UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities and Exchange Act of 1934
Date of Report: January 27, 2016
(Date of earliest event reported)
Umpqua Holdings Corporation
(Exact Name of Registrant as Specified in Its Charter)
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OREGON (State or Other Jurisdiction of Incorporation or Organization) | 001-34624 (Commission File Number) | 93-1261319 (I.R.S. Employer Identification Number) |
One SW Columbia Street, Suite 1200
Portland, Oregon 97258
(address of Principal Executive Offices)(Zip Code)
(503) 727-4100
(Registrant's Telephone Number, Including Area Code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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[ ] | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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[ ] | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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[ ] | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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[ ] | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
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Item 2.02 | Results of Operations and Financial Condition. |
On January 27, 2016, Umpqua Holdings Corporation issued a press release announcing fourth quarter and full year 2015 financial results. The release is attached hereto as Exhibit 99.1. The information included in the press release is considered to be "furnished" under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Umpqua Holdings Corporation will include final financial statements and additional analyses for the year ended December 31, 2015 as part of its annual report on Form 10-K covering that period.
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Item 7.01 | Regulation FD Disclosure |
Umpqua Holdings Corporation is filing an investor slide presentation that it intends to review in conjunction with its earnings release conference call on January 28, 2016. The slides are included as Exhibit 99.2 to this report and shall not be deemed to be "filed" for the purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
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Item 9.01 | Financial Statements and Exhibits. |
(d) | EXHIBITS |
| 99.1 Press Release announcing fourth quarter and full year 2015 financial results dated January 27, 2016 |
| 99.2 Fourth Quarter 2015 Investor Presentation |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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| UMPQUA HOLDINGS CORPORATION (Registrant) |
Dated: January 27, 2016 | By:/s/ Andrew H. Ognall Andrew H. Ognall Executive Vice President, General Counsel and Secretary |
EXHIBIT INDEX
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Exhibit Number | | Description |
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99.1 | | Press Release announcing fourth quarter and full year 2015 financial results dated January 27, 2016 |
99.2 | | Fourth Quarter 2015 Investor Presentation |
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EXHIBIT 99.1
Contacts:
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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 QUARTERLY AND ANNUAL RESULTS
Full-year 2015 operating earnings1 of $1.15 per share, up 6% from $1.08 in 2014
Fourth quarter 2015 operating earnings of $66.6 million, or $0.30 per share
Improved results attributable to strong net interest margin, double-digit revenue and loan growth
Loan and lease growth of 3% for the quarter, 10% for the year
PORTLAND, Ore. – January 27, 2016 – Umpqua Holdings Corporation (NASDAQ: UMPQ) (the “Company”) reported net earnings available to common shareholders of $63.4 million for the fourth quarter of 2015, compared to $57.5 million for the third quarter of 2015 and $52.4 million for the fourth quarter of 2014. Earnings per diluted common share were $0.29 for the fourth quarter of 2015, compared to $0.26 for the third quarter of 2015 and $0.24 for the fourth quarter of 2014.
Operating earnings, 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 $66.6 million for the fourth quarter of 2015, compared to $62.1 million for the third quarter of 2015 and $59.4 million for the fourth quarter of 2014. Operating earnings per diluted common share were $0.30 for the fourth quarter of 2015, compared to $0.28 for the third quarter of 2015 and $0.27 for the fourth quarter of 2014.
For the twelve months ended December 31, 2015, the Company reported net earnings available to common shareholders of $222.7 million, or $1.01 per diluted common share, compared to $147.2 million, or $0.78 per diluted common share, for the twelve months ended December 31, 2014. For the twelve months ended December 31, 2015, operating earnings were $253.8 million, or $1.15 per diluted common share, compared to $202.5 million, or $1.08 per diluted common share, for the twelve months ended December 31, 2014.
“Umpqua delivered strong financial performance in 2015, despite the continued low interest rate environment,” said Ray Davis, president and CEO of Umpqua Holdings Corporation. “Umpqua’s double digit loan growth and strong net interest margin led to a six percent increase in operating earnings per share, and improvements in our key profitability metrics. In addition, we returned more capital to our shareholders through increased dividends, and continued to invest in technology initiatives to position Umpqua for the future.”
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 Fourth Quarter and Full-Year 2015 Results
January 27, 2016
Page 2
Full-Year 2015 Highlights (compared to prior year):
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• | Operating earnings of $253.8 million, up from $202.5 million: |
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◦ | Revenue growth of 20%, driven primarily by higher net interest income from a larger balance sheet and improvement in asset mix, and an increase in mortgage banking revenue; |
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◦ | Efficiency ratio (operating basis)1 improved to 61.90%, from 62.33%; |
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◦ | Return on average assets (operating basis)1 of 1.11% and return on average tangible common equity (operating basis)1 of 12.81%, both increased from prior year; |
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• | Gross loan and lease growth of $1.5 billion, or 10%; |
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• | Non-performing assets to total assets decreased to 0.29%, from 0.43%; |
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• | Paid dividends of $0.62 per common share, repurchased 571,000 shares of stock, and grew tangible book value by 4%, or $0.37 per share; |
Fourth Quarter 2015 Highlights (compared to prior quarter):
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• | Operating earnings1 increased to $66.6 million: |
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◦ | Net interest income increased by $0.6 million, driven by strong loan growth; |
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◦ | Provision for loan and lease losses decreased by $3.6 million, driven by improved credit performance and lower net charge-offs; |
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◦ | Non-interest income increased by $8.0 million, driven by a lower loss related to the change in fair value of the mortgage servicing rights ("MSR") asset; |
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◦ | Non-interest expense (excluding merger-related expense) increased by $4.2 million, driven primarily by higher marketing, professional services, communications and depreciation expense; |
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• | Strong loan and deposit growth: |
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◦ | Gross loan and lease growth of $460.3 million, or 11% annualized; |
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◦ | Deposits grew by $240.2 million, or 5% annualized; |
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• | Prudently managed capital: |
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◦ | Estimated total risk-based capital ratio of 14.2% and estimated Tier 1 common to risk weighted assets ratio of 11.2%; |
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◦ | Paid quarterly dividend of $0.16 per common share; and |
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◦ | Repurchased 61,000 shares of common stock for $1.1 million. |
Financial Statement Presentation
Please note that the financial statement presentation, and the surrounding narrative, contains certain prior period amounts which have been reclassified to conform with current year presentation.
Balance Sheet
Total consolidated assets increased to $23.4 billion as of December 31, 2015, compared to $23.2 billion as of September 30, 2015 and $22.6 billion as of December 31, 2014. Including secured off-balance sheet lines of credit, the Company had total available liquidity of $7.6 billion as of December 31, 2015, representing 32% of total assets and 43% of total deposits.
Gross loans and leases were $16.8 billion as of December 31, 2015, an increase of $460.3 million from $16.4 billion as of September 30, 2015. This increase was driven by strong loan growth in both the commercial and consumer portfolios.
The Company also sold $27.7 million and $201.1 million of portfolio residential mortgage loans for the fourth quarter and full year of 2015, respectively. Excluding the impact of these sales, gross loan growth for the fourth quarter of 2015 was $488.0 million, or 12% annualized, and gross loan growth for 2015 was $1.7 billion, or 11%.
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 Fourth Quarter and Full-Year 2015 Results
January 27, 2016
Page 3
Total deposits were $17.7 billion as of December 31, 2015, an increase of $240.2 million, or 5% annualized, from $17.5 billion as of September 30, 2015. This increase was primarily attributable to growth in demand, money market and savings deposits, partially offset by a decrease in time deposits.
Net Interest Income
Net interest income was up $0.6 million from the prior quarter, driven primarily by strong quarterly loan growth. This growth was partially offset by a slight decline in core margin and a $1.2 million linked quarter decrease in interest income arising from the accretion of the credit discount recorded on loans acquired from Sterling. Over the same period in the prior year, net interest income decreased by $8.2 million, driven by a lower 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 4.37% for the fourth quarter of 2015, down from 4.42% for the third quarter of 2015 and from 4.69% for the fourth quarter of 2014. These decreases reflect the lower level of accretion of the credit discount recorded on loans acquired from Sterling, as well as lower average yields on interest-earning assets.
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 fourth quarter of 2015, the Company reported $13.1 million of accretion related to the Sterling credit discount in interest income, as compared to $14.3 million in the prior quarter. As of December 31, 2015, the purchased non-credit impaired loans had approximately $72.8 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 $44.4 million of remaining total discount.
The allowance for loan and lease losses was $130.3 million, or 0.77% of loans and leases, as of December 31, 2015. To provide better comparability to prior periods, this pro-forma ratio would have been approximately 1.5% 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 1.6% as of September 30, 2015.
The provision for loan and lease losses decreased by $3.6 million from the prior quarter, driven primarily by continued improvement in credit performance within the loan and lease portfolio and a linked quarter decline in net charge-offs.
Charge-offs, net of recoveries, were $4.4 million for the fourth quarter of 2015, compared to $5.1 million for the third quarter of 2015.
As of December 31, 2015, non-performing assets represented 0.29% of total assets, compared to 0.28% as of September 30, 2015 and 0.43% as of December 31, 2014.
Non-interest Income
Total non-interest income was up $8.0 million from the prior quarter, driven primarily by increased mortgage banking revenue and increased income related to debt capital market activities, partially offset by lower brokerage revenue and income from portfolio loans sales. Over the same period in the prior year, non-interest income increased by $19.0 million primarily reflecting stronger mortgage banking revenues.
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 Fourth Quarter and Full-Year 2015 Results
January 27, 2016
Page 4
The largest component of non-interest income is 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. The linked quarter increase in mortgage banking revenue was driven primarily by a lower loss related to the change in fair value of the MSR asset, which decreased to a loss of $0.5 million, from a loss of $10.1 million in the prior quarter. This change reflected the linked quarter increase in interest rates and its impact on the prepayment speed assumption for the MSR asset.
Revenue from the origination and sale of residential mortgages decreased slightly from the prior quarter, reflecting a 6% linked quarter decline in for sale mortgage originations. Home lending gain on sale margin remained flat at 3.19%. Of the current quarter’s mortgage production, 63% related to purchase activity, as compared to 70% for the prior quarter and 63% for the same period in the prior year.
Revenue related to the servicing of residential mortgage loans increased by 4% from the prior quarter, and has increased by 20% 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 $185.1 million for the fourth quarter of 2015, which included $3.7 million of merger-related expenses. This compares to $183.2 million, including $6.0 million of merger-related expenses for the third quarter of 2015, and $190.9 million, including $10.2 million of merger-related expenses, for the fourth quarter of 2014.
Excluding merger-related expenses, non-interest expense increased by $4.2 million from the prior quarter. This increase from the prior quarter was driven primarily by higher marketing and professional service expense, as well as higher costs associated with communications and depreciation.
Capital
As of December 31, 2015, the Company’s tangible book value per common share1 increased to $9.16, from $9.08 in the prior quarter and from $8.79 in the same period of the prior year. During the fourth quarter of 2015, the Company repurchased 61,000 shares of common stock for $1.1 million. For 2015, the Company repurchased 571,000 shares for $10.0 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 December 31, 2015, compared to 14.5% and 11.5%, respectively, as of September 30, 2015. The Company remains above current “well-capitalized” regulatory minimums. The regulatory capital ratios as of December 31, 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 Fourth Quarter and Full-Year 2015 Results
January 27, 2016
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 Fourth Quarter and Full-Year 2015 Results
January 27, 2016
Page 6
The following table provides the reconciliation of earnings available to common shareholders (GAAP) to operating earnings (non-GAAP), and earnings per diluted common share (GAAP) to operating earnings per diluted share (non-GAAP) for the periods presented:
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| | Quarter Ended | | % Change |
(Dollars in thousands, except per share data) | | Dec 31, 2015 | | Sep 30, 2015 | | Jun 30, 2015 | | Mar 31, 2015 | | Dec 31, 2014 | | Seq. Quarter | | Year over Year |
Net earnings available to common shareholders | | $ | 63,434 |
| | $ | 57,523 |
| | $ | 54,691 |
| | $ | 47,045 |
| | $ | 52,436 |
| | 10 | % | | 21 | % |
Adjustments: | | |
| | |
| | | | | | |
| | | | |
Net loss on junior subordinated debentures carried at fair value, net of tax (1) | | 953 |
| | 954 |
| | 943 |
| | 933 |
| | 953 |
| | 0 | % | | 0 | % |
Merger related expenses, net of tax (1) | | 2,227 |
| | 3,595 |
| | 13,078 |
| | 8,449 |
| | 6,038 |
| | (38 | )% | | (63 | )% |
Operating earnings | | $ | 66,614 |
| | $ | 62,072 |
| | $ | 68,712 |
| | $ | 56,427 |
| | $ | 59,427 |
| | 7 | % | | 12 | % |
| | | | | | | | | | | | | | |
Earnings per diluted share: | | |
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| | | | | | |
| | | | |
Earnings available to common shareholders | | $ | 0.29 |
| | $ | 0.26 |
| | $ | 0.25 |
| | $ | 0.21 |
| | $ | 0.24 |
| | 12 | % | | 21 | % |
Operating earnings | | $ | 0.30 |
| | $ | 0.28 |
| | $ | 0.31 |
| | $ | 0.26 |
| | $ | 0.27 |
| | 7 | % | | 11 | % |
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| | Year Ended | | % Change | | | | | | | | |
| | Dec 31, 2015 | | Dec 31, 2014 | | Year over Year | | | | | | | | |
Net earnings available to common shareholders | | $ | 222,693 |
| | $ | 147,174 |
| | 51 | % | | | |
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Adjustments: | | |
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Net loss on junior subordinated debentures carried at fair value, net of tax (1) | | 3,783 |
| | 3,054 |
| | 24 | % | | | |
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Merger related expenses, net of tax (1) | | 27,349 |
| | 52,311 |
| | (48 | )% | | | |
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Operating earnings | | $ | 253,825 |
| | $ | 202,539 |
| | 25 | % | | | |
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Earnings per diluted share: | | |
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| | | | | | | | | | |
Earnings available to common shareholders | | $ | 1.01 |
| | $ | 0.78 |
| | 29 | % | | | |
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Operating earnings | | $ | 1.15 |
| | $ | 1.08 |
| | 6 | % | | | |
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(1) Income tax effect of pro forma operating earnings adjustments at 40% for tax-deductible items. | | |
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Management believes tangible common equity and the tangible common equity ratio are meaningful measures of capital adequacy because they provide a meaningful base for period-to-period and company-to-company comparisons, which management believes will assist investors in assessing the capital of the Company and the ability to absorb potential losses. Tangible common equity is calculated as total shareholders' equity less goodwill and other intangible assets, net (excluding MSRs). Tangible assets are total assets less goodwill and other intangible assets, net (excluding MSRs). The tangible common equity ratio is calculated as tangible common shareholders’ equity divided by tangible assets.
Umpqua Reports Fourth Quarter and Full-Year 2015 Results
January 27, 2016
Page 7
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).
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(Dollars in thousands, except per share data) | | Dec 31, 2015 | | Sep 30, 2015 | | Jun 30, 2015 | | Mar 31, 2015 | | Dec 31, 2014 |
Total shareholders' equity | | $ | 3,849,846 |
| | $ | 3,835,552 |
| | $ | 3,804,179 |
| | $ | 3,800,970 |
| | $ | 3,777,626 |
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Subtract: | | |
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Goodwill and other intangible assets, net | | 1,833,301 |
| | 1,836,954 |
| | 1,839,760 |
| | 1,842,567 |
| | 1,842,958 |
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Tangible common shareholders' equity | | $ | 2,016,545 |
| | $ | 1,998,598 |
| | $ | 1,964,419 |
| | $ | 1,958,403 |
| | $ | 1,934,668 |
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Total assets | | $ | 23,387,717 |
| | $ | 23,162,304 |
| | $ | 22,793,331 |
| | $ | 22,953,158 |
| | $ | 22,609,903 |
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Subtract: | | |
| | |
| | | | | | |
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Goodwill and other intangible assets, net | | 1,833,301 |
| | 1,836,954 |
| | 1,839,760 |
| | 1,842,567 |
| | 1,842,958 |
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Tangible assets | | $ | 21,554,416 |
| | $ | 21,325,350 |
| | $ | 20,953,571 |
| | $ | 21,110,591 |
| | $ | 20,766,945 |
|
Common shares outstanding at period end | | 220,171 |
| | 220,217 |
| | 220,280 |
| | 220,454 |
| | 220,161 |
|
Tangible common equity ratio | | 9.36 | % | | 9.37 | % | | 9.38 | % | | 9.28 | % | | 9.32 | % |
Tangible book value per common share | | $ | 9.16 |
| | $ | 9.08 |
| | $ | 8.92 |
| | $ | 8.88 |
| | $ | 8.79 |
|
Umpqua Reports Fourth Quarter and Full-Year 2015 Results
January 27, 2016
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 fourth quarter 2015 earnings conference call on Thursday, January 28, 2016, at 10:00 a.m. PT (1:00 p.m. ET). During the call, the Company will provide an update on recent activities and discuss its fourth quarter and full-year 2015 financial results. There will be a live question-and-answer session following the presentation. To join the call, please dial (877) 718-5095 ten minutes prior to the start time and enter conference ID: 641424. A re-broadcast will be available approximately two hours after the call by dialing (888) 203-1112 and entering conference ID 641424. 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 and our earnings call and related slide presentation include 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. 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 Fourth Quarter and Full-Year 2015 Results
January 27, 2016
Page 9
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Umpqua Holdings Corporation |
Consolidated Statements of Income |
(Unaudited) |
| | | | | | | | | | |
| | Quarter Ended | | % Change |
(In thousands, except per share data) | | Dec 31, 2015 | | Sep 30, 2015 | | Jun 30, 2015 | | Mar 31, 2015 | | Dec 31, 2014 | | Seq. Quarter | | Year over Year |
Interest income: | | | | | | | | | | | | | | |
Loans and leases | | $ | 219,440 |
| | $ | 218,975 |
| | $ | 217,143 |
| | $ | 213,875 |
| | $ | 226,853 |
| | 0 | % | | (3 | )% |
Interest and dividends on investments: | | | | | | | | | | | |
|
| |
|
|
Taxable | | 12,654 |
| | 11,882 |
| | 11,517 |
| | 11,789 |
| | 11,629 |
| | 6 | % | | 9 | % |
Exempt from federal income tax | | 2,363 |
| | 2,393 |
| | 2,410 |
| | 2,481 |
| | 2,746 |
| | (1 | )% | | (14 | )% |
Dividends | | 326 |
| | 112 |
| | 169 |
| | 101 |
| | 66 |
| | 191 | % | | 394 | % |
Temporary investments & interest bearing deposits | | 422 |
| | 440 |
| | 549 |
| | 825 |
| | 857 |
| | (4 | )% | | (51 | )% |
Total interest income | | 235,205 |
| | 233,802 |
| | 231,788 |
| | 229,071 |
| | 242,151 |
| | 1 | % | | (3 | )% |
Interest expense: | | | | | | | | | | | | | | |
Deposits | | 7,905 |
| | 7,450 |
| | 7,381 |
| | 7,103 |
| | 7,119 |
| | 6 | % | | 11 | % |
Repurchase agreements | | 39 |
| | 43 |
| | 43 |
| | 48 |
| | 48 |
| | (9 | )% | | (19 | )% |
Term debt | | 3,885 |
| | 3,629 |
| | 3,492 |
| | 3,464 |
| | 3,570 |
| | 7 | % | | 9 | % |
Junior subordinated debentures | | 3,542 |
| | 3,465 |
| | 3,406 |
| | 3,337 |
| | 3,399 |
| | 2 | % | | 4 | % |
Total interest expense | | 15,371 |
| | 14,587 |
| | 14,322 |
| | 13,952 |
| | 14,136 |
| | 5 | % | | 9 | % |
Net interest income | | 219,834 |
| | 219,215 |
| | 217,466 |
| | 215,119 |
| | 228,015 |
| | 0 | % | | (4 | )% |
Provision for loan and lease losses | | 4,545 |
| | 8,153 |
| | 11,254 |
| | 12,637 |
| | 5,241 |
| | (44 | )% | | (13 | )% |
Non-interest income: | | | | | | | | | | | | | |
|
|
Service charges on deposits | | 15,039 |
| | 15,616 |
| | 14,811 |
| | 14,274 |
| | 15,472 |
| | (4 | )% | | (3 | )% |
Brokerage revenue | | 4,061 |
| | 5,003 |
| | 4,648 |
| | 4,769 |
| | 4,960 |
| | (19 | )% | | (18 | )% |
Residential mortgage banking revenue, net | | 32,440 |
| | 24,041 |
| | 40,014 |
| | 28,227 |
| | 16,489 |
| | 35 | % | | 97 | % |
Gain on investment securities, net | | 2,567 |
| | 220 |
| | 19 |
| | 116 |
| | 1,026 |
| | 1,067 | % | | 150 | % |
Gain on loan sales | | 1,729 |
| | 5,212 |
| | 8,711 |
| | 6,728 |
| | 5,730 |
| | (67 | )% | | (70 | )% |
Loss on junior subordinated debentures carried at fair value | | (1,589 | ) | | (1,590 | ) | | (1,572 | ) | | (1,555 | ) | | (1,589 | ) | | 0 | % | | 0 | % |
Change in FDIC indemnification asset | | 200 |
| | 1,432 |
| | (1,199 | ) | | (1,286 | ) | | (1,982 | ) | | (86 | )% | | (110 | )% |
BOLI income | | 1,841 |
| | 2,165 |
| | 2,043 |
| | 2,302 |
| | 1,971 |
| | (15 | )% | | (7 | )% |
Other income | | 13,057 |
| | 9,273 |
| | 13,627 |
| | 10,330 |
| | 8,228 |
| | 41 | % | | 59 | % |
Total non-interest income | | 69,345 |
| | 61,372 |
| | 81,102 |
| | 63,905 |
| | 50,305 |
| | 13 | % | | 38 | % |
Non-interest expense: | | | | | | | | | | | | | | |
Salaries and employee benefits | | 106,203 |
| | 106,482 |
| | 110,807 |
| | 107,444 |
| | 104,039 |
| | 0 | % | | 2 | % |
Occupancy and equipment, net | | 38,722 |
| | 37,235 |
| | 34,868 |
| | 32,150 |
| | 32,987 |
| | 4 | % | | 17 | % |
Intangible amortization | | 2,806 |
| | 2,806 |
| | 2,807 |
| | 2,806 |
| | 3,102 |
| | 0 | % | | (10 | )% |
FDIC assessments | | 3,742 |
| | 3,369 |
| | 3,155 |
| | 3,214 |
| | 3,522 |
| | 11 | % | | 6 | % |
(Gain) loss on other real estate owned, net | | (242 | ) | | (158 | ) | | 480 |
| | 1,814 |
| | 3,609 |
| | 53 | % | | (107 | )% |
Merger related expenses | | 3,712 |
| | 5,991 |
| | 21,797 |
| | 14,082 |
| | 10,171 |
| | (38 | )% | | (64 | )% |
Other expense | | 30,134 |
| | 27,469 |
| | 28,004 |
| | 31,109 |
| | 33,426 |
| | 10 | % | | (10 | )% |
Total non-interest expense | | 185,077 |
| | 183,194 |
| | 201,918 |
| | 192,619 |
| | 190,856 |
| | 1 | % | | (3 | )% |
Income before provision for income taxes | | 99,557 |
| | 89,240 |
| | 85,396 |
| | 73,768 |
| | 82,223 |
| | 12 | % | | 21 | % |
Provision for income taxes | | 36,027 |
| | 31,633 |
| | 30,612 |
| | 26,639 |
| | 29,641 |
| | 14 | % | | 22 | % |
Net income | | 63,530 |
| | 57,607 |
| | 54,784 |
| | 47,129 |
| | 52,582 |
| | 10 | % | | 21 | % |
Dividends and undistributed earnings allocated to participating securities | | 96 |
| | 84 |
| | 93 |
| | 84 |
| | 146 |
| | 14 | % | | (34 | )% |
Net earnings available to common shareholders | | $ | 63,434 |
| | $ | 57,523 |
| | $ | 54,691 |
| | $ | 47,045 |
| | $ | 52,436 |
| | 10 | % | | 21 | % |
| | | | | | | | | | | | | | |
Weighted average basic shares outstanding | | 220,202 |
| | 220,297 |
| | 220,463 |
| | 220,349 |
| | 218,963 |
| | 0 | % | | 1 | % |
Weighted average diluted shares outstanding | | 220,930 |
| | 220,904 |
| | 221,150 |
| | 221,051 |
| | 219,974 |
| | 0 | % | | 0 | % |
Earnings per common share – basic | | $ | 0.29 |
| | $ | 0.26 |
| | $ | 0.25 |
| | $ | 0.21 |
| | $ | 0.24 |
| | 12 | % | | 21 | % |
Earnings per common share – diluted | | $ | 0.29 |
| | $ | 0.26 |
| | $ | 0.25 |
| | $ | 0.21 |
| | $ | 0.24 |
| | 12 | % | | 21 | % |
| | |
| | |
| | |
| | |
| | |
| | | | |
Umpqua Reports Fourth Quarter and Full-Year 2015 Results
January 27, 2016
Page 10
|
| | | | | | | | | | | |
Umpqua Holdings Corporation |
Consolidated Statements of Income |
(Unaudited) |
| | | | |
| | Year Ended | | % Change |
(In thousands, except per share data) | | Dec 31, 2015 | | Dec 31, 2014 | | Year over Year |
Interest income: | | | | | | |
Loans and leases | | $ | 869,433 |
| | $ | 763,803 |
| | 14 | % |
Interest and dividends on investments: | | | | | | |
|
Taxable | | 47,842 |
| | 45,784 |
| | 4 | % |
Exempt from federal income tax | | 9,647 |
| | 10,345 |
| | (7 | )% |
Dividends | | 708 |
| | 325 |
| | 118 | % |
Temporary investments & interest bearing deposits | | 2,236 |
| | 2,264 |
| | (1 | )% |
Total interest income | | 929,866 |
| | 822,521 |
| | 13 | % |
Interest expense: | | |
| | | | |
|
Deposits | | 29,839 |
| | 23,815 |
| | 25 | % |
Repurchase agreements | | 173 |
| | 346 |
| | (50 | )% |
Term debt | | 14,470 |
| | 12,793 |
| | 13 | % |
Junior subordinated debentures | | 13,750 |
| | 11,739 |
| | 17 | % |
Total interest expense | | 58,232 |
| | 48,693 |
| | 20 | % |
Net interest income | | 871,634 |
| | 773,828 |
| | 13 | % |
Provision for loan and lease losses | | 36,589 |
| | 40,241 |
| | (9 | )% |
Non-interest income: | | |
| | | | |
Service charges on deposits | | 59,740 |
| | 54,700 |
| | 9 | % |
Brokerage revenue | | 18,481 |
| | 18,133 |
| | 2 | % |
Residential mortgage banking revenue, net | | 124,722 |
| | 77,265 |
| | 61 | % |
Gain on investment securities, net | | 2,922 |
| | 2,904 |
| | 1 | % |
Gain on loan sales | | 22,380 |
| | 15,113 |
| | 48 | % |
Loss on junior subordinated debentures carried at fair value | | (6,306 | ) | | (5,090 | ) | | 24 | % |
Change in FDIC indemnification asset | | (853 | ) | | (15,151 | ) | | (94 | )% |
BOLI income | | 8,351 |
| | 6,835 |
| | 22 | % |
Other income | | 46,287 |
| | 26,465 |
| | 75 | % |
Total non-interest income | | 275,724 |
| | 181,174 |
| | 52 | % |
Non-interest expense: | | |
| | | | |
|
Salaries and employee benefits | | 430,936 |
| | 355,379 |
| | 21 | % |
Occupancy and equipment, net | | 142,975 |
| | 111,263 |
| | 29 | % |
Intangible amortization | | 11,225 |
| | 10,207 |
| | 10 | % |
FDIC assessments | | 13,480 |
| | 10,998 |
| | 23 | % |
Loss on other real estate owned, net | | 1,894 |
| | 4,116 |
| | (54 | )% |
Merger related expenses | | 45,582 |
| | 82,317 |
| | (45 | )% |
Other expense | | 116,716 |
| | 109,783 |
| | 6 | % |
Total non-interest expense | | 762,808 |
| | 684,063 |
| | 12 | % |
Income before provision for income taxes | | 347,961 |
| | 230,698 |
| | 51 | % |
Provision for income taxes | | 124,911 |
| | 83,040 |
| | 50 | % |
Net income | | 223,050 |
| | 147,658 |
| | 51 | % |
Dividends and undistributed earnings allocated to participating securities | | 357 |
| | 484 |
| | (26 | )% |
Net earnings available to common shareholders | | $ | 222,693 |
| | $ | 147,174 |
| | 51 | % |
| | | | | | |
Weighted average basic shares outstanding | | 220,327 |
| | 186,550 |
| | 18 | % |
Weighted average diluted shares outstanding | | 221,045 |
| | 187,544 |
| | 18 | % |
Earnings per common share – basic | | $ | 1.01 |
| | $ | 0.79 |
| | 28 | % |
Earnings per common share – diluted | | $ | 1.01 |
| | $ | 0.78 |
| | 29 | % |
| | |
| | |
| | |
|
Umpqua Reports Fourth Quarter and Full-Year 2015 Results
January 27, 2016
Page 11
|
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Umpqua Holdings Corporation Consolidated Balance Sheets |
(Unaudited) |
| | | | | | | | | | | | |
| | | | | | | | | | | | % Change |
(In thousands, except per share data) | | Dec 31, 2015 | | Sep 30, 2015 | | Jun 30, 2015 | | Mar 31, 2015 | | Dec 31, 2014 | | Seq. Quarter | | Year over Year |
Assets: | | | | | | | | | | | | | | |
Noninterest bearing cash | | $ | 277,645 |
| | $ | 283,773 |
| | $ | 364,256 |
| | $ | 292,558 |
| | $ | 282,455 |
| | (2 | )% | | (2 | )% |
Interest bearing deposits and temporary investments | | 496,080 |
| | 673,843 |
| | 515,691 |
| | 1,088,316 |
| | 1,322,716 |
| | (26 | )% | | (62 | )% |
Investment securities: | | |
| | |
| | |
| | |
| | |
| |
|
| |
|
|
Trading, at fair value | | 9,586 |
| | 9,509 |
| | 10,005 |
| | 10,452 |
| | 9,999 |
| | 1 | % | | (4 | )% |
Available for sale, at fair value | | 2,522,539 |
| | 2,482,478 |
| | 2,557,245 |
| | 2,535,121 |
| | 2,298,555 |
| | 2 | % | | 10 | % |
Held to maturity, at amortized cost | | 4,609 |
| | 4,699 |
| | 4,807 |
| | 4,953 |
| | 5,211 |
| | (2 | )% | | (12 | )% |
Loans held for sale | | 363,275 |
| | 398,015 |
| | 419,704 |
| | 406,487 |
| | 286,802 |
| | (9 | )% | | 27 | % |
Loans and leases | | 16,848,195 |
| | 16,387,934 |
| | 15,974,197 |
| | 15,548,957 |
| | 15,327,732 |
| | 3 | % | | 10 | % |
Allowance for loan and lease losses | | (130,322 | ) | | (130,133 | ) | | (127,071 | ) | | (120,104 | ) | | (116,167 | ) | | 0 | % | | 12 | % |
Loans and leases, net | | 16,717,873 |
| | 16,257,801 |
| | 15,847,126 |
| | 15,428,853 |
| | 15,211,565 |
| | 3 | % | | 10 | % |
Restricted equity securities | | 46,949 |
| | 46,904 |
| | 46,917 |
| | 117,218 |
| | 119,334 |
| | 0 | % | | (61 | )% |
Premises and equipment, net | | 328,734 |
| | 330,306 |
| | 331,208 |
| | 322,925 |
| | 317,834 |
| | 0 | % | | 3 | % |
Goodwill | | 1,787,793 |
| | 1,788,640 |
| | 1,788,640 |
| | 1,788,640 |
| | 1,786,225 |
| | 0 | % | | 0 | % |
Other intangible assets, net | | 45,508 |
| | 48,314 |
| | 51,120 |
| | 53,927 |
| | 56,733 |
| | (6 | )% | | (20 | )% |
Residential mortgage servicing rights, at fair value | | 131,817 |
| | 124,814 |
| | 127,206 |
| | 116,365 |
| | 117,259 |
| | 6 | % | | 12 | % |
Other real estate owned | | 22,307 |
| | 23,892 |
| | 23,038 |
| | 32,064 |
| | 37,942 |
| | (7 | )% | | (41 | )% |
FDIC indemnification asset | | 855 |
| | 892 |
| | 432 |
| | 1,861 |
| | 4,417 |
| | (4 | )% | | (81 | )% |
Bank owned life insurance | | 291,892 |
| | 297,321 |
| | 295,551 |
| | 294,697 |
| | 294,296 |
| | (2 | )% | | (1 | )% |
Deferred tax assets, net | | 137,545 |
| | 149,320 |
| | 181,245 |
| | 198,778 |
| | 230,442 |
| | (8 | )% | | (40 | )% |
Other assets | | 202,710 |
| | 241,783 |
| | 229,140 |
| | 259,943 |
| | 228,118 |
| | (16 | )% | | (11 | )% |
Total assets | | $ | 23,387,717 |
| | $ | 23,162,304 |
| | $ | 22,793,331 |
| | $ | 22,953,158 |
| | $ | 22,609,903 |
| | 1 | % | | 3 | % |
Liabilities: | | |
| | |
| | |
| | |
| | |
| | | |
|
|
Deposits | | $ | 17,707,189 |
| | $ | 17,467,024 |
| | $ | 17,145,046 |
| | $ | 17,222,566 |
| | $ | 16,892,099 |
| | 1 | % | | 5 | % |
Securities sold under agreements to repurchase | | 304,560 |
| | 323,722 |
| | 325,711 |
| | 321,202 |
| | 313,321 |
| | (6 | )% | | (3 | )% |
Term debt | | 888,769 |
| | 889,358 |
| | 889,997 |
| | 965,675 |
| | 1,006,395 |
| | 0 | % | | (12 | )% |
Junior subordinated debentures, at fair value | | 255,457 |
| | 253,665 |
| | 252,214 |
| | 250,652 |
| | 249,294 |
| | 1 | % | | 2 | % |
Junior subordinated debentures, at amortized cost | | 101,254 |
| | 101,334 |
| | 101,415 |
| | 101,496 |
| | 101,576 |
| | 0 | % | | 0 | % |
Other liabilities | | 280,642 |
| | 291,649 |
| | 274,769 |
| | 290,597 |
| | 269,592 |
| | (4 | )% | | 4 | % |
Total liabilities | | 19,537,871 |
| | 19,326,752 |
| | 18,989,152 |
| | 19,152,188 |
| | 18,832,277 |
| | 1 | % | | 4 | % |
Shareholders' equity: | | |
| | |
| | |
| | |
| | |
| | | |
|
|
Common stock | | 3,520,591 |
| | 3,517,751 |
| | 3,517,557 |
| | 3,521,201 |
| | 3,519,316 |
| | 0 | % | | 0 | % |
Retained earnings | | 331,813 |
| | 303,729 |
| | 281,573 |
| | 260,128 |
| | 246,242 |
| | 9 | % | | 35 | % |
Accumulated other comprehensive (loss) income | | (2,558 | ) | | 14,072 |
| | 5,049 |
| | 19,641 |
| | 12,068 |
| | (118 | )% | | (121 | )% |
Total shareholders' equity | | 3,849,846 |
| | 3,835,552 |
| | 3,804,179 |
| | 3,800,970 |
| | 3,777,626 |
| | 0 | % | | 2 | % |
Total liabilities and shareholders' equity | | $ | 23,387,717 |
| | $ | 23,162,304 |
| | $ | 22,793,331 |
| | $ | 22,953,158 |
| | $ | 22,609,903 |
| | 1 | % | | 3 | % |
| | | | | | | | | | | | | | |
Common shares outstanding at period end | | 220,171 |
| | 220,217 |
| | 220,280 |
| | 220,454 |
| | 220,161 |
| | 0 | % | | 0 | % |
Book value per common share | | $ | 17.49 |
| | $ | 17.42 |
| | $ | 17.27 |
| | $ | 17.24 |
| | $ | 17.16 |
| | 0 | % | | 2 | % |
Tangible book value per common share | | $ | 9.16 |
| | $ | 9.08 |
| | $ | 8.92 |
| | $ | 8.88 |
| | $ | 8.79 |
| | 1 | % | | 4 | % |
Tangible equity - common | | $ | 2,016,545 |
| | $ | 1,998,598 |
| | $ | 1,964,419 |
| | $ | 1,958,403 |
| | $ | 1,934,668 |
| | 1 | % | | 4 | % |
Tangible common equity to tangible assets | | 9.36 | % | | 9.37 | % | | 9.38 | % | | 9.28 | % | | 9.32 | % | | (0.01 | ) | | 0.04 |
|
Umpqua Reports Fourth Quarter and Full-Year 2015 Results
January 27, 2016
Page 12
|
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Umpqua Holdings Corporation |
Loan & Lease Portfolio |
(Unaudited) |
| | | | | | | | | | | | | | |
(Dollars in thousands) | | Dec 31, 2015 | | Sep 30, 2015 | | Jun 30, 2015 | | Mar 31, 2015 | | Dec 31, 2014 | | % Change |
| | Amount | | Amount | | Amount | | Amount | | Amount | | Seq. Quarter | | Year over Year |
Loans & leases: | | |
| | |
| | |
| | | | | | |
| | |
|
Commercial real estate: | | |
| | |
| | |
| | | | | | |
| | |
|
Non-owner occupied term, net | | $ | 3,141,680 |
| | $ | 3,148,288 |
| | $ | 3,294,359 |
| | $ | 3,303,629 |
| | $ | 3,290,610 |
| | 0 | % | | (5 | )% |
Owner occupied term, net | | 2,691,921 |
| | 2,655,340 |
| | 2,636,800 |
| | 2,577,484 |
| | 2,633,864 |
| | 1 | % | | 2 | % |
Multifamily, net | | 3,074,918 |
| | 2,961,609 |
| | 2,859,884 |
| | 2,764,403 |
| | 2,638,618 |
| | 4 | % | | 17 | % |
Commercial construction, net | | 301,892 |
| | 287,757 |
| | 244,354 |
| | 238,303 |
| | 258,722 |
| | 5 | % | | 17 | % |
Residential development, net | | 99,459 |
| | 94,380 |
| | 76,734 |
| | 81,160 |
| | 81,846 |
| | 5 | % | | 22 | % |
Commercial: | | | | | | | | | | | | |
| | |
|
Term, net | | 1,425,009 |
| | 1,398,346 |
| | 1,374,528 |
| | 1,411,043 |
| | 1,396,089 |
| | 2 | % | | 2 | % |
Lines of credit & other, net | | 1,043,076 |
| | 1,014,523 |
| | 981,897 |
| | 993,814 |
| | 1,029,620 |
| | 3 | % | | 1 | % |
Leases & equipment finance, net | | 729,161 |
| | 679,033 |
| | 630,695 |
| | 570,492 |
| | 523,114 |
| | 7 | % | | 39 | % |
Residential real estate: | | | | | | | | | | | | |
| | |
|
Mortgage, net | | 2,890,223 |
| | 2,740,228 |
| | 2,533,042 |
| | 2,330,325 |
| | 2,233,735 |
| | 5 | % | | 29 | % |
Home equity lines & loans, net | | 923,667 |
| | 910,287 |
| | 882,596 |
| | 863,269 |
| | 852,478 |
| | 1 | % | | 8 | % |
Consumer & other, net | | 527,189 |
| | 498,143 |
| | 459,308 |
| | 415,035 |
| | 389,036 |
| | 6 | % | | 36 | % |
Total, net of deferred fees and costs | | $ | 16,848,195 |
| | $ | 16,387,934 |
| | $ | 15,974,197 |
| | $ | 15,548,957 |
| | $ | 15,327,732 |
| | 3 | % | | 10 | % |
| | | | | | | | | | | | | | |
Loan & leases mix: | | | | | | | | | | | | | | |
Commercial real estate: | | | | | | | | | | | | | | |
Non-owner occupied term, net | | 19 | % | | 19 | % | | 20 | % | | 20 | % | | 20 | % | | | | |
Owner occupied term, net | | 16 | % | | 16 | % | | 17 | % | | 17 | % | | 17 | % | | | | |
Multifamily, net | | 18 | % | | 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 | % | | 6 | % | | 7 | % | | | | |
Leases & equipment finance, net | | 4 | % | | 4 | % | | 4 | % | | 4 | % | | 3 | % | | | | |
Residential real estate: | | |
| |
|
| |
|
| |
|
| |
|
| | | | |
Mortgage, net | | 17 | % | | 17 | % | | 16 | % | | 15 | % | | 15 | % | | | | |
Home equity lines & loans, net | | 5 | % | | 6 | % | | 6 | % | | 6 | % | | 6 | % | | | | |
Consumer & other, net | | 3 | % | | 3 | % | | 3 | % | | 3 | % | | 3 | % | | | | |
Total | | 100 | % | | 100 | % | | 100 | % | | 100 | % | | 100 | % | | | | |
Umpqua Reports Fourth Quarter and Full-Year 2015 Results
January 27, 2016
Page 13
|
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Umpqua Holdings Corporation |
Deposits by Type/Core Deposits |
(Unaudited) |
| | | | | | | | | | | | | | |
(Dollars in thousands) | | Dec 31, 2015 | | Sep 30, 2015 | | Jun 30, 2015 | | Mar 31, 2015 | | Dec 31, 2014 | | % Change |
| | Amount | | Amount | | Amount | | Amount | | Amount | | Seq. Quarter | | Year over Year |
Deposits: | | |
| | |
| | |
| | | | | | |
| | |
|
Demand, non-interest bearing | | $ | 5,318,591 |
| | $ | 5,207,129 |
| | $ | 4,927,526 |
| | $ | 4,930,642 |
| | $ | 4,744,804 |
| | 2 | % | | 12 | % |
Demand, interest bearing | | 2,157,376 |
| | 2,098,223 |
| | 2,090,595 |
| | 2,085,368 |
| | 2,054,994 |
| | 3 | % | | 5 | % |
Money market | | 6,599,516 |
| | 6,514,174 |
| | 6,374,624 |
| | 6,287,165 |
| | 6,113,138 |
| | 1 | % | | 8 | % |
Savings | | 1,136,809 |
| | 1,102,611 |
| | 1,058,337 |
| | 1,022,829 |
| | 971,185 |
| | 3 | % | | 17 | % |
Time | | 2,494,897 |
| | 2,544,887 |
| | 2,693,964 |
| | 2,896,562 |
| | 3,007,978 |
| | (2 | )% | | (17 | )% |
Total | | $ | 17,707,189 |
| | $ | 17,467,024 |
| | $ | 17,145,046 |
| | $ | 17,222,566 |
| | $ | 16,892,099 |
| | 1 | % | | 5 | % |
| | | | | | | | | | | | | | |
Total core deposits (1) | | $ | 16,102,743 |
| | $ | 15,940,229 |
| | $ | 15,529,997 |
| | $ | 15,304,001 |
| | $ | 15,126,378 |
| | 1 | % | | 6 | % |
| | | | | | | | | | | | | | |
Deposit mix: | | | | | | | | | | | | | | |
Demand, non-interest bearing | | 30 | % | | 30 | % | | 29 | % | | 29 | % | | 28 | % | | | | |
Demand, interest bearing | | 12 | % | | 12 | % | | 12 | % | | 12 | % | | 12 | % | | | | |
Money market | | 37 | % | | 37 | % | | 37 | % | | 36 | % | | 36 | % | | | | |
Savings | | 6 | % | | 6 | % | | 6 | % | | 6 | % | | 6 | % | | | | |
Time | | 15 | % | | 15 | % | | 16 | % | | 17 | % | | 18 | % | | | | |
Total | | 100 | % | | 100 | % | | 100 | % | | 100 | % | | 100 | % | | | | |
| | | | | | | | | | | | | | |
Number of open accounts: | | |
| | |
| | |
| | | | |
| | |
| | |
|
Demand, non-interest bearing | | 371,745 |
| | 370,128 |
| | 367,086 |
| | 368,701 |
| | 367,854 |
| |
|
| |
|
|
Demand, interest bearing | | 86,745 |
| | 88,171 |
| | 90,021 |
| | 85,082 |
| | 86,135 |
| |
|
| |
|
|
Money market | | 57,194 |
| | 57,622 |
| | 58,156 |
| | 61,991 |
| | 63,095 |
| |
|
| |
|
|
Savings | | 154,176 |
| | 153,534 |
| | 152,404 |
| | 150,989 |
| | 150,548 |
| |
|
| |
|
|
Time | | 47,672 |
| | 48,168 |
| | 49,983 |
| | 52,179 |
| | 53,530 |
| |
|
| |
|
|
Total | | 717,532 |
| | 717,623 |
| | 717,650 |
| | 718,942 |
| | 721,162 |
| |
|
| |
|
|
| | | | | | | | | | | | | | |
Average balance per account: | | |
| | |
| | |
| | | | |
| | |
| | |
|
Demand, non-interest bearing | | $ | 14.3 |
| | $ | 14.1 |
| | $ | 13.4 |
| | $ | 13.4 |
| | $ | 12.9 |
| | |
| | |
|
Demand, interest bearing | | 24.9 |
| | 23.8 |
| | 23.2 |
| | 24.5 |
| | 23.9 |
| | |
| | |
|
Money market | | 115.4 |
| | 113.1 |
| | 109.6 |
| | 101.4 |
| | 96.9 |
| | |
| | |
|
Savings | | 7.4 |
| | 7.2 |
| | 6.9 |
| | 6.8 |
| | 6.5 |
| | |
| | |
|
Time | | 52.3 |
| | 52.8 |
| | 53.9 |
| | 55.5 |
| | 56.2 |
| | |
| | |
|
Total | | $ | 24.7 |
| | $ | 24.3 |
| | $ | 23.9 |
| | $ | 24.0 |
| | $ | 23.4 |
| | |
| | |
|
(1) Core deposits are defined as total deposits less time deposits greater than $100,000.
Umpqua Reports Fourth Quarter and Full-Year 2015 Results
January 27, 2016
Page 14
|
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Umpqua Holdings Corporation |
Credit Quality – Non-performing Assets |
(Unaudited) |
| | | | | | | | | | | | | | |
| | Quarter Ended | | % Change |
(Dollars in thousands) | | Dec 31, 2015 | | Sep 30, 2015 | | Jun 30, 2015 | | Mar 31, 2015 | | Dec 31, 2014 | | Seq. Quarter | | Year over Year |
Non-performing assets: | | |
| | |
| | | | | | |
| | |
| | |
|
Loans and leases on non-accrual status | | $ | 29,215 |
| | $ | 30,989 |
| | $ | 33,572 |
| | $ | 40,246 |
| | $ | 52,041 |
| | (6 | )% | | (44 | )% |
Loans and leases past due 90+ days & accruing | | 15,169 |
| | 9,967 |
| | 13,529 |
| | 10,416 |
| | 7,512 |
| | 52 | % | | 102 | % |
Total non-performing loans and leases | | 44,384 |
| | 40,956 |
| | 47,101 |
| | 50,662 |
| | 59,553 |
| | 8 | % | | (25 | )% |
Other real estate owned | | 22,307 |
| | 23,892 |
| | 23,038 |
| | 32,064 |
| | 37,942 |
| | (7 | )% | | (41 | )% |
Total | | $ | 66,691 |
| | $ | 64,848 |
| | $ | 70,139 |
| | $ | 82,726 |
| | $ | 97,495 |
| | 3 | % | | (32 | )% |
| | | | | | | | | | | | | | |
Performing restructured loans and leases | | $ | 31,355 |
| | $ | 35,706 |
| | $ | 37,023 |
| | $ | 60,896 |
| | $ | 54,836 |
| | (12 | )% | | (43 | )% |
Loans and leases past due 31-89 days | | $ | 28,423 |
| | $ | 28,919 |
| | $ | 25,553 |
| | $ | 20,488 |
| | $ | 24,659 |
| | (2 | )% | | 15 | % |
Loans and leases past due 31-89 days to total loans and leases | | 0.17 | % | | 0.18 | % | | 0.16 | % | | 0.13 | % | | 0.16 | % | | |
| | |
|
Non-performing loans and leases to total loans and leases | | 0.26 | % | | 0.25 | % | | 0.29 | % | | 0.33 | % | | 0.39 | % | | |
| | |
|
Non-performing assets to total assets | | 0.29 | % | | 0.28 | % | | 0.31 | % | | 0.36 | % | | 0.43 | % | | |
| | |
|
Umpqua Reports Fourth Quarter and Full-Year 2015 Results
January 27, 2016
Page 15
|
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Umpqua Holdings Corporation |
Credit Quality – Allowance for Loan and Lease Losses |
(Unaudited) |
| | | | | | | | | | | | | | |
| | Quarter Ended | | % Change |
(Dollars in thousands) | | Dec 31, 2015 | | Sep 30, 2015 | | Jun 30, 2015 | | Mar 31, 2015 | | Dec 31, 2014 | | Seq. Quarter | | Year over Year |
Allowance for loan and lease losses: | | | | | | | | | | | | |
Balance beginning of period | | $ | 130,133 |
| | $ | 127,071 |
| | $ | 120,104 |
| | $ | 116,167 |
| | $ | 115,635 |
| |
|
| |
|
|
Provision for loan and lease losses | | 4,545 |
| | 8,153 |
| | 11,254 |
| | 12,637 |
| | 5,241 |
| | (44 | )% | | (13 | )% |
Charge-offs | | (7,108 | ) | | (8,476 | ) | | (7,442 | ) | | (12,545 | ) | | (9,088 | ) | | (16 | )% | | (22 | )% |
Recoveries | | 2,752 |
| | 3,385 |
| | 3,155 |
| | 3,845 |
| | 4,379 |
| | (19 | )% | | (37 | )% |
Net charge-offs | | (4,356 | ) | | (5,091 | ) | | (4,287 | ) | | (8,700 | ) | | (4,709 | ) | | (14 | )% | | (7 | )% |
Total allowance for loan and lease losses | | 130,322 |
| | 130,133 |
| | 127,071 |
| | 120,104 |
| | 116,167 |
| | 0 | % | | 12 | % |
Reserve for unfunded commitments | | 3,574 |
| | 3,081 |
| | 2,864 |
| | 3,194 |
| | 3,539 |
| | 16 | % | | 1 | % |
Total allowance for credit losses | | $ | 133,896 |
| | $ | 133,214 |
| | $ | 129,935 |
| | $ | 123,298 |
| | $ | 119,706 |
| | 1 | % | | 12 | % |
| | |
| | |
| | | | | | |
| | |
| | |
|
Net charge-offs to average loans and leases (annualized) | | 0.10 | % | | 0.13 | % | | 0.11 | % | | 0.23 | % | | 0.12 | % | | |
| | |
|
Recoveries to gross charge-offs | | 38.72 | % | | 39.94 | % | | 42.39 | % | | 30.65 | % | | 48.18 | % | | | | |
|
Allowance for loan and lease losses to loans and leases | | 0.77 | % | | 0.79 | % | | 0.80 | % | | 0.77 | % | | 0.76 | % | | |
| | |
|
Allowance for credit losses to loans and leases | | 0.79 | % | | 0.81 | % | | 0.81 | % | | 0.79 | % | | 0.78 | % | | |
| | |
|
| | | | | | | | | | | | |
| | |
|
| | | | | | | | | | | | | | |
Umpqua Reports Fourth Quarter and Full-Year 2015 Results
January 27, 2016
Page 16
|
| | | | | | | | | | | |
Umpqua Holdings Corporation |
Credit Quality – Allowance for Loan and Lease Losses |
(Unaudited) |
| | Year Ended | | % Change |
(Dollars in thousands) | | Dec 31, 2015 | | Dec 31, 2014 | | Year over Year |
Allowance for credit losses: | | | | |
Balance beginning of period | | $ | 116,167 |
| | $ | 95,085 |
| | |
Provision for loan and lease losses | | 36,589 |
| | 40,241 |
| | (9 | )% |
Charge-offs | | (35,571 | ) | | (30,178 | ) | | 18 | % |
Recoveries | | 13,137 |
| | 11,019 |
| | 19 | % |
Net charge-offs | | (22,434 | ) | | (19,159 | ) | | 17 | % |
Total allowance for loan and lease losses | | 130,322 |
| | 116,167 |
| | 12 | % |
Reserve for unfunded commitments | | 3,574 |
| | 3,539 |
| | 1 | % |
Total allowance for credit losses | | $ | 133,896 |
| | $ | 119,706 |
| | 12 | % |
| | |
| | |
| | |
Net charge-offs to average loans and leases | | 0.14 | % | | 0.15 | % | | |
Recoveries to gross charge-offs | | 36.93 | % | | 36.51 | % | | |
Umpqua Reports Fourth Quarter and Full-Year 2015 Results
January 27, 2016
Page 17
|
| | | | | | | | | | | | | | | | | | | | | |
Umpqua Holdings Corporation |
Selected Ratios |
(Unaudited) |
| | | | | | | | | | |
| | Quarter Ended | | % Change |
| | Dec 31, 2015 | | Sep 30, 2015 | | Jun 30, 2015 | | Mar 31, 2015 | | Dec 31, 2014 | | Seq. Quarter | | Year over Year |
Average Rates: | | |
| | |
| | |
| | | | |
| | | | |
Yield on loans and leases | | 5.19 | % | | 5.29 | % | | 5.46 | % | | 5.59 | % | | 5.82 | % | | (0.10 | ) | | (0.63 | ) |
Yield on loans held for sale | | 3.80 | % | | 4.07 | % | | 3.24 | % | | 3.81 | % | | 4.01 | % | | (0.27 | ) | | (0.21 | ) |
Yield on taxable investments | | 2.25 | % | | 2.09 | % | | 2.03 | % | | 2.17 | % | | 2.16 | % | | 0.16 |
| | 0.09 |
|
Yield on tax-exempt investments (1) | | 4.72 | % | | 4.69 | % | | 4.69 | % | | 4.81 | % | | 5.09 | % | | 0.03 |
| | (0.37 | ) |
Yield on temporary investments & interest bearing cash | | 0.28 | % | | 0.25 | % | | 0.26 | % | | 0.25 | % | | 0.25 | % | | 0.03 |
| | 0.03 |
|
Total yield on earning assets (1) | | 4.68 | % | | 4.71 | % | | 4.77 | % | | 4.80 | % | | 4.98 | % | | (0.03 | ) | | (0.30 | ) |
| | | | | | | | | | | | | | |
Cost of interest bearing deposits | | 0.26 | % | | 0.24 | % | | 0.24 | % | | 0.24 | % | | 0.23 | % | | 0.02 |
| | 0.03 |
|
Cost of securities sold under agreements | | |
| | |
| | |
| | | | | |
|
| |
|
|
to repurchase and fed funds purchased | | 0.05 | % | | 0.05 | % | | 0.05 | % | | 0.06 | % | | 0.06 | % | | — |
| | (0.01 | ) |
Cost of term debt | | 1.73 | % | | 1.62 | % | | 1.51 | % | | 1.42 | % | | 1.41 | % | | 0.11 |
| | 0.32 |
|
Cost of junior subordinated debentures | | 3.96 | % | | 3.89 | % | | 3.88 | % | | 3.86 | % | | 3.86 | % | | 0.07 |
| | 0.10 |
|
Total cost of interest bearing liabilities | | 0.44 | % | | 0.42 | % | | 0.41 | % | | 0.41 | % | | 0.41 | % | | 0.02 |
| | 0.03 |
|
| | | | | | | | | | | | | | |
Net interest spread (1) | | 4.24 | % | | 4.29 | % | | 4.36 | % | | 4.39 | % | | 4.57 | % | | (0.05 | ) | | (0.33 | ) |
Net interest margin – Consolidated (1) | | 4.37 | % | | 4.42 | % | | 4.48 | % | | 4.51 | % | | 4.69 | % | | (0.05 | ) | | (0.32 | ) |
Net interest margin – Bank (1) | | 4.44 | % | | 4.49 | % | | 4.55 | % | | 4.57 | % | | 4.75 | % | | (0.05 | ) | | (0.31 | ) |
| | | | | | | | | | | | | | |
As reported (GAAP): | | |
| | |
| | |
| | | | | |
|
| |
|
|
Return on average assets | | 1.08 | % | | 0.99 | % | | 0.96 | % | | 0.84 | % | | 0.92 | % | | 0.09 |
| | 0.16 |
|
Return on average tangible assets | | 1.18 | % | | 1.08 | % | | 1.05 | % | | 0.92 | % | | 1.00 | % | | 0.10 |
| | 0.18 |
|
Return on average common equity | | 6.54 | % | | 5.98 | % | | 5.77 | % | | 5.02 | % | | 5.59 | % | | 0.56 |
| | 0.95 |
|
Return on average tangible common equity | | 12.51 | % | | 11.52 | % | | 11.18 | % | | 9.76 | % | | 11.08 | % | | 0.99 |
| | 1.43 |
|
Efficiency ratio – Consolidated | | 63.73 | % | | 65.00 | % | | 67.35 | % | | 68.71 | % | | 68.23 | % | | (1.27 | ) | | (4.50 | ) |
Efficiency ratio – Bank | | 62.11 | % | | 63.08 | % | | 65.74 | % | | 67.07 | % | | 66.23 | % | | (0.97 | ) | | (4.12 | ) |
| | | | | | | | | | | | | | |
Operating basis (non-GAAP): (2) | | |
| | |
| | |
| | | | | |
|
| |
|
|
Return on average assets | | 1.14 | % | | 1.07 | % | | 1.21 | % | | 1.01 | % | | 1.04 | % | | 0.07 |
| | 0.10 |
|
Return on average tangible assets | | 1.24 | % | | 1.17 | % | | 1.32 | % | | 1.10 | % | | 1.13 | % | | 0.07 |
| | 0.11 |
|
Return on average common equity | | 6.87 | % | | 6.45 | % | | 7.25 | % | | 6.03 | % | | 6.34 | % | | 0.42 |
| | 0.53 |
|
Return on average tangible common equity | | 13.14 | % | | 12.43 | % | | 14.05 | % | | 11.71 | % | | 12.56 | % | | 0.71 |
| | 0.58 |
|
Efficiency ratio – Consolidated | | 62.11 | % | | 62.52 | % | | 59.76 | % | | 63.34 | % | | 64.23 | % | | (0.41 | ) | | (2.12 | ) |
Efficiency ratio – Bank | | 60.84 | % | | 61.15 | % | | 58.49 | % | | 62.05 | % | | 62.61 | % | | (0.31 | ) | | (1.77 | ) |
(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 Fourth Quarter and Full-Year 2015 Results
January 27, 2016
Page 18
|
| | | | | | | | | |
Umpqua Holdings Corporation |
Selected Ratios |
(Unaudited) |
| | | | |
| | Year Ended | | % Change |
| | Dec 31, 2015 | | Dec 31, 2014 | | Year over Year |
Average Rates: | | |
| | |
| | |
Yield on loans and leases | | 5.38 | % | | 5.81 | % | | (0.43 | ) |
Yield on loans held for sale | | 3.72 | % | | 4.06 | % | | (0.34 | ) |
Yield on taxable investments | | 2.13 | % | | 2.22 | % | | (0.09 | ) |
Yield on tax-exempt investments (1) | | 4.73 | % | | 5.20 | % | | (0.47 | ) |
Yield on temporary investments & interest bearing cash | | 0.26 | % | | 0.25 | % | | 0.01 |
|
Total yield on earning assets (1) | | 4.74 | % | | 5.02 | % | | (0.28 | ) |
| | | | | | |
Cost of interest bearing deposits | | 0.24 | % | | 0.23 | % | | 0.01 |
|
Cost of securities sold under agreements | | |
| | |
| | |
|
to repurchase and fed funds purchased | | 0.05 | % | | 0.11 | % | | (0.06 | ) |
Cost of term debt | | 1.57 | % | | 1.57 | % | | — |
|
Cost of junior subordinated debentures | | 3.90 | % | | 3.89 | % | | 0.01 |
|
Total cost of interest bearing liabilities | | 0.42 | % | | 0.41 | % | | 0.01 |
|
| | | | | | |
Net interest spread (1) | | 4.32 | % | | 4.61 | % | | (0.29 | ) |
Net interest margin – Consolidated (1) | | 4.44 | % | | 4.73 | % | | (0.29 | ) |
Net interest margin – Bank (1) | | 4.51 | % | | 4.79 | % | | (0.28 | ) |
| | | | | | |
As reported (GAAP): | | |
| | |
| | |
|
Return on average assets | | 0.97 | % | | 0.77 | % | | 0.20 |
|
Return on average tangible assets | | 1.06 | % | | 0.83 | % | | 0.23 |
|
Return on average common equity | | 5.83 | % | | 4.69 | % | | 1.14 |
|
Return on average tangible common equity | | 11.24 | % | | 9.17 | % | | 2.07 |
|
Efficiency ratio – Consolidated | | 66.19 | % | | 71.23 | % | | (5.04 | ) |
Efficiency ratio – Bank | | 64.50 | % | | 69.64 | % | | (5.14 | ) |
| | | | | | |
Operating basis (non-GAAP): (2) | | |
| | |
| | |
|
Return on average assets | | 1.11 | % | | 1.06 | % | | 0.05 |
|
Return on average tangible assets | | 1.20 | % | | 1.15 | % | | 0.05 |
|
Return on average common equity | | 6.64 | % | | 6.45 | % | | 0.19 |
|
Return on average tangible common equity | | 12.81 | % | | 12.62 | % | | 0.19 |
|
Efficiency ratio – Consolidated | | 61.90 | % | | 62.33 | % | | (0.43 | ) |
Efficiency ratio – Bank | | 60.60 | % | | 61.07 | % | | (0.47 | ) |
(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 Fourth Quarter and Full-Year 2015 Results
January 27, 2016
Page 19
|
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Umpqua Holdings Corporation Average Balances |
(Unaudited) |
| | | | | | |
| | Quarter Ended | | % Change |
(Dollars in thousands) | | Dec 31, 2015 | | Sep 30, 2015 | | Jun 30, 2015 | | Mar 31, 2015 | | Dec 31, 2014 | | Seq. Quarter | | Year over Year |
Temporary investments & interest bearing cash | | $ | 608,250 |
| | $ | 693,114 |
| | $ | 861,775 |
| | $ | 1,323,671 |
| | $ | 1,368,726 |
| | (12 | )% | | (56 | )% |
Investment securities, taxable | | 2,293,429 |
| | 2,272,676 |
| | 2,300,123 |
| | 2,222,174 |
| | 2,169,504 |
| | 1 | % | | 6 | % |
Investment securities, tax-exempt | | 302,443 |
| | 311,984 |
| | 317,655 |
| | 323,852 |
| | 326,858 |
| | (3 | )% | | (7 | )% |
Loans held for sale | | 334,428 |
| | 357,905 |
| | 368,112 |
| | 262,777 |
| | 255,830 |
| | (7 | )% | | 31 | % |
Loans and leases | | 16,514,740 |
| | 16,155,792 |
| | 15,731,298 |
| | 15,334,555 |
| | 15,300,425 |
| | 2 | % | | 8 | % |
Total interest earning assets | | 20,053,290 |
| | 19,791,471 |
| | 19,578,963 |
| | 19,467,029 |
| | 19,421,343 |
| | 1 | % | | 3 | % |
Goodwill & other intangible assets, net | | 1,835,821 |
| | 1,838,740 |
| | 1,841,535 |
| | 1,842,390 |
| | 1,844,084 |
| | 0 | % | | 0 | % |
Total assets | | 23,196,213 |
| | 22,943,563 |
| | 22,777,421 |
| | 22,687,515 |
| | 22,625,461 |
| | 1 | % | | 3 | % |
| | | | | | | | | | | | | | |
Non-interest bearing demand deposits | | 5,285,992 |
| | 5,109,047 |
| | 4,852,989 |
| | 4,808,062 |
| | 4,836,517 |
| | 3 | % | | 9 | % |
Interest bearing deposits | | 12,249,333 |
| | 12,225,691 |
| | 12,274,814 |
| | 12,187,132 |
| | 12,153,481 |
| | 0 | % | | 1 | % |
Total deposits | | 17,535,325 |
| | 17,334,738 |
| | 17,127,803 |
| | 16,995,194 |
| | 16,989,998 |
| | 1 | % | | 3 | % |
Interest bearing liabilities | | 13,812,644 |
| | 13,798,350 |
| | 13,880,474 |
| | 13,838,515 |
| | 13,833,126 |
| | 0 | % | | 0 | % |
| | | | | | | | | | | | | | |
Shareholders’ equity - common | | 3,847,587 |
| | 3,819,303 |
| | 3,803,634 |
| | 3,797,108 |
| | 3,721,003 |
| | 1 | % | | 3 | % |
Tangible common equity (1) | | 2,011,766 |
| | 1,980,563 |
| | 1,962,099 |
| | 1,954,718 |
| | 1,876,919 |
| | 2 | % | | 7 | % |
|
| | | | | | | | | | | |
Umpqua Holdings Corporation Average Balances |
(Unaudited) |
| | Year Ended | % Change |
(Dollars in thousands) | | Dec 31, 2015 | | Dec 31, 2014 | | Year over Year |
Temporary investments & interest bearing cash | | $ | 869,253 |
| | $ | 900,851 |
| | (4 | )% |
Investment securities, taxable | | 2,275,512 |
| | 2,072,936 |
| | 10 | % |
Investment securities, tax-exempt | | 310,684 |
| | 301,535 |
| | 3 | % |
Loans held for sale | | 333,461 |
| | 205,580 |
| | 62 | % |
Loans and leases | | 15,938,120 |
| | 13,003,762 |
| | 23 | % |
Total interest earning assets | | 19,727,030 |
| | 16,484,664 |
| | 20 | % |
Goodwill & other intangible assets, net | | 1,839,601 |
| | 1,533,403 |
| | 20 | % |
Total assets | | 22,905,582 |
| | 19,169,098 |
| | 19 | % |
| | | | | | |
Non-interest bearing demand deposits | | 5,015,508 |
| | 3,951,429 |
| | 27 | % |
Interest bearing deposits | | 12,235,302 |
| | 10,455,902 |
| | 17 | % |
Total deposits | | 17,250,810 |
| | 14,407,331 |
| | 20 | % |
Interest bearing liabilities | | 13,833,245 |
| | 11,875,802 |
| | 16 | % |
| | | | | | |
Shareholders’ equity - common | | 3,820,506 |
| | 3,137,858 |
| | 22 | % |
Tangible common equity (1) | | 1,980,905 |
| | 1,604,455 |
| | 23 | % |
(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 Fourth Quarter and Full-Year 2015 Results
January 27, 2016
Page 20
|
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Umpqua Holdings Corporation Residential Mortgage Banking Activity |
(unaudited) |
| | | | | | |
| | Quarter Ended | | % Change |
(Dollars in thousands) | | Dec 31, 2015 | | Sep 30, 2015 | | Jun 30, 2015 | | Mar 31, 2015 | | Dec 31, 2014 | | Seq. Quarter | | Year over Year |
Residential mortgage servicing rights: | | | | | | | | | | | | | | |
Residential mortgage loans serviced for others | | $ | 13,047,266 |
| | $ | 12,693,451 |
| | $ | 12,302,866 |
| | $ | 11,874,910 |
| | $ | 11,590,310 |
| | 3 | % | | 13 | % |
MSR asset, at fair value | | 131,817 |
| | 124,814 |
| | 127,206 |
| | 116,365 |
| | 117,259 |
| | 6 | % | | 12 | % |
MSR as % of serviced portfolio | | 1.01 | % | | 0.98 | % | | 1.03 | % | | 0.98 | % | | 1.01 | % | | |
| | |
|
Residential mortgage banking revenue: | | |
| | |
| | | | | | |
| | |
| | |
|
Origination and sale | | $ | 25,363 |
| | $ | 26,904 |
| | $ | 33,667 |
| | $ | 31,498 |
| | $ | 18,378 |
| | (6 | )% | | 38 | % |
Servicing | | 7,546 |
| | 7,240 |
| | 6,770 |
| | 6,457 |
| | 6,306 |
| | 4 | % | | 20 | % |
Change in fair value of MSR asset | | (469 | ) | | (10,103 | ) | | (423 | ) | | (9,728 | ) | | (8,195 | ) | | (95 | )% | | (94 | )% |
Total | | $ | 32,440 |
| | $ | 24,041 |
| | $ | 40,014 |
| | $ | 28,227 |
| | $ | 16,489 |
| | 35 | % | | 97 | % |
| | | | | | | | | | | | | | |
Closed loan volume: | | | | | | | | | | | | | | |
Closed loan volume - portfolio | | $ | 352,465 |
| | $ | 446,088 |
| | $ | 446,712 |
| | $ | 311,149 |
| | $ | 319,779 |
| | (21 | )% | | 10 | % |
Closed loan volume - for-sale | | 794,820 |
| | 843,720 |
| | 997,225 |
| | 862,155 |
| | 622,133 |
| | (6 | )% | | 28 | % |
Closed loan volume - total | | $ | 1,147,285 |
| | $ | 1,289,808 |
| | 1,443,937 |
| | 1,173,304 |
| | $ | 941,912 |
| | (11 | )% | | 22 | % |
| | | | | | | | | | | | | | |
Gain on sale margin: | | | | | | | | | | | | | | |
Based on for-sale volume | | 3.19 | % | | 3.19 | % | | 3.38 | % | | 3.65 | % | | 2.95 | % | | — |
| | 0.24 |
|
| | | | | | | | | | | | | | |
| | Year Ended | | % Change | | | | | | | | |
| | Dec 31, 2015 | | Dec 31, 2014 | | Year over Year | | | | | | | | |
Residential mortgage banking revenue: | | |
| | |
| | | | | | | | | | |
Origination and sale | | $ | 117,432 |
| | $ | 73,038 |
| | 61 | % | | | |
|
| | | | |
Servicing | | 28,013 |
| | 20,813 |
| | 35 | % | | | |
|
| | | | |
Change in fair value of MSR asset | | (20,723 | ) | | (16,586 | ) | | 25 | % | | | |
|
| | | | |
Total | | $ | 124,722 |
| | $ | 77,265 |
| | 61 | % | | | |
|
| | | | |
| | | | | | | | | | | | | | |
Closed loan volume: | | | | | | | | | | | | | | |
Closed loan volume - portfolio | | $ | 1,556,414 |
| | $ | 971,245 |
| | 60 | % | | | |
|
| | | | |
Closed loan volume - for-sale | | 3,497,920 |
| | 2,146,828 |
| | 63 | % | | | |
|
| | | | |
Closed loan volume - total | | $ | 5,054,334 |
| | $ | 3,118,073 |
| | 62 | % | | | | | | | | |
| | | | | | | | | | | | | | |
Gain on sale margin: | | | | | | | | | | | | | | |
Based on for-sale volume | | 3.36 | % | | 3.40 | % | | (0.04 | ) | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
###
UMPQUA HOLDINGS CORPORATION 4th Quarter 2015 Earnings Conference Call Presentation January 28, 2015
2 Forward-looking Statements and Notes This presentation and our related earnings release and call include 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 our quarterly materials we make forward-looking statements about the integration of the merger with Sterling Financial Corporation and systems conversions; timing and amount of merger-related synergies and merger-related expenses; credit discount accretion related to the merger; planned investments and initiatives; loan and deposit growth; mortgage production; credit quality; balance sheet mix; and use of capital. 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. Financial Statement Presentation: Please note that the financial statement presentation, and the surrounding narrative, contains certain prior period amounts which have been reclassified to conform with current year presentation.
2015 Highlights 3 > (1) Non-GAAP financial measure. A reconciliation to the comparable GAAP measurement is provided in the appendix of this slide presentation. Full-Year 2015 (compared to prior year): Operating earnings1 of $253.8 million, or $1.15 per diluted share, up from $202.5 million, or $1.08 per diluted share • Revenue growth of 20%, driven primarily by higher net interest income from a larger balance sheet and improvement in asset mix, and an increase in mortgage banking revenue • Efficiency ratio (operating basis)1 improved to 61.90%, from 62.33% • Return on average assets (operating basis)1 of 1.11% and return on tangible common equity (operating basis)1 of 12.81%, both increased from prior year Gross loan and lease growth of $1.5 billion, or 10% Non-performing assets to total assets decreased to 0.29%, from 0.43% Paid dividends of $0.62 per common share, repurchased 571,000 shares of stock, and grew tangible book value1 by 4% Fourth Quarter 2015 (compared to prior quarter): Operating earnings1 increased to $66.6 million, or $0.30 per diluted share, up from $62.1 million, or $0.28 per diluted share • Net interest income increased by $0.6 million, driven by strong loan growth • Provision for loan and lease losses decreased by $3.6 million, driven by improved credit performance and lower net charge-offs • Non-interest income increased by $8.0 million, driven by a lower loss related to the change in fair value of the MSR asset; • Non-interest expense (excluding merger-related expense) increased by $4.2 million, driven primarily by higher marketing, professional services, communications and depreciation expense Gross loans and leases grew by $460.3 million, or 11% annualized, and deposits grew by $240.2 million, or 5% annualized Estimated total risk-based capital ratio of 14.2% and estimated Tier 1 common to risk weighted assets ratio of 11.2% Paid quarterly dividend of $0.16 per common share; Repurchased 61,000 shares of common stock for $1.1 million
Improvement in Key Profitability Metrics 4 > (1) Non-GAAP financial measure. A reconciliation to the comparable GAAP measurement is provided in the appendix of this slide presentation. $0.94 $1.08 $1.15 $0.50 $0.70 $0.90 $1.10 $1.30 FY 2013 FY 2014 FY 2015 Operating Earnings Per Share (1) 0.92% 1.06% 1.11% 0.00% 0.20% 0.40% 0.60% 0.80% 1.00% 1.20% FY 2013 FY 2014 FY 2015 Return on Average Assets (operating) (1) 10.60% 12.62% 12.81% 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% FY 2013 FY 2014 FY 2015 Return on Average Tangible Common Equity (operating) (1)
FY 2015 FY 2014 Q4 2015 Q3 2015 Q2 2015 Q1 2015 Q4 2014 Return on average assets 1.11% 1.06% 1.14% 1.07% 1.21% 1.01% 1.04% Return on average tangible assets 1.20% 1.15% 1.24% 1.17% 1.32% 1.10% 1.13% Return on average common equity 6.64% 6.45% 6.87% 6.45% 7.25% 6.03% 6.34% Return on average tangible common equity 12.81% 12.62% 13.14% 12.43% 14.05% 11.71% 12.56% Efficiency ratio - consolidated 61.90% 62.33% 62.11% 62.52% 59.76% 63.34% 64.23% Net interest margin - consolidated 4.44% 4.73% 4.37% 4.42% 4.48% 4.51% 4.69% Non-performing loans and leases to loans and leases 0.26% 0.39% 0.26% 0.25% 0.29% 0.33% 0.39% Non-performing assets to total assets 0.29% 0.43% 0.29% 0.28% 0.31% 0.36% 0.43% Net charge-offs to average loans and leases (annualized) 0.14% 0.15% 0.10% 0.13% 0.11% 0.23% 0.12% Tangible common equity to tangible assets (1) 9.36% 9.32% 9.36% 9.37% 9.38% 9.28% 9.32% Basel III - Tier 1 common to risk-weighted asset ratio (2) 11.2% NA 11.2% 11.5% 11.5% 11.1% NA Basel III - Total risk-based capital ratio (2) 14.2% NA 14.2% 14.5% 14.6% 14.6% NA Basel I - Tier 1 common to risk-weighted asset ratio NA 11.5% NA NA NA NA 11.5% Basel I - Total risk-based capital ratio NA 15.2% NA NA NA NA 15.2% Key Performance Ratios 5 > (1) Non-GAAP financial measure. A reconciliation to the comparable GAAP measurement is provided at the end of this slide presentation. > (2) Capital ratio estimated for current quarter, pending completion and filing of regulatory reports. Profitability (operating basis)(1) Credit Quality Capital For the quarter ended For the year ended
Summary Income Statement 6 > Note: tables may not foot due to rounding. > (1) Income tax effect of pro forma operating earnings adjustments at 40% for tax-deductible items. > (2) Non-GAAP financial measure. A reconciliation to the comparable GAAP measurement is provided in the appendix of this slide presentation. ($ in millions except per share da ta ) FY 2015 FY 2014 4Q 2015 3Q 2015 4Q 2013 Net interest income before provision 871.6$ 773.8$ 219.8$ 219.2$ 228.0$ Provision for loan and lease losses 36.6 40.2 4.5 8.2 5.2 Net interest income 835.0 733.6 215.3 211.1 222.8 Non-interest income 275.7 181.2 69.3 61.4 50.3 Non-interest expense 762.8 684.1 185.1 183.2 190.9 Income be fore provision for income taxes 348.0 230.7 99.6 89.2 82.2 Provision for income taxes 124.9 83.0 36.0 31.6 29.6 Ne t income 223.1 147.7 63.5 57.6 52.6 Dividends and undistributed earnings allocated to participating securities 0.4 0.5 0.1 0.1 0.1 Ne t earnings ava ilable to common shareholders 222.7$ 147.2$ 63.4$ 57.5$ 52.4$ Adjustments Net loss on junior subordinated debentures carried at fair value, net of tax 3.8 3.1 1.0 1.0 1.0 Merger related expenses, net of tax 27.3 52.3 2.2 3.6 6.0 Opera ting earnings 253.8$ 202.5$ 66.6$ 62.1$ 59.4$ Earnings per diluted share: Earnings available to common shareholders $1.01 $0.78 $0.29 0.26$ $0.24 Operating earnings $1.15 $1.08 $0.30 0.28$ $0.27 Year ended Quarte r ended
Net Interest Income and Margin 7 $228.0 $215.1 $217.5 $219.2 $219.8 4.69% 4.51% 4.48% 4.42% 4.37% 2.00% 3.00% 4.00% 5.00% 6.00% 7.00% $100 $120 $140 $160 $180 $200 $220 $240 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Net interest income Net interest margin > Net interest income increased by $0.6 million from the prior quarter • Driven primarily by strong loan growth • Core net interest margin declined by 1 bps (in millions) Net interest margin, excluding interest income related to credit discount from Sterling deal and related to 310-30 covered loan PIFs 4.22% 4.14% 4.13% 4.09% 4.08%
Provision for Loan and Lease Losses 8 > Provision for loan and lease losses decreased by $3.6 million from the prior quarter • Driven by improved portfolio performance and lower net charge-offs $5.2 $12.6 $11.3 $8.2 $4.5 $0 $2 $4 $6 $8 $10 $12 $14 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Provision for loan and lease losses (in millions)
($2.5) ($2.7) ($2.8) $0.1 $1.2 $8.2 $10.3 $13.6 $9.3 $13.1 $5.7 $6.7 $8.7 $5.2 $1.7 $2.0 $2.3 $2.0 $2.2 $1.8 $16.5 $28.2 $40.0 $24.0 $32.4 $5.0 $4.8 $4.6 $5.0 $4.1 $15.5 $14.3 $14.8 $15.6 $15.0 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Service charges Brokerage fees Residential mortgage banking revenue, net BOLI income Gain on loan sales Other income Other misc. Non-interest Income 9 > Non-interest income increased by $8.0 million from the prior quarter • Driven primarily by increased mortgage banking revenue and increased income related to debt capital market activities • Partially offset by lower brokerage revenue and income from portfolio loans sales (in millions) $50.3 > (1) Includes net gain on investment securities, loss on junior subordinated debentures carried at fair value, and change in FDIC indemnification asset. (1) $63.9 $81.1 $61.4 $69.3
Mortgage Banking Revenue 10 $18.4 $31.5 $33.7 $26.9 $25.4 $6.3 $6.5 $6.8 $7.2 $7.5 $(8.2) $(9.7) $(0.4) $(10.1) $(0.5) Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Origination and sale Servicing Change in fair value of MSR asset > Total mortgage banking revenue increased by $8.4 million from the prior quarter • Driven primarily by a lower loss related to the change in fair value of the MSR asset • Servicing revenue continues to grow, up 4% from the prior quarter and 20% from the same period a year ago (in millions) $16.5 $28.2 $40.0 $24.0 $32.4
> For sale mortgage originations decreased by 6% from the prior quarter, and gain on sale margin remained flat at 3.19% bps 11 $320 $311 $447 $446 $352 $622 $862 $997 $844 $795 $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Closed mortgage volume Portfolio For Sale (in millions) Mortgage Originations and Gain on Sale Margin $942 2.95% 3.65% 3.38% 3.19% 3.19% 0.02 0.025 0.03 0.035 0.04 0.045 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Gain on sale margin $1,173 $1,444 $1,290 $1,147
Non-interest Expense 12 > Non-interest expense (excluding merger-related expenses) increased by $4.2 million from the prior quarter • Driven primarily by higher marketing, professional service, communications and depreciation expenses. • Achieved $82 million, or 95%, of $87 million (annualized) cost synergy target, in December 2015. • Targeting operating efficiency ratio at 60% or below in 2016 > (1) For presentation purposes, non-interest expense excludes merger-related expenses of $10.2 million, $14.1 million, $21.8 million, $6.0 million and $3.7 million for Q4 2014, Q1 2015, Q2 2015, Q3 2015 and Q4 2015, respectively. >(2) Non-GAAP financial measure. A reconciliation to the comparable GAAP measurement is provided in the appendix of this slide presentation. > (in millions) $180.7 $178.9 $180.1 $177.2 $181.4 64.23% 63.34% 59.76% 62.52% 62.11% 55.0% 60.0% 65.0% 70.0% 75.0% $105.0 $115.0 $125.0 $135.0 $145.0 $155.0 $165.0 $175.0 $185.0 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Non-interest expense (1) Efficiency ratio (operating) (2)
Selected Balance Sheet 13 ($ in millions) Q4 2015 Q3 2015 Q4 2014 Total assets 23,387.7$ 23,162.3$ 22,609.9$ Interest bearing cash and temporary investments 496.1 673.8 1,322.7 Investment securities 2,536.7 2,496.7 2,313.8 Loans and leases, gross 16,848.2 16,387.9 15,327.7 Allowance for loan and lease losses (130.3) (130.1) (116.2) Goodwill and other intangibles, net 1,833.3 1,837.0 1,843.0 Deposits 17,707.2 17,467.0 16,892.1 Securities sold under agreements to repurchase 304.6 323.7 313.3 Term debt 888.8 889.4 1,006.4 Total shareholders' equity 3,849.8 3,835.6 3,777.6 Ratios: Loan to deposit ratio 95.1% 93.8% 90.7% Book value per common share 17.49$ 17.42$ 17.16$ Tangible book value per common share (1) 9.16$ 9.08$ 8.79$ Tangible common equity to tangible assets (1) 9.36% 9.37% 9.32% > (1) Non-GAAP financial measure. A reconciliation to the comparable GAAP measurement is provided in the appendix of this slide presentation.
Loan Growth 14 Loans and Leases (Gross) $6.4 $6.5 $7.2 $7.7 $15.3 $16.8 (in billions) 19% 16% 18% 2% 9% 6% 4% 17% 5% 3% Non-owner occupied term CRE Owner occupied term CRE Multifamily Commercial construction Residential development Commercial term Commercial lines of credit & other Leases & equipment finance Mortgage Home equity lines & loans Consumer & other As of Dec 31, 2015 > Gross loan and lease growth of $488.0 billion, or 12%, annualized, from the prior quarter • Loan growth was partially offset by quarterly portfolio residential mortgage loans loan sales of $27.7 million
30% 12% 37% 6% 15% Demand, non-interest bearing Demand, interest bearing Money market Savings Time Deposit Growth $9.4 $9.2 $9.4 $9.1 $16.9 $17.7 (in billions) Total Deposits As of Dec 31, 2015 > Total deposits increased by $240.2 million, or 5% annualized, from the prior quarter • Driven by growth in non-interest bearing demand and money market, partially offset by a decrease in time deposits > Cost of interest bearing deposits increased by 2 bps to 0.26% 15
Credit Quality 16 > All of the key credit quality ratios remained strong 0.76% 0.77% 0.80% 0.79% 0.77% 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 3.50% 4.00% Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Allowance for loan and lease losses to loans and leases 0.43% 0.36% 0.31% 0.28% 0.29% 0.00% 0.20% 0.40% 0.60% 0.80% 1.00% Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Non-performing assets to total assets 0.12% 0.23% 0.11% 0.13% 0.10% 0.00% 0.20% 0.40% 0.60% 0.80% 1.00% Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Net charge-offs to average loans and leases (annualized) Ratio after grossing up for value of Sterling-related credit mark remaining at quarter end 2.0% 1.7% 1.8% 1.6% 1.5%
Prudent Capital Management 17 > All regulatory capital ratios remained in excess of well-capitalized and internal policy limits > Focused on prudently managing capital • Quarterly dividend of $0.16 per share, ~4.6% dividend yield • Repurchased 61,000 shares of common stock for $1.1 million • Total payout ratio of 55% of operating earnings Tangible Common Equity/Tangible Assets Tier 1 Leverage Tier 1 Common Risk Based Tier 1 Risk Based Total Risk Based Q4 2015 Capital Ratios (1) Common TRUP LLR 9.6% 11.2% 11.5% 14.2% 9.36% > (1) Regulatory capital ratios are estimates pending completion and filing of the Company’s regulatory reports. > Note: LLR = loan loss reserve, TRUP = trust preferred capital, Common = tangible common equity.
Appendix – Non-GAAP Reconciliation
Non-GAAP Reconciliation – Operating Earnings 19
Non-GAAP Reconciliation – Tangible Book Value 20
Thank you
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