EX-99.1 2 umpqq32015ex991earningsrel.htm PRESS RELEASE ANNOUNCING THIRD QUARTER 2015 FINANCIAL RESULTS Exhibit

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
Page 2


◦
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
 
 
 
 
 
 
 
 
 
 
 
 
 
 



###