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 2015 RESULTS
Operating earnings1 of $62.1 million, or $0.28 per share
Operating results include $11.3 million in negative fair-value adjustments to mortgage servicing rights and swap instruments driven by decline in long-term rates
Strong loan and lease growth (before sales) of $469 million, or 12% annualized, and deposit growth of $322 million, or 8% annualized
Tangible book value per share1 increased by 1.8% sequentially to $9.08
PORTLAND, Ore. – October 21, 2015 – Umpqua Holdings Corporation (NASDAQ: UMPQ) (the “Company”) reported net earnings available to common shareholders of $57.5 million for the third quarter of 2015, compared to $54.7 million for the second quarter of 2015 and $58.7 million for the third quarter of 2014. Earnings per diluted common share were $0.26 for the third quarter of 2015, compared to $0.25 for the second quarter of 2015 and $0.27 for the third quarter of 2014.
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, were $62.1 million for the third quarter of 2015, compared to $68.7 million for the second quarter of 2015 and $65.0 million for the third quarter of 2014. Operating earnings per diluted common share were $0.28 for the third quarter of 2015, compared to $0.31 for the second quarter of 2015 and $0.30 for the third quarter of 2014.
“Umpqua’s financial performance in the third quarter reflects the strength of our footprint and unique position in strategic growth markets, as well as our focus on both managing capital wisely and increasing shareholder value,” said Ray Davis, President and CEO of Umpqua Holdings Corporation. “Despite the difficult low interest rate environment, the company performed strongly, including robust loan and deposit growth, decreased non-interest expense, additional cost synergies, and an increased quarterly dividend per share. We also continue to invest in the future of the company, and look forward to introducing new developments in the coming months that will continue advancing the innovative customer experience and product delivery for which Umpqua is known.”
Highlights (as compared to the prior quarter):
• | Third quarter of 2015 operating earnings1 decreased to $62.1 million: |
◦ | Net interest income increased by $1.6 million, driven primarily by strong loan growth; |
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 2015 Results
October 21, 2015
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◦ | Provision for loan and lease losses decreased by $3.1 million, driven primarily by improved portfolio performance; |
◦ | Non-interest income decreased by $20.0 million, reflecting $11.3 million in negative fair value adjustments to the mortgage servicing rights ("MSR") asset and swap instruments, lower revenues from the origination and sale of residential mortgages, and lower gains related to portfolio loan sales; |
◦ | Non-interest expense (excluding merger-related expense) decreased by $3.4 million, driven primarily by a $2.3 million decrease in variable mortgage banking expenses related to lower mortgage origination volume and additional merger-related cost synergies, partially offset by higher other operating expenses; |
• | Strong loan and deposit growth: |
◦ | Gross loans and leases (before sales) grew by $468.7 million, or 12% annualized; |
◦ | Deposits grew by $322.0 million, or 8% annualized; |
• | Prudently managed capital: |
◦ | Tangible book value per common share1 increased to $9.08, from $8.92; |
◦ | Under Basel III rules, estimated total risk-based capital ratio of 14.4% and estimated Tier 1 common to risk weighted assets ratio of 11.4%; |
◦ | Increased quarterly dividend to $0.16 per common share; and |
◦ | Repurchased 150,000 shares of common stock for $2.5 million. |
For the nine months ended September 30, 2015, the Company reported net earnings available to common shareholders of $159.3 million, or $0.72 per diluted common share, compared to $94.7 million, or $0.54 per diluted common share, for the nine months ended September 30, 2014. For the nine months ended September 30, 2015, operating earnings1 were $187.2 million, or $0.85 per diluted common share, compared to $143.1 million, or $0.81 per diluted common share, for the nine months ended September 30, 2014.
Balance Sheet
Total consolidated assets were $23.2 billion as of September 30, 2015, compared to $22.8 billion as of June 30, 2015 and $22.5 billion as of September 30, 2014. Including secured off-balance sheet lines of credit, the Company had total available liquidity of $7.4 billion as of September 30, 2015, representing 32% of total assets and 43% of total deposits.
Gross loans and leases were $16.4 billion as of September 30, 2015, an increase of $413.7 million, or 10% annualized, from $16.0 billion as of June 30, 2015. This increase was driven by strong loan growth within the commercial, multifamily and mortgage portfolios, partially offset by a decline in non-owner occupied commercial real estate loans. During the third quarter of 2015, the Company also sold $54.9 million of portfolio residential mortgage loans. Excluding the impact of these sales, gross loan growth was $468.7 million, or 12% annualized.
Total deposits were $17.5 billion as of September 30, 2015, an increase of $322.0 million, or 8% annualized, from $17.1 billion as of June 30, 2015. This increase was primarily attributable to growth in non-interest bearing demand and money market deposits, partially offset by a decrease in time deposits.
Net Interest Income
Net interest income was $219.7 million for the third quarter of 2015, up $1.6 million from the prior quarter, but down $6.0 million from the same period in the prior year. The increase from the prior quarter was primarily driven by strong loan growth and one additional day in the quarter, partially offset by a 7 basis point decline in net interest margin. In addition, the level of interest income arising from the accretion of the credit discount recorded on loans acquired from Sterling decreased to $14.3 million for the third quarter of 2015, compared to $16.1 million in the prior quarter.
The Company’s net interest margin was 4.43% for the third quarter of 2015, down from 4.50% for the second quarter of 2015 and from 4.75% for the third quarter of 2014. The decrease from the prior quarter was primarily driven
by a lower average yield on interest earning assets and a lower level of interest income arising from the accretion of the credit discount recorded on loans acquired from Sterling.
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 2015 Results
October 21, 2015
Page 3
Credit Quality
Under acquisition accounting, 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 loan and lease portfolio acquired from Sterling as of the acquisition date. The credit portion of the fair value mark is not reflected in the reported allowance for loan and lease losses, or its related allowance coverage ratios, but we believe should be considered when comparing the current quarter ratios to similar ratios in periods prior to the acquisition of Sterling.
Loans acquired with significant deteriorated credit quality are accounted for as purchased credit impaired pools. Accordingly, loans included in the purchased credit impaired pools are not reported as non-performing loans based upon their individual performance status.
During the third quarter of 2015, the Company reported $14.3 million of accretion related to the Sterling credit discount in interest income. As of September 30, 2015, the purchased non-credit impaired loans had approximately $82.5 million of remaining credit discount that will accrete into interest income over the life of the loans, and the purchased credit impaired loan pools had approximately $49.8 million of remaining total discount.
The allowance for loan and lease losses was $130.1 million, or 0.79% of loans and leases, as of September 30, 2015. To provide better comparability to prior periods, this pro-forma ratio would have been approximately 1.6% after grossing up the allowance for loan and lease losses and the loans and leases by the amount of the credit discount remaining as of quarter-end. This compares to a pro-forma ratio of approximately 1.7% as of June 30, 2015.
The provision for loan and lease losses was $8.2 million for the third quarter of 2015, a decrease of $3.1 million from the prior quarter. The decrease from the prior quarter was primarily driven by improved credit performance within the loan and lease portfolio. Charge-offs, net of recoveries, were $5.1 million for the third quarter of 2015, compared to $4.3 million in the prior quarter.
Non-performing assets decreased to $64.8 million, or 0.28% of total assets, as of September 30, 2015, compared to $70.1 million, or 0.31% of total assets, as of June 30, 2015. Loans past due 31 to 89 days were $28.9 million, or 0.18% of loans and leases, as of September 30, 2015, compared to $25.6 million, or 0.16% of loans and leases, as of June 30, 2015. Restructured loans on accrual status were $35.7 million as of September 30, 2015, compared to $37.0 million as of June 30, 2015.
Non-interest Income
Total non-interest income was $60.3 million for the third quarter of 2015, down $20.1 million from the prior quarter and $1.8 million from the same period in the prior year. The decrease from the prior quarter was primarily driven by lower mortgage banking revenue, lower gains related to portfolio loan sales, and lower other income. The decrease in other income was primarily attributable to a fair value loss of $1.2 million on debt capital market swap derivatives, compared to a gain of $1.4 million in the prior quarter, resulting from the decline in long-term interest rates.
Residential mortgage banking revenue, which includes revenue from the origination and sale of residential mortgage loans, revenue from the servicing of residential mortgage loans and changes to the fair value of the residential MSR asset, decreased by $16.0 million from the prior quarter. Revenue from the origination and sale of residential mortgages decreased by $6.8 million from the prior quarter, driven primarily by a 15% decrease in for sale mortgage originations and a lower home lending gain on sale margin, reflecting increased competitive pressures in the mortgage market. The change in fair value related to the MSR asset resulted in a loss of $10.1 million for the third quarter of 2015, as compared to a loss of $0.4 million for the prior quarter, reflecting the linked quarter decline in interest rates and its impact on the prepayment speed assumption for the MSR asset.
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 2015 Results
October 21, 2015
Page 4
The Company’s gain on sale margin was 3.19% for the third quarter of 2015, down from 3.38% in the prior quarter. Of the current quarter’s mortgage production, 70% related to purchase activity, as compared to 59% for the prior quarter and 71% for the same period in the prior year.
As of September 30, 2015, the Company serviced $12.7 billion of residential mortgage loans for others, and its related MSR asset was valued at $124.8 million, or 0.98% of the total serviced portfolio principal balance. This compares to $12.3 billion of residential mortgage loans serviced for others as of June 30, 2015, with a related MSR asset of $127.2 million, or 1.03% of the total serviced portfolio principal balance. 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.
Non-interest Expense
Non-interest expense was $182.7 million for the third quarter of 2015, which included $6.0 million of merger-related expenses. This compares to $201.9 million, including $21.8 million of merger-related expenses, for the second quarter of 2015 and $182.6 million, including $8.6 million of merger-related expenses, for the third quarter of 2014.
Excluding merger-related expenses, non-interest expense decreased by $3.4 million from the prior quarter. The decrease from the prior quarter reflected a $2.3 million decrease in variable mortgage banking expenses, driven by lower mortgage volume, and additional merger-related cost synergies realized during the quarter, partially offset by higher other operating expenses.
The third quarter of 2015 non-interest expense run-rate does not reflect the full benefit of the anticipated Sterling merger cost synergies. The remaining cost synergies are expected to be realized over the next several months.
Income taxes
The Company recorded a provision for income taxes of $31.6 million for the third quarter of 2015, representing an effective tax rate of 35.4% for the quarter, compared to $30.6 million, with an effective tax rate of 35.8%, for the second quarter of 2015.
Capital
As of September 30, 2015, the Company’s tangible book value per common share1 was $9.08 and its ratio of tangible common equity to tangible assets1 was 9.37%, compared to $8.92 and 9.38%, respectively, in the prior quarter.
During the third quarter of 2015, the Company repurchased 150,000 shares of common stock for $2.5 million. Year-to-date through September 30, 2015, the Company has repurchased 510,000 shares for $8.9 million. The Company may repurchase up to 11.5 million of additional shares under the current stock repurchase plan, which was recently extended to July 31, 2017 by the Company's Board of Directors.
Based on Basel III rules, as of September 30, 2015, the Company’s estimated total risk-based capital ratio was 14.4% and its estimated Tier 1 common to risk weighted assets ratio was 11.4%, compared to 14.6% and 11.5%, respectively, as of June 30, 2015. The Company remains above current “well-capitalized” regulatory minimums. The regulatory capital ratios as of September 30, 2015 are estimates, pending completion and filing of the Company’s regulatory reports.
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 2015 Results
October 21, 2015
Page 5
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 2015 Results
October 21, 2015
Page 6
The following table provides the reconciliation of net 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 | |||||||||||||||||||||||||
(In thousands, except per share data) | Sep 30, 2015 | Jun 30, 2015 | Mar 31, 2015 | Dec 31, 2014 | Sep 30, 2014 | Seq. Quarter | Year over Year | |||||||||||||||||||
Net earnings available to common shareholders | $ | 57,523 | $ | 54,691 | $ | 47,045 | $ | 52,436 | $ | 58,741 | 5 | % | (2 | )% | ||||||||||||
Adjustments: | ||||||||||||||||||||||||||
Net loss on junior subordinated debentures carried at fair value, net of tax (1) | 954 | 943 | 933 | 953 | 955 | 1 | % | 0 | % | |||||||||||||||||
Merger related expenses, net of tax (1) | 3,595 | 13,078 | 8,449 | 6,038 | 5,274 | (73 | )% | (32 | )% | |||||||||||||||||
Operating earnings | $ | 62,072 | $ | 68,712 | $ | 56,427 | $ | 59,427 | $ | 64,970 | (10 | )% | (4 | )% | ||||||||||||
Earnings per diluted share: | ||||||||||||||||||||||||||
Earnings available to common shareholders | $ | 0.26 | $ | 0.25 | $ | 0.21 | $ | 0.24 | $ | 0.27 | 4 | % | (4 | )% | ||||||||||||
Operating earnings | $ | 0.28 | $ | 0.31 | $ | 0.26 | $ | 0.27 | $ | 0.30 | (10 | )% | (7 | )% | ||||||||||||
Nine Months Ended | % Change | |||||||||||||||||||||||||
Sep 30, 2015 | Sep 30, 2014 | Year over Year | ||||||||||||||||||||||||
Net earnings available to common shareholders | $ | 159,259 | $ | 94,738 | 68 | % | ||||||||||||||||||||
Adjustments: | ||||||||||||||||||||||||||
Net loss on junior subordinated debentures carried at fair value, net of tax (1) | 2,830 | 2,101 | 35 | % | ||||||||||||||||||||||
Merger related expenses, net of tax (1) | 25,122 | 46,273 | (46 | )% | ||||||||||||||||||||||
Operating earnings | $ | 187,211 | $ | 143,112 | 31 | % | ||||||||||||||||||||
Earnings per diluted share: | ||||||||||||||||||||||||||
Earnings available to common shareholders | $ | 0.72 | $ | 0.54 | 33 | % | ||||||||||||||||||||
Operating earnings | $ | 0.85 | $ | 0.81 | 5 | % | ||||||||||||||||||||
(1) Income tax effect of pro forma operating earnings adjustments at 40% for tax-deductible items. | ||||||||||||||||||||||||||
nm = not meaningful. | ||||||||||||||||||||||||||
Umpqua Reports Third Quarter 2015 Results
October 21, 2015
Page 7
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.
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).
(In thousands, except per share data) | Sep 30, 2015 | Jun 30, 2015 | Mar 31, 2015 | Dec 31, 2014 | Sep 30, 2014 | |||||||||||||||
Total shareholders' equity | $ | 3,835,552 | $ | 3,804,179 | $ | 3,800,970 | $ | 3,777,626 | $ | 3,749,101 | ||||||||||
Subtract: | ||||||||||||||||||||
Goodwill and other intangible assets, net | 1,836,954 | 1,839,760 | 1,842,567 | 1,842,958 | 1,845,242 | |||||||||||||||
Tangible common shareholders' equity | $ | 1,998,598 | $ | 1,964,419 | $ | 1,958,403 | $ | 1,934,668 | $ | 1,903,859 | ||||||||||
Total assets | $ | 23,162,304 | $ | 22,793,331 | $ | 22,953,158 | $ | 22,609,903 | $ | 22,484,652 | ||||||||||
Subtract: | ||||||||||||||||||||
Goodwill and other intangible assets, net | 1,836,954 | 1,839,760 | 1,842,567 | 1,842,958 | 1,845,242 | |||||||||||||||
Tangible assets | $ | 21,325,350 | $ | 20,953,571 | $ | 21,110,591 | $ | 20,766,945 | $ | 20,639,410 | ||||||||||
Common shares outstanding at period end | 220,217 | 220,280 | 220,454 | 220,161 | 217,262 | |||||||||||||||
Tangible common equity ratio | 9.37 | % | 9.38 | % | 9.28 | % | 9.32 | % | 9.22 | % | ||||||||||
Tangible book value per common share | $ | 9.08 | $ | 8.92 | $ | 8.88 | $ | 8.79 | $ | 8.76 | ||||||||||
Umpqua Reports Third Quarter 2015 Results
October 21, 2015
Page 8
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 Oregon, Washington, California, Idaho and 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 2015 earnings conference call on Thursday, October 22, 2015, 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 2015 financial results. There will be a live question-and-answer session following the presentation. To join the call, please dial (888) 471-3840 ten minutes prior to the start time and enter conference ID: 370250. A re-broadcast will be available approximately two hours after the call by dialing (888) 203-1112 and entering conference ID 370250. 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 the integration of the merger with Sterling Financial Corporation; timing and amount of merger-related synergies; credit discount accretion related to the merger, and planned investments and initiatives. Specific risks that could cause results to differ from these forward looking statements are Umpqua’s ability to promptly and effectively integrate the businesses of Sterling and Umpqua and achieve the synergies and earnings accretion contemplated by the Sterling merger. Additional risks that could cause results to differ from forward-looking statements we make 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 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; 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 2015 Results
October 21, 2015
Page 9
Umpqua Holdings Corporation | ||||||||||||||||||||||||||
Consolidated Statements of Income | ||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||
Quarter Ended | % Change | |||||||||||||||||||||||||
(In thousands, except per share data) | Sep 30, 2015 | Jun 30, 2015 | Mar 31, 2015 | Dec 31, 2014 | Sep 30, 2014 | Seq. Quarter | Year over Year | |||||||||||||||||||
Interest income: | ||||||||||||||||||||||||||
Loans and leases | $ | 219,488 | $ | 217,828 | $ | 214,663 | $ | 226,853 | $ | 223,972 | 1 | % | (2 | )% | ||||||||||||
Interest and dividends on investments: | ||||||||||||||||||||||||||
Taxable | 11,639 | 11,268 | 11,551 | 11,629 | 12,136 | 3 | % | (4 | )% | |||||||||||||||||
Exempt from federal income tax | 2,637 | 2,657 | 2,720 | 2,746 | 2,790 | (1 | )% | (5 | )% | |||||||||||||||||
Dividends | 113 | 168 | 101 | 66 | 81 | (33 | )% | 40 | % | |||||||||||||||||
Temporary investments & interest bearing deposits | 440 | 549 | 825 | 857 | 544 | (20 | )% | (19 | )% | |||||||||||||||||
Total interest income | 234,317 | 232,470 | 229,860 | 242,151 | 239,523 | 1 | % | (2 | )% | |||||||||||||||||
Interest expense: | ||||||||||||||||||||||||||
Deposits | 7,450 | 7,381 | 7,103 | 7,119 | 6,773 | 1 | % | 10 | % | |||||||||||||||||
Repurchase agreements | 43 | 43 | 48 | 48 | 54 | 0 | % | (20 | )% | |||||||||||||||||
Term debt | 3,629 | 3,492 | 3,464 | 3,570 | 3,586 | 4 | % | 1 | % | |||||||||||||||||
Junior subordinated debentures | 3,465 | 3,406 | 3,337 | 3,399 | 3,394 | 2 | % | 2 | % | |||||||||||||||||
Total interest expense | 14,587 | 14,322 | 13,952 | 14,136 | 13,807 | 2 | % | 6 | % | |||||||||||||||||
Net interest income | 219,730 | 218,148 | 215,908 | 228,015 | 225,716 | 1 | % | (3 | )% | |||||||||||||||||
Provision for loan and lease losses | 8,153 | 11,254 | 12,637 | 5,241 | 14,333 | (28 | )% | (43 | )% | |||||||||||||||||
Non-interest income: | ||||||||||||||||||||||||||
Service charges on deposits | 15,638 | 14,825 | 14,296 | 15,472 | 16,090 | 5 | % | (3 | )% | |||||||||||||||||
Brokerage revenue | 5,003 | 4,648 | 4,769 | 4,960 | 4,882 | 8 | % | 2 | % | |||||||||||||||||
Residential mortgage banking revenue, net | 24,041 | 40,014 | 28,227 | 16,489 | 25,996 | (40 | )% | (8 | )% | |||||||||||||||||
Gain on investment securities, net | 220 | 19 | 116 | 1,026 | 902 | nm | (76 | )% | ||||||||||||||||||
Gain on loan sales | 5,212 | 8,711 | 6,728 | 5,730 | 8,309 | (40 | )% | (37 | )% | |||||||||||||||||
Loss on junior subordinated debentures carried at fair value | (1,590 | ) | (1,572 | ) | (1,555 | ) | (1,589 | ) | (1,590 | ) | 1 | % | 0 | % | ||||||||||||
Change in FDIC indemnification asset | 1,432 | (1,199 | ) | (1,286 | ) | (1,982 | ) | (2,728 | ) | (219 | )% | (152 | )% | |||||||||||||
BOLI income | 1,656 | 2,023 | 2,781 | 1,971 | 2,161 | (18 | )% | (23 | )% | |||||||||||||||||
Other income | 8,737 | 12,930 | 9,519 | 8,228 | 8,143 | (32 | )% | 7 | % | |||||||||||||||||
Total non-interest income | 60,349 | 80,399 | 63,595 | 50,305 | 62,165 | (25 | )% | (3 | )% | |||||||||||||||||
Non-interest expense: | ||||||||||||||||||||||||||
Salaries and employee benefits | 105,974 | 110,786 | 107,923 | 104,039 | 102,564 | (4 | )% | 3 | % | |||||||||||||||||
Occupancy and equipment, net | 37,235 | 34,868 | 32,150 | 32,987 | 33,029 | 7 | % | 13 | % | |||||||||||||||||
Intangible amortization | 2,806 | 2,807 | 2,806 | 3,102 | 3,103 | 0 | % | (10 | )% | |||||||||||||||||
FDIC assessments | 3,369 | 3,155 | 3,214 | 3,522 | 3,038 | 7 | % | 11 | % | |||||||||||||||||
(Gain) loss on other real estate owned, net | (158 | ) | 480 | 1,814 | 3,609 | 313 | (133 | )% | (150 | )% | ||||||||||||||||
Merger related expenses | 5,991 | 21,797 | 14,082 | 10,171 | 8,632 | (73 | )% | (31 | )% | |||||||||||||||||
Other expense | 27,469 | 28,004 | 31,109 | 33,426 | 31,879 | (2 | )% | (14 | )% | |||||||||||||||||
Total non-interest expense | 182,686 | 201,897 | 193,098 | 190,856 | 182,558 | (10 | )% | 0 | % | |||||||||||||||||
Income before provision for income taxes | 89,240 | 85,396 | 73,768 | 82,223 | 90,990 | 5 | % | (2 | )% | |||||||||||||||||
Provision for income taxes | 31,633 | 30,612 | 26,639 | 29,641 | 32,107 | 3 | % | (1 | )% | |||||||||||||||||
Net income | 57,607 | 54,784 | 47,129 | 52,582 | 58,883 | 5 | % | (2 | )% | |||||||||||||||||
Dividends and undistributed earnings allocated to participating securities | 84 | 93 | 84 | 146 | 142 | (10 | )% | (41 | )% | |||||||||||||||||
Net earnings available to common shareholders | $ | 57,523 | $ | 54,691 | $ | 47,045 | $ | 52,436 | $ | 58,741 | 5 | % | (2 | )% | ||||||||||||
Weighted average basic shares outstanding | 220,297 | 220,463 | 220,349 | 218,963 | 217,245 | 0 | % | 1 | % | |||||||||||||||||
Weighted average diluted shares outstanding | 220,904 | 221,150 | 221,051 | 219,974 | 218,941 | 0 | % | 1 | % | |||||||||||||||||
Earnings per common share – basic | $ | 0.26 | $ | 0.25 | $ | 0.21 | $ | 0.24 | $ | 0.27 | 4 | % | (4 | )% | ||||||||||||
Earnings per common share – diluted | $ | 0.26 | $ | 0.25 | $ | 0.21 | $ | 0.24 | $ | 0.27 | 4 | % | (4 | )% | ||||||||||||
nm = not meaningful | ||||||||||||||||||||||||||
Umpqua Reports Third Quarter 2015 Results
October 21, 2015
Page 10
Umpqua Holdings Corporation | |||||||||||
Consolidated Statements of Income | |||||||||||
(Unaudited) | |||||||||||
Nine Months Ended | % Change | ||||||||||
(In thousands, except per share data) | Sep 30, 2015 | Sep 30, 2014 | Year over Year | ||||||||
Interest income | |||||||||||
Loans and leases | $ | 651,979 | $ | 536,950 | 21 | % | |||||
Interest and dividends on investments: | |||||||||||
Taxable | 34,458 | 34,155 | 1 | % | |||||||
Exempt from federal income tax | 8,014 | 7,599 | 5 | % | |||||||
Dividends | 382 | 259 | 47 | % | |||||||
Temporary investments & interest bearing deposits | 1,814 | 1,407 | 29 | % | |||||||
Total interest income | 696,647 | 580,370 | 20 | % | |||||||
Interest expense | |||||||||||
Deposits | 21,934 | 16,696 | 31 | % | |||||||
Repurchase agreements | 134 | 298 | (55 | )% | |||||||
Term debt | 10,585 | 9,223 | 15 | % | |||||||
Junior subordinated debentures | 10,208 | 8,340 | 22 | % | |||||||
Total interest expense | 42,861 | 34,557 | 24 | % | |||||||
Net interest income | 653,786 | 545,813 | 20 | % | |||||||
Provision for loan and lease losses | 32,044 | 35,000 | (8 | )% | |||||||
Non-interest income | |||||||||||
Service charges on deposits | 44,759 | 39,228 | 14 | % | |||||||
Brokerage revenue | 14,420 | 13,173 | 9 | % | |||||||
Residential mortgage banking revenue, net | 92,282 | 60,776 | 52 | % | |||||||
Gain on investment securities, net | 355 | 1,878 | (81 | )% | |||||||
Gain on loan sales | 20,651 | 9,383 | 120 | % | |||||||
Loss on junior subordinated debentures carried at fair value | (4,717 | ) | (3,501 | ) | 35 | % | |||||
Change in FDIC indemnification asset | (1,053 | ) | (13,169 | ) | (92 | )% | |||||
BOLI Income | 6,460 | 4,864 | 33 | % | |||||||
Other income | 31,186 | 18,237 | 71 | % | |||||||
Total non-interest income | 204,343 | 130,869 | 56 | % | |||||||
Non-interest expense | |||||||||||
Salaries and employee benefits | 324,683 | 251,340 | 29 | % | |||||||
Occupancy and equipment, net | 104,253 | 78,276 | 33 | % | |||||||
Intangible amortization | 8,419 | 7,105 | 18 | % | |||||||
FDIC assessments | 9,738 | 7,476 | 30 | % | |||||||
Loss on other real estate owned, net | 2,136 | 507 | nm | ||||||||
Merger related expenses | 41,870 | 72,146 | (42 | )% | |||||||
Other expense | 86,582 | 76,357 | 13 | % | |||||||
Total non-interest expense | 577,681 | 493,207 | 17 | % | |||||||
Income before provision for income taxes | 248,404 | 148,475 | 67 | % | |||||||
Provision for income taxes | 88,884 | 53,399 | 66 | % | |||||||
Net income | 159,520 | 95,076 | 68 | % | |||||||
Dividends and undistributed earnings | |||||||||||
allocated to participating securities | 261 | 338 | (23 | )% | |||||||
Net earnings available to common shareholders | $ | 159,259 | $ | 94,738 | 68 | % | |||||
Weighted average basic shares outstanding | 220,370 | 175,627 | 25 | % | |||||||
Weighted average diluted shares outstanding | 221,062 | 176,656 | 25 | % | |||||||
Earnings per common share – basic | $ | 0.72 | $ | 0.54 | 33 | % | |||||
Earnings per common share – diluted | $ | 0.72 | $ | 0.54 | 33 | % | |||||
nm = not meaningful | |||||||||||
Umpqua Reports Third Quarter 2015 Results
October 21, 2015
Page 11
Umpqua Holdings Corporation Consolidated Balance Sheets | ||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||
% Change | ||||||||||||||||||||||||||
(In thousands, except per share data) | Sep 30, 2015 | Jun 30, 2015 | Mar 31, 2015 | Dec 31, 2014 | Sep 30, 2014 | Seq. Quarter | Year over Year | |||||||||||||||||||
Assets: | ||||||||||||||||||||||||||
Cash and due from banks | $ | 283,773 | $ | 364,256 | $ | 292,558 | $ | 282,455 | $ | 266,624 | (22 | )% | 6 | % | ||||||||||||
Interest bearing cash and temporary investments | 673,843 | 515,691 | 1,088,316 | 1,322,716 | 1,177,086 | 31 | % | (43 | )% | |||||||||||||||||
Investment securities: | ||||||||||||||||||||||||||
Trading, at fair value | 9,509 | 10,005 | 10,452 | 9,999 | 9,727 | (5 | )% | (2 | )% | |||||||||||||||||
Available for sale, at fair value | 2,482,478 | 2,557,245 | 2,535,121 | 2,298,555 | 2,400,061 | (3 | )% | 3 | % | |||||||||||||||||
Held to maturity, at amortized cost | 4,699 | 4,807 | 4,953 | 5,211 | 5,356 | (2 | )% | (12 | )% | |||||||||||||||||
Loans held for sale | 398,015 | 419,704 | 406,487 | 286,802 | 265,800 | (5 | )% | 50 | % | |||||||||||||||||
Loans and leases | 16,387,934 | 15,974,197 | 15,548,957 | 15,327,732 | 15,259,201 | 3 | % | 7 | % | |||||||||||||||||
Allowance for loan and lease losses | (130,133 | ) | (127,071 | ) | (120,104 | ) | (116,167 | ) | (115,635 | ) | 2 | % | 13 | % | ||||||||||||
Loans and leases, net | 16,257,801 | 15,847,126 | 15,428,853 | 15,211,565 | 15,143,566 | 3 | % | 7 | % | |||||||||||||||||
Restricted equity securities | 46,904 | 46,917 | 117,218 | 119,334 | 120,759 | 0 | % | (61 | )% | |||||||||||||||||
Premises and equipment, net | 330,306 | 331,208 | 322,925 | 317,834 | 314,364 | 0 | % | 5 | % | |||||||||||||||||
Goodwill | 1,788,640 | 1,788,640 | 1,788,640 | 1,786,225 | 1,785,407 | 0 | % | 0 | % | |||||||||||||||||
Other intangible assets, net | 48,314 | 51,120 | 53,927 | 56,733 | 59,835 | (5 | )% | (19 | )% | |||||||||||||||||
Residential mortgage servicing rights, at fair value | 124,814 | 127,206 | 116,365 | 117,259 | 118,725 | (2 | )% | 5 | % | |||||||||||||||||
Other real estate owned | 23,892 | 23,038 | 32,064 | 37,942 | 34,456 | 4 | % | (31 | )% | |||||||||||||||||
FDIC indemnification asset | 892 | 432 | 1,861 | 4,417 | 7,811 | 106 | % | (89 | )% | |||||||||||||||||
Bank owned life insurance | 297,321 | 295,551 | 294,697 | 294,296 | 293,511 | 1 | % | 1 | % | |||||||||||||||||
Deferred tax assets, net | 149,320 | 181,245 | 198,778 | 230,442 | 251,854 | (18 | )% | (41 | )% | |||||||||||||||||
Other assets | 241,783 | 229,140 | 259,943 | 228,118 | 229,710 | 6 | % | 5 | % | |||||||||||||||||
Total assets | $ | 23,162,304 | $ | 22,793,331 | $ | 22,953,158 | $ | 22,609,903 | $ | 22,484,652 | 2 | % | 3 | % | ||||||||||||
Liabilities: | ||||||||||||||||||||||||||
Deposits | $ | 17,467,024 | $ | 17,145,046 | $ | 17,222,566 | $ | 16,892,099 | $ | 16,727,610 | 2 | % | 4 | % | ||||||||||||
Securities sold under agreements to repurchase | 323,722 | 325,711 | 321,202 | 313,321 | 339,367 | (1 | )% | (5 | )% | |||||||||||||||||
Term debt | 889,358 | 889,997 | 965,675 | 1,006,395 | 1,057,140 | 0 | % | (16 | )% | |||||||||||||||||
Junior subordinated debentures, at fair value | 253,665 | 252,214 | 250,652 | 249,294 | 247,528 | 1 | % | 2 | % | |||||||||||||||||
Junior subordinated debentures, at amortized cost | 101,334 | 101,415 | 101,496 | 101,576 | 101,657 | 0 | % | 0 | % | |||||||||||||||||
Other liabilities | 291,649 | 274,769 | 290,597 | 269,592 | 262,249 | 6 | % | 11 | % | |||||||||||||||||
Total liabilities | 19,326,752 | 18,989,152 | 19,152,188 | 18,832,277 | 18,735,551 | 2 | % | 3 | % | |||||||||||||||||
Shareholders' equity: | ||||||||||||||||||||||||||
Common stock | 3,517,751 | 3,517,557 | 3,521,201 | 3,519,316 | 3,515,621 | 0 | % | 0 | % | |||||||||||||||||
Retained earnings | 303,729 | 281,573 | 260,128 | 246,242 | 226,895 | 8 | % | 34 | % | |||||||||||||||||
Accumulated other comprehensive income | 14,072 | 5,049 | 19,641 | 12,068 | 6,585 | 179 | % | 114 | % | |||||||||||||||||
Total shareholders' equity | 3,835,552 | 3,804,179 | 3,800,970 | 3,777,626 | 3,749,101 | 1 | % | 2 | % | |||||||||||||||||
Total liabilities and shareholders' equity | $ | 23,162,304 | $ | 22,793,331 | $ | 22,953,158 | $ | 22,609,903 | $ | 22,484,652 | 2 | % | 3 | % | ||||||||||||
Common shares outstanding at period end | 220,217 | 220,280 | 220,454 | 220,161 | 217,262 | 0 | % | 1 | % | |||||||||||||||||
Book value per common share | $ | 17.42 | $ | 17.27 | $ | 17.24 | $ | 17.16 | $ | 17.26 | 1 | % | 1 | % | ||||||||||||
Tangible book value per common share | $ | 9.08 | $ | 8.92 | $ | 8.88 | $ | 8.79 | $ | 8.76 | 2 | % | 4 | % | ||||||||||||
Tangible equity - common | $ | 1,998,598 | $ | 1,964,419 | $ | 1,958,403 | $ | 1,934,668 | $ | 1,903,859 | 2 | % | 5 | % | ||||||||||||
Tangible common equity to tangible assets | 9.37 | % | 9.38 | % | 9.28 | % | 9.32 | % | 9.22 | % | 0 | % | 2 | % | ||||||||||||
Umpqua Reports Third Quarter 2015 Results
October 21, 2015
Page 12
Umpqua Holdings Corporation | ||||||||||||||||||||||||||
Loan & Lease Portfolio | ||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||
(Dollars in thousands) | Sep 30, 2015 | Jun 30, 2015 | Mar 31, 2015 | Dec 31, 2014 | Sep 30, 2014 | % Change | ||||||||||||||||||||
Amount | Amount | Amount | Amount | Amount | Seq. Quarter | Year over Year | ||||||||||||||||||||
Loans & leases: | ||||||||||||||||||||||||||
Commercial real estate: | ||||||||||||||||||||||||||
Non-owner occupied term, net | $ | 3,148,288 | $ | 3,294,359 | $ | 3,303,629 | $ | 3,290,610 | $ | 3,423,453 | (4 | )% | (8 | )% | ||||||||||||
Owner occupied term, net | 2,655,340 | 2,636,800 | 2,577,484 | 2,633,864 | 2,682,870 | 1 | % | (1 | )% | |||||||||||||||||
Multifamily, net | 2,961,609 | 2,859,884 | 2,764,403 | 2,638,618 | 2,565,711 | 4 | % | 15 | % | |||||||||||||||||
Commercial construction, net | 287,757 | 244,354 | 238,303 | 258,722 | 247,816 | 18 | % | 16 | % | |||||||||||||||||
Residential development, net | 94,380 | 76,734 | 81,160 | 81,846 | 76,849 | 23 | % | 23 | % | |||||||||||||||||
Commercial: | ||||||||||||||||||||||||||
Term, net | 1,398,346 | 1,374,528 | 1,411,043 | 1,396,089 | 1,427,121 | 2 | % | (2 | )% | |||||||||||||||||
Lines of credit & other, net | 1,014,523 | 981,897 | 993,814 | 1,029,620 | 1,037,278 | 3 | % | (2 | )% | |||||||||||||||||
Leases & equipment finance, net | 679,033 | 630,695 | 570,492 | 523,114 | 492,221 | 8 | % | 38 | % | |||||||||||||||||
Residential real estate: | ||||||||||||||||||||||||||
Mortgage, net | 2,740,228 | 2,533,042 | 2,330,325 | 2,233,735 | 2,102,333 | 8 | % | 30 | % | |||||||||||||||||
Home equity lines & loans, net | 910,287 | 882,596 | 863,269 | 852,478 | 836,054 | 3 | % | 9 | % | |||||||||||||||||
Consumer & other, net | 498,143 | 459,308 | 415,035 | 389,036 | 367,495 | 8 | % | 36 | % | |||||||||||||||||
Total, net of deferred fees and costs | $ | 16,387,934 | $ | 15,974,197 | $ | 15,548,957 | $ | 15,327,732 | $ | 15,259,201 | 3 | % | 7 | % | ||||||||||||
Loan & leases mix: | ||||||||||||||||||||||||||
Commercial real estate: | ||||||||||||||||||||||||||
Non-owner occupied term, net | 19 | % | 20 | % | 20 | % | 20 | % | 22 | % | ||||||||||||||||
Owner occupied term, net | 16 | % | 17 | % | 17 | % | 17 | % | 18 | % | ||||||||||||||||
Multifamily, net | 17 | % | 17 | % | 17 | % | 17 | % | 17 | % | ||||||||||||||||
Commercial construction, net | 2 | % | 2 | % | 2 | % | 2 | % | 2 | % | ||||||||||||||||
Residential development, net | 1 | % | — | % | 1 | % | 1 | % | 1 | % | ||||||||||||||||
Commercial: | ||||||||||||||||||||||||||
Term, net | 9 | % | 9 | % | 9 | % | 9 | % | 9 | % | ||||||||||||||||
Lines of credit & other, net | 6 | % | 6 | % | 6 | % | 7 | % | 7 | % | ||||||||||||||||
Leases & equipment finance, net | 4 | % | 4 | % | 4 | % | 3 | % | 3 | % | ||||||||||||||||
Residential real estate: | ||||||||||||||||||||||||||
Mortgage, net | 17 | % | 16 | % | 15 | % | 15 | % | 14 | % | ||||||||||||||||
Home equity lines & loans, net | 6 | % | 6 | % | 6 | % | 6 | % | 5 | % | ||||||||||||||||
Consumer & other, net | 3 | % | 3 | % | 3 | % | 3 | % | 2 | % | ||||||||||||||||
Total | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | ||||||||||||||||
Umpqua Reports Third Quarter 2015 Results
October 21, 2015
Page 13
Umpqua Holdings Corporation | ||||||||||||||||||||||||||
Deposits by Type/Core Deposits | ||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||
(Dollars in thousands) | Sep 30, 2015 | Jun 30, 2015 | Mar 31, 2015 | Dec 31, 2014 | Sep 30, 2014 | % Change | ||||||||||||||||||||
Amount | Amount | Amount | Amount | Amount | Seq. Quarter | Year over Year | ||||||||||||||||||||
Deposits: | ||||||||||||||||||||||||||
Demand, non-interest bearing | $ | 5,207,129 | $ | 4,927,526 | $ | 4,930,642 | $ | 4,744,804 | $ | 4,741,897 | 6 | % | 10 | % | ||||||||||||
Demand, interest bearing | 2,098,223 | 2,090,595 | 2,085,368 | 2,054,994 | 1,942,792 | 0 | % | 8 | % | |||||||||||||||||
Money market | 6,514,174 | 6,374,624 | 6,287,165 | 6,113,138 | 5,998,339 | 2 | % | 9 | % | |||||||||||||||||
Savings | 1,102,611 | 1,058,337 | 1,022,829 | 971,185 | 952,122 | 4 | % | 16 | % | |||||||||||||||||
Time | 2,544,887 | 2,693,964 | 2,896,562 | 3,007,978 | 3,092,460 | (6 | )% | (18 | )% | |||||||||||||||||
Total | $ | 17,467,024 | $ | 17,145,046 | $ | 17,222,566 | $ | 16,892,099 | $ | 16,727,610 | 2 | % | 4 | % | ||||||||||||
Total core deposits (1) | $ | 15,940,229 | $ | 15,529,997 | $ | 15,304,001 | $ | 15,126,378 | $ | 14,653,183 | 3 | % | 9 | % | ||||||||||||
Deposit mix: | ||||||||||||||||||||||||||
Demand, non-interest bearing | 30 | % | 29 | % | 29 | % | 28 | % | 28 | % | ||||||||||||||||
Demand, interest bearing | 12 | % | 12 | % | 12 | % | 12 | % | 12 | % | ||||||||||||||||
Money market | 37 | % | 37 | % | 36 | % | 36 | % | 36 | % | ||||||||||||||||
Savings | 6 | % | 6 | % | 6 | % | 6 | % | 6 | % | ||||||||||||||||
Time | 15 | % | 16 | % | 17 | % | 18 | % | 18 | % | ||||||||||||||||
Total | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | ||||||||||||||||
Number of open accounts: | ||||||||||||||||||||||||||
Demand, non-interest bearing | 370,128 | 367,086 | 368,701 | 367,854 | 366,279 | |||||||||||||||||||||
Demand, interest bearing | 88,171 | 90,021 | 85,082 | 86,135 | 87,223 | |||||||||||||||||||||
Money market | 57,622 | 58,156 | 61,991 | 63,095 | 63,979 | |||||||||||||||||||||
Savings | 153,534 | 152,404 | 150,989 | 150,548 | 150,527 | |||||||||||||||||||||
Time | 48,168 | 49,983 | 52,179 | 53,530 | 54,565 | |||||||||||||||||||||
Total | 717,623 | 717,650 | 718,942 | 721,162 | 722,573 | |||||||||||||||||||||
Average balance per account: | ||||||||||||||||||||||||||
Demand, non-interest bearing | $ | 14.1 | $ | 13.4 | $ | 13.4 | $ | 12.9 | $ | 12.9 | ||||||||||||||||
Demand, interest bearing | 23.8 | 23.2 | 24.5 | 23.9 | 22.3 | |||||||||||||||||||||
Money market | 113.1 | 109.6 | 101.4 | 96.9 | 93.8 | |||||||||||||||||||||
Savings | 7.2 | 6.9 | 6.8 | 6.5 | 6.3 | |||||||||||||||||||||
Time | 52.8 | 53.9 | 55.5 | 56.2 | 56.7 | |||||||||||||||||||||
Total | $ | 24.3 | $ | 23.9 | $ | 24.0 | $ | 23.4 | $ | 23.2 | ||||||||||||||||
(1) Core deposits are defined as total deposits less time deposits greater than $100,000.
Umpqua Reports Third Quarter 2015 Results
October 21, 2015
Page 14
Umpqua Holdings Corporation | ||||||||||||||||||||||||||
Credit Quality – Non-performing Assets | ||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||
Quarter Ended | % Change | |||||||||||||||||||||||||
(Dollars in thousands) | Sep 30, 2015 | Jun 30, 2015 | Mar 31, 2015 | Dec 31, 2014 | Sep 30, 2014 | Seq. Quarter | Year over Year | |||||||||||||||||||
Non-performing assets: | ||||||||||||||||||||||||||
Loans and leases on non-accrual status | $ | 30,989 | $ | 33,572 | $ | 40,246 | $ | 52,041 | $ | 42,397 | (8 | )% | (27 | )% | ||||||||||||
Loans and leases past due 90+ days & accruing | 9,967 | 13,529 | 10,416 | 7,512 | 7,416 | (26 | )% | 34 | % | |||||||||||||||||
Total non-performing loans and leases | 40,956 | 47,101 | 50,662 | 59,553 | 49,813 | (13 | )% | (18 | )% | |||||||||||||||||
Other real estate owned | 23,892 | 23,038 | 32,064 | 37,942 | 34,456 | 4 | % | (31 | )% | |||||||||||||||||
Total | $ | 64,848 | $ | 70,139 | $ | 82,726 | $ | 97,495 | $ | 84,269 | (8 | )% | (23 | )% | ||||||||||||
Performing restructured loans and leases | $ | 35,706 | $ | 37,023 | $ | 60,896 | $ | 54,836 | $ | 63,507 | (4 | )% | (44 | )% | ||||||||||||
Loans and leases past due 31-89 days | $ | 28,919 | $ | 25,553 | $ | 20,488 | $ | 24,659 | $ | 34,025 | 13 | % | (15 | )% | ||||||||||||
Loans and leases past due 31-89 days to total loans and leases | 0.18 | % | 0.16 | % | 0.13 | % | 0.16 | % | 0.22 | % | ||||||||||||||||
Non-performing loans and leases to total loans and leases | 0.25 | % | 0.29 | % | 0.33 | % | 0.39 | % | 0.33 | % | ||||||||||||||||
Non-performing assets to total assets | 0.28 | % | 0.31 | % | 0.36 | % | 0.43 | % | 0.37 | % | ||||||||||||||||
Umpqua Reports Third Quarter 2015 Results
October 21, 2015
Page 15
Umpqua Holdings Corporation | ||||||||||||||||||||||||||
Credit Quality – Allowance for Loan and Lease Losses | ||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||
Quarter Ended | % Change | |||||||||||||||||||||||||
(Dollars in thousands) | Sep 30, 2015 | Jun 30, 2015 | Mar 31, 2015 | Dec 31, 2014 | Sep 30, 2014 | Seq. Quarter | Year over Year | |||||||||||||||||||
Allowance for loan and lease losses: | ||||||||||||||||||||||||||
Balance beginning of period | $ | 127,071 | $ | 120,104 | $ | 116,167 | $ | 115,635 | $ | 106,495 | ||||||||||||||||
Provision for loan and lease losses | 8,153 | 11,254 | 12,637 | 5,241 | 14,333 | (28 | )% | (43 | )% | |||||||||||||||||
Charge-offs | (8,476 | ) | (7,442 | ) | (12,545 | ) | (9,088 | ) | (7,524 | ) | 14 | % | 13 | % | ||||||||||||
Recoveries | 3,385 | 3,155 | 3,845 | 4,379 | 2,331 | 7 | % | 45 | % | |||||||||||||||||
Net charge-offs | (5,091 | ) | (4,287 | ) | (8,700 | ) | (4,709 | ) | (5,193 | ) | 19 | % | (2 | )% | ||||||||||||
Total allowance for loan and lease losses | 130,133 | 127,071 | 120,104 | 116,167 | 115,635 | 2 | % | 13 | % | |||||||||||||||||
Reserve for unfunded commitments | 3,081 | 2,864 | 3,194 | 3,539 | 4,388 | |||||||||||||||||||||
Total allowance for credit losses | $ | 133,214 | $ | 129,935 | $ | 123,298 | $ | 119,706 | $ | 120,023 | ||||||||||||||||
Net charge-offs to average loans and leases (annualized) | 0.13 | % | 0.11 | % | 0.23 | % | 0.12 | % | 0.14 | % | ||||||||||||||||
Recoveries to gross charge-offs | 39.94 | % | 42.39 | % | 30.65 | % | 48.18 | % | 30.98 | % | ||||||||||||||||
Allowance for loan and lease losses to loans and leases | 0.79 | % | 0.80 | % | 0.77 | % | 0.76 | % | 0.76 | % | ||||||||||||||||
Allowance for credit losses to loans and leases | 0.81 | % | 0.81 | % | 0.79 | % | 0.78 | % | 0.79 | % | ||||||||||||||||
Umpqua Reports Third Quarter 2015 Results
October 21, 2015
Page 16
Umpqua Holdings Corporation | |||||||||||
Credit Quality – Allowance for Loan and Lease Losses | |||||||||||
(Unaudited) | |||||||||||
Nine Months Ended | % Change | ||||||||||
(Dollars in thousands) | Sep 30, 2015 | Sep 30, 2014 | Year over Year | ||||||||
Allowance for loan and lease losses: | |||||||||||
Balance beginning of period | $ | 116,167 | $ | 95,085 | |||||||
Provision for loan and lease losses | 32,044 | 35,000 | (8 | )% | |||||||
Charge-offs | (28,463 | ) | (21,090 | ) | 35 | % | |||||
Recoveries | 10,385 | 6,640 | 56 | % | |||||||
Net charge-offs | (18,078 | ) | (14,450 | ) | 25 | % | |||||
Total allowance for loan and lease losses | 130,133 | 115,635 | 13 | % | |||||||
Reserve for unfunded commitments | 3,081 | 4,388 | (30 | )% | |||||||
Total allowance for credit losses | $ | 133,214 | $ | 120,023 | 11 | % | |||||
Net charge-offs to average loans and leases (annualized) | 0.15 | % | 0.16 | % | |||||||
Recoveries to gross charge-offs | 36.49 | % | 31.48 | % | |||||||
Allowance for loan and lease losses to loans and leases | 0.79 | % | 0.76 | % | |||||||
Allowance for credit losses to loans and leases | 0.81 | % | 0.79 | % | |||||||
Umpqua Reports Third Quarter 2015 Results
October 21, 2015
Page 17
Umpqua Holdings Corporation | |||||||||||||||||||||
Selected Ratios | |||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||
Quarter Ended | % Change | ||||||||||||||||||||
Sep 30, 2015 | Jun 30, 2015 | Mar 31, 2015 | Dec 31, 2014 | Sep 30, 2014 | Seq. Quarter | Year over Year | |||||||||||||||
Average Rates: | |||||||||||||||||||||
Yield on loans and leases | 5.30 | % | 5.48 | % | 5.61 | % | 5.82 | % | 5.78 | % | (0.18 | ) | (0.48 | ) | |||||||
Yield on loans held for sale | 4.07 | % | 3.24 | % | 3.95 | % | 4.01 | % | 3.86 | % | 0.83 | 0.21 | |||||||||
Yield on taxable investments | 2.07 | % | 1.99 | % | 2.10 | % | 2.16 | % | 2.12 | % | 0.08 | (0.05 | ) | ||||||||
Yield on tax-exempt investments (1) | 5.12 | % | 5.07 | % | 5.10 | % | 5.09 | % | 5.12 | % | 0.05 | — | |||||||||
Yield on interest bearing cash and temporary investments | 0.25 | % | 0.26 | % | 0.25 | % | 0.25 | % | 0.25 | % | (0.01 | ) | — | ||||||||
Total yield on earning assets (1) | 4.72 | % | 4.79 | % | 4.82 | % | 4.98 | % | 5.04 | % | (0.07 | ) | (0.32 | ) | |||||||
Cost of interest bearing deposits | 0.24 | % | 0.24 | % | 0.24 | % | 0.23 | % | 0.22 | % | — | 0.02 | |||||||||
Cost of securities sold under agreements | |||||||||||||||||||||
to repurchase and fed funds purchased | 0.05 | % | 0.05 | % | 0.06 | % | 0.06 | % | 0.07 | % | — | (0.02 | ) | ||||||||
Cost of term debt | 1.62 | % | 1.51 | % | 1.42 | % | 1.41 | % | 1.35 | % | 0.11 | 0.27 | |||||||||
Cost of junior subordinated debentures | 3.89 | % | 3.88 | % | 3.86 | % | 3.86 | % | 3.87 | % | 0.01 | 0.02 | |||||||||
Total cost of interest bearing liabilities | 0.42 | % | 0.41 | % | 0.41 | % | 0.41 | % | 0.40 | % | 0.01 | 0.02 | |||||||||
Net interest spread (1) | 4.30 | % | 4.38 | % | 4.41 | % | 4.57 | % | 4.64 | % | (0.08 | ) | (0.34 | ) | |||||||
Net interest margin – Consolidated (1) | 4.43 | % | 4.50 | % | 4.53 | % | 4.69 | % | 4.75 | % | (0.07 | ) | (0.32 | ) | |||||||
Net interest margin – Bank (1) | 4.50 | % | 4.56 | % | 4.59 | % | 4.75 | % | 4.82 | % | (0.06 | ) | (0.32 | ) | |||||||
As reported (GAAP): | |||||||||||||||||||||
Return on average assets | 0.99 | % | 0.96 | % | 0.84 | % | 0.92 | % | 1.05 | % | 0.03 | (0.06 | ) | ||||||||
Return on average tangible assets | 1.08 | % | 1.05 | % | 0.92 | % | 1.00 | % | 1.14 | % | 0.03 | (0.06 | ) | ||||||||
Return on average common equity | 5.98 | % | 5.77 | % | 5.02 | % | 5.59 | % | 6.28 | % | 0.21 | (0.30 | ) | ||||||||
Return on average tangible common equity | 11.52 | % | 11.18 | % | 9.76 | % | 11.08 | % | 12.46 | % | 0.34 | (0.94 | ) | ||||||||
Efficiency ratio – Consolidated | 64.91 | % | 67.32 | % | 68.74 | % | 68.23 | % | 63.10 | % | (2.41 | ) | 1.81 | ||||||||
Efficiency ratio – Bank | 62.99 | % | 65.71 | % | 67.09 | % | 66.23 | % | 61.63 | % | (2.72 | ) | 1.36 | ||||||||
Operating basis (non-GAAP): (2) | |||||||||||||||||||||
Return on average assets | 1.07 | % | 1.21 | % | 1.01 | % | 1.04 | % | 1.16 | % | (0.14 | ) | (0.09 | ) | |||||||
Return on average tangible assets | 1.17 | % | 1.32 | % | 1.10 | % | 1.13 | % | 1.26 | % | (0.15 | ) | (0.09 | ) | |||||||
Return on average common equity | 6.45 | % | 7.25 | % | 6.03 | % | 6.34 | % | 6.94 | % | (0.80 | ) | (0.49 | ) | |||||||
Return on average tangible common equity | 12.43 | % | 14.05 | % | 11.71 | % | 12.56 | % | 13.78 | % | (1.62 | ) | (1.35 | ) | |||||||
Efficiency ratio – Consolidated | 62.43 | % | 59.74 | % | 63.38 | % | 64.23 | % | 59.79 | % | 2.69 | 2.64 | |||||||||
Efficiency ratio – Bank | 61.05 | % | 58.46 | % | 62.09 | % | 62.61 | % | 58.65 | % | 2.59 | 2.40 | |||||||||
(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 2015 Results
October 21, 2015
Page 18
Umpqua Holdings Corporation | |||||||||
Selected Ratios | |||||||||
(Unaudited) | |||||||||
Nine Months Ended | % Change | ||||||||
Sep 30, 2015 | Sep 30, 2014 | Year over Year | |||||||
Average Rates: | |||||||||
Yield on loans and leases | 5.46 | % | 5.81 | % | (0.35 | ) | |||
Yield on loans held for sale | 3.73 | % | 4.07 | % | (0.34 | ) | |||
Yield on taxable investments | 2.05 | % | 2.25 | % | (0.20 | ) | |||
Yield on tax-exempt investments (1) | 5.10 | % | 5.25 | % | (0.15 | ) | |||
Yield on interest bearing cash and temporary investments | 0.25 | % | 0.25 | % | — | ||||
Total yield on earning assets (1) | 4.78 | % | 5.04 | % | (0.26 | ) | |||
Cost of interest bearing deposits | 0.24 | % | 0.23 | % | 0.01 | ||||
Cost of securities sold under agreements | |||||||||
to repurchase and fed funds purchased | 0.06 | % | 0.13 | % | (0.07 | ) | |||
Cost of term debt | 1.51 | % | 1.64 | % | (0.13 | ) | |||
Cost of junior subordinated debentures | 3.88 | % | 3.91 | % | (0.03 | ) | |||
Total cost of interest bearing liabilities | 0.41 | % | 0.41 | % | — | ||||
Net interest spread (1) | 4.37 | % | 4.63 | % | (0.26 | ) | |||
Net interest margin – Consolidated (1) | 4.48 | % | 4.74 | % | (0.26 | ) | |||
Net interest margin – Bank (1) | 4.55 | % | 4.81 | % | (0.26 | ) | |||
As reported (GAAP): | |||||||||
Return on average assets | 0.93 | % | 0.70 | % | 0.23 | ||||
Return on average tangible assets | 1.02 | % | 0.76 | % | 0.26 | ||||
Return on average common equity | 5.59 | % | 4.31 | % | 1.28 | ||||
Return on average tangible common equity | 10.83 | % | 8.37 | % | 2.46 | ||||
Efficiency ratio – Consolidated | 67.00 | % | 72.47 | % | (5.47 | ) | |||
Efficiency ratio – Bank | 65.27 | % | 70.86 | % | (5.59 | ) | |||
Operating basis (non-GAAP): (2) | |||||||||
Return on average assets | 1.10 | % | 1.06 | % | 0.04 | ||||
Return on average tangible assets | 1.19 | % | 1.15 | % | 0.04 | ||||
Return on average common equity | 6.58 | % | 6.51 | % | 0.07 | ||||
Return on average tangible common equity | 12.73 | % | 12.65 | % | 0.08 | ||||
Efficiency ratio – Consolidated | 61.80 | % | 61.55 | % | 0.25 | ||||
Efficiency ratio – Bank | 60.49 | % | 60.26 | % | 0.23 | ||||
(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 2015 Results
October 21, 2015
Page 19
Umpqua Holdings Corporation Average Balances | ||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||
Quarter Ended | % Change | |||||||||||||||||||||||||
(Dollars in thousands) | Sep 30, 2015 | Jun 30, 2015 | Mar 31, 2015 | Dec 31, 2014 | Sep 30, 2014 | Seq. Quarter | Year over Year | |||||||||||||||||||
Temporary investments & interest bearing cash | $ | 693,114 | $ | 861,775 | $ | 1,323,671 | $ | 1,368,726 | $ | 849,399 | (20 | )% | (18 | )% | ||||||||||||
Investment securities, taxable | 2,272,676 | 2,300,123 | 2,222,174 | 2,169,504 | 2,307,732 | (1 | )% | (2 | )% | |||||||||||||||||
Investment securities, tax-exempt | 311,984 | 317,655 | 323,852 | 326,858 | 330,902 | (2 | )% | (6 | )% | |||||||||||||||||
Loans held for sale | 357,905 | 368,112 | 262,777 | 255,830 | 274,834 | (3 | )% | 30 | % | |||||||||||||||||
Loans and leases | 16,155,792 | 15,731,298 | 15,334,555 | 15,300,425 | 15,200,893 | 3 | % | 6 | % | |||||||||||||||||
Total interest earning assets | 19,791,471 | 19,578,963 | 19,467,029 | 19,421,343 | 18,963,760 | 1 | % | 4 | % | |||||||||||||||||
Goodwill & other intangible assets, net | 1,838,740 | 1,841,535 | 1,842,390 | 1,844,084 | 1,841,668 | 0 | % | 0 | % | |||||||||||||||||
Total assets | 22,943,563 | 22,777,421 | 22,687,515 | 22,625,461 | 22,220,999 | 1 | % | 3 | % | |||||||||||||||||
Non-interest bearing demand deposits | 5,109,047 | 4,852,989 | 4,808,062 | 4,836,517 | 4,558,672 | 5 | % | 12 | % | |||||||||||||||||
Interest bearing deposits | 12,225,691 | 12,274,814 | 12,187,132 | 12,153,481 | 11,948,731 | 0 | % | 2 | % | |||||||||||||||||
Total deposits | 17,334,738 | 17,127,803 | 16,995,194 | 16,989,998 | 16,507,403 | 1 | % | 5 | % | |||||||||||||||||
Interest bearing liabilities | 13,798,350 | 13,880,474 | 13,838,515 | 13,833,126 | 13,681,205 | (1 | )% | 1 | % | |||||||||||||||||
Shareholders’ equity - common | 3,819,303 | 3,803,634 | 3,797,108 | 3,721,003 | 3,712,813 | 0 | % | 3 | % | |||||||||||||||||
Tangible common equity (1) | 1,980,563 | 1,962,099 | 1,954,718 | 1,876,919 | 1,871,145 | 1 | % | 6 | % | |||||||||||||||||
Umpqua Holdings Corporation Average Balances | |||||||||||
(Unaudited) | |||||||||||
Nine Months Ended | % Change | ||||||||||
(Dollars in thousands) | Sep 30, 2015 | Sep 30, 2014 | Year over Year | ||||||||
Temporary investments & interest bearing cash | $ | 957,210 | $ | 743,179 | 29 | % | |||||
Investment securities, taxable | 2,265,175 | 2,040,394 | 11 | % | |||||||
Investment securities, tax-exempt | 317,787 | 293,000 | 8 | % | |||||||
Loans held for sale | 329,946 | 188,646 | 75 | % | |||||||
Loans and leases | 15,743,558 | 12,229,795 | 29 | % | |||||||
Total interest earning assets | 19,613,676 | 15,495,014 | 27 | % | |||||||
Goodwill & other intangible assets, net | 1,840,875 | 1,428,705 | 29 | % | |||||||
Total assets | 22,803,723 | 18,004,316 | 27 | % | |||||||
Non-interest bearing demand deposits | 4,924,464 | 3,653,158 | 35 | % | |||||||
Interest bearing deposits | 12,229,354 | 9,883,824 | 24 | % | |||||||
Total deposits | 17,153,818 | 13,536,982 | 27 | % | |||||||
Interest bearing liabilities | 13,838,966 | 11,216,190 | 23 | % | |||||||
Shareholders’ equity - common | 3,806,719 | 2,941,341 | 29 | % | |||||||
Tangible common equity (1) | 1,965,844 | 1,512,636 | 30 | % | |||||||
(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 2015 Results
October 21, 2015
Page 20
Umpqua Holdings Corporation Residential Mortgage Banking Activity | ||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||
Quarter Ended | % Change | |||||||||||||||||||||||||
(Dollars in thousands) | Sep 30, 2015 | Jun 30, 2015 | Mar 31, 2015 | Dec 31, 2014 | Sep 30, 2014 | Seq. Quarter | Year over Year | |||||||||||||||||||
Residential mortgage servicing rights: | ||||||||||||||||||||||||||
Residential mortgage loans serviced for others | $ | 12,693,451 | $ | 12,302,866 | $ | 11,874,910 | $ | 11,590,310 | $ | 11,300,947 | 3 | % | 12 | % | ||||||||||||
MSR asset, at fair value | 124,814 | 127,206 | 116,365 | 117,259 | 118,725 | (2 | )% | 5 | % | |||||||||||||||||
MSR as % of serviced portfolio | 0.98 | % | 1.03 | % | 0.98 | % | 1.01 | % | 1.05 | % | ||||||||||||||||
Residential mortgage banking revenue: | ||||||||||||||||||||||||||
Origination and sale | $ | 26,904 | $ | 33,667 | $ | 31,498 | $ | 18,378 | $ | 24,097 | (20 | )% | 12 | % | ||||||||||||
Servicing | 7,240 | 6,770 | 6,457 | 6,306 | 6,178 | 7 | % | 17 | % | |||||||||||||||||
Change in fair value of MSR asset | (10,103 | ) | (423 | ) | (9,728 | ) | (8,195 | ) | (4,279 | ) | nm | 136 | % | |||||||||||||
Total | $ | 24,041 | $ | 40,014 | $ | 28,227 | $ | 16,489 | $ | 25,996 | (40 | )% | (8 | )% | ||||||||||||
Closed loan volume: | ||||||||||||||||||||||||||
Closed loan volume - portfolio | $ | 446,088 | $ | 446,712 | $ | 311,149 | $ | 319,779 | $ | 292,154 | 0 | % | 53 | % | ||||||||||||
Closed loan volume - for-sale | 843,720 | 997,225 | 862,155 | 622,133 | 695,877 | (15 | )% | 21 | % | |||||||||||||||||
Closed loan volume - total | $ | 1,289,808 | $ | 1,443,937 | $ | 1,173,304 | $ | 941,912 | $ | 988,031 | (11 | )% | 31 | % | ||||||||||||
Gain on sale margin: | ||||||||||||||||||||||||||
Based on for-sale volume | 3.19 | % | 3.38 | % | 3.65 | % | 2.95 | % | 3.46 | % | (0.19 | ) | (0.27 | ) | ||||||||||||
Nine Months Ended | % Change | |||||||||||||||||||||||||
Sep 30, 2015 | Sep 30, 2014 | Year over Year | ||||||||||||||||||||||||
Residential mortgage banking revenue: | ||||||||||||||||||||||||||
Origination and sale | $ | 92,069 | $ | 54,660 | 68 | % | ||||||||||||||||||||
Servicing | 20,467 | 14,508 | 41 | % | ||||||||||||||||||||||
Change in fair value of MSR asset | (20,254 | ) | (8,392 | ) | 141 | % | ||||||||||||||||||||
Total | $ | 92,282 | $ | 60,776 | 52 | % | ||||||||||||||||||||
Closed loan volume: | ||||||||||||||||||||||||||
Closed loan volume - portfolio | $ | 1,203,949 | $ | 652,202 | 85 | % | ||||||||||||||||||||
Closed loan volume - for-sale | 2,703,100 | 1,523,959 | 77 | % | ||||||||||||||||||||||
Closed loan volume - total | $ | 3,907,049 | $ | 2,176,161 | 80 | % | ||||||||||||||||||||
Gain on sale margin: | ||||||||||||||||||||||||||
Based on for-sale volume | 3.41 | % | 3.59 | % | (0.18 | ) | ||||||||||||||||||||
nm = not meaningful | ||||||||||||||||||||||||||
###
