EX-99.1 2 umpqq32014ex991earningsrel.htm PRESS RELEASE ANNOUNCING THIRD QUARTER 2014 FINANCIAL RESULTS UMPQ Q3 2014 ex 99.1 Earnings Release

EXHIBIT 99.1 
 
 
 

 
Contacts:
Ron Farnsworth
Bradley Howes
EVP/Chief Financial Officer
SVP/Director of Investor Relations
Umpqua Holdings Corporation
Umpqua Holdings Corporation
503-727-4108
503-727-4226
ronfarnsworth@umpquabank.com
bradhowes@umpquabank.com
 
UMPQUA REPORTS THIRD QUARTER 2014 RESULTS

Operating earnings1 increased to $65.1 million, or $0.30 per share
7% annualized growth in non-covered loans and leases (gross of sales) and 10% annualized growth in deposits
Improved regulatory capital ratios and significant increase in on-balance sheet liquidity
 
PORTLAND, Ore. – October 15, 2014 – Umpqua Holdings Corporation (NASDAQ: UMPQ) (the “Company”) reported net earnings available to common shareholders of $58.8 million for the third quarter of 2014, an increase from $17.1 million for the second quarter of 2014 and $23.3 million for the third quarter of 2013. Earnings per diluted common share increased to $0.27 for the third quarter of 2014, as compared to $0.09 for the second quarter of 2014 and $0.21 for the third quarter of 2013.

Operating earnings1, which represent earnings available to common shareholders before gains or losses on junior subordinated debentures carried at fair value, net of tax, and merger related expenses, net of tax, increased to $65.1 million for the third quarter of 2014, as compared to $53.9 million for the second quarter of 2014 and $26.5 million for the third quarter of 2013. Operating earnings per diluted common share increased to $0.30 for the third quarter of 2014, as compared to $0.27 for the second quarter of 2014 and $0.24 for the third quarter of 2013.

“Umpqua continues to build on the momentum started earlier this year, reporting strong organic loan and deposit growth, higher top-line revenues, and increased capital and liquidity levels, while making good progress on our integration of Sterling,” said Ray Davis, president and CEO of Umpqua Holdings Corporation. “We expect to complete the majority of the integration by the end of the first quarter of 2015, and look forward to introducing new creative strategies early next year to enhance Umpqua's organic growth and further strengthen our unique brand and innovative product delivery systems.”

Third Quarter 2014 Financial Highlights:
•
Delivered improved operating results:
◦
Net interest income increased by $13.5 million from the prior quarter;
◦
Adjusted net interest margin1 declined from 4.85% to 4.71% due to a slight reduction in interest income from credit discount accretion and a higher balance of interest-bearing cash;
◦
Non-interest income increased by $17.4 million from the prior quarter, and included $7.1 million in gains arising from multi-family and portfolio residential loan sales;
◦
Efficiency ratio (operating basis)1 improved to 59.83%, from 60.33% in the prior quarter;

1 "Non-GAAP" financial measure. More information regarding this measurement and a reconciliation to the comparable GAAP measurement is provided under the heading Non-GAAP Financial Measures below.
Umpqua Reports Third Quarter 2014 Results
October 15, 2014
Page 2


◦
Return on average tangible common equity (operating basis)1 improved to 13.80%, from 12.76% in the prior quarter;
 
•
Continued strong growth in loans and deposits:
◦
Non-covered loans and leases (gross of sales) grew by $263.1 million, or 7% annualized, from the prior quarter. This growth was partially offset by sales of loans and leases of $117.6 million, for net growth of $145.5 million;
◦
Strong deposit growth of $404.6 million, or 10% annualized, from the prior quarter, driven by 14% annualized growth in core deposits;

•
Credit quality remained strong:
◦
Non-covered, non-performing assets to total assets remained at 0.36%;

•
Increased capital and liquidity:
◦
Tangible book value per common share1 increased to $8.78, from $8.69 in the prior quarter;
◦
Estimated total risk-based capital ratio of 14.3% and estimated Tier 1 common to risk weighted assets ratio of 10.8%, up from 14.2% and 10.7%, respectively;
◦
Declared a dividend of $0.15 per common share; and
◦
Interest bearing cash increased to $1.2 billion, from $0.5 billion in the prior quarter.
  
For the nine months ended September 30, 2014, the Company reported net earnings available to common shareholders of $94.6 million, or $0.54 per diluted common share, as compared to $72.5 million, or $0.65 per diluted common share, for the nine months ended September 30, 2013. For the nine months ended September 30, 2014, operating earnings1 were $143.0 million, or $0.81 per diluted common share, as compared to $77.8 million, or $0.69 per diluted common share, for the nine months ended September 30, 2013.

Update on Acquisition of Sterling Financial
The Company completed its acquisition of Sterling Financial Corporation (“Sterling”) on April 18, 2014, and as required under acquisition accounting rules, recorded the acquired assets and liabilities from Sterling’s balance sheet at their estimated fair values as of that date. The results of operations from Sterling have been included in the Company’s financial results since the completion of the acquisition, beginning on April 19, 2014. Under Generally Accepted Accounting Principles, the Sterling allowance for loan losses was eliminated and a fair value discount was recorded against the loans acquired as of the acquisition date.

During the third quarter of 2014, the Company reported $21.7 million of accretion from the credit discount in interest income, as compared to $24.5 million during the second quarter of 2014. As of September 30, 2014, the purchased non-credit impaired loans had approximately $139 million of remaining credit discount that will accrete into interest income over the life of the loans, and the purchased credit impairment loan pools had approximately $72 million of remaining total discount.

New loans originated and subsequent advances by the former Sterling workforce since April 19, 2014 are accounted for separately from the discounted acquired loans. As a result, the Company recognized $9.7 million during the quarter in provision for loan losses, related primarily to new loan production from the former Sterling offices.

In total, the Sterling acquisition was 49% accretive to third quarter of 2014 operating earnings per share1. Together, the accretion from the credit discount, offset by the provision for loan losses related to new production by former Sterling offices, added $7.1 million to net income, or $0.03 per diluted share. Excluding those two items, the Sterling acquisition would have been 33% accretive to third quarter of 2014 operating earnings per share1.

Integration efforts continue to proceed as planned, with the previously announced store consolidations currently in process and expected to be completed by the end of 2014. System conversions are scheduled through early 2015. Cost

1 "Non-GAAP" financial measure. More information regarding this measurement and a reconciliation to the comparable GAAP measurement is provided under the heading Non-GAAP Financial Measures below.
Umpqua Reports Third Quarter 2014 Results
October 15, 2014
Page 3


synergies remain on track to the previously announced target of $87 million (annualized), which is expected to be fully realized following system conversions.

Balance Sheet
Total consolidated assets were $22.5 billion as of September 30, 2014, as compared to $22.0 billion as of June 30, 2014 and $11.6 billion as of September 30, 2013. Total gross loans and leases (covered and non-covered) and deposits, were $15.3 billion and $16.7 billion, respectively, as of September 30, 2014, as compared to $15.1 billion and $16.3 billion, respectively, as of June 30, 2014, and $7.6 billion and $9.1 billion, respectively, as of September 30, 2013.

Total non-covered loans and leases held for investment increased to $15.0 billion as of September 30, 2014, as compared to $14.8 billion as of June 30, 2014 and $7.2 billion as of September 30, 2013. Gross non-covered loan and leases grew by $263.1 million, or 7% annualized, from the prior quarter. This growth was partially offset by sales of $117.6 million, which was primarily composed of $54.9 million in portfolio residential mortgage loan sales, $35.3 million in multifamily loan sales and $25.1 million in government guaranteed loan sales, resulting in net organic loan growth of $145.5 million.

Total covered loans were $275.6 million as of September 30, 2014, a $22.0 million decline from the prior quarter and a $121.5 million decline from the same period in the prior year. This portfolio will continue to decrease over time as loan payments are received, covered loans are refinanced or modified out of loss sharing, and as troubled credits are resolved and worked out.
 
Total deposits increased to $16.7 billion as of September 30, 2014, as compared to $16.3 billion as of June 30, 2014 and $9.1 billion as of September 30, 2013. This $404.6 million increase, or 10% annualized, from the prior quarter was primarily driven by strong growth in demand and savings accounts, as the Company continues its emphasis on core deposit gathering.
 
Including secured off-balance sheet lines of credit, total available liquidity to the Company was $7.6 billion as of September 30, 2014, representing 34% of total assets and 46% of total deposits. This compares to total available liquidity to the Company of $7.0 billion, or 32% of total assets and 43% of total deposits, as of June 30, 2014.

Net Interest Income
Net interest income was $225.7 million for the third quarter of 2014, up $13.5 million from the prior quarter and $118.9 million from the same period in the prior year. The increase from the prior quarter was primarily driven by higher interest-earning assets, as well as 19 additional days of Sterling net interest income due to the timing of the acquisition in the prior quarter. The increase from prior year was primarily driven by the acquisition of Sterling, along with continued organic loan growth. Net interest income for the third quarter of 2014 included $21.7 million in interest income arising from the accretion of the credit discount recorded on the loans acquired from the acquisition of Sterling.

The Company’s net interest margin was 4.75% for the third quarter of 2014, as compared to 5.01% for the second quarter of 2014, and 4.22% for the third quarter of 2013. The decrease from the prior quarter was primarily driven by lower average balances of covered loans and a decrease in interest income arising from lower accretion of the credit discount, as well as a higher balance of interest-bearing cash. The increase from the prior year was primarily driven by the acquisition of Sterling, an improvement in the yield earned on interest-earnings assets, and a lower cost of funds.

Adjusted Net Interest Income1 
The Company’s adjusted net interest income and margin excludes gains on covered loan disposals, and interest and fee reversals related to non-accrual loans.

Loan disposal 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) exceed the allocated carrying value of the loan disposed of from the pool. Loan disposal activities contributed $2.3 million of interest income for the third quarter of 2014, as compared

1 "Non-GAAP" financial measure. More information regarding this measurement and a reconciliation to the comparable GAAP measurement is provided under the heading Non-GAAP Financial Measures below.
Umpqua Reports Third Quarter 2014 Results
October 15, 2014
Page 4


to $7.1 million for the second quarter of 2014 and $1.8 million for the third quarter of 2013. While dispositions of covered loans positively impact interest income and net interest margin, the Company recognizes a corresponding decrease to the change in the FDIC indemnification asset within non-interest income that partially offsets the impact to net income. Interest and fee reversals related to non-accrual loans during the third quarter of 2014 totaled $74 thousand, as compared to $450 thousand for the second quarter of 2014 and $203 thousand for third quarter of 2013.

Adjusted net interest income was $225.0 million for the third quarter of 2014, as compared to $207.0 million for the second quarter of 2014 and $106.3 million for the third quarter of 2013. The Company’s adjusted net interest margin was 4.71% for the third quarter of 2014, as compared to 4.85% for the second quarter of 2014 and 4.16% for the third quarter of 2013.

Non-Interest Income
Total non-interest income was $61.9 million for the third quarter of 2014, up $17.4 million from the prior quarter and $35.8 million from the same period in the prior year. Non-interest income in the third quarter of 2014 included $7.1 million of gains arising from multi-family and portfolio residential loan sales. The remainder of the increase from the prior quarter was primarily driven by higher Sterling mortgage banking and fee revenues from 19 additional days due to the timing of the acquisition in the prior quarter. The increase from the prior year was primarily driven by the acquisition of Sterling, as well as the gains arising from loan sales.

Residential mortgage banking revenue, which includes income generated from the origination and sale of residential mortgage loans, income from the servicing of residential mortgage loans and changes to the fair value of the residential mortgage servicing rights (“MSR”) asset, increased to $26.0 million for the third quarter of 2014, up $1.7 million from the prior quarter, and up $10.9 million from the same period in the prior year.

The Company’s gain on sale margin, as a percentage of total residential mortgage production, was 2.44% for the third quarter of 2014, down slightly from 2.47% in the prior quarter due to a decline in the locked mortgage pipeline. Of the current quarter’s mortgage production, 71% related to purchase activity, as compared to 74% for the prior quarter and 66% for the same period in the prior year.

As of September 30, 2014, the Company serviced $11.3 billion of residential mortgage loans for others, and its related MSR asset was valued at $118.7 million, or 1.05% of the total serviced portfolio principal balance. This compares to $10.8 billion of residential mortgage loans serviced for others as of June 30, 2014, with a related MSR asset of $114.2 million, or 1.05% of the total serviced portfolio principal balance. As of September 30, 2013, the Company serviced $4.2 billion of residential mortgage loans serviced for others, and its related MSR asset was valued at $41.9 million, or 1.00% of the total serviced portfolio principal balance.

Non-interest Expense
Non-interest expense was $182.6 million for the third quarter of 2014, which included $8.6 million of merger-related expenses. This compares to $214.1 million, including $57.5 million of merger-related expenses, for the second quarter of 2014 and $95.6 million, including $4.9 million of merger-related expenses, for the third quarter of 2013. The increase in the Company’s non-interest expense from the prior quarter was primarily driven by 19 additional days of Sterling non-interest expense due to the timing of the acquisition in the prior quarter. The third quarter of 2014 non-interest expense run-rate does not reflect the full benefit of the anticipated Sterling merger cost synergies.

On an operating basis1, which excludes merger-related expenses, the Company’s efficiency ratio improved to 59.83% for the third quarter of 2014, from 60.33% for the second quarter of 2014 and 67.40% for the third quarter of 2013.

Income taxes
The Company recorded a provision for income taxes of $31.8 million for the third quarter of 2014, representing an effective tax rate of 35.0% for the quarter. The year-to-date effective tax rate was 35.4%, which is the anticipated full-year 2014 effective tax rate.

1 "Non-GAAP" financial measure. More information regarding this measurement and a reconciliation to the comparable GAAP measurement is provided under the heading Non-GAAP Financial Measures below.
Umpqua Reports Third Quarter 2014 Results
October 15, 2014
Page 5


 
Capital
As of September 30, 2014, the Company’s tangible book value per common share1 was $8.78 and its ratio of tangible common equity to tangible assets1 was 9.24%, as compared to $8.69 and 9.34%, respectively, in the prior quarter.

The Company made no open market nor privately negotiated purchases of common stock under the Company’s previously announced share repurchase plan during the third quarter of 2014. The Company may repurchase up to 12.0 million of additional shares under this plan.
 
The Company’s estimated total risk-based capital ratio was 14.3% and its estimated Tier 1 common to risk weighted assets ratio was 10.8% as of September 30, 2014, up from 14.2% and 10.7%, respectively. The Company remains well above current “well-capitalized” regulatory minimums. These capital ratios, as of September 30, 2014, are estimates pending completion and filing of the Company’s regulatory reports.
 
On July 2, 2013, federal banking regulators approved the final proposed rules that revise the regulatory capital rules to incorporate certain revisions by the Basel Committee on Banking Supervision to the Basel capital framework (“Basel III”). Under Basel III, the Company's combined trust preferred issuances must be phased out of Tier 1 and into Tier 2 capital (75% in 2015 and 100% in 2016). As of September 30, 2014, the total par value of trust preferred securities was $461.2 million. In addition, the Company is required under Basel III to exclude the entire deferred tax asset related to net operating losses (“NOLs”) from Tier 1 capital. As of September 30, 2014, the Company’s total net deferred tax asset was $250.9 million, and the portion related to NOLs was $211.7 million.

Credit Quality – Non-covered Loan Portfolio
Under purchase accounting rules, loans (including those considered non-performing) acquired from Sterling were recorded at their estimated fair value, and the related allowance for loan losses was eliminated. As a result, the Company wrote down the value of the non-covered loan and lease portfolio acquired from Sterling as of the acquisition date. This credit portion of the fair value mark is not reflected in the reported allowance for loan losses, or its related allowance coverage ratios, but should be considered when comparing the current quarter ratios to similar ratios in periods prior to the acquisition of Sterling.

The allowance for non-covered loan losses was $107.8 million, or 0.72% of non-covered loans and leases, as of September 30, 2014. To provide better comparability to prior periods, this pro-forma ratio would have been approximately 2.1% after grossing up the allowance for loan losses and the non-covered loans and leases by the amount of the remaining credit mark remaining as of quarter-end. This compares to a ratio of approximately 2.2% as of June 30, 2014.

The provision for non-covered loan losses was $14.4 million for the third quarter of 2014, down from $15.4 million for the second quarter of 2014 and an increase from $3.0 million for the third quarter of 2013. Of the third quarter of 2014 provision for loan losses, $9.7 million related primarily to new loan production from former Sterling offices, $5.1 million related to growth in the Financial Pacific Leasing portfolio, and the remaining recapture related to legacy Umpqua Bank.

Non-covered, non-performing assets were $81.6 million, or 0.36% of total assets, as of September 30, 2014, as compared to $79.4 million, or 0.36% of total assets, as of June 30, 2014, and $63.0 million, or 0.54% of total assets, as of September 30, 2013.

Non-covered loans past due 31 to 89 days were $34.0 million, or 0.23% of non-covered loans and leases, as of September 30, 2014, as compared to $28.9 million, or 0.19% of non-covered loans and leases, as of June 30, 2014, and $22.1 million, or 0.31% of non-covered loans and leases, as of September 30, 2013. Non-covered restructured loans on accrual status were $63.5 million as of September 30, 2014, as compared to $67.5 million as of June 30, 2014, and $69.5 million as of September 30, 2013.


1 "Non-GAAP" financial measure. More information regarding this measurement and a reconciliation to the comparable GAAP measurement is provided under the heading Non-GAAP Financial Measures below.
Umpqua Reports Third Quarter 2014 Results
October 15, 2014
Page 6


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. The Company believes that certain non-GAAP financial measures provide investors with information useful in understanding the Company’s financial performance; however, readers of this document are urged to review these non-GAAP financial measures in conjunction with the GAAP results as reported.

The Company recognizes gains or losses on its 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, the Company incurs significant expenses related to the completion and integration of mergers and acquisitions. Additionally, it 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, the Company may recognize one-time bargain purchase gains on certain acquisitions that are not reflective of the Company’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. The Company defines operating earnings as earnings available to common shareholders before gains or losses on junior subordinated debentures carried at fair value, net of tax, bargain purchase gains on acquisitions, net of tax, merger related expenses, net of tax, and goodwill impairment, and we calculate operating earnings per diluted share by dividing operating earnings by the same diluted share total used in determining diluted earnings per common share.
 

Umpqua Reports Third Quarter 2014 Results
October 15, 2014
Page 7


The following table provides the reconciliation of earnings available to common shareholders (GAAP) to operating earnings (non-GAAP), and earnings per diluted common share (GAAP) to operating earnings per diluted share (non-GAAP) for the periods presented:
 
 
 
Quarter Ended
 
% Change
(Dollars in thousands, except per share data)
 
Sep 30, 2014
 
Jun 30, 2014
 
Mar 31, 2014
 
Dec 31, 2013
 
Sep 30, 2013
 
Seq. Quarter
 
Year over Year
Net earnings available to common shareholders
 
$
58,847

 
$
17,138

 
$
18,651

 
$
25,058

 
$
23,281

 
243
 %
 
153
%
Adjustments:
 
 

 
 

 
 
 
 
 
 

 
 
 
 
Net loss on junior subordinated debentures carried at fair value, net of tax (1)
 
955

 
821

 
325

 
332

 
332

 
16
 %
 
188
%
Merger related expenses, net of tax (1)
 
5,274

 
35,926

 
5,073

 
2,502

 
2,914

 
(85
)%
 
81
%
Operating earnings
 
$
65,076

 
$
53,885

 
$
24,049

 
$
27,892

 
$
26,527

 
21
 %
 
145
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings per diluted share:
 
 

 
 

 
 
 
 
 
 

 
 
 
 
Earnings available to common shareholders
 
$
0.27

 
$
0.09

 
$
0.17

 
$
0.22

 
$
0.21

 
200
 %
 
29
%
Operating earnings
 
$
0.30

 
$
0.27

 
$
0.21

 
$
0.25

 
$
0.24

 
11
 %
 
25
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine Months Ended
 
% Change
 
 
 
 
 
 
 
 
 
 
Sep 30, 2014
 
Sep 30, 2013
 
Year over Year
 
 
 
 
 
 
 
 
Net earnings available to common shareholders
 
$
94,636

 
$
72,515

 
31
 %
 
 
 


 
 
 
 
Adjustments:
 
 

 
 

 
 
 
 
 
 
 
 
 
 
Net loss on junior subordinated debentures carried at fair value, net of tax (1)
 
2,101

 
986

 
113
 %
 
 
 


 
 
 
 
Merger related expenses, net of tax (1)
 
46,273

 
4,318

 
nm

 
 
 


 
 
 
 
Operating earnings
 
$
143,010

 
$
77,819

 
84
 %
 
 
 


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings per diluted share:
 
 

 
 

 
 
 
 
 
 
 
 
 
 
Earnings available to common shareholders
 
$
0.54

 
$
0.65

 
(17
)%
 
 
 


 
 
 
 
Operating earnings
 
$
0.81

 
$
0.69

 
17
 %
 
 
 


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Income tax effect of pro forma operating earnings adjustments at 40% for tax-deductible items.
 
 
nm = not meaningful.
 
 

Management believes adjusted net interest income and adjusted net interest margin are useful financial measures because they enable investors to evaluate the underlying growth or compression in these values excluding interest income adjustments related to credit quality. Management uses these measures to evaluate adjusted net interest income operating results exclusive of credit costs, in order to monitor our effectiveness in growing higher interest yielding assets and managing our cost of interest bearing liabilities over time. Adjusted net interest income is calculated as net interest income, adjusting tax exempt interest income to its taxable equivalent, adding back interest and fee reversals related to new non-accrual loans during the period, and deducting the interest income gains recognized from loan disposition activities within covered loan pools. Adjusted net interest margin is calculated by dividing annualized adjusted net interest income by a period’s average interest earning assets.
 

Umpqua Reports Third Quarter 2014 Results
October 15, 2014
Page 8


The following table provides the reconciliation of net interest income (GAAP) to adjusted net interest income (non-GAAP), and net interest margin (GAAP) to adjusted net interest margin (non-GAAP) for the periods presented:
 
 
 
Quarter Ended
 
% Change
(Dollars in thousands)
 
Sep 30, 2014
 
Jun 30, 2014
 
Mar 31, 2014
 
Dec 31, 2013
 
Sep 30, 2013
 
Seq. Quarter
 
Year over Year
Net interest income
 
$
225,716

 
$
212,259

 
$
107,838

 
$
110,074

 
$
106,809

 
6
 %
 
111
 %
Tax equivalent adjustment (1)
 
1,443

 
1,394

 
1,092

 
1,119

 
1,137

 
4
 %
 
27
 %
Net interest income (1)
 
227,159

 
213,653

 
108,930

 
111,193

 
107,946

 
6
 %
 
110
 %
Adjustments:
 
 

 
 

 
 
 
 
 
 

 
 

 
 

Interest and fee reversals (recoveries) on non-accrual loans
 
74

 
450

 
122

 
(399
)
 
203

 
(84
)%
 
(64
)%
Covered loan disposal gains
 
(2,262
)
 
(7,128
)
 
(4,259
)
 
(3,908
)
 
(1,836
)
 
(68
)%
 
23
 %
Adjusted net interest income  (1)
 
$
224,971

 
$
206,975

 
$
104,793

 
$
106,886

 
$
106,313

 
9
 %
 
112
 %
Average interest earning assets
 
$
18,963,760

 
$
17,116,070

 
$
10,310,116

 
$
10,292,996

 
$
10,136,677

 
11
 %
 
87
 %
Net interest margin – consolidated (1)
 
4.75
%
 
5.01
%
 
4.28
 %
 
4.29
%
 
4.22
%
 
 

 
 

Adjusted net interest margin – consolidated (1)
 
4.71
%
 
4.85
%
 
4.12
 %
 
4.12
%
 
4.16
%
 
 

 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine Months Ended
 
% Change
 
 
 
 
 
 
 
 
 
 
 
Sep 30, 2014
 
Sep 30, 2013
 
Year over Year
 
 
 
 
 
 
 
 
Net interest income
 
$
545,813

 
$
294,891

 
85
 %
 
 
 


 
 
 
 
Tax equivalent adjustment (1)
 
3,929

 
3,460

 
14
 %
 
 
 


 
 
 
 
Net interest income (1)
 
549,742

 
298,351

 
84
 %
 
 
 


 
 
 
 
Adjustments:
 
 

 
 

 
 
 
 
 
 
 
 
 
 
Interest and fee reversals on non-accrual loans
 
646

 
1,321

 
(51
)%
 
 
 


 
 
 
 
Covered loan disposal gains
 
(13,649
)
 
(9,227
)
 
48
 %
 
 
 


 
 
 
 
Adjusted net interest income  (1)
 
$
536,739

 
$
290,445

 
85
 %
 
 
 


 
 
 
 
Average interest earning assets
 
$
15,495,014

 
$
10,201,559

 
52
 %
 
 
 


 
 
 
 
Net interest margin – consolidated (1)
 
4.74
%
 
3.91
%
 
 
 
 
 
 
 
 
 
 
Adjusted net interest margin – consolidated (1)
 
4.63
%
 
3.81
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Tax equivalent basis. Tax exempt interest has been adjusted to a taxable equivalent basis using a 35% tax rate.
 
 
 
 
 
Management believes tangible common equity and the tangible common equity ratio are meaningful measures of capital adequacy because they provide a meaningful base for period-to-period and company-to-company comparisons, which management believes will assist investors in assessing the capital of the Company and the ability to absorb potential losses. Tangible common equity is calculated as total shareholders' equity less goodwill and other intangible assets, net (excluding MSRs). Tangible assets are total assets less goodwill and other intangible assets, net (excluding MSRs).  The tangible common equity ratio is calculated as tangible common shareholders’ equity divided by tangible assets.

Umpqua Reports Third Quarter 2014 Results
October 15, 2014
Page 9


 
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, 2014
 
Jun 30, 2014
 
Mar 31, 2014
 
Dec 31, 2013
 
Sep 30, 2013
Total shareholders' equity
 
$
3,752,508

 
$
3,729,060

 
$
1,734,476

 
$
1,727,426

 
$
1,725,995

Subtract:
 
 

 
 

 
 
 
 
 
 

Goodwill and other intangible assets, net
 
1,845,242

 
1,842,670

 
775,488

 
776,683

 
778,094

Tangible common shareholders' equity
 
$
1,907,266

 
$
1,886,390

 
$
958,988

 
$
950,743

 
$
947,901

Total assets
 
$
22,488,059

 
$
22,042,229

 
$
11,838,726

 
$
11,636,112

 
$
11,569,297

Subtract:
 
 

 
 

 
 
 
 
 
 

Goodwill and other intangible assets, net
 
1,845,242

 
1,842,670

 
775,488

 
776,683

 
778,094

Tangible assets
 
$
20,642,817

 
$
20,199,559

 
$
11,063,238

 
$
10,859,429

 
$
10,791,203

Common shares outstanding at period end
 
217,261,722

 
217,190,721

 
112,319,525

 
111,973,203

 
111,928,762

Tangible common equity ratio
 
9.24
%
 
9.34
%
 
8.67
%
 
8.75
%
 
8.78
%
Tangible book value per common share
 
$
8.78

 
$
8.69

 
$
8.54

 
$
8.49

 
$
8.47


About Umpqua Holdings Corporation
Umpqua Holdings Corporation (NASDAQ: UMPQ) is the parent company of Umpqua Bank, an Oregon-based community bank recognized for its entrepreneurial approach, innovative use of technology, and distinctive banking solutions. Umpqua Bank has locations across Idaho, Washington, Oregon, California 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 Private Bank serves high net worth individuals and nonprofits,
providing trust and investment services. Umpqua Holdings Corporation is headquartered in Portland, Oregon. For more information, visit www.umpquaholdingscorp.com.
 
Earnings Conference Call Information
The Company will host its third quarter 2014 earnings conference call on Thursday, October 16, 2014, at 10:00 a.m. PST (1:00 p.m. EST). During the call, the Company will provide an update on recent activities and discuss its third quarter 2014 financial results. There will be a live question-and-answer session following the presentation. To join the call, please dial (888) 487-0340 ten minutes prior to the start time and enter conference ID: 9952803. A re-broadcast will be available approximately two hours after the call by dialing (888) 203-1112 and entering conference ID 9952803.
The earnings conference call will also be available as an audiocast, which can be accessed on the Company’s investor relations page at www.umpquaholdingscorp.com. A slide presentation to accompany the call will also be posted on the website before 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 our positioning relative to changes in interest rates, growth and efficiency potential from the acquisition of Sterling Financial Corporation; the integration of the merger with Sterling Financial Corporation; timing and amount of merger-related synergies and timing of systems conversions; credit discount accretion related to the merger; planned creative strategy initiatives; and projected effective tax rate. Specific risks that could cause results to differ from forward-looking statements are set forth in our filings with the SEC and include, without limitation, changes in the discounted cash flow model used to determine the fair value of subordinated debentures; prolonged low interest rate environment; unanticipated weakness in loan demand or loan pricing; 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 inability to effectively manage

Umpqua Reports Third Quarter 2014 Results
October 15, 2014
Page 10


problem credits; certain loan assets becoming ineligible for loss sharing; unanticipated increases in the cost of deposits; the consequences of a phase-out of junior subordinated debentures from Tier 1 capital; Umpqua’s ability to achieve the synergies and earnings accretion contemplated by the Sterling merger; Umpqua’s ability to promptly and effectively integrate the businesses of Sterling and Umpqua and complete system conversions; the diversion of management time on issues related to merger integration; changes in laws or regulations; and changes in general economic conditions.


Umpqua Reports Third Quarter 2014 Results
October 15, 2014
Page 11


Umpqua Holdings Corporation
Consolidated Statements of Income
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
Quarter Ended
 
% Change
(In thousands, except per share data)
 
Sep 30, 2014
 
Jun 30, 2014
 
Mar 31, 2014
 
Dec 31, 2013
 
Sep 30, 2013
 
Seq. Quarter
 
Year over Year
Interest income:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-covered loans and leases
 
$
215,197

 
$
193,061

 
$
91,268

 
$
93,032

 
$
93,706

 
11
 %
 
130
 %
Covered loans and leases
 
8,775

 
15,931

 
12,718

 
13,330

 
11,837

 
(45
)%
 
(26
)%
Interest and dividends on investments:
 
 
 
 

 
 
 
 
 
 
 


 


Taxable
 
12,136

 
12,728

 
9,291

 
9,517

 
7,882

 
(5
)%
 
54
 %
Exempt from federal income tax
 
2,790

 
2,697

 
2,112

 
2,173

 
2,200

 
3
 %
 
27
 %
Dividends
 
81

 
128

 
50

 
87

 
51

 
(37
)%
 
59
 %
Temporary investments & interest bearing deposits
 
544

 
422

 
441

 
399

 
284

 
29
 %
 
92
 %
Total interest income
 
239,523

 
224,967

 
115,880

 
118,538

 
115,960

 
6
 %
 
107
 %
Interest expense:
 
 

 
 

 
 

 
 

 
 

 
 
 
 
Deposits
 
6,773

 
6,075

 
3,848

 
4,168

 
4,845

 
11
 %
 
40
 %
Repurchase agreements and fed funds purchased
 
54

 
203

 
41

 
42

 
35

 
(73
)%
 
54
 %
Term debt
 
3,586

 
3,364

 
2,273

 
2,332

 
2,338

 
7
 %
 
53
 %
Junior subordinated debentures
 
3,394

 
3,066

 
1,880

 
1,922

 
1,933

 
11
 %
 
76
 %
Total interest expense
 
13,807

 
12,708

 
8,042

 
8,464

 
9,151

 
9
 %
 
51
 %
Net interest income
 
225,716

 
212,259

 
107,838

 
110,074

 
106,809

 
6
 %
 
111
 %
Provision for non-covered loan and lease losses
 
14,431

 
15,399

 
5,400

 
3,840

 
3,008

 
(6
)%
 
380
 %
(Recapture of) provision for covered loan and lease losses
 
(98
)
 
(703
)
 
571

 
(1,369
)
 
(1,904
)
 
(86
)%
 
(95
)%
Non-interest income:
 
 

 
 

 
 

 
 

 
 

 
 
 


Service charges
 
16,090

 
15,371

 
7,767

 
8,108

 
8,374

 
5
 %
 
92
 %
Brokerage fees
 
4,882

 
4,566

 
3,725

 
3,584

 
3,854

 
7
 %
 
27
 %
Residential mortgage banking revenue, net
 
25,996

 
24,341

 
10,439

 
15,957

 
15,071

 
7
 %
 
72
 %
Net gain on investment securities
 
902

 
976

 
—

 
191

 
3

 
(8
)%
 
nm

Loss on junior subordinated debentures carried at fair value
 
(1,590
)
 
(1,369
)
 
(542
)
 
(554
)
 
(554
)
 
16
 %
 
187
 %
Change in FDIC indemnification asset
 
(2,728
)
 
(5,601
)
 
(4,840
)
 
(5,708
)
 
(6,474
)
 
(51
)%
 
(58
)%
BOLI income
 
2,161

 
1,967

 
736

 
621

 
763

 
10
 %
 
183
 %
Other income
 
16,211

 
4,278

 
5,722

 
4,586

 
5,107

 
279
 %
 
217
 %
Total non-interest income
 
61,924

 
44,529

 
23,007

 
26,785

 
26,144

 
39
 %
 
137
 %
Non-interest expense:
 
 

 
 

 
 

 
 

 
 

 
 
 
 
Salaries and employee benefits
 
102,564

 
95,560

 
53,218

 
52,720

 
53,699

 
7
 %
 
91
 %
Net occupancy and equipment
 
33,029

 
28,746

 
16,501

 
16,254

 
16,019

 
15
 %
 
106
 %
Intangible amortization
 
3,103

 
2,808

 
1,194

 
1,186

 
1,186

 
11
 %
 
162
 %
FDIC assessments
 
3,038

 
2,575

 
1,863

 
1,922

 
1,709

 
18
 %
 
78
 %
Net loss (gain) on non-covered other real estate owned
 
271

 
178

 
(18
)
 
1,416

 
(27
)
 
52
 %
 
nm

Net loss (gain) on covered other real estate owned
 
42

 
80

 
(46
)
 
(19
)
 
(68
)
 
(48
)%
 
(162
)%
Merger related expenses
 
8,632

 
57,531

 
5,983

 
1,639

 
4,856

 
(85
)%
 
78
 %
Other expense
 
31,879

 
26,653

 
17,823

 
20,246

 
18,230

 
20
 %
 
75
 %
Total non-interest expense
 
182,558

 
214,131

 
96,518

 
95,364

 
95,604

 
(15
)%
 
91
 %
Income before provision for income taxes
 
90,749

 
27,961

 
28,356

 
39,024

 
36,245

 
225
 %
 
150
 %
Provision for income taxes
 
31,760

 
10,740

 
9,592

 
13,754

 
12,768

 
196
 %
 
149
 %
Net income
 
58,989

 
17,221

 
18,764

 
25,270

 
23,477

 
243
 %
 
151
 %
Dividends and undistributed earnings allocated to participating securities
 
142

 
83

 
113

 
212

 
196

 
71
 %
 
(28
)%
Net earnings available to common shareholders
 
$
58,847

 
$
17,138

 
$
18,651

 
$
25,058

 
$
23,281

 
243
 %
 
153
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average basic shares outstanding
 
217,245

 
196,312

 
112,170

 
111,949

 
111,912

 
11
 %
 
94
 %
Weighted average diluted shares outstanding
 
218,941

 
197,638

 
112,367

 
112,214

 
112,195

 
11
 %
 
95
 %
Earnings per common share – basic
 
$
0.27

 
$
0.09

 
$
0.17

 
$
0.22

 
$
0.21

 
200
 %
 
29
 %
Earnings per common share – diluted
 
$
0.27

 
$
0.09

 
$
0.17

 
$
0.22

 
$
0.21

 
200
 %
 
29
 %
nm = not meaningful
 
 

 
 

 
 

 
 

 
 

 
 
 
 

Umpqua Reports Third Quarter 2014 Results
October 15, 2014
Page 12


Umpqua Holdings Corporation
Consolidated Statements of Income
(Unaudited)
 
 
 
 
 
 
 
Nine Months Ended
 
% Change
(In thousands, except per share data)
 
Sep 30, 2014
 
Sep 30, 2013
 
Year over Year
Interest income
 
 
 
 
 
 
Non-covered loans and leases
 
$
499,526

 
$
250,685

 
99
 %
Covered loans and leases
 
37,424

 
41,167

 
(9
)%
Interest and dividends on investments:
 
 
 
 
 
 

Taxable
 
34,155

 
24,629

 
39
 %
Exempt from federal income tax
 
7,599

 
6,725

 
13
 %
Dividends
 
259

 
165

 
57
 %
Temporary investments & interest bearing deposits
 
1,407

 
937

 
50
 %
Total interest income
 
580,370

 
324,308

 
79
 %
Interest expense
 
 

 
 
 
 

Deposits
 
16,696

 
16,587

 
1
 %
Repurchase agreements and fed funds purchased
 
298

 
99

 
201
 %
Term debt
 
9,223

 
6,916

 
33
 %
Junior subordinated debentures
 
8,340

 
5,815

 
43
 %
Total interest expense
 
34,557

 
29,417

 
17
 %
Net interest income
 
545,813

 
294,891

 
85
 %
Provision for non-covered loan and lease losses
 
35,230

 
12,989

 
171
 %
Recapture of provision for covered loan and lease losses
 
(230
)
 
(4,744
)
 
(95
)%
Non-interest income
 
 

 
 
 
 
Service charges
 
39,228

 
22,844

 
72
 %
Brokerage fees
 
13,173

 
11,152

 
18
 %
Residential mortgage banking revenue, net
 
60,776

 
62,928

 
(3
)%
Net gain on investment securities
 
1,878

 
18

 
nm

Loss on junior subordinated debentures carried at fair value
 
(3,501
)
 
(1,643
)
 
113
 %
Change in FDIC indemnification asset
 
(13,169
)
 
(19,841
)
 
(34
)%
BOLI Income
 
4,864

 
2,432

 
100
 %
Other income
 
26,211

 
16,766

 
56
 %
Total non-interest income
 
129,460

 
94,656

 
37
 %
Non-interest expense
 
 

 
 
 
 

Salaries and employee benefits
 
251,340

 
157,271

 
60
 %
Net occupancy and equipment
 
78,276

 
45,813

 
71
 %
Intangible amortization
 
7,105

 
3,595

 
98
 %
FDIC assessments
 
7,476

 
5,032

 
49
 %
Net loss (gain) on non-covered other real estate owned
 
431

 
(303
)
 
nm

Net loss on covered other real estate owned
 
76

 
154

 
(51
)%
Merger related expenses
 
72,146

 
7,197

 
nm

Other expense
 
76,357

 
50,538

 
51
 %
Total non-interest expense
 
493,207

 
269,297

 
83
 %
Income before provision for income taxes
 
147,066

 
112,005

 
31
 %
Provision for income taxes
 
52,092

 
38,914

 
34
 %
Net income
 
94,974

 
73,091

 
30
 %
Dividends and undistributed earnings
 
 

 
 
 
 

allocated to participating securities
 
338

 
576

 
(41
)%
Net earnings available to common shareholders
 
$
94,636

 
$
72,515

 
31
 %
 
 
 
 
 
 
 
Weighted average basic shares outstanding
 
175,627

 
111,934

 
57
 %
Weighted average diluted shares outstanding
 
176,656

 
112,154

 
58
 %
Earnings per common share – basic
 
$
0.54

 
$
0.65

 
(17
)%
Earnings per common share – diluted
 
$
0.54

 
$
0.65

 
(17
)%
nm = not meaningful
 
 

 
 

 
 


Umpqua Reports Third Quarter 2014 Results
October 15, 2014
Page 13


Umpqua Holdings Corporation
Consolidated Balance Sheets
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
% Change
(In thousands, except per share data)
 
Sep 30, 2014
 
Jun 30, 2014
 
Mar 31, 2014
 
Dec 31, 2013
 
Sep 30, 2013
 
Seq. Quarter
 
Year over Year
Assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and due from banks
 
$
266,624

 
$
347,152

 
$
196,963

 
$
178,685

 
$
193,188

 
(23
)%
 
38
 %
Interest bearing deposits
 
1,176,599

 
492,739

 
887,620

 
611,224

 
503,369

 
139
 %
 
134
 %
Temporary investments
 
487

 
529

 
525

 
514

 
534

 
(8
)%
 
(9
)%
Investment securities:
 
 

 
 

 
 

 
 

 
 

 


 


Trading, at fair value
 
9,727

 
9,420

 
4,498

 
5,958

 
4,012

 
3
 %
 
142
 %
Available for sale, at fair value
 
2,400,061

 
2,588,969

 
1,701,730

 
1,790,978

 
1,910,082

 
(7
)%
 
26
 %
Held to maturity, at amortized cost
 
5,356

 
5,519

 
5,465

 
5,563

 
5,766

 
(3
)%
 
(7
)%
Loans held for sale
 
265,800

 
328,968

 
73,106

 
104,664

 
113,993

 
(19
)%
 
133
 %
Non-covered loans and leases
 
14,975,811

 
14,830,345

 
7,411,108

 
7,354,403

 
7,228,904

 
1
 %
 
107
 %
Allowance for non-covered loan and lease losses
 
(107,807
)
 
(97,995
)
 
(86,709
)
 
(85,314
)
 
(84,694
)
 
10
 %
 
27
 %
Non-covered loans and leases, net
 
14,868,004

 
14,732,350

 
7,324,399

 
7,269,089

 
7,144,210

 
1
 %
 
108
 %
Covered loans and leases, net
 
275,562

 
297,610

 
342,263

 
363,992

 
397,083

 
(7
)%
 
(31
)%
Restricted equity securities
 
120,759

 
122,194

 
29,948

 
30,685

 
31,444

 
(1
)%
 
284
 %
Premises and equipment, net
 
314,364

 
310,407

 
180,199

 
177,680

 
173,876

 
1
 %
 
81
 %
Goodwill
 
1,785,407

 
1,779,732

 
764,304

 
764,305

 
764,530

 
0
 %
 
134
 %
Other intangible assets, net
 
59,835

 
62,938

 
11,184

 
12,378

 
13,564

 
(5
)%
 
341
 %
Residential mortgage servicing rights, at fair value
 
118,725

 
114,192

 
49,220

 
47,765

 
41,853

 
4
 %
 
184
 %
Non-covered other real estate owned
 
31,753

 
26,172

 
22,034

 
21,833

 
18,249

 
21
 %
 
74
 %
Covered other real estate owned
 
2,703

 
1,810

 
1,746

 
2,102

 
2,980

 
49
 %
 
(9
)%
FDIC indemnification asset
 
7,811

 
11,293

 
18,362

 
23,174

 
29,427

 
(31
)%
 
(73
)%
Bank owned life insurance
 
293,511

 
292,714

 
97,589

 
96,938

 
96,276

 
0
 %
 
205
 %
Deferred tax assets, net
 
250,910

 
259,993

 
11,393

 
16,627

 
20,342

 
(3
)%
 
nm

Other assets
 
234,061

 
257,528

 
116,178

 
111,958

 
104,519

 
(9
)%
 
124
 %
Total assets
 
$
22,488,059

 
$
22,042,229

 
$
11,838,726

 
$
11,636,112

 
$
11,569,297

 
2
 %
 
94
 %
Liabilities:
 
 

 
 

 
 

 
 

 
 

 
 
 


Deposits
 
$
16,727,610

 
$
16,323,000

 
$
9,273,583

 
$
9,117,660

 
$
9,067,240

 
2
 %
 
84
 %
Securities sold under agreements to repurchase
 
339,367

 
315,025

 
262,483

 
224,882

 
215,310

 
8
 %
 
58
 %
Term debt
 
1,057,140

 
1,057,915

 
250,964

 
251,494

 
252,017

 
0
 %
 
319
 %
Junior subordinated debentures, at fair value
 
247,528

 
246,077

 
87,800

 
87,274

 
86,718

 
1
 %
 
185
 %
Junior subordinated debentures, at amortized cost
 
101,657

 
101,737

 
101,818

 
101,899

 
101,979

 
0
 %
 
0
 %
Other liabilities
 
262,249

 
269,415

 
127,602

 
125,477

 
120,038

 
(3
)%
 
118
 %
Total liabilities
 
18,735,551

 
18,313,169

 
10,104,250

 
9,908,686

 
9,843,302

 
2
 %
 
90
 %
Shareholders' equity:
 
 

 
 

 
 

 
 

 
 

 
 
 


Common stock
 
3,515,621

 
3,512,507

 
1,514,969

 
1,514,485

 
1,513,225

 
0
 %
 
132
 %
Retained earnings
 
230,302

 
204,109

 
219,686

 
217,917

 
209,597

 
13
 %
 
10
 %
Accumulated other comprehensive income (loss)
 
6,585

 
12,444

 
(179
)
 
(4,976
)
 
3,173

 
(47
)%
 
108
 %
Total shareholders' equity
 
3,752,508

 
3,729,060

 
1,734,476

 
1,727,426

 
1,725,995

 
1
 %
 
117
 %
Total liabilities and shareholders' equity
 
$
22,488,059

 
$
22,042,229

 
$
11,838,726

 
$
11,636,112

 
$
11,569,297

 
2
 %
 
94
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common shares outstanding at period end
 
217,261,722

 
217,190,721

 
112,319,525

 
111,973,203

 
111,928,762

 
0
 %
 
94
 %
Book value per common share
 
$
17.27

 
$
17.17

 
$
15.44

 
$
15.43

 
$
15.42

 
1
 %
 
12
 %
Tangible book value per common share
 
$
8.78

 
$
8.69

 
$
8.54

 
$
8.49

 
$
8.47

 
1
 %
 
4
 %
Tangible equity - common
 
$
1,907,266

 
$
1,886,390

 
$
958,988

 
$
950,743

 
$
947,901

 
1
 %
 
101
 %
Tangible common equity to tangible assets
 
9.24
%
 
9.34
%
 
8.67
%
 
8.75
%
 
8.78
%
 
(1
)%
 
5
 %
nm = not meaningful

Umpqua Reports Third Quarter 2014 Results
October 15, 2014
Page 14


Umpqua Holdings Corporation
Non-covered Loan & Lease Portfolio
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Dollars in thousands)
 
Sep 30, 2014
 
Jun 30, 2014
 
Mar 31, 2014
 
Dec 31, 2013
 
Sep 30, 2013
 
% Change
 
 
Amount
 
Amount
 
Amount
 
Amount
 
Amount
 
Seq. Quarter
 
Year over Year
Non-covered loans & leases:
 
 

 
 

 
 

 
 
 
 
 
 

 
 

Commercial real estate:
 
 

 
 

 
 

 
 
 
 
 
 

 
 

Non-owner occupied term, net
 
$
3,273,932

 
$
3,348,029

 
$
2,311,952

 
$
2,328,260

 
$
2,382,430

 
(2
)%
 
37
 %
Owner occupied term, net
 
2,636,951

 
2,666,128

 
1,282,482

 
1,259,583

 
1,230,417

 
(1
)%
 
114
 %
Multifamily, net
 
2,536,710

 
2,482,995

 
400,927

 
403,537

 
379,395

 
2
 %
 
569
 %
Commercial construction, net
 
245,457

 
261,767

 
229,262

 
245,231

 
246,583

 
(6
)%
 
0
 %
Residential development, net
 
73,781

 
91,690

 
89,510

 
88,413

 
78,756

 
(20
)%
 
(6
)%
Commercial:
 
 
 
 
 
 
 
 
 
 
 
 

 
 

Term, net
 
1,110,028

 
1,104,206

 
735,004

 
770,845

 
768,926

 
1
 %
 
44
 %
Lines of credit & other, net
 
1,338,821

 
1,322,167

 
1,005,800

 
987,360

 
950,954

 
1
 %
 
41
 %
Leases & equipment finance, net
 
492,221

 
463,784

 
388,418

 
361,591

 
335,580

 
6
 %
 
47
 %
Residential real estate:
 
 
 
 
 
 
 
 
 
 
 
 

 
 

Mortgage, net
 
2,085,266

 
1,958,597

 
651,042

 
597,201

 
553,285

 
6
 %
 
277
 %
Home equity lines & loans, net
 
818,765

 
799,171

 
268,497

 
264,269

 
258,610

 
2
 %
 
217
 %
   Consumer & other, net
 
363,879

 
331,811

 
48,214

 
48,113

 
43,968

 
10
 %
 
728
 %
Total, net of deferred fees and costs
 
$
14,975,811

 
$
14,830,345

 
$
7,411,108

 
$
7,354,403

 
$
7,228,904

 
1
 %
 
107
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-covered loan & leases mix:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial real estate:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   Non-owner occupied term, net
 
22
%
 
23
%
 
31
%
 
33
%
 
32
%
 
 
 
 
   Owner occupied term, net
 
18
%
 
18
%
 
17
%
 
17
%
 
17
%
 
 
 
 
   Multifamily, net
 
17
%
 
17
%
 
5
%
 
5
%
 
5
%
 
 
 
 
Commercial construction, net
 
2
%
 
2
%
 
3
%
 
3
%
 
3
%
 
 
 
 
Residential development, net
 
1
%
 
1
%
 
1
%
 
1
%
 
1
%
 
 
 
 
Commercial:
 
 

 
 
 


 


 


 
 
 
 
Term, net
 
7
%
 
7
%
 
10
%
 
10
%
 
11
%
 
 
 
 
Lines of credit & other, net
 
9
%
 
9
%
 
14
%
 
13
%
 
13
%
 
 
 
 
Leases & equipment finance, net
 
3
%
 
3
%
 
5
%
 
5
%
 
5
%
 
 
 
 
Residential real estate:
 
 

 


 


 


 


 
 
 
 
Mortgage, net
 
14
%
 
13
%
 
9
%
 
8
%
 
8
%
 
 
 
 
Home equity lines & loans, net
 
5
%
 
5
%
 
4
%
 
4
%
 
4
%
 
 
 
 
   Consumer & other, net
 
2
%
 
2
%
 
1
%
 
1
%
 
1
%
 
 
 
 
Total
 
100
%
 
100
%
 
100
%
 
100
%
 
100
%
 
 
 
 


Umpqua Reports Third Quarter 2014 Results
October 15, 2014
Page 15


Umpqua Holdings Corporation
Covered Loan & Lease Portfolio, Net
(Unaudited)
(Dollars in thousands)
 
Sep 30, 2014
 
Jun 30, 2014
 
Mar 31, 2014
 
Dec 31, 2013
 
Sep 30, 2013
 
% Change
 
 
Amount
 
Amount
 
Amount
 
Amount
 
Amount
 
Seq. Quarter
 
Year over Year
Covered loans & leases:
 
 

 
 

 
 
 
 
 
 

 
 

 
 

Commercial real estate:
 
 

 
 

 
 
 
 
 
 

 
 

 
 

Non-owner occupied term, net
 
$
147,695

 
$
166,969

 
$
197,067

 
$
204,052

 
$
216,354

 
(12
)%
 
(32
)%
Owner occupied term, net
 
44,819

 
47,034

 
48,447

 
48,673

 
54,332

 
(5
)%
 
(18
)%
Multifamily, net
 
28,545

 
23,409

 
27,079

 
37,185

 
40,052

 
22
 %
 
(29
)%
Commercial construction, net
 
1,990

 
1,972

 
2,779

 
2,803

 
6,654

 
1
 %
 
(70
)%
Residential development, net
 
2,534

 
2,562

 
6,083

 
6,311

 
7,468

 
(1
)%
 
(66
)%
Commercial:
 
 

 
 

 
 
 
 
 
 
 
 

 
 

Term, net
 
7,096

 
7,516

 
7,861

 
13,280

 
13,864

 
(6
)%
 
(49
)%
Lines of credit & other, net
 
5,813

 
8,357

 
8,929

 
6,302

 
10,583

 
(30
)%
 
(45
)%
Residential real estate:
 
 

 
 

 
 
 
 
 
 
 
 

 
 

Mortgage, net
 
17,005

 
18,272

 
21,664

 
22,175

 
23,161

 
(7
)%
 
(27
)%
Home equity lines & loans, net
 
16,565

 
17,736

 
18,501

 
19,119

 
20,037

 
(7
)%
 
(17
)%
 Consumer & other, net
 
3,500

 
3,783

 
3,853

 
4,092

 
4,578

 
(7
)%
 
(24
)%
Total, net
 
$
275,562

 
$
297,610

 
$
342,263

 
$
363,992

 
$
397,083

 
(7
)%
 
(31
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Covered loans & leases Mix:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial real estate:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-owner occupied term, net
 
54
%
 
55
%
 
58
%
 
56
%
 
54
%
 
 
 
 
Owner occupied term, net
 
16
%
 
16
%
 
14
%
 
13
%
 
14
%
 
 
 
 
Multifamily, net
 
10
%
 
8
%
 
8
%
 
10
%
 
10
%
 
 
 
 
Commercial construction, net
 
1
%
 
1
%
 
1
%
 
1
%
 
2
%
 
 
 
 
Residential development, net
 
1
%
 
1
%
 
2
%
 
2
%
 
2
%
 
 
 
 
Commercial:
 


 


 


 


 


 
 
 
 
Term, net
 
3
%
 
3
%
 
2
%
 
4
%
 
3
%
 
 
 
 
Lines of credit & other, net
 
2
%
 
3
%
 
3
%
 
2
%
 
3
%
 
 
 
 
Residential real estate:
 


 


 


 


 


 
 
 
 
Mortgage, net
 
6
%
 
6
%
 
6
%
 
6
%
 
6
%
 
 
 
 
Home equity lines & loans, net
 
6
%
 
6
%
 
5
%
 
5
%
 
5
%
 
 
 
 
 Consumer & other, net
 
1
%
 
1
%
 
1
%
 
1
%
 
1
%
 
 
 
 
Total
 
100
%
 
100
%
 
100
%
 
100
%
 
100
%
 
 
 
 

Covered loan & lease portfolio balances represent the loan portfolios acquired through the assumption of Evergreen Bank 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 Reports Third Quarter 2014 Results
October 15, 2014
Page 16


Umpqua Holdings Corporation
Deposits by Type/Core Deposits
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Dollars in thousands)
 
Sep 30, 2014
 
Jun 30, 2014
 
Mar 31, 2014
 
Dec 31, 2013
 
Sep 30, 2013
 
% Change
 
 
Amount
 
Amount
 
Amount
 
Amount
 
Amount
 
Seq. Quarter
 
Year over Year
Deposits:
 
 

 
 

 
 

 
 
 
 
 
 

 
 

Demand, non-interest bearing
 
$
4,741,897

 
$
4,363,710

 
$
2,465,606

 
$
2,436,477

 
$
2,421,008

 
9
 %
 
96
%
Demand, interest bearing
 
1,942,792

 
1,869,626

 
1,182,634

 
1,233,070

 
1,179,351

 
4
 %
 
65
%
Money market
 
5,998,339

 
5,973,197

 
3,526,368

 
3,349,946

 
3,283,085

 
0
 %
 
83
%
Savings
 
952,122

 
912,073

 
578,238

 
560,699

 
551,327

 
4
 %
 
73
%
Time
 
3,092,460

 
3,204,394

 
1,520,737

 
1,537,468

 
1,632,469

 
(3
)%
 
89
%
Total
 
$
16,727,610

 
$
16,323,000

 
$
9,273,583

 
$
9,117,660

 
$
9,067,240

 
2
 %
 
84
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total core deposits (1)
 
$
14,653,183

 
$
14,171,946

 
$
8,205,636

 
$
8,052,280

 
$
7,926,734

 
3
 %
 
85
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Deposit mix:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Demand, non-interest bearing
 
28
%
 
26
%
 
27
%
 
26
%
 
27
%
 
 
 
 
Demand, interest bearing
 
12
%
 
11
%
 
13
%
 
14
%
 
13
%
 
 
 
 
Money market
 
36
%
 
37
%
 
38
%
 
37
%
 
36
%
 
 
 
 
Savings
 
6
%
 
6
%
 
6
%
 
6
%
 
6
%
 
 
 
 
Time
 
18
%
 
20
%
 
16
%
 
17
%
 
18
%
 
 
 
 
Total
 
100
%
 
100
%
 
100
%
 
100
%
 
100
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of open accounts:
 
 

 
 

 
 

 
 
 
 

 
 

 
 

Demand, non-interest bearing
 
366,279

 
363,378

 
190,298

 
187,088

 
186,975

 


 


Demand, interest bearing
 
87,223

 
88,162

 
46,291

 
48,643

 
49,226

 


 


Money market
 
63,979

 
65,216

 
34,913

 
35,303

 
35,909

 


 


Savings
 
150,527

 
149,877

 
84,686

 
84,144

 
84,448

 


 


Time
 
54,565

 
56,285

 
22,755

 
23,688

 
24,618

 


 


Total
 
722,573

 
722,918

 
378,943

 
378,866

 
381,176

 


 


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average balance per account:
 
 

 
 

 
 

 
 
 
 

 
 

 
 

Demand, non-interest bearing
 
$
12.9

 
$
12.3

 
$
13.0

 
$
13.0

 
$
12.9

 
 

 
 

Demand, interest bearing
 
22.3

 
21.2

 
25.5

 
25.3

 
24.0

 
 

 
 

Money market
 
93.8

 
91.6

 
101.0

 
94.9

 
91.4

 
 

 
 

Savings
 
6.3

 
6.1

 
6.8

 
6.7

 
6.5

 
 

 
 

Time
 
56.7

 
56.9

 
66.8

 
64.9

 
66.3

 
 

 
 

Total
 
$
23.2

 
$
22.7

 
$
24.5

 
$
24.1

 
$
23.8

 
 

 
 

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



Umpqua Reports Third Quarter 2014 Results
October 15, 2014
Page 17


 
Umpqua Holdings Corporation
Credit Quality – Non-performing Assets
 (Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Quarter Ended
 
% Change
(Dollars in thousands)
 
Sep 30, 2014
 
Jun 30, 2014
 
Mar 31, 2013
 
Dec 31, 2013
 
Sep 30, 2013
 
Seq. Quarter
 
Year over Year
Non-covered, non-performing assets:
 
 

 
 

 
 
 
 
 
 

 
 

 
 

Non-covered loans and leases on non-accrual status
 
$
42,397

 
$
48,358

 
$
37,884

 
$
31,891

 
$
39,805

 
(12
)%
 
7
 %
Non-covered loans and leases past due 90+ days & accruing
 
7,416

 
4,919

 
2,269

 
3,430

 
4,936

 
51
 %
 
50
 %
Total non-performing loans and leases
 
49,813

 
53,277

 
40,153

 
35,321

 
44,741

 
(7
)%
 
11
 %
Non-covered other real estate owned
 
31,753

 
26,172

 
22,034

 
21,833

 
18,249

 
21
 %
 
74
 %
Total
 
$
81,566

 
$
79,449

 
$
62,187

 
$
57,154

 
$
62,990

 
3
 %
 
29
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-covered performing restructured loans and leases
 
$
63,507

 
$
67,464

 
$
67,897

 
$
68,791

 
$
69,497

 
(6
)%
 
(9
)%
Non-covered loans and leases past due 31-89 days
 
$
34,025

 
$
28,913

 
$
29,416

 
$
15,290

 
$
22,060

 
18
 %
 
54
 %
Non-covered loans and leases past due 31-89 days to non-covered loans and leases
 
0.23
%
 
0.19
%
 
0.40
%
 
0.21
%
 
0.31
%
 
 

 
 

Non-covered, non-performing loans and leases to non-covered loans and leases
 
0.33
%
 
0.36
%
 
0.54
%
 
0.48
%
 
0.62
%
 
 

 
 

Non-covered, non-performing assets to total assets
 
0.36
%
 
0.36
%
 
0.53
%
 
0.49
%
 
0.54
%
 
 

 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Covered non-performing assets:
 
 

 
 

 
 
 
 
 
 

 
 

 
 

Covered loans and leases on non-accrual status
 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
nm

 
nm

Total non-performing loans and leases
 
—

 
—

 
—

 
—

 
—

 
nm

 
nm

Covered other real estate owned
 
2,703

 
1,810

 
1,746

 
2,102

 
2,980

 
49
 %
 
(9
)%
Total
 
$
2,703

 
$
1,810

 
$
1,746

 
$
2,102

 
$
2,980

 
49
 %
 
(9
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Covered non-performing loans and leases to covered loans and leases
 
—
%
 
—
%
 
—
%
 
—
%
 
—
%
 
 

 
 

Covered non-performing assets to total assets
 
0.01
%
 
0.01
%
 
0.01
%
 
0.02
%
 
0.03
%
 
 

 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total non-performing assets:
 
 

 
 

 
 
 
 
 
 

 
 

 
 

Loans and leases on non-accrual status
 
$
42,397

 
$
48,358

 
$
37,884

 
$
31,891

 
$
39,805

 
(12
)%
 
7
 %
Loans and leases past due 90+ days & accruing    
 
7,416

 
4,919

 
2,269

 
3,430

 
4,936

 
51
 %
 
50
 %
Total non-performing loans and leases
 
49,813

 
53,277

 
40,153

 
35,321

 
44,741

 
(7
)%
 
11
 %
Other real estate owned
 
34,456

 
27,982

 
23,780

 
23,935

 
21,229

 
23
 %
 
62
 %
Total
 
$
84,269

 
$
81,259

 
$
63,933

 
$
59,256

 
$
65,970

 
4
 %
 
28
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-performing loans and leases to loans and leases
 
0.33
%
 
0.35
%
 
0.52
%
 
0.46
%
 
0.59
%
 
 

 
 

Non-performing assets to total assets
 
0.37
%
 
0.37
%
 
0.54
%
 
0.51
%
 
0.57
%
 
 

 
 


Umpqua Reports Third Quarter 2014 Results
October 15, 2014
Page 18


Umpqua Holdings Corporation
Credit Quality – Allowance for Non-covered Credit Losses
 (Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Quarter Ended
 
% Change
(Dollars in thousands)
 
Sep 30, 2014
 
Jun 30, 2014
 
Mar 31, 2013
 
Dec 31, 2013
 
Sep 30, 2013
 
Seq. Quarter
 
Year over Year
Allowance for non-covered credit losses:
 
 
 
 
 
 
 
 
 
 
 
 
Balance beginning of period
 
$
97,995

 
$
86,709

 
$
85,314

 
$
84,694

 
$
85,836

 


 


Provision for non-covered loan and lease losses
 
14,431

 
15,399

 
5,400

 
3,840

 
3,008

 
(6
)%
 
380
 %
Charge-offs
 
(6,743
)
 
(5,814
)
 
(5,565
)
 
(11,349
)
 
(6,317
)
 
16
 %
 
7
 %
Recoveries
 
2,124

 
1,701

 
1,560

 
8,129

 
2,167

 
25
 %
 
(2
)%
Net charge-offs
 
(4,619
)
 
(4,113
)
 
(4,005
)
 
(3,220
)
 
(4,150
)
 
12
 %
 
11
 %
Total allowance for non-covered loan and lease losses
 
107,807

 
97,995

 
86,709

 
85,314

 
84,694

 
10
 %
 
27
 %
Reserve for unfunded commitments
 
4,388

 
4,845

 
1,417

 
1,436

 
1,375

 
(9
)%
 
219
 %
Total allowance for non-covered credit losses
 
$
112,195

 
$
102,840

 
$
88,126

 
$
86,750

 
$
86,069

 
9
 %
 
30
 %
 
 
 

 
 

 
 
 
 
 
 

 
 

 
 

Net charge-offs to average non-covered loans and leases (annualized)
 
0.12
%
 
0.12
%
 
0.22
 %
 
0.18
%
 
0.23
%
 
 

 
 

Recoveries to gross charge-offs
 
31.50
%
 
29.26
%
 
28.03
 %
 
71.63
%
 
34.30
%
 
 
 
 

Allowance for non-covered loan losses to non-covered loans and leases
 
0.72
%
 
0.66
%
 
1.17
 %
 
1.16
%
 
1.17
%
 
 

 
 

Allowance for non-covered credit losses to non-covered loans and leases
 
0.75
%
 
0.69
%
 
1.19
 %
 
1.18
%
 
1.19
%
 
 

 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine Months Ended
 
% Change
 
 
 
 
 
 
 
 
(Dollars in thousands)
 
Sep 30, 2014
 
Sep 30, 2013
 
Year over Year
 
 
 
 
 
 
 
 
Allowance for non-covered credit losses:
 
 
 
 
 
 
 
 
 
 
 
 
Balance beginning of period
 
$
85,314

 
$
85,391

 


 
 
 


 
 
 
 
Provision for non-covered loan and lease losses
 
35,230

 
12,989

 
171
 %
 
 
 


 
 
 
 
Charge-offs
 
(18,122
)
 
(19,646
)
 
(8
)%
 
 
 


 
 
 
 
Recoveries
 
5,385

 
5,960

 
(10
)%
 
 
 


 
 
 
 
Net charge-offs
 
(12,737
)
 
(13,686
)
 
(7
)%
 
 
 


 
 
 
 
Total allowance for non-covered loan and lease losses
 
107,807

 
84,694

 
27
 %
 
 
 


 
 
 
 
Reserve for unfunded commitments
 
4,388

 
1,375

 
219
 %
 
 
 


 
 
 
 
Total allowance for non-covered credit losses
 
$
112,195

 
$
86,069

 
30
 %
 
 
 


 
 
 
 
 
 
 

 
 

 
 
 
 
 
 
 
 
 
 
Net charge-offs to average non-covered loans and leases (annualized)
 
0.22
%
 
0.26
%
 
 
 
 
 
 
 
 
 
 
Recoveries to gross charge-offs
 
29.72
%
 
30.34
%
 
 
 
 
 
 
 
 
 
 


Umpqua Reports Third Quarter 2014 Results
October 15, 2014
Page 19



Umpqua Holdings Corporation
Selected Ratios
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
Quarter Ended
 
% Change
 
 
Sep 30, 2014
 
Jun 30, 2014
 
Mar 31, 2014
 
Dec 31, 2013
 
Sep 30, 2013
 
Seq. Quarter
 
Year over Year
Average Rates:
 
 

 
 

 
 

 
 
 
 

 
 
 
 
Yield on non-covered loans and leases
 
5.62
%
 
5.71
%
 
4.96
%
 
5.00
%
 
5.12
%
 
(0.09
)
 
0.50

Yield on covered loans and leases
 
12.24
%
 
20.07
%
 
14.82
%
 
13.99
%
 
11.67
%
 
(7.83
)
 
0.57

Yield on taxable investments
 
2.12
%
 
2.29
%
 
2.39
%
 
2.31
%
 
1.77
%
 
(0.17
)
 
0.35

Yield on tax-exempt investments (1)
 
5.12
%
 
5.19
%
 
5.54
%
 
5.56
%
 
5.62
%
 
(0.07
)
 
(0.50
)
Yield on temporary investments & interest bearing cash
 
0.25
%
 
0.25
%
 
0.25
%
 
0.25
%
 
0.25
%
 
—

 
—

Total yield on earning assets (1)
 
5.04
%
 
5.30
%
 
4.60
%
 
4.61
%
 
4.58
%
 
(0.26
)
 
0.46

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cost of interest bearing deposits
 
0.22
%
 
0.22
%
 
0.23
%
 
0.25
%
 
0.29
%
 
—

 
(0.07
)
Cost of securities sold under agreements
 
 

 
 

 
 

 
 
 
 
 


 


to repurchase and fed funds purchased
 
0.07
%
 
0.25
%
 
0.07
%
 
0.07
%
 
0.07
%
 
(0.18
)
 
—

Cost of term debt
 
1.35
%
 
1.45
%
 
3.67
%
 
3.68
%
 
3.67
%
 
(0.10
)
 
(2.32
)
Cost of junior subordinated debentures
 
3.87
%
 
3.87
%
 
4.03
%
 
4.04
%
 
4.08
%
 
—

 
(0.21
)
Total cost of interest bearing liabilities
 
0.40
%
 
0.41
%
 
0.44
%
 
0.46
%
 
0.50
%
 
(0.01
)
 
(0.10
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest spread (1)
 
4.64
%
 
4.90
%
 
4.16
%
 
4.15
%
 
4.08
%
 
(0.26
)
 
0.56

Net interest margin – Consolidated (1)
 
4.75
%
 
5.01
%
 
4.28
%
 
4.29
%
 
4.22
%
 
(0.26
)
 
0.53

Net interest margin – Bank (1)
 
4.82
%
 
5.07
%
 
4.35
%
 
4.35
%
 
4.30
%
 
(0.25
)
 
0.52

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
As reported (GAAP):
 
 

 
 

 
 

 
 
 
 
 


 


Return on average assets
 
1.05
%
 
0.34
%
 
0.65
%
 
0.86
%
 
0.81
%
 
0.71

 
0.24

Return on average tangible assets
 
1.15
%
 
0.37
%
 
0.70
%
 
0.92
%
 
0.86
%
 
0.78

 
0.29

Return on average common equity
 
6.29
%
 
2.05
%
 
4.35
%
 
5.73
%
 
5.36
%
 
4.24

 
0.93

Return on average tangible common equity
 
12.48
%
 
4.06
%
 
7.86
%
 
10.38
%
 
9.79
%
 
8.42

 
2.69

Efficiency ratio – Consolidated
 
63.15
%
 
82.94
%
 
73.15
%
 
69.12
%
 
71.30
%
 
(19.79
)
 
(8.15
)
Efficiency ratio – Bank
 
61.68
%
 
81.37
%
 
71.18
%
 
67.30
%
 
69.30
%
 
(19.69
)
 
(7.62
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating basis (non-GAAP): (2)
 
 

 
 

 
 

 
 
 
 
 


 


Return on average assets
 
1.16
%
 
1.08
%
 
0.84
%
 
0.95
%
 
0.92
%
 
0.08

 
0.24

Return on average tangible assets
 
1.27
%
 
1.18
%
 
0.90
%
 
1.02
%
 
0.99
%
 
0.09

 
0.28

Return on average common equity
 
6.95
%
 
6.45
%
 
5.61
%
 
6.38
%
 
6.11
%
 
0.50

 
0.84

Return on average tangible common equity
 
13.80
%
 
12.76
%
 
10.13
%
 
11.56
%
 
11.15
%
 
1.04

 
2.65

Efficiency ratio – Consolidated
 
59.83
%
 
60.33
%
 
68.34
%
 
67.66
%
 
67.40
%
 
(0.50
)
 
(7.57
)
Efficiency ratio – Bank
 
58.70
%
 
59.15
%
 
66.60
%
 
66.10
%
 
65.63
%
 
(0.45
)
 
(6.93
)

(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 Reports Third Quarter 2014 Results
October 15, 2014
Page 20


Umpqua Holdings Corporation
Selected Ratios
(Unaudited)
 
 
 
 
 
 
 
Nine Months Ended
 
% Change
 
 
Sep 30, 2014
 
Sep 30, 2013
 
Year over Year
Average Rates:
 
 

 
 

 
 
Yield on non-covered loans and leases
 
5.52
%
 
4.80
%
 
0.72

Yield on covered loans and leases
 
15.80
%
 
12.80
%
 
3.00

Yield on taxable investments
 
2.25
%
 
1.61
%
 
0.64

Yield on tax-exempt investments (1)
 
5.25
%
 
5.42
%
 
(0.17
)
Yield on temporary investments & interest bearing cash
 
0.25
%
 
0.26
%
 
(0.01
)
Total yield on earning assets (1)
 
5.04
%
 
4.30
%
 
0.74

 
 
 
 
 
 
 
Cost of interest bearing deposits
 
0.23
%
 
0.33
%
 
(0.10
)
Cost of securities sold under agreements
 
 

 
 

 
 

to repurchase and fed funds purchased
 
0.13
%
 
0.08
%
 
0.05

Cost of term debt
 
1.64
%
 
3.66
%
 
(2.02
)
Cost of junior subordinated debentures
 
3.91
%
 
4.10
%
 
(0.19
)
Total cost of interest bearing liabilities
 
0.41
%
 
0.53
%
 
(0.12
)
 
 
 
 
 
 
 
Net interest spread (1)
 
4.63
%
 
3.77
%
 
0.86

Net interest margin – Consolidated (1)
 
4.74
%
 
3.91
%
 
0.83

Net interest margin – Bank (1)
 
4.81
%
 
3.98
%
 
0.83

 
 
 
 
 
 
 
As reported (GAAP):
 
 

 
 

 
 

Return on average assets
 
0.70
%
 
0.85
%
 
(0.15
)
Return on average tangible assets
 
0.76
%
 
0.90
%
 
(0.14
)
Return on average common equity
 
4.30
%
 
5.61
%
 
(1.31
)
Return on average tangible common equity
 
8.36
%
 
9.59
%
 
(1.23
)
Efficiency ratio – Consolidated
 
72.62
%
 
68.52
%
 
4.10

Efficiency ratio – Bank
 
71.01
%
 
66.28
%
 
4.73

 
 
 
 
 
 
 
Operating basis (non-GAAP): (2)
 
 

 
 

 
 

Return on average assets
 
1.06
%
 
0.91
%
 
0.15

Return on average tangible assets
 
1.15
%
 
0.97
%
 
0.18

Return on average common equity
 
6.50
%
 
6.02
%
 
0.48

Return on average tangible common equity
 
12.64
%
 
10.29
%
 
2.35

Efficiency ratio – Consolidated
 
61.68
%
 
66.41
%
 
(4.73
)
Efficiency ratio – Bank
 
60.39
%
 
64.43
%
 
(4.04
)
        
(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 Reports Third Quarter 2014 Results
October 15, 2014
Page 21


Umpqua Holdings Corporation
Average Balances
(Unaudited)
 
 
 
 
 
 
 
 
 
Quarter Ended
 
% Change
(Dollars in thousands)
 
Sep 30, 2014
 
Jun 30, 2014
 
Mar 31, 2014
 
Dec 31, 2013
 
Sep 30, 2013
 
Seq. Quarter
 
Year over Year
Temporary investments & interest bearing cash
 
$
849,399

 
$
672,587

 
$
705,974

 
$
625,405

 
$
443,148

 
26
 %
 
92
 %
Investment securities, taxable
 
2,307,732

 
2,242,414

 
1,562,849

 
1,664,716

 
1,788,567

 
3
 %
 
29
 %
Investment securities, tax-exempt
 
330,902

 
315,488

 
231,520

 
236,552

 
237,545

 
5
 %
 
39
 %
Loans held for sale
 
274,834

 
211,694

 
77,234

 
89,553

 
136,261

 
30
 %
 
102
 %
Non-covered loans and leases
 
14,916,541

 
13,355,455

 
7,384,555

 
7,298,622

 
7,128,753

 
12
 %
 
109
 %
Covered loans and leases
 
284,352

 
318,432

 
347,984

 
378,148

 
402,403

 
(11
)%
 
(29
)%
Total interest earning assets
 
18,963,760

 
17,116,070

 
10,310,116

 
10,292,996

 
10,136,677

 
11
 %
 
87
 %
Goodwill & other intangible assets, net
 
1,841,668

 
1,656,687

 
776,006

 
777,188

 
779,294

 
11
 %
 
136
 %
Total assets
 
22,220,999

 
20,036,742

 
11,638,357

 
11,624,424

 
11,460,729

 
11
 %
 
94
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-interest bearing demand deposits
 
4,558,672

 
3,963,233

 
2,414,001

 
2,452,554

 
2,317,932

 
15
 %
 
97
 %
Interest bearing deposits
 
11,948,731

 
10,948,991

 
6,696,029

 
6,661,933

 
6,691,579

 
9
 %
 
79
 %
Total deposits
 
16,507,403

 
14,912,224

 
9,110,030

 
9,114,487

 
9,009,511

 
11
 %
 
83
 %
Interest bearing liabilities
 
13,681,205

 
12,521,219

 
7,376,780

 
7,326,763

 
7,320,460

 
9
 %
 
87
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Shareholders’ equity - common
 
3,712,813

 
3,350,836

 
1,738,680

 
1,734,583

 
1,722,881

 
11
 %
 
116
 %
Tangible common equity (1)
 
1,871,145

 
1,694,149

 
962,674

 
957,395

 
943,587

 
10
 %
 
98
 %

Umpqua Holdings Corporation
Average Balances
(Unaudited)
 
 
Nine Months Ended
% Change
(Dollars in thousands)
 
Sep 30, 2014
 
Sep 30, 2013
 
Year over Year
Temporary investments & interest bearing cash
 
$
743,179

 
$
483,142

 
54
 %
Investment securities, taxable
 
1,953,926

 
2,049,630

 
(5
)%
Investment securities, tax-exempt
 
379,468

 
250,535

 
51
 %
Loans held for sale
 
188,646

 
154,839

 
22
 %
Non-covered loans and leases
 
11,913,105

 
6,833,504

 
74
 %
Covered loans and leases
 
316,690

 
429,909

 
(26
)%
Total interest earning assets
 
15,495,014

 
10,201,559

 
52
 %
Goodwill & other intangible assets, net
 
1,428,705

 
716,137

 
100
 %
Total assets
 
18,004,316

 
11,468,348

 
57
 %
 
 
 
 
 
 
 
Non-interest bearing demand deposits
 
3,653,158

 
2,228,530

 
64
 %
Interest bearing deposits
 
9,883,824

 
6,809,997

 
45
 %
Total deposits
 
13,536,982

 
9,038,527

 
50
 %
Interest bearing liabilities
 
11,216,190

 
7,414,449

 
51
 %
 
 
 
 
 
 
 
Shareholders’ equity - common
 
2,941,341

 
1,727,229

 
70
 %
Tangible common equity (1)
 
1,512,636

 
1,011,092

 
50
 %

(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 Reports Third Quarter 2014 Results
October 15, 2014
Page 22


Umpqua Holdings Corporation
Residential Mortgage Banking Activity
(unaudited)
 
 
 
 
 
 
 
 
 
Quarter Ended
 
% Change
(Dollars in thousands)
 
Sep 30, 2014
 
Jun 30, 2014
 
Mar 31, 2014
 
Dec 31, 2013
 
Sep 30, 2013
 
Seq. Quarter
 
Year over Year
Residential mortgage servicing rights:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Residential mortgage loans serviced for others
 
$
11,300,947

 
$
10,838,313

 
$
4,496,662

 
$
4,362,499

 
$
4,195,759

 
4
 %
 
169
 %
MSR asset, at fair value
 
118,725

 
114,192

 
49,220

 
47,765

 
41,853

 
4
 %
 
184
 %
MSR as % of serviced portfolio
 
1.05
%
 
1.05
%
 
1.09
 %
 
1.09
%
 
1.00
%
 
 

 
 

Residential mortgage banking revenue:
 
 

 
 

 
 
 
 
 
 

 
 

 
 

Origination and sale
 
$
24,097

 
$
22,142

 
$
8,421

 
$
9,915

 
$
12,764

 
9
 %
 
89
 %
Servicing
 
6,178

 
5,359

 
2,970

 
2,911

 
2,718

 
15
 %
 
127
 %
Change in fair value of MSR asset
 
(4,279
)
 
(3,160
)
 
(952
)
 
3,131

 
(411
)
 
35
 %
 
941
 %
Total
 
$
25,996

 
$
24,341

 
$
10,439

 
$
15,957

 
$
15,071

 
7
 %
 
72
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Closed loan volume:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Closed loan volume - total
 
$
988,031

 
$
894,955

 
$
293,175

 
$
359,569

 
$
463,036

 
10
 %
 
113
 %
Closed loan volume - for sale
 
$
695,877

 
$
623,727

 
$
204,356

 
$
271,541

 
$
357,371

 
12
 %
 
95
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gain on sale margin:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Based on total volume
 
2.44
%
 
2.47
%
 
2.87
 %
 
2.76
%
 
2.76
%
 
(0.03
)
 
(0.32
)
Based on for sale volume
 
3.46
%
 
3.55
%
 
4.12
 %
 
3.65
%
 
3.57
%
 
(0.09
)
 
(0.11
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine Months Ended
 
% Change
 
 
 
 
 
 
 
 
 
 
Sep 30, 2014
 
Sep 30, 2013
 
Year over Year
 
 
 
 
 
 
 
 
Residential mortgage banking revenue:
 
 

 
 

 
 
 
 
 
 
 
 
 
 
Origination and sale
 
$
54,660

 
$
56,202

 
(3
)%
 
 
 


 
 
 
 
Servicing
 
14,508

 
7,484

 
94
 %
 
 
 


 
 
 
 
Change in fair value of MSR asset
 
(8,392
)
 
(758
)
 
1,007
 %
 
 
 


 
 
 
 
Total
 
$
60,776

 
$
62,928

 
(3
)%
 
 
 


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Closed loan volume:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Closed loan volume - total
 
$
2,176,161

 
$
1,571,308

 
38
 %
 
 
 


 
 
 
 
Closed loan volume - for sale
 
1,523,959

 
1,328,143

 
15
 %
 
 
 


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gain on sale margin:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Based on total volume
 
2.51
%
 
3.58
%
 
(1.07
)
 
 
 
 
 
 
 
 
Based on for sale volume
 
3.59
%
 
4.23
%
 
(0.64
)
 
 
 
 
 
 
 
 







###