | |||||||||||
|
|
|
|
|
|
|
Sequential |
Year over | |||
(Dollars in thousands) |
Mar 31, 2011 |
|
Dec 31, 2010 |
|
Mar 31, 2010 |
|
Quarter |
Year | |||
|
Amount |
Mix |
|
Amount |
Mix |
|
Amount |
Mix |
|
% Change |
% Change |
Non-covered loans & leases: |
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate: |
|
|
|
|
|
|
|
|
|
|
|
Non-owner occupied |
$2,239,817 |
40% |
|
$2,251,996 |
40% |
|
$2,354,746 |
40% |
|
(1)% |
(5)% |
Owner occupied |
1,248,263 |
22% |
|
1,231,479 |
22% |
|
1,165,219 |
20% |
|
1% |
7% |
Residential real estate |
485,917 |
9% |
|
484,185 |
9% |
|
451,628 |
8% |
|
0% |
8% |
Construction |
366,738 |
7% |
|
412,892 |
7% |
|
554,688 |
10% |
|
(11)% |
(34)% |
Total real estate |
4,340,735 |
77% |
|
4,380,552 |
77% |
|
4,526,281 |
78% |
|
(1)% |
(4)% |
Commercial |
1,238,541 |
22% |
|
1,224,416 |
22% |
|
1,252,418 |
21% |
|
1% |
(1)% |
Leases |
31,855 |
1% |
|
31,008 |
1% |
|
32,740 |
1% |
|
3% |
(3)% |
Installment and other |
32,516 |
1% |
|
34,041 |
1% |
|
31,451 |
1% |
|
(4)% |
3% |
Deferred loan fees, net |
(11,284) |
0% |
|
(11,030) |
0% |
|
(11,032) |
0% |
|
2% |
2% |
Total |
$5,632,363 |
100% |
|
$5,658,987 |
100% |
|
$5,831,858 |
100% |
|
0% |
(3)% |
|
|
|
|
|
|
|
|
|
|
|
|
Umpqua Holdings Corporation |
| |||||||||||
Covered Loan & Lease Portfolio |
| |||||||||||
(Unaudited) |
| |||||||||||
(Dollars in thousands) |
Mar 31, 2011 |
|
Dec 31, 2010 |
|
Mar 31, 2010 |
|
Sequential Quarter |
Year over Year | ||||
|
Amount |
Mix |
|
Amount |
Mix |
|
Amount |
Mix |
|
% Change |
% Change | |
Covered loans & leases: |
|
|
|
|
|
|
|
|
|
|
| |
Commercial real estate |
$544,575 |
73% |
|
$573,264 |
73% |
|
$464,221 |
67% |
|
(5)% |
17% | |
Residential real estate |
76,205 |
10% |
|
75,605 |
10% |
|
118,033 |
17% |
|
1% |
(35)% | |
Construction |
39,930 |
5% |
|
42,213 |
5% |
|
51,251 |
7% |
|
(5)% |
(22)% | |
Total real estate |
660,710 |
89% |
|
691,082 |
88% |
|
633,505 |
92% |
|
(4)% |
4% | |
Commercial |
71,019 |
10% |
|
83,722 |
11% |
|
43,854 |
6% |
|
(15)% |
62% | |
Installment and other |
9,901 |
1% |
|
11,094 |
1% |
|
14,316 |
2% |
|
(11)% |
(31)% | |
Total |
$741,630 |
100% |
|
$785,898 |
100% |
|
$691,618 |
100% |
|
(6)% |
7% | |
|
|
|
|
|
|
|
|
|
|
|
| |
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 First Quarter Results
April 21, 2011
Page 14 of 22
Umpqua Holdings Corporation | |||||||||||||||||||
Deposits by Type/Core Deposits | |||||||||||||||||||
(Unaudited) | |||||||||||||||||||
|
|
|
|
|
|
|
Sequential |
Year over | |||||||||||
(Dollars in thousands) |
Mar 31, 2011 |
|
Dec 31, 2010 |
|
Mar 31, 2010 |
|
Quarter |
Year | |||||||||||
|
Amount |
Mix |
|
Amount |
Mix |
|
Amount |
Mix |
|
% Change |
% Change | ||||||||
Deposits: |
|
|
|
|
|
|
|
|
|
|
| ||||||||
Demand, non-interest bearing |
$1,671,797 |
18% |
|
$1,616,687 |
17% |
|
$1,472,408 |
18% |
|
3% |
14% | ||||||||
Demand, interest bearing |
4,341,994 |
47% |
|
4,394,773 |
47% |
|
3,690,025 |
45% |
|
(1)% |
18% | ||||||||
Savings |
370,294 |
4% |
|
349,695 |
4% |
|
342,883 |
4% |
|
6% |
8% | ||||||||
Time |
2,908,588 |
31% |
|
3,072,650 |
33% |
|
2,701,919 |
33% |
|
(5)% |
8% | ||||||||
Total |
$9,292,673 |
100% |
|
$9,433,805 |
100% |
|
$8,207,235 |
100% |
|
(1)% |
13% | ||||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Total core deposits-ending (1) |
$7,227,087 |
78% |
|
$7,242,749 |
77% |
|
$6,405,118 |
78% |
|
0% |
13% | ||||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Number of open accounts: |
|
|
|
|
|
|
|
|
|
|
| ||||||||
Demand, non-interest bearing |
185,929 |
|
|
182,741 |
|
|
177,152 |
|
|
2% |
5% | ||||||||
Demand, interest bearing |
77,664 |
|
|
78,165 |
|
|
70,082 |
|
|
(1)% |
11% | ||||||||
Savings |
86,933 |
|
|
86,773 |
|
|
95,367 |
|
|
0% |
(9)% | ||||||||
Time |
40,155 |
|
|
41,832 |
|
|
40,269 |
|
|
(4)% |
0% | ||||||||
Total |
390,681 |
|
|
389,511 |
|
|
382,870 |
|
|
0% |
2% | ||||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Average balance per account: |
|
|
|
|
|
|
|
|
|
|
| ||||||||
Demand, non-interest bearing |
$9.0 |
|
|
$8.8 |
|
|
$8.3 |
|
|
|
| ||||||||
Demand, interest bearing |
55.9 |
|
|
56.2 |
|
|
52.7 |
|
|
|
| ||||||||
Savings |
4.3 |
|
|
4.0 |
|
|
3.6 |
|
|
|
| ||||||||
Time |
72.4 |
|
|
73.5 |
|
|
67.1 |
|
|
|
| ||||||||
Total |
23.8 |
|
|
24.2 |
|
|
21.4 |
|
|
|
| ||||||||
(1) Core deposits are defined as total deposits less time deposits greater than $100,000. | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Umpqua Holdings Corporation Announces First Quarter Results
April 21, 2011
Page 15 of 22
Umpqua Holdings Corporation | |||||
Credit Quality – Non-performing Assets | |||||
(Unaudited) | |||||
|
|
|
|
Sequential |
Year over |
|
|
Quarter Ended |
|
Quarter |
Year |
(Dollars in thousands) |
Mar 31, 2011 |
Dec 31, 2010 |
Mar 31, 2010 |
% Change |
% Change |
|
|
|
|
|
|
Non-covered, non-performing assets: |
|
|
|
|
|
Non-covered loans on non-accrual status |
$136,125 |
$138,177 |
$183,510 |
(1)% |
(26)% |
Non-covered loans past due 90+ days & accruing |
6,327 |
7,071 |
7,200 |
(11)% |
(12)% |
Total non-performing loans |
142,452 |
145,248 |
190,710 |
(2)% |
(25)% |
Non-covered other real estate owned |
34,512 |
32,791 |
18,872 |
5% |
83% |
Total |
$176,964 |
$178,039 |
$209,582 |
(1)% |
(16)% |
|
|
|
|
|
|
Performing restructured loans |
$67,499 |
$84,442 |
$97,971 |
(20)% |
(31)% |
|
|
|
|
|
|
Past due 30-89 days |
$70,665 |
$48,217 |
$53,947 |
(47)% |
31% |
Past due 30-89 days to total loans and leases |
1.25% |
0.85% |
0.93% |
|
|
|
|
|
|
|
|
Non-covered, non-performing loans to |
|
|
|
|
|
non-covered loans and leases |
2.53% |
2.57% |
3.27% |
|
|
Non-covered, non-performing assets to total assets |
1.53% |
1.53% |
1.99% |
|
|
|
|
|
|
|
|
Covered non-performing assets: |
|
|
|
|
|
Covered loans on non-accrual status |
$-- |
$-- |
$37,031 |
nm |
(100)% |
Total non-performing loans |
-- |
-- |
37,031 |
nm |
(100)% |
Covered other real estate owned |
29,531 |
29,863 |
8,995 |
(1)% |
228% |
Total |
$29,531 |
$29,863 |
$46,026 |
(1)% |
(36)% |
|
|
|
|
|
|
Covered non-performing loans to |
|
|
|
|
|
covered loans and leases |
--% |
--% |
5.35% |
|
|
Covered non-performing assets to total assets |
0.26% |
0.26% |
0.44% |
|
|
|
|
|
|
|
|
Total non-performing assets: |
|
|
|
|
|
Loans on non-accrual status |
$136,125 |
$138,177 |
$220,541 |
(1)% |
(38)% |
Loans past due 90+ days & accruing |
6,327 |
7,071 |
7,200 |
(11)% |
(12)% |
Total non-performing loans |
142,452 |
145,248 |
227,741 |
(2)% |
(37)% |
Other real estate owned |
64,043 |
62,654 |
27,867 |
2% |
130% |
Total |
$206,495 |
$207,902 |
$255,608 |
(1)% |
(19)% |
|
|
|
|
|
|
Non-performing loans to loans and leases |
2.23% |
2.25% |
3.49% |
|
|
Non-performing assets to total assets |
1.79% |
1.78% |
2.43% |
|
|
Umpqua Holdings Corporation Announces First Quarter Results
April 21, 2011
Page 16 of 22
Umpqua Holdings Corporation | |||||
Credit Quality – Allowance for Non-covered Credit Losses | |||||
(Unaudited) | |||||
|
|
|
|
Sequential |
Year over |
|
|
Quarter Ended |
|
Quarter |
Year |
(Dollars in thousands) |
Mar 31, 2011 |
Dec 31, 2010 |
Mar 31, 2010 |
% Change |
% Change |
Allowance for non-covered credit losses: |
|
|
|
|
|
Balance beginning of period |
$101,921 |
$108,098 |
$107,657 |
|
|
Provision for non-covered loan and lease losses |
15,030 |
17,567 |
42,106 |
(14)% |
(64)% |
|
|
|
|
|
|
Charge-offs |
(20,875) |
(25,770) |
(39,759) |
(19)% |
(47)% |
Recoveries |
1,757 |
2,026 |
780 |
(13)% |
125% |
Net charge-offs |
(19,118) |
(23,744) |
(38,979) |
(19)% |
(51)% |
|
|
|
|
|
|
Total allowance for non-covered loan and lease losses |
97,833 |
101,921 |
110,784 |
(4)% |
(12)% |
|
|
|
|
|
|
Reserve for unfunded commitments |
911 |
818 |
765 |
|
|
Total allowance for non-covered credit losses |
$98,744 |
$102,739 |
$111,549 |
(4)% |
(11)% |
|
|
|
|
|
|
Net charge-offs to average non-covered |
|
|
|
|
|
loans and leases (annualized) |
1.38% |
1.66% |
2.66% |
|
|
Recoveries to gross charge-offs |
8.42% |
7.86% |
1.96% |
|
|
Allowance for credit losses to non-covered |
|
|
|
|
|
loans and leases |
1.75% |
1.82% |
1.91% |
|
|
Umpqua Holdings Corporation Announces First Quarter Results
April 21, 2011
Page 17 of 22
Umpqua Holdings Corporation | |||||
Selected Ratios | |||||
(Unaudited) | |||||
|
|
Sequential |
Year over | ||
|
Quarter Ended: |
Quarter |
Year | ||
|
Mar 31, 2011 |
Dec 31, 2010 |
Mar 31, 2010 |
Change |
Change |
Net interest spread: |
|
|
|
|
|
Yield on non-covered loans and leases |
5.63% |
5.73% |
5.75% |
(0.10) |
(0.12) |
Yield on covered loans and leases |
12.07% |
12.86% |
6.98% |
(0.79) |
5.09 |
Yield on taxable investments |
2.97% |
2.87% |
3.99% |
0.10 |
(1.02) |
Yield on tax-exempt investments (1) |
5.90% |
5.74% |
5.84% |
0.16 |
0.06 |
Yield on temporary investments & interest bearing cash |
0.25% |
0.25% |
0.24% |
0.00 |
0.01 |
Total yield on earning assets (1) |
5.02% |
5.05% |
5.07% |
(0.03) |
(0.05) |
|
|
|
|
|
|
Cost of interest bearing deposits |
0.83% |
0.97% |
1.19% |
(0.14) |
(0.36) |
Cost of securities sold under agreements |
|
|
|
|
|
to repurchase and fed funds purchased |
0.59% |
0.79% |
1.02% |
(0.20) |
(0.43) |
Cost of term debt |
3.56% |
3.57% |
3.41% |
(0.01) |
0.15 |
Cost of junior subordinated debentures |
4.23% |
4.24% |
4.05% |
(0.01) |
0.18 |
Total cost of interest bearing liabilities |
0.99% |
1.12% |
1.33% |
(0.13) |
(0.34) |
|
|
|
|
|
|
Net interest spread (1) |
4.03% |
3.93% |
3.74% |
0.10 |
0.29 |
Net interest margin – Consolidated (1) |
4.23% |
4.14% |
4.04% |
0.09 |
0.19 |
|
|
|
|
|
|
Net interest margin – Bank (1) |
4.30% |
4.21% |
4.12% |
0.09 |
0.18 |
|
|
|
|
|
|
As reported (GAAP): |
|
|
|
|
|
Return on average assets |
0.47% |
0.28% |
(0.15%) |
0.19 |
0.62 |
Return on average tangible assets |
0.50% |
0.29% |
(0.16%) |
0.21 |
0.66 |
Return on average common equity |
3.30% |
1.95% |
(1.05%) |
1.35 |
4.35 |
Return on average tangible common equity |
5.62% |
3.30% |
(1.94%) |
2.32 |
7.56 |
Efficiency ratio – Consolidated |
66.01% |
71.24% |
59.14% |
(5.23) |
6.87 |
Efficiency ratio – Bank |
63.47% |
68.90% |
59.60% |
(5.43) |
3.87 |
|
|
|
|
|
|
Operating basis (non-GAAP): (2) |
|
|
|
|
|
Return on average assets |
0.48% |
0.31% |
-0.41% |
0.17 |
0.89 |
Return on average tangible assets |
0.52% |
0.33% |
-0.44% |
0.19 |
0.96 |
Return on average common equity |
3.40% |
2.16% |
-2.86% |
1.24 |
6.26 |
Return on average tangible common equity |
5.80% |
3.67% |
-5.28% |
2.13 |
11.08 |
Efficiency ratio – Consolidated |
65.59% |
70.15% |
64.35% |
(4.56) |
1.24 |
Efficiency ratio – Bank |
63.33% |
68.12% |
61.44% |
(4.79) |
1.89 |
|
|
|
|
|
|
(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 First Quarter Results
April 21, 2011
Page 18 of 22
Umpqua Holdings Corporation | |||||
Average Balances | |||||
(Unaudited) | |||||
|
|
Sequential |
Year over | ||
|
Quarter Ended: |
Quarter |
Year | ||
(Dollars in thousands) |
Mar 31, 2011 |
Dec 31, 2010 |
Mar 31, 2010 |
% Change |
% Change |
|
|
|
|
|
|
Temporary investments & interest bearing cash |
$652,844 |
$1,007,345 |
$678,930 |
(35)% |
(4)% |
Investment securities, taxable |
2,964,410 |
2,550,856 |
1,610,407 |
16% |
84% |
Investment securities, tax-exempt |
219,523 |
226,371 |
221,405 |
(3)% |
(1)% |
Loans held for sale |
47,646 |
68,982 |
24,141 |
(31)% |
97% |
Non-covered loans and leases |
5,623,811 |
5,691,794 |
5,934,805 |
(1)% |
(5)% |
Covered loans and leases |
767,911 |
809,984 |
363,315 |
(5)% |
111% |
Total earning assets |
10,276,145 |
10,355,333 |
8,833,003 |
(1)% |
16% |
Goodwill & other intangible assets, net |
681,494 |
681,966 |
653,778 |
0% |
4% |
Total assets |
11,572,751 |
11,695,980 |
9,977,400 |
(1)% |
16% |
|
|
|
|
|
|
Non-interest bearing demand deposits |
1,644,452 |
1,624,285 |
1,448,668 |
1% |
14% |
Interest bearing deposits |
7,683,403 |
7,826,703 |
6,389,093 |
(2)% |
20% |
Total deposits |
9,327,855 |
9,450,988 |
7,837,761 |
(1)% |
19% |
Interest bearing liabilities |
8,211,760 |
8,343,628 |
6,807,376 |
(2)% |
21% |
|
|
|
|
|
|
Shareholders’ equity - common |
1,649,674 |
1,659,151 |
1,426,935 |
(1)% |
16% |
Tangible common equity (1) |
968,180 |
977,185 |
773,157 |
(1)% |
25% |
(1) Average tangible common equity is a non-GAAP financial measure. Average tangible common equity is calculated as average
common shareholders’ equity less average goodwill and other intangible assets, net (excluding MSRs).
Umpqua Holdings Corporation Announces First Quarter Results
April 21, 2011
Page 19 of 22
Umpqua Holdings Corporation | |||||
Mortgage Banking Activity | |||||
(unaudited) | |||||
|
|
Sequential |
Year over | ||
|
Quarter Ended: |
Quarter |
Year | ||
(Dollars in thousands) |
Mar 31, 2011 |
Dec 31, 2010 |
Mar 31, 2010 |
% Change |
% Change |
|
|
|
|
|
|
Mortgage Servicing Rights (MSR): |
|
|
|
|
|
Mortgage loans serviced for others |
$1,691,112 |
$1,603,414 |
$1,345,550 |
5% |
26% |
MSR Asset, at fair value |
15,605 |
14,454 |
$13,628 |
8% |
15% |
|
|
|
|
|
|
MSR as % of serviced portfolio |
0.92% |
0.90% |
1.01% |
|
|
|
|
|
|
|
|
Mortgage Banking Revenue: |
|
|
|
|
|
Origination and sale |
$4,336 |
$7,395 |
$2,704 |
(41)% |
60% |
Servicing |
1,121 |
1,016 |
903 |
10% |
24% |
Change in fair value of MSR asset |
(182) |
(1,022) |
(129) |
(82)% |
41% |
Total |
$5,275 |
$7,389 |
$3,478 |
(29)% |
52% |
|
|
|
|
|
|
|
|
|
|
|
|
Closed loan volume |
$166,737 |
$281,086 |
$127,314 |
(41)% |
31% |
|
|
|
|
|
|
Umpqua Holdings Corporation Announces First Quarter Results
April 21, 2011
Page 20 of 22
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 March 31, 2011, December 31, 2010 and March 31, 2010:
Table 1- Non-covered residential development loan trends by region | ||||||
(Dollars in thousands) |
|
Non- |
| |||
|
|
|
|
% change |
performing |
Performing |
|
Balance |
Balance |
Balance |
from |
loans |
Loans |
|
3/31/10 |
12/31/10 |
3/31/11 |
3/31/10 |
3/31/11 |
3/31/11 |
Northwest Oregon |
$81,409 |
$64,263 |
$59,862 |
(26)% |
$13,871 |
$45,991 |
Central Oregon |
4,962 |
3,629 |
2,035 |
(59)% |
-- |
2,035 |
Southern Oregon |
17,149 |
6,256 |
4,607 |
(73)% |
829 |
3,778 |
Washington |
8,462 |
9,308 |
9,766 |
15% |
3,033 |
6,733 |
Greater Sacramento |
67,676 |
49,329 |
41,537 |
(39)% |
8,073 |
33,464 |
Northern California |
22,140 |
15,028 |
14,207 |
(36)% |
7,954 |
6,253 |
Total |
$201,798 |
$147,813 |
$132,014 |
(35)% |
$33,760 |
$98,254 |
% of total non-covered loan portfolio |
3% |
3% |
2% |
|
|
2% |
|
|
|
|
|
|
|
Quarter change $ |
$(24,011) |
$(12,572) |
$(15,799) |
|
|
|
Quarter change % |
(11)% |
(8)% |
(11)% |
|
|
|
The following is a stratification by size and region of the remaining non-covered performing residential development loans as of March 31, 2011:
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 |
$1,889 |
$4,549 |
$8,742 |
$10,277 |
$6,160 |
$14,374 |
$45,991 |
Central Oregon |
379 |
1,656 |
-- |
-- |
-- |
-- |
2,035 |
Southern Oregon |
833 |
1,845 |
1,100 |
-- |
-- |
-- |
3,778 |
Washington |
1,110 |
339 |
5,284 |
-- |
-- |
-- |
6,733 |
Greater Sacramento |
3,379 |
3,114 |
3,661 |
-- |
11,455 |
11,855 |
33,464 |
Northern California |
1,083 |
1,026 |
4,144 |
-- |
-- |
-- |
6,253 |
Total |
$8,673 |
$12,529 |
$22,931 |
$10,277 |
$17,615 |
$26,229 |
$98,254 |
% of Total |
9% |
13% |
23% |
10% |
18% |
27% |
100% |
Umpqua Holdings Corporation Announces First Quarter Results
April 21, 2011
Page 21 of 22
The following is a distribution of non-covered, non-performing assets by type and by region as of March 31, 2011:
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 |
$13,871 |
$-- |
$829 |
$3,033 |
$8,073 |
$7,954 |
$33,760 |
Commercial construction |
10,061 |
-- |
472 |
-- |
9,039 |
109 |
19,681 |
Commercial real estate |
31,265 |
2,341 |
-- |
2,074 |
9,379 |
10,054 |
55,113 |
Commercial |
8,021 |
2,488 |
369 |
4,176 |
7,251 |
5,266 |
27,571 |
Other |
-- |
-- |
-- |
-- |
-- |
-- |
-- |
Total |
$63,218 |
$4,829 |
$1,670 |
$9,283 |
$33,742 |
$23,383 |
$136,125 |
|
|
|
|
|
|
|
|
Loans 90 days past due: |
|
|
|
|
|
|
|
Residential development |
$-- |
$-- |
$-- |
$-- |
$-- |
$-- |
$-- |
Commercial construction |
-- |
-- |
-- |
-- |
-- |
-- |
-- |
Commercial real estate |
-- |
-- |
-- |
-- |
-- |
-- |
-- |
Commercial |
-- |
-- |
-- |
-- |
-- |
-- |
-- |
Other |
4,776 |
-- |
-- |
300 |
1,251 |
-- |
6,327 |
Total |
$4,776 |
$-- |
$-- |
$300 |
$1,251 |
$-- |
$6,327 |
|
|
|
|
|
|
|
|
Total non-performing loans |
$67,994 |
$4,829 |
$1,670 |
$9,583 |
$34,993 |
$23,383 |
$142,452 |
|
|
|
|
|
|
|
|
Other real estate owned: |
|
|
|
|
|
|
|
Residential development |
$590 |
$1,934 |
$2,094 |
$83 |
$174 |
$1,064 |
$5,939 |
Commercial construction |
4,590 |
539 |
-- |
313 |
3,991 |
-- |
9,433 |
Commercial real estate |
5,826 |
837 |
2,063 |
-- |
2,523 |
5,316 |
16,565 |
Commercial |
-- |
359 |
282 |
968 |
-- |
44 |
1,653 |
Other |
922 |
-- |
-- |
-- |
-- |
-- |
922 |
Total |
$11,928 |
$3,669 |
$4,439 |
$1,364 |
$6,688 |
$6,424 |
$34,512 |
|
|
|
|
|
|
|
|
Total non-performing assets |
$79,922 |
$8,498 |
$6,109 |
$10,947 |
$41,681 |
$29,807 |
$176,964 |
% of total |
45% |
5% |
3% |
6% |
24% |
17% |
100% |
|
|
|
|
|
|
|
|
The Company has aggressively charged-down impaired assets to their disposition values. As of March 31, 2011, the non-performing assets of $177.0 million have been written down by 41%, or $121.1 million, from their current par balance of $298.1 million.
The following is a distribution of non-covered loans past due 30 to 89 days by loan type by region as of March 31, 2011:
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 |
$3,285 |
$-- |
$156 |
$-- |
$6,736 |
$-- |
$10,177 |
|
Commercial construction |
2,627 |
-- |
165 |
-- |
2,742 |
-- |
5,534 |
|
Commercial real estate |
12,308 |
-- |
323 |
-- |
8,068 |
12,065 |
32,764 |
|
Commercial |
1,952 |
448 |
371 |
5,995 |
2,113 |
5,564 |
16,443 |
|
Other |
5,222 |
-- |
-- |
6 |
519 |
-- |
5,747 |
|
Total |
$25,394 |
$448 |
$1,015 |
$6,001 |
$20,178 |
$17,629 |
$70,665 |
|
Umpqua Holdings Corporation Announces First Quarter Results
April 21, 2011
Page 22 of 22
Table 5 –Non-covered loans past due 30-89 days trends | |||||
(Dollars in thousands) |
|
|
|
|
|
|
|
|
|
Sequential |
Year |
|
|
|
|
Quarter |
Over Year |
|
Mar 31, 2011 |
Dec 31, 2010 |
Mar 31, 2010 |
% Change |
% Change |
Loans 30-89 days past due: |
|
|
|
| |
Residential development |
$10,177 |
$640 |
$13,583 |
1490% |
(25)% |
Commercial construction |
5,534 |
8,898 |
4,861 |
(38)% |
14% |
Commercial real estate |
32,764 |
22,924 |
21,672 |
43% |
51% |
Commercial |
16,443 |
9,422 |
8,306 |
75% |
98% |
Other |
5,747 |
6,333 |
5,525 |
(9)% |
4% |
Total |
$70,665 |
$48,217 |
$53,947 |
47% |
31% |
The following is a distribution of non-covered restructured loans by loan type by region as of March 31, 2011:
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 |
$14,895 |
$-- |
$-- |
$5,284 |
$21,718 |
$-- |
$41,897 |
Commercial construction |
-- |
-- |
-- |
-- |
5,468 |
-- |
5,468 |
Commercial real estate |
-- |
-- |
3,888 |
-- |
11,336 |
3,536 |
18,760 |
Commercial |
-- |
-- |
-- |
-- |
-- |
1,196 |
1,196 |
Other |
178 |
-- |
-- |
-- |
-- |
-- |
178 |
Total |
$15,073 |
$-- |
$3,888 |
$5,284 |
$38,522 |
$4,732 |
$67,499 |
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