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 FIRST QUARTER 2016 RESULTS
Net earnings of $47.5 million, or $0.22 per common share
Operating earnings1 of $63.9 million, or $0.29 per common share
12% annualized loan and lease growth (before sales and transfers) and 10% annualized deposit growth
Credit quality, capital and liquidity all remained strong
PORTLAND, Ore. – April 20, 2016 – Umpqua Holdings Corporation (NASDAQ: UMPQ) (the “Company”) reported net earnings available to common shareholders of $47.5 million for the first quarter of 2016, compared to $62.9 million for the fourth quarter of 2015 and $47.0 million for the first quarter of 2015. Earnings per diluted common share were $0.22 for the first quarter of 2016, compared to $0.28 for the fourth quarter of 2015 and $0.21 for the first quarter of 2015.
“Umpqua delivered solid financial performance in the first quarter; highlighted by robust growth in both loans and deposits, and reductions in core expenses,” said Ray Davis, president and CEO of Umpqua Holdings Corporation. “Our loan-to-deposit ratio was at 93 percent, as we continue to proactively manage asset concentrations and portfolio mix through diversified loan and lease growth and targeted sales. We continue to make good progress in advancing our technology, innovation, and customer delivery through our new subsidiary, Pivotus Ventures, and look forward to sharing further developments in the near future.”
Reconciliation of Net Earnings (GAAP) to Operating Earnings (non-GAAP):
The Company’s financial results include several significant items which have been excluded in the presentation of operating earnings, which is a non-GAAP financial measure. A summary of these items, and a reconciliation of earnings available to common shareholders (GAAP) to operating earnings (non-GAAP), is presented below. More information is provided in the non-GAAP financial measures section of this release, which we urge you to read.
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 First Quarter 2016 Results
April 20, 2016
Page 2
Quarter Ended | ||||||||||||||||||||
(In thousands, except per share data) | Mar 31, 2016 | Dec 31, 2015 | Sep 30, 2015 | Jun 30, 2015 | Mar 31, 2015 | |||||||||||||||
Net earnings available to common shareholders | $ | 47,540 | $ | 62,923 | $ | 57,523 | $ | 54,691 | $ | 47,045 | ||||||||||
Adjustments: | ||||||||||||||||||||
Merger related expenses | 3,450 | 3,712 | 5,991 | 21,797 | 14,082 | |||||||||||||||
Net loss on junior subordinated debentures carried at fair value | 1,572 | 1,589 | 1,590 | 1,572 | 1,555 | |||||||||||||||
Loss from change in fair value of MSR asset | 20,625 | 469 | 10,103 | 423 | 9,728 | |||||||||||||||
Loss (gain) from change in fair value of swap derivative | 1,793 | (715 | ) | 1,181 | (1,408 | ) | 781 | |||||||||||||
Gain on investment securities, net | (696 | ) | (2,567 | ) | (220 | ) | (19 | ) | (116 | ) | ||||||||||
Goodwill impairment | 142 | — | — | — | — | |||||||||||||||
Exit or disposal costs | 347 | — | — | — | — | |||||||||||||||
Total pre-tax adjustments | 27,233 | 2,488 | 18,645 | 22,365 | 26,030 | |||||||||||||||
Income tax effect (1) | (10,836 | ) | (995 | ) | (7,458 | ) | (8,946 | ) | (10,412 | ) | ||||||||||
Net adjustments | 16,397 | 1,493 | 11,187 | 13,419 | 15,618 | |||||||||||||||
Operating earnings | $ | 63,937 | $ | 64,416 | $ | 68,710 | $ | 68,110 | $ | 62,663 | ||||||||||
Earnings per diluted share: | ||||||||||||||||||||
Earnings available to common shareholders | $ | 0.22 | $ | 0.28 | $ | 0.26 | $ | 0.25 | $ | 0.21 | ||||||||||
Operating earnings | $ | 0.29 | $ | 0.29 | $ | 0.31 | $ | 0.31 | $ | 0.28 | ||||||||||
(1) Income tax effect of pro forma operating earnings adjustments at 40% for tax-deductible items. | ||||||||||||||||||||
Financial Highlights (compared to prior quarter):
• | Net earnings decreased, while operating earnings1 remained flat: |
◦ | Net interest income decreased by $2.1 million, driven by one fewer day in the quarter and a 3 basis point decline in net interest margin; |
◦ | Non-interest income decreased by $23.4 million, reflecting a charge of $20.6 million related to negative fair value adjustments to the mortgage servicing rights (“MSR”) asset and a charge of $1.8 million related to a decline in the fair value of debt capital market swap derivatives, both driven by the decline in long-term interest rates during the quarter. Excluding the impact of non-operating items1, total non-interest income increased by $1.1 million, driven primarily by higher mortgage banking revenue; |
◦ | Non-interest expense decreased by $1.9 million. Excluding the impact of non-operating items1, total non-interest expense decreased by $2.1 million, driven by lower core expenses in most categories, partially offset by higher seasonal payroll taxes and a higher loss on other real estate owned; |
• | Strong balance sheet: |
◦ | Net loan and lease growth of $94.1 million, or 2% annualized, including $139.1 million of loan sales and $256.0 million of loans transferred to held for sale. Gross loan and lease growth (prior to the impact of loan sales and transfers) of $489.2 million, or 12% annualized; |
◦ | Deposit growth of $455.8 million, or 10% annualized; |
◦ | Loan to deposit ratio decreased to 93%; |
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 First Quarter 2016 Results
April 20, 2016
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• | Prudently managed capital: |
◦ | Book value per share increased by 1% sequentially to $17.62 per share and tangible book value per share1 increased by 2% sequentially to $9.30; |
◦ | Estimated total risk-based capital ratio of 14.2% and estimated Tier 1 common to risk weighted assets ratio of 11.2%; |
◦ | Paid quarterly cash dividend of $0.16 per common share; and |
◦ | Repurchased 235,000 shares of common stock for $3.5 million. |
Balance Sheet
Total consolidated assets were $23.9 billion as of March 31, 2016, compared to $23.4 billion as of December 31, 2015 and $23.0 billion as of March 31, 2015. Including secured off-balance sheet lines of credit, the Company had total available liquidity of $8.0 billion as of March 31, 2016, representing 33% of total assets and 44% of total deposits.
Gross loans and leases were $16.9 billion as of March 31, 2016, an increase of $94.1 million, or 2% annualized, from $16.8 billion as of December 31, 2015. During the first quarter of 2016, the Company sold $129.4 million of multi-family loans and $9.7 million of purchase credit impaired commercial real estate loans. In addition, $170.8 million of portfolio residential mortgage loans and $85.2 million of multi-family loans were transferred to held for sale, and are expected to be sold during the second quarter of 2016. Excluding the combined impact of the loan sales and transfers to held for sale, gross loan growth was $489.2 million, or 12% annualized.
Total deposits were $18.2 billion as of March 31, 2016, an increase of $455.8 million, or 10% annualized, from $17.7 billion as of December 31, 2015. This increase was primarily attributable to growth in demand, savings and money market deposits.
Net Interest Income
Net interest income was down $2.1 million from the prior quarter, driven primarily by one less day in the quarter and a 3 basis point decrease in net interest margin. These were partially offset by balance sheet growth and a $3.4 million linked quarter increase in the level of interest income arising from the accretion of the credit discount recorded on loans acquired from Sterling.
The Company’s net interest margin was 4.34% for the first quarter of 2016, down from 4.37% for the fourth quarter of 2015. This decrease reflects lower average yields on interest-earning assets, as well as a 3 basis point increase in the cost of interest-bearing liabilities, partially offset by the increase in the level of accretion of the credit discount.
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 first quarter of 2016, the Company reported $16.5 million of accretion related to the Sterling credit discount in interest income, as compared to $13.1 million in the prior quarter. Of the current quarter's accretion, $6.5 million was accelerated from purchased credit impaired loan pools, driven by the sale of a small pool of impaired loans. As of March 31, 2016, the purchased non-credit impaired loans had approximately $65.1 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 $38.8 million of remaining total discount.
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 First Quarter 2016 Results
April 20, 2016
Page 4
The allowance for loan and lease losses was $130.2 million, or 0.77% of loans and leases, as of March 31, 2016. To provide better comparability to prior periods, this pro-forma ratio would have been approximately 1.4% 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 1.5% as of December 31, 2015.
The provision for loan and lease losses was $4.8 million for the first quarter of 2016, a slight increase from the prior quarter. Charge-offs, net of recoveries, were $4.9 million for the first quarter of 2016, compared to $4.4 million in the prior quarter.
Non-performing assets increased to $72.6 million, or 0.30% of total assets, as of March 31, 2016, compared to $66.7 million, or 0.29% of total assets, as of December 31, 2015. This increase was attributable to a group of delinquent Ginnie Mae residential mortgage loans, which were repurchased out of the servicing pool to be mitigated internally.
Non-interest Income
Total reported non-interest income was $46.0 million for the first quarter of 2016, down $23.4 million from the prior quarter. The current quarter non-interest income included a charge of $20.6 million related to negative fair value adjustments to the MSR asset, attributable to the decline in long-term interest rates during the quarter, and its impact on the prepayment speed assumption for the MSR asset. Also included was a charge of $1.8 million related to a decline in the fair value of debt capital market swap derivatives, driven by the decline in long-term interest rates during the quarter.
On an operating basis1, non-interest income increased by $1.1 million from the prior quarter, driven primarily by higher revenue from the origination and sale of residential mortgages. Home lending gain on sale margin increased to 3.72%, as compared to 3.19% in the prior quarter. For sale mortgage originations decreased by 4% from the prior quarter level, reflecting normal seasonality but partially offset by an increase in refinance activity due to the decline in long-term interest rates. Of the current quarter’s mortgage production, 58% related to purchase activity, as compared to 63% for the prior quarter and 45% for the same period in the prior year.
Revenue related to the servicing of residential mortgage loans increased by 1% from the prior quarter, and has increased by 18% from the same period in the prior year, consistent with the growth in residential mortgage loans serviced for others.
Non-interest Expense
Non-interest expense was $184.0 million for the first quarter of 2016, which included $3.5 million of merger-related expenses. This compares to $185.9 million, including $3.7 million of merger-related expenses for the fourth quarter of 2015.
On an operating basis1, non-interest expense decreased by $2.1 million from the prior quarter. This decrease was primarily driven by lower occupancy, marketing and other expense, and was partially offset by a $1.6 million linked quarter increase in loss on other real estate owned. Salaries and benefits expense in the first quarter of 2016 included a $3.4 million increase in seasonal payroll taxes.
Capital
As of March 31, 2016, the Company’s book value per share increased to $17.62, from $17.48 in the prior quarter, and its tangible book value per common share1 increased to $9.30, from $9.16 in the prior quarter. During the first quarter of 2016, the Company repurchased 235,000 shares of common stock for $3.5 million.
The Company’s estimated total risk-based capital ratio was 14.2% and its estimated Tier 1 common to risk weighted
assets ratio was 11.2% as of March 31, 2016, consistent with the prior quarter level. The Company remains above current “well-capitalized” regulatory minimums. The regulatory capital ratios as of March 31, 2016 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 First Quarter 2016 Results
April 20, 2016
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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 incurs significant expenses related to the completion and integration of mergers and acquisitions. It also 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. 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. The Company recognizes gains and losses related to the change in the fair value of its MSR, which are primarily tied to movements in interest rates, and are not indicative of the fundamental operating activities for the period. It also recognizes gains or losses related to the change in the fair value of its swap derivatives, which are driven by movements in interest rates and are beyond our control. On occasion, the Company may sell certain securities in its investment portfolio, and recognize an associated gain or loss, which can be highly discretionary based on the timing of the sales, market opportunities, and interest rates, and therefore are not reflective of the Company's operating performance. The Company also may incur expenses related to the exit or disposal of certain business activities, such as the consolidation of bank branches, which do not reflect the on-going operating performance of the Company. 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 after-tax impact of merger-related expenses, gains or losses on junior subordinated debentures measured at fair value, gains or losses from the change in fair value of the MSR, gains or losses from the change in fair value of the swap derivative, net gains or losses in investment securities, exit or disposal costs and other charges related to business combinations such as goodwill impairment charges or bargain purchase gains. The Company defines operating earnings as earnings available to common shareholders before these items, and calculates 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 First Quarter 2016 Results
April 20, 2016
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) | Mar 31, 2016 | Dec 31, 2015 | Sep 30, 2015 | Jun 30, 2015 | Mar 31, 2015 | Seq. Quarter | Year over Year | |||||||||||||||||||
Net earnings available to common shareholders | $ | 47,540 | $ | 62,923 | $ | 57,523 | $ | 54,691 | $ | 47,045 | (24 | )% | 1 | % | ||||||||||||
Adjustments: | ||||||||||||||||||||||||||
Merger related expenses | 3,450 | 3,712 | 5,991 | 21,797 | 14,082 | (7 | )% | (76 | )% | |||||||||||||||||
Net loss on junior subordinated debentures carried at fair value | 1,572 | 1,589 | 1,590 | 1,572 | 1,555 | (1 | )% | 1 | % | |||||||||||||||||
Loss from change in fair value of MSR asset | 20,625 | 469 | 10,103 | 423 | 9,728 | nm | 112 | % | ||||||||||||||||||
Loss (gain) from change in fair value of swap derivative | 1,793 | (715 | ) | 1,181 | (1,408 | ) | 781 | nm | 130 | % | ||||||||||||||||
Gain on investment securities, net | (696 | ) | (2,567 | ) | (220 | ) | (19 | ) | (116 | ) | (73 | )% | 500 | % | ||||||||||||
Goodwill impairment | 142 | — | — | — | — | nm | nm | |||||||||||||||||||
Exit or disposal costs | 347 | — | — | — | — | nm | nm | |||||||||||||||||||
Total pre-tax adjustments | 27,233 | 2,488 | 18,645 | 22,365 | 26,030 | 995 | % | 5 | % | |||||||||||||||||
Income tax effect (1) | (10,836 | ) | (995 | ) | (7,458 | ) | (8,946 | ) | (10,412 | ) | 989 | % | 4 | % | ||||||||||||
Net adjustments | 16,397 | 1,493 | 11,187 | 13,419 | 15,618 | 998 | % | 5 | % | |||||||||||||||||
Operating earnings | $ | 63,937 | $ | 64,416 | $ | 68,710 | $ | 68,110 | $ | 62,663 | (1 | )% | 2 | % | ||||||||||||
Earnings per diluted share: | ||||||||||||||||||||||||||
Earnings available to common shareholders | $ | 0.22 | $ | 0.28 | $ | 0.26 | $ | 0.25 | $ | 0.21 | (21 | )% | 5 | % | ||||||||||||
Operating earnings | $ | 0.29 | $ | 0.29 | $ | 0.31 | $ | 0.31 | $ | 0.28 | 0 | % | 4 | % | ||||||||||||
(1) Income tax effect of pro forma operating earnings adjustments at 40% for tax-deductible items. | ||||||||||||||||||||||||||
nm = not meaningful. | ||||||||||||||||||||||||||
Umpqua Reports First Quarter 2016 Results
April 20, 2016
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The following tables provide the reconciliation of non-interest income (GAAP) to non-interest income, on an operating basis, (non-GAAP), and non-interest expense (GAAP) to non-interest expense, on an operating basis, (non-GAAP) for the periods presented:
Quarter Ended | ||||||||||||||||||||
(Dollars in thousands) | Mar 31, 2016 | Dec 31, 2015 | Sep 30, 2015 | Jun 30, 2015 | Mar 31, 2015 | |||||||||||||||
Non-interest income (GAAP) | $ | 45,951 | $ | 69,345 | $ | 61,372 | $ | 81,102 | $ | 63,905 | ||||||||||
Adjustments: | ||||||||||||||||||||
Net loss on junior subordinated debentures carried at fair value | 1,572 | 1,589 | 1,590 | 1,572 | 1,555 | |||||||||||||||
Loss from change in fair value of MSR asset | 20,625 | 469 | 10,103 | 423 | 9,728 | |||||||||||||||
Loss (gain) from change in fair value of swap derivative | 1,793 | (715 | ) | 1,181 | (1,408 | ) | 781 | |||||||||||||
Gain on investment securities, net | (696 | ) | (2,567 | ) | (220 | ) | (19 | ) | (116 | ) | ||||||||||
Non-interest income (operating basis) | $ | 69,245 | $ | 68,121 | $ | 74,026 | $ | 81,670 | $ | 75,853 | ||||||||||
Quarter Ended | ||||||||||||||||||||
Mar 31, 2016 | Dec 31, 2015 | Sep 30, 2015 | Jun 30, 2015 | Mar 31, 2015 | ||||||||||||||||
Non-interest expense (GAAP) | $ | 183,989 | $ | 185,911 | 183,194 | $ | 201,918 | $ | 192,619 | |||||||||||
Adjustments: | ||||||||||||||||||||
Merger related expenses | (3,450 | ) | (3,712 | ) | (5,991 | ) | (21,797 | ) | (14,082 | ) | ||||||||||
Goodwill impairment | (142 | ) | — | — | — | — | ||||||||||||||
Exit or disposal costs | (347 | ) | — | — | — | — | ||||||||||||||
Non-interest expense (operating basis) | $ | 180,050 | $ | 182,199 | $ | 177,203 | $ | 180,121 | $ | 178,537 | ||||||||||
Umpqua Reports First Quarter 2016 Results
April 20, 2016
Page 8
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) | Mar 31, 2016 | Dec 31, 2015 | Sep 30, 2015 | Jun 30, 2015 | Mar 31, 2015 | |||||||||||||||
Total shareholders' equity | $ | 3,878,630 | $ | 3,849,334 | $ | 3,835,552 | $ | 3,804,179 | $ | 3,800,970 | ||||||||||
Subtract: | ||||||||||||||||||||
Goodwill and other intangible assets, net | 1,830,599 | 1,833,301 | 1,836,954 | 1,839,760 | 1,842,567 | |||||||||||||||
Tangible common shareholders' equity | $ | 2,048,031 | $ | 2,016,033 | $ | 1,998,598 | $ | 1,964,419 | $ | 1,958,403 | ||||||||||
Total assets | $ | 23,921,531 | $ | 23,387,205 | $ | 23,162,304 | $ | 22,793,331 | $ | 22,953,158 | ||||||||||
Subtract: | ||||||||||||||||||||
Goodwill and other intangible assets, net | 1,830,599 | 1,833,301 | 1,836,954 | 1,839,760 | 1,842,567 | |||||||||||||||
Tangible assets | $ | 22,090,932 | $ | 21,553,904 | $ | 21,325,350 | $ | 20,953,571 | $ | 21,110,591 | ||||||||||
Common shares outstanding at period end | 220,171 | 220,171 | 220,217 | 220,280 | 220,454 | |||||||||||||||
Common equity ratio | 16.21 | % | 16.46 | % | 16.56 | % | 16.69 | % | 16.56 | % | ||||||||||
Tangible common equity ratio | 9.27 | % | 9.35 | % | 9.37 | % | 9.38 | % | 9.28 | % | ||||||||||
Book value per common share | $ | 17.62 | $ | 17.48 | $ | 17.42 | $ | 17.27 | $ | 17.24 | ||||||||||
Tangible book value per common share | $ | 9.30 | $ | 9.16 | $ | 9.08 | $ | 8.92 | $ | 8.88 | ||||||||||
Umpqua Reports First Quarter 2016 Results
April 20, 2016
Page 9
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 first quarter 2016 earnings conference call on Thursday, April 21, 2016, 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 first quarter 2016 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 credit discount accretion related to loans acquired from Sterling Financial Corporation, loan and lease growth and loan sales, and planned investments and results of new initiatives. 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, prolonged low interest rate environment; unanticipated weakness in loan demand or loan pricing; deterioration in the economy; lack of strategic growth opportunities or our failure to execute on those opportunities; our inability to effectively manage problem credits; our ability to successfully develop and market new products and technology; changes in laws or regulations; and changes in general economic conditions.
Umpqua Reports First Quarter 2016 Results
April 20, 2016
Page 10
Umpqua Holdings Corporation | ||||||||||||||||||||||||||
Consolidated Statements of Income | ||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||
Quarter Ended | % Change | |||||||||||||||||||||||||
(In thousands, except per share data) | Mar 31, 2016 | Dec 31, 2015 | Sep 30, 2015 | Jun 30, 2015 | Mar 31, 2015 | Seq. Quarter | Year over Year | |||||||||||||||||||
Interest income: | ||||||||||||||||||||||||||
Loans and leases | $ | 217,928 | $ | 219,440 | $ | 218,975 | $ | 217,143 | $ | 213,875 | (1 | )% | 2 | % | ||||||||||||
Interest and dividends on investments: | ||||||||||||||||||||||||||
Taxable | 13,055 | 12,654 | 11,882 | 11,517 | 11,789 | 3 | % | 11 | % | |||||||||||||||||
Exempt from federal income tax | 2,235 | 2,363 | 2,393 | 2,410 | 2,481 | (5 | )% | (10 | )% | |||||||||||||||||
Dividends | 366 | 326 | 112 | 169 | 101 | 12 | % | 262 | % | |||||||||||||||||
Temporary investments & interest bearing deposits | 480 | 422 | 440 | 549 | 825 | 14 | % | (42 | )% | |||||||||||||||||
Total interest income | 234,064 | 235,205 | 233,802 | 231,788 | 229,071 | 0 | % | 2 | % | |||||||||||||||||
Interest expense: | ||||||||||||||||||||||||||
Deposits | 8,413 | 7,905 | 7,450 | 7,381 | 7,103 | 6 | % | 18 | % | |||||||||||||||||
Repurchase agreements | 36 | 39 | 43 | 43 | 48 | (8 | )% | (25 | )% | |||||||||||||||||
Term debt | 4,186 | 3,885 | 3,629 | 3,492 | 3,464 | 8 | % | 21 | % | |||||||||||||||||
Junior subordinated debentures | 3,727 | 3,542 | 3,465 | 3,406 | 3,337 | 5 | % | 12 | % | |||||||||||||||||
Total interest expense | 16,362 | 15,371 | 14,587 | 14,322 | 13,952 | 6 | % | 17 | % | |||||||||||||||||
Net interest income | 217,702 | 219,834 | 219,215 | 217,466 | 215,119 | (1 | )% | 1 | % | |||||||||||||||||
Provision for loan and lease losses | 4,823 | 4,545 | 8,153 | 11,254 | 12,637 | 6 | % | (62 | )% | |||||||||||||||||
Non-interest income: | ||||||||||||||||||||||||||
Service charges on deposits | 14,516 | 15,039 | 15,616 | 14,811 | 14,274 | (3 | )% | 2 | % | |||||||||||||||||
Brokerage revenue | 4,094 | 4,061 | 5,003 | 4,648 | 4,769 | 1 | % | (14 | )% | |||||||||||||||||
Residential mortgage banking revenue, net | 15,426 | 32,440 | 24,041 | 40,014 | 28,227 | (52 | )% | (45 | )% | |||||||||||||||||
Gain on investment securities, net | 696 | 2,567 | 220 | 19 | 116 | (73 | )% | 500 | % | |||||||||||||||||
Gain on loan sales | 2,371 | 1,729 | 5,212 | 8,711 | 6,728 | 37 | % | (65 | )% | |||||||||||||||||
Loss on junior subordinated debentures carried at fair value | (1,572 | ) | (1,589 | ) | (1,590 | ) | (1,572 | ) | (1,555 | ) | (1 | )% | 1 | % | ||||||||||||
BOLI income | 2,139 | 1,841 | 2,165 | 2,043 | 2,302 | 16 | % | (7 | )% | |||||||||||||||||
Other income | 8,281 | 13,257 | 10,705 | 12,428 | 9,044 | (38 | )% | (8 | )% | |||||||||||||||||
Total non-interest income | 45,951 | 69,345 | 61,372 | 81,102 | 63,905 | (34 | )% | (28 | )% | |||||||||||||||||
Non-interest expense: | ||||||||||||||||||||||||||
Salaries and employee benefits | 106,538 | 106,203 | 106,482 | 110,807 | 107,444 | 0 | % | (1 | )% | |||||||||||||||||
Occupancy and equipment, net | 38,295 | 38,722 | 37,235 | 34,868 | 32,150 | (1 | )% | 19 | % | |||||||||||||||||
Intangible amortization | 2,560 | 2,806 | 2,806 | 2,807 | 2,806 | (9 | )% | (9 | )% | |||||||||||||||||
FDIC assessments | 3,721 | 3,742 | 3,369 | 3,155 | 3,214 | (1 | )% | 16 | % | |||||||||||||||||
Loss (gain) on other real estate owned, net | 1,389 | (242 | ) | (158 | ) | 480 | 1,814 | nm | (23 | )% | ||||||||||||||||
Merger related expenses | 3,450 | 3,712 | 5,991 | 21,797 | 14,082 | (7 | )% | (76 | )% | |||||||||||||||||
Goodwill impairment | 142 | — | — | — | — | nm | nm | |||||||||||||||||||
Other expense | 27,894 | 30,968 | 27,469 | 28,004 | 31,109 | (10 | )% | (10 | )% | |||||||||||||||||
Total non-interest expense | 183,989 | 185,911 | 183,194 | 201,918 | 192,619 | (1 | )% | (4 | )% | |||||||||||||||||
Income before provision for income taxes | 74,841 | 98,723 | 89,240 | 85,396 | 73,768 | (24 | )% | 1 | % | |||||||||||||||||
Provision for income taxes | 27,272 | 35,704 | 31,633 | 30,612 | 26,639 | (24 | )% | 2 | % | |||||||||||||||||
Net income | 47,569 | 63,019 | 57,607 | 54,784 | 47,129 | (25 | )% | 1 | % | |||||||||||||||||
Dividends and undistributed earnings allocated to participating securities | 29 | 96 | 84 | 93 | 84 | (70 | )% | (65 | )% | |||||||||||||||||
Net earnings available to common shareholders | $ | 47,540 | $ | 62,923 | $ | 57,523 | $ | 54,691 | $ | 47,045 | (24 | )% | 1 | % | ||||||||||||
Weighted average basic shares outstanding | 220,227 | 220,202 | 220,297 | 220,463 | 220,349 | 0 | % | 0 | % | |||||||||||||||||
Weighted average diluted shares outstanding | 221,052 | 220,930 | 220,904 | 221,150 | 221,051 | 0 | % | 0 | % | |||||||||||||||||
Earnings per common share – basic | $ | 0.22 | $ | 0.29 | $ | 0.26 | $ | 0.25 | $ | 0.21 | (24 | )% | 5 | % | ||||||||||||
Earnings per common share – diluted | $ | 0.22 | $ | 0.28 | $ | 0.26 | $ | 0.25 | $ | 0.21 | (21 | )% | 5 | % | ||||||||||||
nm = not meaningful | ||||||||||||||||||||||||||
Umpqua Reports First Quarter 2016 Results
April 20, 2016
Page 11
Umpqua Holdings Corporation Consolidated Balance Sheets | ||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||
% Change | ||||||||||||||||||||||||||
(In thousands, except per share data) | Mar 31, 2016 | Dec 31, 2015 | Sep 30, 2015 | Jun 30, 2015 | Mar 31, 2015 | Seq. Quarter | Year over Year | |||||||||||||||||||
Assets: | ||||||||||||||||||||||||||
Cash and due from banks | $ | 299,871 | $ | 277,645 | $ | 283,773 | $ | 364,256 | $ | 292,558 | 8 | % | 2 | % | ||||||||||||
Interest bearing cash and temporary investments | 613,049 | 496,080 | 673,843 | 515,691 | 1,088,316 | 24 | % | (44 | )% | |||||||||||||||||
Investment securities: | ||||||||||||||||||||||||||
Trading, at fair value | 9,791 | 9,586 | 9,509 | 10,005 | 10,452 | 2 | % | (6 | )% | |||||||||||||||||
Available for sale, at fair value | 2,542,535 | 2,522,539 | 2,482,478 | 2,557,245 | 2,535,121 | 1 | % | 0 | % | |||||||||||||||||
Held to maturity, at amortized cost | 4,525 | 4,609 | 4,699 | 4,807 | 4,953 | (2 | )% | (9 | )% | |||||||||||||||||
Loans held for sale | 659,264 | 363,275 | 398,015 | 419,704 | 406,487 | 81 | % | 62 | % | |||||||||||||||||
Loans and leases | 16,941,428 | 16,847,360 | 16,387,934 | 15,974,197 | 15,548,957 | 1 | % | 9 | % | |||||||||||||||||
Allowance for loan and lease losses | (130,243 | ) | (130,322 | ) | (130,133 | ) | (127,071 | ) | (120,104 | ) | 0 | % | 8 | % | ||||||||||||
Loans and leases, net | 16,811,185 | 16,717,038 | 16,257,801 | 15,847,126 | 15,428,853 | 1 | % | 9 | % | |||||||||||||||||
Restricted equity securities | 47,545 | 46,949 | 46,904 | 46,917 | 117,218 | 1 | % | (59 | )% | |||||||||||||||||
Premises and equipment, net | 322,822 | 328,734 | 330,306 | 331,208 | 322,925 | (2 | )% | 0 | % | |||||||||||||||||
Goodwill | 1,787,651 | 1,787,793 | 1,788,640 | 1,788,640 | 1,788,640 | 0 | % | 0 | % | |||||||||||||||||
Other intangible assets, net | 42,948 | 45,508 | 48,314 | 51,120 | 53,927 | (6 | )% | (20 | )% | |||||||||||||||||
Residential mortgage servicing rights, at fair value | 117,172 | 131,817 | 124,814 | 127,206 | 116,365 | (11 | )% | 1 | % | |||||||||||||||||
Other real estate owned | 20,411 | 22,307 | 23,892 | 23,038 | 32,064 | (8 | )% | (36 | )% | |||||||||||||||||
Bank owned life insurance | 293,703 | 291,892 | 297,321 | 295,551 | 294,697 | 1 | % | 0 | % | |||||||||||||||||
Deferred tax assets, net | 108,865 | 138,082 | 149,320 | 181,245 | 198,778 | (21 | )% | (45 | )% | |||||||||||||||||
Other assets | 240,194 | 203,351 | 242,675 | 229,572 | 261,804 | 18 | % | (8 | )% | |||||||||||||||||
Total assets | $ | 23,921,531 | $ | 23,387,205 | $ | 23,162,304 | $ | 22,793,331 | $ | 22,953,158 | 2 | % | 4 | % | ||||||||||||
Liabilities: | ||||||||||||||||||||||||||
Deposits | $ | 18,162,974 | $ | 17,707,189 | $ | 17,467,024 | $ | 17,145,046 | $ | 17,222,566 | 3 | % | 5 | % | ||||||||||||
Securities sold under agreements to repurchase | 325,203 | 304,560 | 323,722 | 325,711 | 321,202 | 7 | % | 1 | % | |||||||||||||||||
Term debt | 903,382 | 888,769 | 889,358 | 889,997 | 965,675 | 2 | % | (6 | )% | |||||||||||||||||
Junior subordinated debentures, at fair value | 256,917 | 255,457 | 253,665 | 252,214 | 250,652 | 1 | % | 2 | % | |||||||||||||||||
Junior subordinated debentures, at amortized cost | 101,173 | 101,254 | 101,334 | 101,415 | 101,496 | 0 | % | 0 | % | |||||||||||||||||
Other liabilities | 293,252 | 280,642 | 291,649 | 274,769 | 290,597 | 4 | % | 1 | % | |||||||||||||||||
Total liabilities | 20,042,901 | 19,537,871 | 19,326,752 | 18,989,152 | 19,152,188 | 3 | % | 5 | % | |||||||||||||||||
Shareholders' equity: | ||||||||||||||||||||||||||
Common stock | 3,518,792 | 3,520,591 | 3,517,751 | 3,517,557 | 3,521,201 | 0 | % | 0 | % | |||||||||||||||||
Retained earnings | 343,421 | 331,301 | 303,729 | 281,573 | 260,128 | 4 | % | 32 | % | |||||||||||||||||
Accumulated other comprehensive income (loss) | 16,417 | (2,558 | ) | 14,072 | 5,049 | 19,641 | nm | (16 | )% | |||||||||||||||||
Total shareholders' equity | 3,878,630 | 3,849,334 | 3,835,552 | 3,804,179 | 3,800,970 | 1 | % | 2 | % | |||||||||||||||||
Total liabilities and shareholders' equity | $ | 23,921,531 | $ | 23,387,205 | $ | 23,162,304 | $ | 22,793,331 | $ | 22,953,158 | 2 | % | 4 | % | ||||||||||||
Common shares outstanding at period end | 220,171 | 220,171 | 220,217 | 220,280 | 220,454 | 0 | % | 0 | % | |||||||||||||||||
Book value per common share | $ | 17.62 | $ | 17.48 | $ | 17.42 | $ | 17.27 | $ | 17.24 | 1 | % | 2 | % | ||||||||||||
Tangible book value per common share | $ | 9.30 | $ | 9.16 | $ | 9.08 | $ | 8.92 | $ | 8.88 | 2 | % | 5 | % | ||||||||||||
Tangible equity - common | $ | 2,048,031 | $ | 2,016,033 | $ | 1,998,598 | $ | 1,964,419 | $ | 1,958,403 | 2 | % | 5 | % | ||||||||||||
Tangible common equity to tangible assets | 9.27 | % | 9.35 | % | 9.37 | % | 9.38 | % | 9.28 | % | (0.08 | ) | (0.01 | ) | ||||||||||||
nm = not meaningful | ||||||||||||||||||||||||||
Umpqua Reports First Quarter 2016 Results
April 20, 2016
Page 12
Umpqua Holdings Corporation | ||||||||||||||||||||||||||
Loan & Lease Portfolio | ||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||
(Dollars in thousands) | Mar 31, 2016 | Dec 31, 2015 | Sep 30, 2015 | Jun 30, 2015 | Mar 31, 2015 | % Change | ||||||||||||||||||||
Amount | Amount | Amount | Amount | Amount | Seq. Quarter | Year over Year | ||||||||||||||||||||
Loans & leases: | ||||||||||||||||||||||||||
Commercial real estate: | ||||||||||||||||||||||||||
Non-owner occupied term, net | $ | 3,165,154 | $ | 3,140,845 | $ | 3,148,288 | $ | 3,294,359 | $ | 3,303,629 | 1 | % | (4 | )% | ||||||||||||
Owner occupied term, net | 2,731,228 | 2,691,921 | 2,655,340 | 2,636,800 | 2,577,484 | 1 | % | 6 | % | |||||||||||||||||
Multifamily, net | 2,945,826 | 3,074,918 | 2,961,609 | 2,859,884 | 2,764,403 | (4 | )% | 7 | % | |||||||||||||||||
Commercial construction, net | 343,519 | 301,892 | 287,757 | 244,354 | 238,303 | 14 | % | 44 | % | |||||||||||||||||
Residential development, net | 121,025 | 99,459 | 94,380 | 76,734 | 81,160 | 22 | % | 49 | % | |||||||||||||||||
Commercial: | ||||||||||||||||||||||||||
Term, net | 1,437,992 | 1,425,009 | 1,398,346 | 1,374,528 | 1,411,043 | 1 | % | 2 | % | |||||||||||||||||
Lines of credit & other, net | 1,041,516 | 1,043,076 | 1,014,523 | 981,897 | 993,814 | 0 | % | 5 | % | |||||||||||||||||
Leases & equipment finance, net | 791,798 | 729,161 | 679,033 | 630,695 | 570,492 | 9 | % | 39 | % | |||||||||||||||||
Residential real estate: | ||||||||||||||||||||||||||
Mortgage, net | 2,865,445 | 2,890,223 | 2,740,228 | 2,533,042 | 2,330,325 | (1 | )% | 23 | % | |||||||||||||||||
Home equity lines & loans, net | 943,254 | 923,667 | 910,287 | 882,596 | 863,269 | 2 | % | 9 | % | |||||||||||||||||
Consumer & other, net | 554,671 | 527,189 | 498,143 | 459,308 | 415,035 | 5 | % | 34 | % | |||||||||||||||||
Total, net of deferred fees and costs | $ | 16,941,428 | $ | 16,847,360 | $ | 16,387,934 | $ | 15,974,197 | $ | 15,548,957 | 1 | % | 9 | % | ||||||||||||
Loan & leases mix: | ||||||||||||||||||||||||||
Commercial real estate: | ||||||||||||||||||||||||||
Non-owner occupied term, net | 19 | % | 19 | % | 19 | % | 20 | % | 20 | % | ||||||||||||||||
Owner occupied term, net | 16 | % | 16 | % | 16 | % | 17 | % | 17 | % | ||||||||||||||||
Multifamily, net | 17 | % | 18 | % | 17 | % | 17 | % | 17 | % | ||||||||||||||||
Commercial construction, net | 2 | % | 2 | % | 2 | % | 2 | % | 2 | % | ||||||||||||||||
Residential development, net | 1 | % | 1 | % | 1 | % | — | % | 1 | % | ||||||||||||||||
Commercial: | ||||||||||||||||||||||||||
Term, net | 8 | % | 9 | % | 9 | % | 9 | % | 9 | % | ||||||||||||||||
Lines of credit & other, net | 6 | % | 6 | % | 6 | % | 6 | % | 6 | % | ||||||||||||||||
Leases & equipment finance, net | 5 | % | 4 | % | 4 | % | 4 | % | 4 | % | ||||||||||||||||
Residential real estate: | ||||||||||||||||||||||||||
Mortgage, net | 17 | % | 17 | % | 17 | % | 16 | % | 15 | % | ||||||||||||||||
Home equity lines & loans, net | 6 | % | 5 | % | 6 | % | 6 | % | 6 | % | ||||||||||||||||
Consumer & other, net | 3 | % | 3 | % | 3 | % | 3 | % | 3 | % | ||||||||||||||||
Total | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | ||||||||||||||||
Umpqua Reports First Quarter 2016 Results
April 20, 2016
Page 13
Umpqua Holdings Corporation | ||||||||||||||||||||||||||
Deposits by Type/Core Deposits | ||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||
(Dollars in thousands) | Mar 31, 2016 | Dec 31, 2015 | Sep 30, 2015 | Jun 30, 2015 | Mar 31, 2015 | % Change | ||||||||||||||||||||
Amount | Amount | Amount | Amount | Amount | Seq. Quarter | Year over Year | ||||||||||||||||||||
Deposits: | ||||||||||||||||||||||||||
Demand, non-interest bearing | $ | 5,460,310 | $ | 5,318,591 | $ | 5,207,129 | $ | 4,927,526 | $ | 4,930,642 | 3 | % | 11 | % | ||||||||||||
Demand, interest bearing | 2,178,446 | 2,157,376 | 2,098,223 | 2,090,595 | 2,085,368 | 1 | % | 4 | % | |||||||||||||||||
Money market | 6,814,160 | 6,599,516 | 6,514,174 | 6,374,624 | 6,287,165 | 3 | % | 8 | % | |||||||||||||||||
Savings | 1,213,049 | 1,136,809 | 1,102,611 | 1,058,337 | 1,022,829 | 7 | % | 19 | % | |||||||||||||||||
Time | 2,497,009 | 2,494,897 | 2,544,887 | 2,693,964 | 2,896,562 | 0 | % | (14 | )% | |||||||||||||||||
Total | $ | 18,162,974 | $ | 17,707,189 | $ | 17,467,024 | $ | 17,145,046 | $ | 17,222,566 | 3 | % | 5 | % | ||||||||||||
Total core deposits (1) | $ | 16,559,943 | $ | 16,102,743 | $ | 15,940,229 | $ | 15,529,997 | $ | 15,304,001 | 3 | % | 8 | % | ||||||||||||
Deposit mix: | ||||||||||||||||||||||||||
Demand, non-interest bearing | 30 | % | 30 | % | 30 | % | 29 | % | 29 | % | ||||||||||||||||
Demand, interest bearing | 12 | % | 12 | % | 12 | % | 12 | % | 12 | % | ||||||||||||||||
Money market | 37 | % | 37 | % | 37 | % | 37 | % | 36 | % | ||||||||||||||||
Savings | 7 | % | 6 | % | 6 | % | 6 | % | 6 | % | ||||||||||||||||
Time | 14 | % | 15 | % | 15 | % | 16 | % | 17 | % | ||||||||||||||||
Total | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | ||||||||||||||||
Number of open accounts: | ||||||||||||||||||||||||||
Demand, non-interest bearing | 375,913 | 371,745 | 370,128 | 367,086 | 368,701 | |||||||||||||||||||||
Demand, interest bearing | 85,731 | 86,745 | 88,171 | 90,021 | 85,082 | |||||||||||||||||||||
Money market | 56,927 | 57,194 | 57,622 | 58,156 | 61,991 | |||||||||||||||||||||
Savings | 156,846 | 154,176 | 153,534 | 152,404 | 150,989 | |||||||||||||||||||||
Time | 47,794 | 47,672 | 48,168 | 49,983 | 52,179 | |||||||||||||||||||||
Total | 723,211 | 717,532 | 717,623 | 717,650 | 718,942 | |||||||||||||||||||||
Average balance per account: | ||||||||||||||||||||||||||
Demand, non-interest bearing | $ | 14.5 | $ | 14.3 | $ | 14.1 | $ | 13.4 | $ | 13.4 | ||||||||||||||||
Demand, interest bearing | 25.4 | 24.9 | 23.8 | 23.2 | 24.5 | |||||||||||||||||||||
Money market | 119.7 | 115.4 | 113.1 | 109.6 | 101.4 | |||||||||||||||||||||
Savings | 7.7 | 7.4 | 7.2 | 6.9 | 6.8 | |||||||||||||||||||||
Time | 52.2 | 52.3 | 52.8 | 53.9 | 55.5 | |||||||||||||||||||||
Total | $ | 25.1 | $ | 24.7 | $ | 24.3 | $ | 23.9 | $ | 24.0 | ||||||||||||||||
(1) Core deposits are defined as total deposits less time deposits greater than $100,000.
Umpqua Reports First Quarter 2016 Results
April 20, 2016
Page 14
Umpqua Holdings Corporation | ||||||||||||||||||||||||||
Credit Quality – Non-performing Assets | ||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||
Quarter Ended | % Change | |||||||||||||||||||||||||
(Dollars in thousands) | Mar 31, 2016 | Dec 31, 2015 | Sep 30, 2015 | Jun 30, 2015 | Mar 31, 2015 | Seq. Quarter | Year over Year | |||||||||||||||||||
Non-performing assets: | ||||||||||||||||||||||||||
Loans and leases on non-accrual status | $ | 30,045 | $ | 29,215 | $ | 30,989 | $ | 33,572 | $ | 40,246 | 3 | % | (25 | )% | ||||||||||||
Loans and leases past due 90+ days & accruing | 22,144 | 15,169 | 9,967 | 13,529 | 10,416 | 46 | % | 113 | % | |||||||||||||||||
Total non-performing loans and leases | 52,189 | 44,384 | 40,956 | 47,101 | 50,662 | 18 | % | 3 | % | |||||||||||||||||
Other real estate owned | 20,411 | 22,307 | 23,892 | 23,038 | 32,064 | (8 | )% | (36 | )% | |||||||||||||||||
Total | $ | 72,600 | $ | 66,691 | $ | 64,848 | $ | 70,139 | $ | 82,726 | 9 | % | (12 | )% | ||||||||||||
Performing restructured loans and leases | $ | 31,409 | $ | 31,355 | $ | 35,706 | $ | 37,023 | $ | 60,896 | 0 | % | (48 | )% | ||||||||||||
Loans and leases past due 31-89 days | $ | 29,054 | $ | 28,423 | $ | 28,919 | $ | 25,553 | $ | 20,488 | 2 | % | 42 | % | ||||||||||||
Loans and leases past due 31-89 days to total loans and leases | 0.17 | % | 0.17 | % | 0.18 | % | 0.16 | % | 0.13 | % | ||||||||||||||||
Non-performing loans and leases to total loans and leases | 0.31 | % | 0.26 | % | 0.25 | % | 0.29 | % | 0.33 | % | ||||||||||||||||
Non-performing assets to total assets | 0.30 | % | 0.29 | % | 0.28 | % | 0.31 | % | 0.36 | % | ||||||||||||||||
Umpqua Reports First Quarter 2016 Results
April 20, 2016
Page 15
Umpqua Holdings Corporation | ||||||||||||||||||||||||||
Credit Quality – Allowance for Loan and Lease Losses | ||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||
Quarter Ended | % Change | |||||||||||||||||||||||||
(Dollars in thousands) | Mar 31, 2016 | Dec 31, 2015 | Sep 30, 2015 | Jun 30, 2015 | Mar 31, 2015 | Seq. Quarter | Year over Year | |||||||||||||||||||
Allowance for loan and lease losses: | ||||||||||||||||||||||||||
Balance beginning of period | $ | 130,322 | $ | 130,133 | $ | 127,071 | $ | 120,104 | $ | 116,167 | ||||||||||||||||
Provision for loan and lease losses | 4,823 | 4,545 | 8,153 | 11,254 | 12,637 | 6 | % | (62 | )% | |||||||||||||||||
Charge-offs | (7,850 | ) | (7,108 | ) | (8,476 | ) | (7,442 | ) | (12,545 | ) | 10 | % | (37 | )% | ||||||||||||
Recoveries | 2,948 | 2,752 | 3,385 | 3,155 | 3,845 | 7 | % | (23 | )% | |||||||||||||||||
Net charge-offs | (4,902 | ) | (4,356 | ) | (5,091 | ) | (4,287 | ) | (8,700 | ) | 13 | % | (44 | )% | ||||||||||||
Total allowance for loan and lease losses | 130,243 | 130,322 | 130,133 | 127,071 | 120,104 | 0 | % | 8 | % | |||||||||||||||||
Reserve for unfunded commitments | 3,482 | 3,574 | 3,081 | 2,864 | 3,194 | (3 | )% | 9 | % | |||||||||||||||||
Total allowance for credit losses | $ | 133,725 | $ | 133,896 | $ | 133,214 | $ | 129,935 | $ | 123,298 | 0 | % | 8 | % | ||||||||||||
Net charge-offs to average loans and leases (annualized) | 0.12 | % | 0.10 | % | 0.13 | % | 0.11 | % | 0.23 | % | ||||||||||||||||
Recoveries to gross charge-offs | 37.55 | % | 38.72 | % | 39.94 | % | 42.39 | % | 30.65 | % | ||||||||||||||||
Allowance for loan and lease losses to loans and leases | 0.77 | % | 0.77 | % | 0.79 | % | 0.80 | % | 0.77 | % | ||||||||||||||||
Allowance for credit losses to loans and leases | 0.79 | % | 0.79 | % | 0.81 | % | 0.81 | % | 0.79 | % | ||||||||||||||||
Umpqua Reports First Quarter 2016 Results
April 20, 2016
Page 16
Umpqua Holdings Corporation | |||||||||||||||||||||
Selected Ratios | |||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||
Quarter Ended | % Change | ||||||||||||||||||||
Mar 31, 2016 | Dec 31, 2015 | Sep 30, 2015 | Jun 30, 2015 | Mar 31, 2015 | Seq. Quarter | Year over Year | |||||||||||||||
Average Rates: | |||||||||||||||||||||
Yield on loans and leases | 5.08 | % | 5.19 | % | 5.29 | % | 5.46 | % | 5.59 | % | (0.11 | ) | (0.51 | ) | |||||||
Yield on loans held for sale | 4.08 | % | 3.80 | % | 4.07 | % | 3.24 | % | 3.81 | % | 0.28 | 0.27 | |||||||||
Yield on taxable investments | 2.32 | % | 2.26 | % | 2.11 | % | 2.03 | % | 2.14 | % | 0.06 | 0.18 | |||||||||
Yield on tax-exempt investments (1) | 4.73 | % | 4.76 | % | 4.73 | % | 4.67 | % | 4.74 | % | (0.03 | ) | (0.01 | ) | |||||||
Yield on interest bearing cash and temporary investments | 0.54 | % | 0.28 | % | 0.25 | % | 0.26 | % | 0.25 | % | 0.26 | 0.29 | |||||||||
Total yield on earning assets (1) | 4.67 | % | 4.68 | % | 4.71 | % | 4.77 | % | 4.80 | % | (0.01 | ) | (0.13 | ) | |||||||
Cost of interest bearing deposits | 0.27 | % | 0.26 | % | 0.24 | % | 0.24 | % | 0.24 | % | 0.01 | 0.03 | |||||||||
Cost of securities sold under agreements | |||||||||||||||||||||
to repurchase and fed funds purchased | 0.05 | % | 0.05 | % | 0.05 | % | 0.05 | % | 0.06 | % | — | (0.01 | ) | ||||||||
Cost of term debt | 1.88 | % | 1.73 | % | 1.62 | % | 1.51 | % | 1.42 | % | 0.15 | 0.46 | |||||||||
Cost of junior subordinated debentures | 4.20 | % | 3.96 | % | 3.89 | % | 3.88 | % | 3.86 | % | 0.24 | 0.34 | |||||||||
Total cost of interest bearing liabilities | 0.47 | % | 0.44 | % | 0.42 | % | 0.41 | % | 0.41 | % | 0.03 | 0.06 | |||||||||
Net interest spread (1) | 4.20 | % | 4.24 | % | 4.29 | % | 4.36 | % | 4.39 | % | (0.04 | ) | (0.19 | ) | |||||||
Net interest margin – Consolidated (1) | 4.34 | % | 4.37 | % | 4.42 | % | 4.48 | % | 4.51 | % | (0.03 | ) | (0.17 | ) | |||||||
Net interest margin – Bank (1) | 4.41 | % | 4.44 | % | 4.49 | % | 4.55 | % | 4.57 | % | (0.03 | ) | (0.16 | ) | |||||||
As reported (GAAP): | |||||||||||||||||||||
Return on average assets | 0.82 | % | 1.08 | % | 0.99 | % | 0.96 | % | 0.84 | % | (0.26 | ) | (0.02 | ) | |||||||
Return on average tangible assets | 0.89 | % | 1.17 | % | 1.08 | % | 1.05 | % | 0.92 | % | (0.28 | ) | (0.03 | ) | |||||||
Return on average common equity | 4.93 | % | 6.49 | % | 5.97 | % | 5.76 | % | 5.02 | % | (1.56 | ) | (0.09 | ) | |||||||
Return on average tangible common equity | 9.34 | % | 12.41 | % | 11.51 | % | 11.16 | % | 9.73 | % | (3.07 | ) | (0.39 | ) | |||||||
Efficiency ratio – Consolidated | 69.48 | % | 64.02 | % | 65.00 | % | 67.35 | % | 68.71 | % | 5.46 | 0.77 | |||||||||
Efficiency ratio – Bank | 67.29 | % | 62.40 | % | 63.08 | % | 65.74 | % | 67.07 | % | 4.89 | 0.22 | |||||||||
Operating basis (non-GAAP): (2) | |||||||||||||||||||||
Return on average assets | 1.10 | % | 1.10 | % | 1.19 | % | 1.20 | % | 1.12 | % | — | (0.02 | ) | ||||||||
Return on average tangible assets | 1.19 | % | 1.20 | % | 1.29 | % | 1.30 | % | 1.22 | % | (0.01 | ) | (0.03 | ) | |||||||
Return on average common equity | 6.63 | % | 6.64 | % | 7.13 | % | 7.17 | % | 6.68 | % | (0.01 | ) | (0.05 | ) | |||||||
Return on average tangible common equity | 12.57 | % | 12.70 | % | 13.74 | % | 13.89 | % | 12.96 | % | (0.13 | ) | (0.39 | ) | |||||||
Efficiency ratio – Consolidated | 62.49 | % | 63.00 | % | 60.17 | % | 59.96 | % | 61.09 | % | (0.51 | ) | 1.40 | ||||||||
Efficiency ratio – Bank | 60.89 | % | 61.72 | % | 58.84 | % | 58.68 | % | 59.84 | % | (0.83 | ) | 1.05 | ||||||||
(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 the after-tax impact of merger-related expenses, gains or losses on junior subordinated debentures carried at fair value, gains or losses from the change in fair value of the MSR, gains or losses from the change in fair value of the swap derivative, net gains or losses in investment securities, exit or disposal costs, bargain purchase gain on acquisitions and goodwill impairment.
Umpqua Reports First Quarter 2016 Results
April 20, 2016
Page 17
Umpqua Holdings Corporation Average Balances | ||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||
Quarter Ended | % Change | |||||||||||||||||||||||||
(Dollars in thousands) | Mar 31, 2016 | Dec 31, 2015 | Sep 30, 2015 | Jun 30, 2015 | Mar 31, 2015 | Seq. Quarter | Year over Year | |||||||||||||||||||
Temporary investments & interest bearing cash | $ | 356,674 | $ | 608,250 | $ | 693,114 | $ | 861,775 | $ | 1,323,671 | (41 | )% | (73 | )% | ||||||||||||
Investment securities, taxable | 2,311,589 | 2,293,429 | 2,276,698 | 2,303,879 | 2,227,301 | 1 | % | 4 | % | |||||||||||||||||
Investment securities, tax-exempt | 287,085 | 302,443 | 307,960 | 313,899 | 318,643 | (5 | )% | (10 | )% | |||||||||||||||||
Loans held for sale | 297,732 | 334,428 | 357,905 | 368,111 | 272,450 | (11 | )% | 9 | % | |||||||||||||||||
Loans and leases | 17,007,929 | 16,514,740 | 16,155,395 | 15,730,269 | 15,336,742 | 3 | % | 11 | % | |||||||||||||||||
Total interest earning assets | 20,261,009 | 20,053,290 | 19,791,072 | 19,577,933 | 19,478,807 | 1 | % | 4 | % | |||||||||||||||||
Goodwill & other intangible assets, net | 1,832,046 | 1,835,821 | 1,838,740 | 1,841,535 | 1,842,390 | 0 | % | (1 | )% | |||||||||||||||||
Total assets | 23,415,252 | 23,196,213 | 22,946,464 | 22,781,479 | 22,692,183 | 1 | % | 3 | % | |||||||||||||||||
Non-interest bearing demand deposits | 5,289,810 | 5,285,992 | 5,108,430 | 4,852,455 | 4,808,891 | 0 | % | 10 | % | |||||||||||||||||
Interest bearing deposits | 12,411,005 | 12,249,333 | 12,225,691 | 12,274,814 | 12,190,835 | 1 | % | 2 | % | |||||||||||||||||
Total deposits | 17,700,815 | 17,535,325 | 17,334,121 | 17,127,269 | 16,999,726 | 1 | % | 4 | % | |||||||||||||||||
Interest bearing liabilities | 13,976,678 | 13,812,644 | 13,798,350 | 13,880,480 | 13,842,219 | 1 | % | 1 | % | |||||||||||||||||
Shareholders’ equity - common | 3,878,540 | 3,847,587 | 3,822,201 | 3,807,703 | 3,804,036 | 1 | % | 2 | % | |||||||||||||||||
Tangible common equity (1) | 2,046,494 | 2,011,766 | 1,983,461 | 1,966,168 | 1,961,646 | 2 | % | 4 | % | |||||||||||||||||
(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 First Quarter 2016 Results
April 20, 2016
Page 18
Umpqua Holdings Corporation Residential Mortgage Banking Activity | ||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||
Quarter Ended | % Change | |||||||||||||||||||||||||
(Dollars in thousands) | Mar 31, 2016 | Dec 31, 2015 | Sep 30, 2015 | Jun 30, 2015 | Mar 31, 2015 | Seq. Quarter | Year over Year | |||||||||||||||||||
Residential mortgage servicing rights: | ||||||||||||||||||||||||||
Residential mortgage loans serviced for others | $ | 13,304,468 | $ | 13,047,266 | $ | 12,693,451 | $ | 12,302,866 | $ | 11,874,910 | 2 | % | 12 | % | ||||||||||||
MSR asset, at fair value | 117,172 | 131,817 | 124,814 | 127,206 | 116,365 | (11 | )% | 1 | % | |||||||||||||||||
MSR as % of serviced portfolio | 0.88 | % | 1.01 | % | 0.98 | % | 1.03 | % | 0.98 | % | ||||||||||||||||
Residential mortgage banking revenue: | ||||||||||||||||||||||||||
Origination and sale | $ | 28,409 | $ | 25,363 | $ | 26,904 | $ | 33,667 | $ | 31,498 | 12 | % | (10 | )% | ||||||||||||
Servicing | 7,642 | 7,546 | 7,240 | 6,770 | 6,457 | 1 | % | 18 | % | |||||||||||||||||
Change in fair value of MSR asset | (20,625 | ) | (469 | ) | (10,103 | ) | (423 | ) | (9,728 | ) | nm | 112 | % | |||||||||||||
Total | $ | 15,426 | $ | 32,440 | $ | 24,041 | $ | 40,014 | $ | 28,227 | (52 | )% | (45 | )% | ||||||||||||
Closed loan volume: | ||||||||||||||||||||||||||
Closed loan volume - portfolio | $ | 332,918 | $ | 352,465 | $ | 446,088 | $ | 446,712 | $ | 311,149 | (6 | )% | 7 | % | ||||||||||||
Closed loan volume - for-sale | 764,076 | 794,820 | 843,720 | 997,225 | 862,155 | (4 | )% | (11 | )% | |||||||||||||||||
Closed loan volume - total | $ | 1,096,994 | $ | 1,147,285 | $ | 1,289,808 | $ | 1,443,937 | $ | 1,173,304 | (4 | )% | (7 | )% | ||||||||||||
Gain on sale margin: | ||||||||||||||||||||||||||
Based on for-sale volume | 3.72 | % | 3.19 | % | 3.19 | % | 3.38 | % | 3.65 | % | 0.53 | 0.07 | ||||||||||||||
nm = not meaningful | ||||||||||||||||||||||||||
###
