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
In the paragraph titled "Earnings Conference Call Information,"
the fourth and fifth sentences are corrected to read: To join the
call, please dial (888) 708-5678 ten minutes prior to the start
time and enter conference ID: 5991746. A re-broadcast will be
available approximately two hours after the call by dialing (888)
203-1112 and entering conference ID 5991746. (Instead of: 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 corrected release reads:
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
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.
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%;
- 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.
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.
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.
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 overYear
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.
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
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
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. PT (1:00 p.m. ET).
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) 708-5678 ten
minutes prior to the start time and enter conference ID: 5991746. A
re-broadcast will be available approximately two hours after the
call by dialing (888) 203-1112 and entering conference ID 5991746.
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 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 overYear
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 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 overYear
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
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 overYear
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 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 overYear
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 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 overYear
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
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 overYear
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
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 overYear
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
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 overYear
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
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 overYear
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
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160420006035/en/
Umpqua Holdings CorporationRon Farnsworth, 503-727-4108EVP/Chief
Financial Officerronfarnsworth@umpquabank.comorBradley Howes,
503-727-4226SVP/Director of Investor
Relationsbradhowes@umpquabank.com
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