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: April 15, 2015
(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 April 15, 2015, Umpqua Holdings Corporation issued a press release announcing first quarter 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 quarter ended March 31, 2015 as part of its quarterly report on Form 10-Q 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 April 16, 2015. 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 first quarter 2015 financial results dated April 15, 2015 |
| 99.2 First 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: April 15, 2015 | By:/s/ Andrew H. Ognall Andrew H. Ognall Executive Vice President, General Counsel and Secretary |
EXHIBIT INDEX
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Exhibit Number | | Description |
| | |
99.1 | | Press Release announcing first quarter 2015 financial results dated April 15, 2015 |
99.2 | | First 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 FIRST QUARTER 2015 RESULTS
Operating earnings1 of $56.4 million, or $0.26 per share
Loan and lease (gross of sales) growth of $294 million, or 8% annualized
Deposit growth of $330 million, or 8% annualized
Core system conversion completed April 2015
PORTLAND, Ore. – April 15, 2015 – Umpqua Holdings Corporation (NASDAQ: UMPQ) (the “Company”) reported net earnings available to common shareholders of $47.0 million for the first quarter of 2015, as compared to $52.4 million for the fourth quarter of 2014 and $18.5 million for the first quarter of 2014. Earnings per diluted common share were $0.21 for the first quarter of 2015, as compared to $0.24 for the fourth quarter of 2014 and $0.16 for the first quarter of 2014.
Operating earnings1, which represent earnings available to common shareholders before gains or losses on junior subordinated debentures carried at fair value, net of tax, and merger related expenses, net of tax, were $56.4 million for the first quarter of 2015, as compared to $59.4 million for the fourth quarter of 2014 and $23.9 million for the first quarter of 2014. Operating earnings per diluted common share were $0.26 for the first quarter of 2015, as compared to $0.27 for the fourth quarter of 2014 and $0.21 for the first quarter of 2014.
“The results of the first quarter of 2015 reflect Umpqua’s continued focus on disciplined growth while we progress in the completion of integrating Sterling,” said Ray Davis, president and CEO of Umpqua Holdings Corporation. “With the core system conversion now behind us, we have turned our attention to the final steps of integration and realizing the remaining expense synergies, which should accelerate over the next two quarters as major obstacles have now been eliminated. We are now able to concentrate more on our growth initiatives, reducing the company's efficiency ratio to below 60%, and continuing to innovate with new technologies and delivery systems.”
Highlights:
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• | First quarter of 2015 operating earnings1 of $56.4 million: |
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◦ | Net interest income decreased by $11.0 million from the prior quarter, driven by a $6.4 million decrease in interest income related to the Sterling credit discount accretion and two fewer days in the quarter; |
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◦ | Provision for loan and lease losses increased by $8.5 million from the prior quarter, driven by higher net charge-offs and stronger loan growth; |
1 "Non-GAAP" financial measure. More information regarding this measurement and a reconciliation to the comparable GAAP measurement is provided under the heading Non-GAAP Financial Measures below.
Umpqua Reports First Quarter 2015 Results
April 15, 2015
Page 2
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◦ | Mortgage banking revenue increased by $11.7 million from the prior quarter, driven by an improvement in gain on sale margin and higher volume, partially offset by a $1.5 million increase in the loss related to the change in fair value of the mortgage servicing rights (MSR); |
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◦ | Non-interest expense (excluding merger-related expense) decreased by $1.7 million from the prior quarter, driven by synergies from reduced store costs, lower services and marketing expenses, and a lower loss on other real estate owned, partially offset by higher variable mortgage banking expense primarily reflected in salaries and benefits; |
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• | Continued growth in loans and deposits: |
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◦ | Loans and leases (gross of sales) grew by $294.1 million, or 8% annualized, from the prior quarter. This growth was partially offset by loan sales of $72.8 million, for net growth of $221.2 million, or 6% annualized; |
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◦ | Deposits grew by $330.5 million, or 8% annualized, from the prior quarter; |
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• | Capital and liquidity position remained strong: |
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◦ | Tangible book value per common share1 increased to $8.88, from $8.79 in the prior quarter; |
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◦ | Under Basel III rules, estimated total risk-based capital ratio of 14.3% and estimated Tier 1 common to risk weighted assets ratio of 10.8%; |
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◦ | Declared a dividend of $0.15 per common share, and |
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◦ | Interest bearing cash of $1.1 billion, as compared to $1.3 billion in the prior quarter. |
Balance Sheet
Total consolidated assets were $23.0 billion as of March 31, 2015, as compared to $22.6 billion as of December 31, 2014 and $11.8 billion as of March 31, 2014. Including secured off-balance sheet lines of credit, total available liquidity to the Company was $7.8 billion as of March 31, 2015, representing 34% of total assets and 45% of total deposits.
Gross loans and leases were $15.5 billion as of March 31, 2015, an increase of $221.2 million, or 6% annualized, from $15.3 billion as of December 31, 2014. During the first quarter of 2015, the Company had loan sales of $72.8 million, primarily comprised of portfolio residential mortgage loans. Excluding the impact of these sales, gross loan growth was $294.1 million, or 8% annualized.
Total deposits were $17.2 billion as of March 31, 2015, an increase of $330.5 million, or 8% annualized, from $16.9 billion as of December 31, 2014. This increase was primarily driven by an increase in non-interest bearing demand, savings and money market accounts, partially offset by a decrease in time deposits.
Net Interest Income
Net interest income was $217.0 million for the first quarter of 2015, down $11.0 million from the prior quarter but up $109.1 million from the same period in the prior year. The decrease from the prior quarter was primarily driven by a $6.4 million decrease in interest income arising from the accretion of the credit discount recorded on the loans acquired from Sterling, along with two fewer days in the quarter. The increase from prior year was primarily driven by the acquisition of Sterling, along with continued organic loan growth. Net interest income for the first quarter of 2015 included $15.2 million in interest income arising from the accretion of the credit discount recorded on the loans acquired from Sterling, as compared to $21.6 million in the prior quarter.
The Company’s net interest margin was 4.55% for the first quarter of 2015, down from 4.69% for the fourth quarter of 2014, but up from 4.28% for the first quarter of 2014. The decrease from the prior quarter was primarily driven by the lower level of Sterling credit discount accretion in interest income. The increase from the prior year was primarily driven by the acquisition of Sterling, and to a lesser degree, a higher yield on interest-earning assets and a lower cost of funds.
1 "Non-GAAP" financial measure. More information regarding this measurement and a reconciliation to the comparable GAAP measurement is provided under the heading Non-GAAP Financial Measures below.
Umpqua Reports First Quarter 2015 Results
April 15, 2015
Page 3
Credit Quality
Under purchase accounting rules, 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 losses, or its related allowance coverage ratios, but should be considered when comparing the current quarter ratios to similar ratios in periods prior to the acquisition of Sterling.
Loans acquired with 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 2015, the Company reported $15.2 million of accretion from the Sterling credit discount in interest income. As of March 31, 2015, the purchased non-credit impaired loans had approximately $107.7 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 $61.1 million of remaining total discount.
The allowance for loan and lease losses was $120.1 million, or 0.77% of loans and leases, as of March 31, 2015. To provide better comparability to prior periods, this pro-forma ratio would have been approximately 1.8% after grossing up the allowance for loan and lease losses and the loans and leases by the amount of the remaining credit mark remaining as of quarter-end. This compares to a ratio of approximately 2.0% as of December 31, 2014.
The provision for loan and lease losses was $13.7 million for the first quarter of 2015, an increase of $8.5 million from the prior quarter. This increase was primarily driven by an increase in net charge-offs and a higher level of loan growth, as compared to the prior quarter. Charge-offs, net of recoveries, increased to $9.8 million for the first quarter of 2015, as compared to $4.7 million in the prior quarter.
Non-performing assets decreased to $82.7 million, or 0.36% of total assets, as of March 31, 2015, as compared to $97.5 million, or 0.43% of total assets, as of December 31, 2014. Loans past due 31 to 89 days were $20.5 million, or 0.13% of loans and leases, as of March 31, 2015, as compared to $24.7 million, or 0.16% of loans and leases, as of December 31, 2014. Restructured loans on accrual status were $60.9 million as of March 31, 2015, as compared to $54.8 million as of December 31, 2014.
Non-interest Income
Total non-interest income was $63.6 million for the first quarter of 2015, up $13.3 million from the prior quarter and $40.4 million from the same period in the prior year. The increase from the prior quarter was primarily driven by higher mortgage banking revenue and other income. The increase from the prior year was primarily driven by the acquisition of Sterling.
Residential mortgage banking revenue, which includes revenue from the origination and sale of residential mortgage loans, revenue from the servicing of residential mortgage loans and changes to the fair value of the residential mortgage servicing rights (“MSR”) asset, increased by $11.7 million from the prior quarter. Revenue from the origination and sale of residential mortgages increased by $13.1 million from the prior quarter, driven by an improvement in gain on sale margin and higher mortgage originations. Loss related to the change in fair value of the MSR increased to $9.7 million for the first quarter of 2015 due to a decline in interest rates, as compared to $8.2 million for the prior quarter.
The Company’s gain on sale margin was 3.65% for the first quarter of 2015, up from 2.95% in the prior quarter. Of the current quarter’s mortgage production, 45% related to purchase activity, as compared to 63% for the prior quarter and 69% for the same period in the prior year.
As of March 31, 2015, the Company serviced $11.9 billion of residential mortgage loans for others, and its related MSR asset was valued at $116.4 million, or 0.98% of the total serviced portfolio principal balance. This compares to
1 "Non-GAAP" financial measure. More information regarding this measurement and a reconciliation to the comparable GAAP measurement is provided under the heading Non-GAAP Financial Measures below.
Umpqua Reports First Quarter 2015 Results
April 15, 2015
Page 4
$11.6 billion of residential mortgage loans for others as of December 31, 2014, with a related MSR asset of $117.3 million, or 1.01% of the total serviced portfolio principal balance. As of March 31, 2014, the Company serviced $4.5 billion of residential mortgage loans serviced for others, and its related MSR asset was valued at $49.2 million, or 1.09% of the total serviced portfolio principal balance.
Non-interest Expense
Non-interest expense was $193.1 million for the first quarter of 2015, which included $14.1 million of merger-related expenses. This compares to $190.9 million, including $10.2 million of merger-related expenses, for the fourth quarter of 2014 and $96.5 million, including $6.0 million of merger-related expenses, for the first quarter of 2014.
Excluding merger-related expenses, non-interest expense decreased by $1.7 million from the prior quarter. This decrease was primarily driven by synergies related to the store consolidations, lower services and marketing expenses, and a lower loss on other real estate owned property. These were partially offset by a $5.0 million increase in variable mortgage expenses, primarily reflected in salaries and benefits, related to higher production in the quarter.
The first quarter of 2015 non-interest expense run-rate does not reflect the full benefit of the anticipated Sterling merger cost synergies. The Company recently completed the core system conversion, and plans to complete the remaining integration over the next two quarters. Cost synergies remain on track to the previously announced target of $87 million (annualized), which is expected to be realized following integration.
Income taxes
The Company recorded a provision for income taxes of $26.6 million for the first quarter of 2015, representing an effective tax rate of 36.1% for the quarter, as compared to $29.6 million, with an effective tax rate of 36.0%, for the fourth quarter of 2014.
Capital
As of March 31, 2015, the Company’s tangible book value per common share1 was $8.88 and its ratio of tangible common equity to tangible assets1 was 9.28%, as compared to $8.79 and 9.31%, respectively, in the prior quarter.
The Company made no open market nor privately negotiated purchases of common stock under the Company’s previously announced share repurchase plan during the first quarter of 2015. The Company may repurchase up to 12.0 million of additional shares under this plan.
Based on Basel III rules, as of March 31, 2015, the Company’s estimated total risk-based capital ratio was 14.3% and its estimated Tier 1 common to risk weighted assets ratio was 10.8%. As of December 31, 2014, which is based on Basel I rules, the Company's total risk-based capital ratio was 15.2% and its Tier 1 common to risk weighted assets ratio was 11.5%. The Company remains well above current “well-capitalized” regulatory minimums. The regulatory capital ratios as of March 31, 2015 are estimates, pending completion and filing of the Company’s regulatory reports.
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
1 "Non-GAAP" financial measure. More information regarding this measurement and a reconciliation to the comparable GAAP measurement is provided under the heading Non-GAAP Financial Measures below.
Umpqua Reports First Quarter 2015 Results
April 15, 2015
Page 5
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.
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) | | Mar 31, 2015 | | Dec 31, 2014 | | Sep 30, 2014 | | Jun 30, 2014 | | Mar 31, 2014 | | Seq. Quarter | | Year over Year |
Net earnings available to common shareholders | | $ | 47,045 |
| | $ | 52,436 |
| | $ | 58,741 |
| | $ | 17,459 |
| | $ | 18,538 |
| | (10 | )% | | 154 | % |
Adjustments: | | |
| | |
| | | | | | |
| | | | |
Net loss on junior subordinated debentures carried at fair value, net of tax (1) | | 933 |
| | 953 |
| | 955 |
| | 821 |
| | 325 |
| | (2 | )% | | 187 | % |
Merger related expenses, net of tax (1) | | 8,449 |
| | 6,038 |
| | 5,274 |
| | 35,926 |
| | 5,073 |
| | 40 | % | | 67 | % |
Operating earnings | | $ | 56,427 |
| | $ | 59,427 |
| | $ | 64,970 |
| | $ | 54,206 |
| | $ | 23,936 |
| | (5 | )% | | 136 | % |
| | | | | | | | | | | | | | |
Earnings per diluted share: | | |
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| | | | | | |
| | | | |
Earnings available to common shareholders | | $ | 0.21 |
| | $ | 0.24 |
| | $ | 0.27 |
| | $ | 0.09 |
| | $ | 0.16 |
| | (13 | )% | | 31 | % |
Operating earnings | | $ | 0.26 |
| | $ | 0.27 |
| | $ | 0.30 |
| | $ | 0.27 |
| | $ | 0.21 |
| | (4 | )% | | 24 | % |
| | | | | | | | | | | | | | |
(1) Income tax effect of pro forma operating earnings adjustments at 40% for tax-deductible items. | | |
nm = not meaningful. | | |
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 First Quarter 2015 Results
April 15, 2015
Page 6
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) | | Mar 31, 2015 | | Dec 31, 2014 | | Sep 30, 2014 | | Jun 30, 2014 | | Mar 31, 2014 |
Total shareholders' equity | | $ | 3,800,970 |
| | $ | 3,777,332 |
| | $ | 3,748,807 |
| | $ | 3,725,465 |
| | $ | 1,730,560 |
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Subtract: | | |
| | |
| | | | | | |
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Goodwill and other intangible assets, net | | 1,842,567 |
| | 1,842,958 |
| | 1,845,242 |
| | 1,842,670 |
| | 775,488 |
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Tangible common shareholders' equity | | $ | 1,958,403 |
| | $ | 1,934,374 |
| | $ | 1,903,565 |
| | $ | 1,882,795 |
| | $ | 955,072 |
|
Total assets | | $ | 22,953,158 |
| | $ | 22,609,609 |
| | $ | 22,484,358 |
| | $ | 22,038,634 |
| | $ | 11,834,810 |
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Subtract: | | |
| | |
| | | | | | |
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Goodwill and other intangible assets, net | | 1,842,567 |
| | 1,842,958 |
| | 1,845,242 |
| | 1,842,670 |
| | 775,488 |
|
Tangible assets | | $ | 21,110,591 |
| | $ | 20,766,651 |
| | $ | 20,639,116 |
| | $ | 20,195,964 |
| | $ | 11,059,322 |
|
Common shares outstanding at period end | | 220,453,729 |
| | 220,161,120 |
| | 217,261,722 |
| | 217,190,721 |
| | 112,319,525 |
|
Tangible common equity ratio | | 9.28 | % | | 9.31 | % | | 9.22 | % | | 9.32 | % | | 8.64 | % |
Tangible book value per common share | | $ | 8.88 |
| | $ | 8.79 |
| | $ | 8.76 |
| | $ | 8.67 |
| | $ | 8.50 |
|
Umpqua Reports First Quarter 2015 Results
April 15, 2015
Page 7
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 Idaho, Washington, Oregon, California and Northern 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 2015 earnings conference call on Thursday, April 16, 2015, at 10:00 a.m. PST (1:00 p.m. EST). During the call, the Company will provide an update on recent activities and discuss its first quarter 2015 financial results. There will be a live question-and-answer session following the presentation. To join the call, please dial (888) 503-8171 ten minutes prior to the start time and enter conference ID: 5683622. A re-broadcast will be available approximately two hours after the call by dialing (888) 203-1112 and entering conference ID 5683622. The earnings conference call will also be available as an audiocast, which can be accessed on the Company’s investor relations page at www.umpquaholdingscorp.com. A slide presentation to accompany the call will also be posted on the website before the call.
Forward-Looking Statements
This press release includes forward-looking statements within the meaning of the “Safe-Harbor” provisions of the Private Securities Litigation Reform Act of 1995, which management believes are a benefit to shareholders. These statements are necessarily subject to risk and uncertainty and actual results could differ materially due to various risk factors, including those set forth from time to time in our filings with the SEC. You should not place undue reliance on forward-looking statements and we undertake no obligation to update any such statements. In this press release we make forward-looking statements about the integration of the merger with Sterling Financial Corporation; timing and amount of merger-related synergies; and credit discount accretion related to the merger. Specific risks that could cause results to differ from forward-looking statements 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; Umpqua’s ability to achieve the synergies and earnings accretion contemplated by the Sterling merger; Umpqua’s ability to promptly and effectively integrate the businesses of Sterling and Umpqua; the diversion of management time on issues related to merger integration; changes in laws or regulations; and changes in general economic conditions.
Umpqua Reports First Quarter 2015 Results
April 15, 2015
Page 8
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Umpqua Holdings Corporation |
Consolidated Statements of Income |
(Unaudited) |
| | | | | | | | | | |
| | Quarter Ended | | % Change |
(In thousands, except per share data) | | Mar 31, 2015 | | Dec 31, 2014 | | Sep 30, 2014 | | Jun 30, 2014 | | Mar 31, 2014 | | Seq. Quarter | | Year over Year |
Interest income: | | | | | | | | | | | | | | |
Loans and leases | | $ | 215,721 |
| | $ | 226,853 |
| | $ | 223,972 |
| | $ | 208,992 |
| | $ | 103,986 |
| | (5 | )% | | 107 | % |
Interest and dividends on investments: | | | | |
| | | | | | | |
|
| |
|
|
Taxable | | 11,551 |
| | 11,629 |
| | 12,136 |
| | 12,728 |
| | 9,291 |
| | (1 | )% | | 24 | % |
Exempt from federal income tax | | 2,720 |
| | 2,746 |
| | 2,790 |
| | 2,697 |
| | 2,112 |
| | (1 | )% | | 29 | % |
Dividends | | 101 |
| | 66 |
| | 81 |
| | 128 |
| | 50 |
| | 53 | % | | 102 | % |
Temporary investments & interest bearing deposits | | 825 |
| | 857 |
| | 544 |
| | 422 |
| | 441 |
| | (4 | )% | | 87 | % |
Total interest income | | 230,918 |
| | 242,151 |
| | 239,523 |
| | 224,967 |
| | 115,880 |
| | (5 | )% | | 99 | % |
Interest expense: | | |
| | |
| | |
| | |
| | |
| | | | |
Deposits | | 7,103 |
| | 7,119 |
| | 6,773 |
| | 6,075 |
| | 3,848 |
| | 0 | % | | 85 | % |
Repurchase agreements and fed funds purchased | | 48 |
| | 48 |
| | 54 |
| | 203 |
| | 41 |
| | 0 | % | | 17 | % |
Term debt | | 3,464 |
| | 3,570 |
| | 3,586 |
| | 3,364 |
| | 2,273 |
| | (3 | )% | | 52 | % |
Junior subordinated debentures | | 3,337 |
| | 3,399 |
| | 3,394 |
| | 3,066 |
| | 1,880 |
| | (2 | )% | | 78 | % |
Total interest expense | | 13,952 |
| | 14,136 |
| | 13,807 |
| | 12,708 |
| | 8,042 |
| | (1 | )% | | 73 | % |
Net interest income | | 216,966 |
| | 228,015 |
| | 225,716 |
| | 212,259 |
| | 107,838 |
| | (5 | )% | | 101 | % |
Provision for loan and lease losses | | 13,695 |
| | 5,241 |
| | 14,333 |
| | 14,696 |
| | 5,971 |
| | 161 | % | | 129 | % |
Non-interest income: | | |
| | |
| | |
| | |
| | |
| | | |
|
|
Service charges | | 14,296 |
| | 15,472 |
| | 16,090 |
| | 15,371 |
| | 7,767 |
| | (8 | )% | | 84 | % |
Brokerage fees | | 4,769 |
| | 4,960 |
| | 4,882 |
| | 4,566 |
| | 3,725 |
| | (4 | )% | | 28 | % |
Residential mortgage banking revenue, net | | 28,227 |
| | 16,489 |
| | 25,996 |
| | 24,341 |
| | 10,439 |
| | 71 | % | | 170 | % |
Net gain on investment securities | | 116 |
| | 1,026 |
| | 902 |
| | 976 |
| | — |
| | (89 | )% | | nm |
|
Loss on junior subordinated debentures carried at fair value | | (1,555 | ) | | (1,589 | ) | | (1,590 | ) | | (1,369 | ) | | (542 | ) | | (2 | )% | | 187 | % |
Change in FDIC indemnification asset | | (1,286 | ) | | (1,982 | ) | | (2,728 | ) | | (5,601 | ) | | (4,840 | ) | | (35 | )% | | (73 | )% |
BOLI income | | 2,781 |
| | 1,971 |
| | 2,161 |
| | 1,967 |
| | 736 |
| | 41 | % | | 278 | % |
Other income | | 16,247 |
| | 13,958 |
| | 16,452 |
| | 5,215 |
| | 5,953 |
| | 16 | % | | 173 | % |
Total non-interest income | | 63,595 |
| | 50,305 |
| | 62,165 |
| | 45,466 |
| | 23,238 |
| | 26 | % | | 174 | % |
Non-interest expense: | | |
| | |
| | |
| | |
| | |
| | | | |
Salaries and employee benefits | | 107,923 |
| | 104,039 |
| | 102,564 |
| | 95,560 |
| | 53,218 |
| | 4 | % | | 103 | % |
Net occupancy and equipment | | 32,150 |
| | 32,987 |
| | 33,029 |
| | 28,746 |
| | 16,501 |
| | (3 | )% | | 95 | % |
Intangible amortization | | 2,806 |
| | 3,102 |
| | 3,103 |
| | 2,808 |
| | 1,194 |
| | (10 | )% | | 135 | % |
FDIC assessments | | 3,214 |
| | 3,522 |
| | 3,038 |
| | 2,575 |
| | 1,863 |
| | (9 | )% | | 73 | % |
Net loss (gain) on other real estate owned | | 1,814 |
| | 3,609 |
| | 313 |
| | 258 |
| | (64 | ) | | (50 | )% | | nm |
|
Merger related expenses | | 14,082 |
| | 10,171 |
| | 8,632 |
| | 57,531 |
| | 5,983 |
| | 38 | % | | 135 | % |
Other expense | | 31,109 |
| | 33,426 |
| | 31,879 |
| | 26,653 |
| | 17,823 |
| | (7 | )% | | 75 | % |
Total non-interest expense | | 193,098 |
| | 190,856 |
| | 182,558 |
| | 214,131 |
| | 96,518 |
| | 1 | % | | 100 | % |
Income before provision for income taxes | | 73,768 |
| | 82,223 |
| | 90,990 |
| | 28,898 |
| | 28,587 |
| | (10 | )% | | 158 | % |
Provision for income taxes | | 26,639 |
| | 29,641 |
| | 32,107 |
| | 11,356 |
| | 9,936 |
| | (10 | )% | | 168 | % |
Net income | | 47,129 |
| | 52,582 |
| | 58,883 |
| | 17,542 |
| | 18,651 |
| | (10 | )% | | 153 | % |
Dividends and undistributed earnings allocated to participating securities | | 84 |
| | 146 |
| | 142 |
| | 83 |
| | 113 |
| | (42 | )% | | (26 | )% |
Net earnings available to common shareholders | | $ | 47,045 |
| | $ | 52,436 |
| | $ | 58,741 |
| | $ | 17,459 |
| | $ | 18,538 |
| | (10 | )% | | 154 | % |
| | | | | | | | | | | | | | |
Weighted average basic shares outstanding | | 220,349 |
| | 218,963 |
| | 217,245 |
| | 196,312 |
| | 112,170 |
| | 1 | % | | 96 | % |
Weighted average diluted shares outstanding | | 221,051 |
| | 219,974 |
| | 218,941 |
| | 197,638 |
| | 112,367 |
| | 0 | % | | 97 | % |
Earnings per common share – basic | | $ | 0.21 |
| | $ | 0.24 |
| | $ | 0.27 |
| | $ | 0.09 |
| | $ | 0.17 |
| | (13 | )% | | 24 | % |
Earnings per common share – diluted | | $ | 0.21 |
| | $ | 0.24 |
| | $ | 0.27 |
| | $ | 0.09 |
| | $ | 0.16 |
| | (13 | )% | | 31 | % |
nm = not meaningful | | |
| | |
| | |
| | |
| | |
| | | | |
Umpqua Reports First Quarter 2015 Results
April 15, 2015
Page 9
|
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Umpqua Holdings Corporation Consolidated Balance Sheets |
(Unaudited) |
| | | | | | | | | | | | |
| | | | | | | | | | | | % Change |
(In thousands, except per share data) | | Mar 31, 2015 | | Dec 31, 2014 | | Sep 30, 2014 | | Jun 30, 2014 | | Mar 31, 2014 | | Seq. Quarter | | Year over Year |
Assets: | | | | | | | | | | | | | | |
Cash and due from banks | | $ | 292,558 |
| | $ | 282,455 |
| | $ | 266,624 |
| | $ | 347,152 |
| | $ | 196,963 |
| | 4 | % | | 49 | % |
Interest bearing deposits | | 1,087,913 |
| | 1,322,214 |
| | 1,176,599 |
| | 492,739 |
| | 887,620 |
| | (18 | )% | | 23 | % |
Temporary investments | | 403 |
| | 502 |
| | 487 |
| | 529 |
| | 525 |
| | (20 | )% | | (23 | )% |
Investment securities: | | |
| | |
| | |
| | |
| | |
| |
|
| |
|
|
Trading, at fair value | | 10,452 |
| | 9,999 |
| | 9,727 |
| | 9,420 |
| | 4,498 |
| | 5 | % | | 132 | % |
Available for sale, at fair value | | 2,535,121 |
| | 2,298,555 |
| | 2,400,061 |
| | 2,588,969 |
| | 1,701,730 |
| | 10 | % | | 49 | % |
Held to maturity, at amortized cost | | 4,953 |
| | 5,211 |
| | 5,356 |
| | 5,519 |
| | 5,465 |
| | (5 | )% | | (9 | )% |
Loans held for sale | | 406,487 |
| | 286,802 |
| | 265,800 |
| | 328,968 |
| | 73,106 |
| | 42 | % | | 456 | % |
Loans and leases | | 15,548,957 |
| | 15,327,732 |
| | 15,259,201 |
| | 15,136,455 |
| | 7,763,691 |
| | 1 | % | | 100 | % |
Allowance for loan and lease losses | | (120,104 | ) | | (116,167 | ) | | (115,635 | ) | | (106,495 | ) | | (97,029 | ) | | 3 | % | | 24 | % |
Loans and leases, net | | 15,428,853 |
| | 15,211,565 |
| | 15,143,566 |
| | 15,029,960 |
| | 7,666,662 |
| | 1 | % | | 101 | % |
Restricted equity securities | | 117,218 |
| | 119,334 |
| | 120,759 |
| | 122,194 |
| | 29,948 |
| | (2 | )% | | 291 | % |
Premises and equipment, net | | 322,925 |
| | 317,834 |
| | 314,364 |
| | 310,407 |
| | 180,199 |
| | 2 | % | | 79 | % |
Goodwill | | 1,788,640 |
| | 1,786,225 |
| | 1,785,407 |
| | 1,779,732 |
| | 764,304 |
| | 0 | % | | 134 | % |
Other intangible assets, net | | 53,927 |
| | 56,733 |
| | 59,835 |
| | 62,938 |
| | 11,184 |
| | (5 | )% | | 382 | % |
Residential mortgage servicing rights, at fair value | | 116,365 |
| | 117,259 |
| | 118,725 |
| | 114,192 |
| | 49,220 |
| | (1 | )% | | 136 | % |
Other real estate owned | | 32,064 |
| | 37,942 |
| | 34,456 |
| | 27,982 |
| | 23,780 |
| | (15 | )% | | 35 | % |
FDIC indemnification asset | | 1,861 |
| | 4,417 |
| | 7,811 |
| | 11,293 |
| | 18,362 |
| | (58 | )% | | (90 | )% |
Bank owned life insurance | | 294,697 |
| | 294,296 |
| | 293,511 |
| | 292,714 |
| | 97,589 |
| | 0 | % | | 202 | % |
Deferred tax assets, net | | 198,778 |
| | 230,258 |
| | 251,670 |
| | 260,686 |
| | 12,287 |
| | (14 | )% | | nm |
|
Other assets | | 259,943 |
| | 228,008 |
| | 229,600 |
| | 253,240 |
| | 111,368 |
| | 14 | % | | 133 | % |
Total assets | | $ | 22,953,158 |
| | $ | 22,609,609 |
| | $ | 22,484,358 |
| | $ | 22,038,634 |
| | $ | 11,834,810 |
| | 2 | % | | 94 | % |
Liabilities: | | |
| | |
| | |
| | |
| | |
| | | |
|
|
Deposits | | $ | 17,222,566 |
| | $ | 16,892,099 |
| | $ | 16,727,610 |
| | $ | 16,323,000 |
| | $ | 9,273,583 |
| | 2 | % | | 86 | % |
Securities sold under agreements to repurchase | | 321,202 |
| | 313,321 |
| | 339,367 |
| | 315,025 |
| | 262,483 |
| | 3 | % | | 22 | % |
Term debt | | 965,675 |
| | 1,006,395 |
| | 1,057,140 |
| | 1,057,915 |
| | 250,964 |
| | (4 | )% | | 285 | % |
Junior subordinated debentures, at fair value | | 250,652 |
| | 249,294 |
| | 247,528 |
| | 246,077 |
| | 87,800 |
| | 1 | % | | 185 | % |
Junior subordinated debentures, at amortized cost | | 101,496 |
| | 101,576 |
| | 101,657 |
| | 101,737 |
| | 101,818 |
| | 0 | % | | 0 | % |
Other liabilities | | 290,597 |
| | 269,592 |
| | 262,249 |
| | 269,415 |
| | 127,602 |
| | 8 | % | | 128 | % |
Total liabilities | | 19,152,188 |
| | 18,832,277 |
| | 18,735,551 |
| | 18,313,169 |
| | 10,104,250 |
| | 2 | % | | 90 | % |
Shareholders' equity: | | |
| | |
| | |
| | |
| | |
| | | |
|
|
Common stock | | 3,521,201 |
| | 3,519,316 |
| | 3,515,621 |
| | 3,512,507 |
| | 1,514,969 |
| | 0 | % | | 132 | % |
Retained earnings | | 260,128 |
| | 245,948 |
| | 226,601 |
| | 200,514 |
| | 215,770 |
| | 6 | % | | 21 | % |
Accumulated other comprehensive income (loss) | | 19,641 |
| | 12,068 |
| | 6,585 |
| | 12,444 |
| | (179 | ) | | 63 | % | | nm |
|
Total shareholders' equity | | 3,800,970 |
| | 3,777,332 |
| | 3,748,807 |
| | 3,725,465 |
| | 1,730,560 |
| | 1 | % | | 120 | % |
Total liabilities and shareholders' equity | | $ | 22,953,158 |
| | $ | 22,609,609 |
| | $ | 22,484,358 |
| | $ | 22,038,634 |
| | $ | 11,834,810 |
| | 2 | % | | 94 | % |
| | | | | | | | | | | | | | |
Common shares outstanding at period end | | 220,453,729 |
| | 220,161,120 |
| | 217,261,722 |
| | 217,190,721 |
| | 112,319,525 |
| | 0 | % | | 96 | % |
Book value per common share | | $ | 17.24 |
| | $ | 17.16 |
| | $ | 17.25 |
| | $ | 17.15 |
| | $ | 15.41 |
| | 0 | % | | 12 | % |
Tangible book value per common share | | $ | 8.88 |
| | $ | 8.79 |
| | $ | 8.76 |
| | $ | 8.67 |
| | $ | 8.50 |
| | 1 | % | | 4 | % |
Tangible equity - common | | $ | 1,958,403 |
| | $ | 1,934,374 |
| | $ | 1,903,565 |
| | $ | 1,882,795 |
| | $ | 955,072 |
| | 1 | % | | 105 | % |
Tangible common equity to tangible assets | | 9.28 | % | | 9.31 | % | | 9.22 | % | | 9.32 | % | | 8.64 | % | | 0 | % | | 7 | % |
nm = not meaningful
Umpqua Reports First Quarter 2015 Results
April 15, 2015
Page 10
|
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Umpqua Holdings Corporation |
Loan & Lease Portfolio |
(Unaudited) |
| | | | | | | | | | | | | | |
(Dollars in thousands) | | Mar 31, 2015 | | Dec 31, 2014 | | Sep 30, 2014 | | Jun 30, 2014 | | Mar 31, 2014 | | % Change |
| | Amount | | Amount | | Amount | | Amount | | Amount | | Seq. Quarter | | Year over Year |
Loans & leases: | | |
| | |
| | |
| | | | | | |
| | |
|
Commercial real estate: | | |
| | |
| | |
| | | | | | |
| | |
|
Non-owner occupied term, net | | $ | 3,296,263 |
| | $ | 3,290,610 |
| | $ | 3,423,453 |
| | $ | 3,517,328 |
| | $ | 2,511,770 |
| | 0 | % | | 31 | % |
Owner occupied term, net | | 2,594,312 |
| | 2,633,864 |
| | 2,682,870 |
| | 2,714,319 |
| | 1,331,969 |
| | (2 | )% | | 95 | % |
Multifamily, net | | 2,764,403 |
| | 2,638,618 |
| | 2,565,711 |
| | 2,506,864 |
| | 428,489 |
| | 5 | % | | 545 | % |
Commercial construction, net | | 238,303 |
| | 258,722 |
| | 247,816 |
| | 264,150 |
| | 232,708 |
| | (8 | )% | | 2 | % |
Residential development, net | | 81,160 |
| | 81,846 |
| | 76,849 |
| | 94,857 |
| | 96,723 |
| | (1 | )% | | (16 | )% |
Commercial: | | | | | | | | | | | | |
| | |
|
Term, net | | 1,128,986 |
| | 1,102,987 |
| | 1,119,658 |
| | 1,114,315 |
| | 745,813 |
| | 2 | % | | 51 | % |
Lines of credit & other, net | | 1,266,409 |
| | 1,322,722 |
| | 1,344,741 |
| | 1,330,771 |
| | 1,015,251 |
| | (4 | )% | | 25 | % |
Leases & equipment finance, net | | 570,492 |
| | 523,114 |
| | 492,221 |
| | 463,784 |
| | 388,418 |
| | 9 | % | | 47 | % |
Residential real estate: | | | | | | | | | | | | |
| | |
|
Mortgage, net | | 2,330,325 |
| | 2,233,735 |
| | 2,102,333 |
| | 1,976,934 |
| | 672,845 |
| | 4 | % | | 246 | % |
Home equity lines & loans, net | | 863,269 |
| | 852,478 |
| | 836,054 |
| | 817,391 |
| | 287,491 |
| | 1 | % | | 200 | % |
Consumer & other, net | | 415,035 |
| | 389,036 |
| | 367,495 |
| | 335,742 |
| | 52,214 |
| | 7 | % | | 695 | % |
Total, net of deferred fees and costs | | $ | 15,548,957 |
| | $ | 15,327,732 |
| | $ | 15,259,201 |
| | $ | 15,136,455 |
| | $ | 7,763,691 |
| | 1 | % | | 100 | % |
| | | | | | | | | | | | | | |
Loan & leases mix: | | | | | | | | | | | | | | |
Commercial real estate: | | | | | | | | | | | | | | |
Non-owner occupied term, net | | 20 | % | | 20 | % | | 22 | % | | 23 | % | | 31 | % | | | | |
Owner occupied term, net | | 17 | % | | 17 | % | | 18 | % | | 18 | % | | 17 | % | | | | |
Multifamily, net | | 17 | % | | 17 | % | | 17 | % | | 17 | % | | 6 | % | | | | |
Commercial construction, net | | 2 | % | | 2 | % | | 2 | % | | 2 | % | | 3 | % | | | | |
Residential development, net | | 1 | % | | 1 | % | | 1 | % | | 1 | % | | 1 | % | | | | |
Commercial: | | |
| | | |
|
| |
|
| |
|
| | | | |
Term, net | | 7 | % | | 7 | % | | 7 | % | | 7 | % | | 10 | % | | | | |
Lines of credit & other, net | | 8 | % | | 9 | % | | 9 | % | | 9 | % | | 13 | % | | | | |
Leases & equipment finance, net | | 4 | % | | 3 | % | | 3 | % | | 3 | % | | 5 | % | | | | |
Residential real estate: | | |
| |
|
| |
|
| |
|
| |
|
| | | | |
Mortgage, net | | 15 | % | | 15 | % | | 14 | % | | 13 | % | | 9 | % | | | | |
Home equity lines & loans, net | | 6 | % | | 6 | % | | 5 | % | | 5 | % | | 4 | % | | | | |
Consumer & other, net | | 3 | % | | 3 | % | | 2 | % | | 2 | % | | 1 | % | | | | |
Total | | 100 | % | | 100 | % | | 100 | % | | 100 | % | | 100 | % | | | | |
Umpqua Reports First Quarter 2015 Results
April 15, 2015
Page 11
|
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Umpqua Holdings Corporation |
Deposits by Type/Core Deposits |
(Unaudited) |
| | | | | | | | | | | | | | |
(Dollars in thousands) | | Mar 31, 2015 | | Dec 31, 2014 | | Sep 30, 2014 | | Jun 30, 2014 | | Mar 31, 2014 | | % Change |
| | Amount | | Amount | | Amount | | Amount | | Amount | | Seq. Quarter | | Year over Year |
Deposits: | | |
| | |
| | |
| | | | | | |
| | |
|
Demand, non-interest bearing | | $ | 4,930,642 |
| | $ | 4,744,804 |
| | $ | 4,741,897 |
| | $ | 4,363,710 |
| | $ | 2,465,606 |
| | 4 | % | | 100 | % |
Demand, interest bearing | | 2,085,368 |
| | 2,054,994 |
| | 1,942,792 |
| | 1,869,626 |
| | 1,182,634 |
| | 1 | % | | 76 | % |
Money market | | 6,287,165 |
| | 6,113,138 |
| | 5,998,339 |
| | 5,973,197 |
| | 3,526,368 |
| | 3 | % | | 78 | % |
Savings | | 1,022,829 |
| | 971,185 |
| | 952,122 |
| | 912,073 |
| | 578,238 |
| | 5 | % | | 77 | % |
Time | | 2,896,562 |
| | 3,007,978 |
| | 3,092,460 |
| | 3,204,394 |
| | 1,520,737 |
| | (4 | )% | | 90 | % |
Total | | $ | 17,222,566 |
| | $ | 16,892,099 |
| | $ | 16,727,610 |
| | $ | 16,323,000 |
| | $ | 9,273,583 |
| | 2 | % | | 86 | % |
| | | | | | | | | | | | | | |
Total core deposits (1) | | $ | 15,304,001 |
| | $ | 15,126,378 |
| | $ | 14,653,183 |
| | $ | 14,171,946 |
| | $ | 8,205,636 |
| | 1 | % | | 87 | % |
| | | | | | | | | | | | | | |
Deposit mix: | | | | | | | | | | | | | | |
Demand, non-interest bearing | | 29 | % | | 28 | % | | 28 | % | | 26 | % | | 27 | % | | | | |
Demand, interest bearing | | 12 | % | | 12 | % | | 12 | % | | 11 | % | | 13 | % | | | | |
Money market | | 36 | % | | 36 | % | | 36 | % | | 37 | % | | 38 | % | | | | |
Savings | | 6 | % | | 6 | % | | 6 | % | | 6 | % | | 6 | % | | | | |
Time | | 17 | % | | 18 | % | | 18 | % | | 20 | % | | 16 | % | | | | |
Total | | 100 | % | | 100 | % | | 100 | % | | 100 | % | | 100 | % | | | | |
| | | | | | | | | | | | | | |
Number of open accounts: | | |
| | |
| | |
| | | | |
| | |
| | |
|
Demand, non-interest bearing | | 368,701 |
| | 367,854 |
| | 366,279 |
| | 363,378 |
| | 190,298 |
| |
|
| |
|
|
Demand, interest bearing | | 85,082 |
| | 86,135 |
| | 87,223 |
| | 88,162 |
| | 46,291 |
| |
|
| |
|
|
Money market | | 61,991 |
| | 63,095 |
| | 63,979 |
| | 65,216 |
| | 34,913 |
| |
|
| |
|
|
Savings | | 150,989 |
| | 150,548 |
| | 150,527 |
| | 149,877 |
| | 84,686 |
| |
|
| |
|
|
Time | | 52,179 |
| | 53,530 |
| | 54,565 |
| | 56,285 |
| | 22,755 |
| |
|
| |
|
|
Total | | 718,942 |
| | 721,162 |
| | 722,573 |
| | 722,918 |
| | 378,943 |
| |
|
| |
|
|
| | | | | | | | | | | | | | |
Average balance per account: | | |
| | |
| | |
| | | | |
| | |
| | |
|
Demand, non-interest bearing | | $ | 13.4 |
| | $ | 12.9 |
| | $ | 12.9 |
| | $ | 12.3 |
| | $ | 13.0 |
| | |
| | |
|
Demand, interest bearing | | 24.5 |
| | 23.9 |
| | 22.3 |
| | 21.2 |
| | 25.5 |
| | |
| | |
|
Money market | | 101.4 |
| | 96.9 |
| | 93.8 |
| | 91.6 |
| | 101.0 |
| | |
| | |
|
Savings | | 6.8 |
| | 6.5 |
| | 6.3 |
| | 6.1 |
| | 6.8 |
| | |
| | |
|
Time | | 55.5 |
| | 56.2 |
| | 56.7 |
| | 56.9 |
| | 66.8 |
| | |
| | |
|
Total | | $ | 24.0 |
| | $ | 23.4 |
| | $ | 23.2 |
| | $ | 22.7 |
| | $ | 24.5 |
| | |
| | |
|
(1) Core deposits are defined as total deposits less time deposits greater than $100,000.
Umpqua Reports First Quarter 2015 Results
April 15, 2015
Page 12
|
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Umpqua Holdings Corporation |
Credit Quality – Non-performing Assets |
(Unaudited) |
| | | | | | | | | | | | | | |
| | Quarter Ended | | % Change |
(Dollars in thousands) | | Mar 31, 2015 | | Dec 31, 2014 | | Sep 30, 2014 | | Jun 30, 2014 | | Mar 31, 2014 | | Seq. Quarter | | Year over Year |
Non-performing assets: | | |
| | |
| | | | | | |
| | |
| | |
|
Loans and leases on non-accrual status | | $ | 40,246 |
| | $ | 52,041 |
| | $ | 42,397 |
| | $ | 48,358 |
| | $ | 37,884 |
| | (23 | )% | | 6 | % |
Loans and leases past due 90+ days & accruing | | 10,416 |
| | 7,512 |
| | 7,416 |
| | 4,919 |
| | 2,269 |
| | 39 | % | | 359 | % |
Total non-performing loans and leases | | 50,662 |
| | 59,553 |
| | 49,813 |
| | 53,277 |
| | 40,153 |
| | (15 | )% | | 26 | % |
Other real estate owned | | 32,064 |
| | 37,942 |
| | 34,456 |
| | 27,982 |
| | 23,780 |
| | (15 | )% | | 35 | % |
Total | | $ | 82,726 |
| | $ | 97,495 |
| | $ | 84,269 |
| | $ | 81,259 |
| | $ | 63,933 |
| | (15 | )% | | 29 | % |
| | | | | | | | | | | | | | |
Performing restructured loans and leases | | $ | 60,896 |
| | $ | 54,836 |
| | $ | 63,507 |
| | $ | 67,464 |
| | $ | 67,897 |
| | 11 | % | | (10 | )% |
Loans and leases past due 31-89 days | | $ | 20,488 |
| | $ | 24,659 |
| | $ | 34,025 |
| | $ | 28,913 |
| | $ | 29,416 |
| | (17 | )% | | (30 | )% |
Loans and leases past due 31-89 days to total loans and leases | | 0.13 | % | | 0.16 | % | | 0.22 | % | | 0.19 | % | | 0.38 | % | | |
| | |
|
Non-performing loans and leases to total loans and leases | | 0.33 | % | | 0.39 | % | | 0.33 | % | | 0.35 | % | | 0.52 | % | | |
| | |
|
Non-performing assets to total assets | | 0.36 | % | | 0.43 | % | | 0.37 | % | | 0.37 | % | | 0.54 | % | | |
| | |
|
Umpqua Reports First Quarter 2015 Results
April 15, 2015
Page 13
|
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Umpqua Holdings Corporation |
Credit Quality – Allowance for Loan and Lease Losses |
(Unaudited) |
| | Quarter Ended | | % Change |
(Dollars in thousands) | | Mar 31, 2015 | | Dec 31, 2014 | | Sep 30, 2014 | | Jun 30, 2014 | | Mar 31, 2014 | | Seq. Quarter | | Year over Year |
Allowance for loan and lease losses: | | | | | | | | | | | | | | |
Balance beginning of period | | $ | 116,167 |
| | $ | 115,635 |
| | $ | 106,495 |
| | $ | 97,029 |
| | $ | 95,085 |
| | | | |
Provision for loan and lease losses | | 13,695 |
| | 5,241 |
| | 14,333 |
| | 14,696 |
| | 5,971 |
| | 161 | % | | 129 | % |
Charge-offs | | (13,603 | ) | | (9,088 | ) | | (7,524 | ) | | (7,332 | ) | | (6,234 | ) | | 50 | % | | 118 | % |
Recoveries | | 3,845 |
| | 4,379 |
| | 2,331 |
| | 2,102 |
| | 2,207 |
| | (12 | )% | | 74 | % |
Net charge-offs | | (9,758 | ) | | (4,709 | ) | | (5,193 | ) | | (5,230 | ) | | (4,027 | ) | | 107 | % | | 142 | % |
Total allowance for loan and lease losses | | 120,104 |
| | 116,167 |
| | 115,635 |
| | 106,495 |
| | 97,029 |
| | 3 | % | | 24 | % |
Reserve for unfunded commitments | | 3,194 |
| | 3,539 |
| | 4,388 |
| | 4,845 |
| | 1,417 |
| |
|
| |
|
|
Total allowance for credit losses | | $ | 123,298 |
| | $ | 119,706 |
| | $ | 120,023 |
| | $ | 111,340 |
| | $ | 98,446 |
| |
|
| |
|
|
| | |
| | |
| | | | | | |
| | |
| | |
|
Net charge-offs to average loans and leases (annualized) | | 0.26 | % | | 0.12 | % | | 0.14 | % | | 0.15 | % | | 0.21 | % | | |
| | |
|
Recoveries to gross charge-offs | | 28.27 | % | | 48.18 | % | | 30.98 | % | | 28.67 | % | | 35.40 | % | | | | |
|
Allowance for loan and lease losses to loans and leases | | 0.77 | % | | 0.76 | % | | 0.76 | % | | 0.70 | % | | 1.25 | % | | |
| | |
|
Allowance for credit losses to loans and leases | | 0.79 | % | | 0.78 | % | | 0.79 | % | | 0.74 | % | | 1.27 | % | | |
| | |
|
Umpqua Reports First Quarter 2015 Results
April 15, 2015
Page 14
|
| | | | | | | | | | | | | | | | | | | | | |
Umpqua Holdings Corporation |
Selected Ratios |
(Unaudited) |
| | | | | | | | | | |
| | Quarter Ended | | % Change |
| | Mar 31, 2015 | | Dec 31, 2014 | | Sep 30, 2014 | | Jun 30, 2014 | | Mar 31, 2014 | | Seq. Quarter | | Year over Year |
Average Rates: | | |
| | |
| | |
| | | | |
| | | | |
Yield on loans and leases | | 5.64 | % | | 5.82 | % | | 5.78 | % | | 6.06 | % | | 5.41 | % | | (0.18 | ) | | 0.23 |
|
Yield on loans held for sale | | 3.95 | % | | 4.01 | % | | 3.86 | % | | 4.30 | % | | 4.04 | % | | (0.06 | ) | | (0.09 | ) |
Yield on taxable investments | | 2.10 | % | | 2.16 | % | | 2.12 | % | | 2.29 | % | | 2.39 | % | | (0.06 | ) | | (0.29 | ) |
Yield on tax-exempt investments (1) | | 5.10 | % | | 5.09 | % | | 5.12 | % | | 5.19 | % | | 5.54 | % | | 0.01 |
| | (0.44 | ) |
Yield on temporary investments & interest bearing cash | | 0.25 | % | | 0.25 | % | | 0.25 | % | | 0.25 | % | | 0.25 | % | | — |
| | — |
|
Total yield on earning assets (1) | | 4.84 | % | | 4.98 | % | | 5.04 | % | | 5.30 | % | | 4.60 | % | | (0.14 | ) | | 0.24 |
|
| | | | | | | | | | | | | | |
Cost of interest bearing deposits | | 0.24 | % | | 0.23 | % | | 0.22 | % | | 0.22 | % | | 0.23 | % | | 0.01 |
| | 0.01 |
|
Cost of securities sold under agreements | | |
| | |
| | |
| | | | | |
|
| |
|
|
to repurchase and fed funds purchased | | 0.06 | % | | 0.06 | % | | 0.07 | % | | 0.25 | % | | 0.07 | % | | — |
| | (0.01 | ) |
Cost of term debt | | 1.42 | % | | 1.41 | % | | 1.35 | % | | 1.45 | % | | 3.67 | % | | 0.01 |
| | (2.25 | ) |
Cost of junior subordinated debentures | | 3.86 | % | | 3.86 | % | | 3.87 | % | | 3.87 | % | | 4.03 | % | | — |
| | (0.17 | ) |
Total cost of interest bearing liabilities | | 0.41 | % | | 0.41 | % | | 0.40 | % | | 0.41 | % | | 0.44 | % | | — |
| | (0.03 | ) |
| | | | | | | | | | | | | | |
Net interest spread (1) | | 4.43 | % | | 4.57 | % | | 4.64 | % | | 4.90 | % | | 4.16 | % | | (0.14 | ) | | 0.27 |
|
Net interest margin – Consolidated (1) | | 4.55 | % | | 4.69 | % | | 4.75 | % | | 5.01 | % | | 4.28 | % | | (0.14 | ) | | 0.27 |
|
Net interest margin – Bank (1) | | 4.62 | % | | 4.75 | % | | 4.82 | % | | 5.07 | % | | 4.35 | % | | (0.13 | ) | | 0.27 |
|
| | | | | | | | | | | | | | |
As reported (GAAP): | | |
| | |
| | |
| | | | | |
|
| |
|
|
Return on average assets | | 0.84 | % | | 0.92 | % | | 1.05 | % | | 0.35 | % | | 0.65 | % | | (0.08 | ) | | 0.19 |
|
Return on average tangible assets | | 0.92 | % | | 1.00 | % | | 1.14 | % | | 0.38 | % | | 0.69 | % | | (0.08 | ) | | 0.23 |
|
Return on average common equity | | 5.02 | % | | 5.59 | % | | 6.28 | % | | 2.09 | % | | 4.32 | % | | (0.57 | ) | | 0.70 |
|
Return on average tangible common equity | | 9.76 | % | | 11.08 | % | | 12.46 | % | | 4.13 | % | | 7.81 | % | | (1.32 | ) | | 1.95 |
|
Efficiency ratio – Consolidated | | 68.48 | % | | 68.23 | % | | 63.10 | % | | 82.64 | % | | 73.03 | % | | 0.25 |
| | (4.55 | ) |
Efficiency ratio – Bank | | 66.84 | % | | 66.23 | % | | 61.63 | % | | 81.08 | % | | 71.06 | % | | 0.61 |
| | (4.22 | ) |
| | | | | | | | | | | | | | |
Operating basis (non-GAAP): (2) | | |
| | |
| | |
| | | | | |
|
| |
|
|
Return on average assets | | 1.01 | % | | 1.04 | % | | 1.16 | % | | 1.08 | % | | 0.83 | % | | (0.03 | ) | | 0.18 |
|
Return on average tangible assets | | 1.10 | % | | 1.13 | % | | 1.26 | % | | 1.18 | % | | 0.89 | % | | (0.03 | ) | | 0.21 |
|
Return on average common equity | | 6.03 | % | | 6.34 | % | | 6.94 | % | | 6.49 | % | | 5.58 | % | | (0.31 | ) | | 0.45 |
|
Return on average tangible common equity | | 11.71 | % | | 12.56 | % | | 13.78 | % | | 12.83 | % | | 10.08 | % | | (0.85 | ) | | 1.63 |
|
Efficiency ratio – Consolidated | | 63.14 | % | | 64.23 | % | | 59.79 | % | | 60.12 | % | | 68.22 | % | | (1.09 | ) | | (5.08 | ) |
Efficiency ratio – Bank | | 61.86 | % | | 62.61 | % | | 58.65 | % | | 58.94 | % | | 66.48 | % | | (0.75 | ) | | (4.62 | ) |
(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 First Quarter 2015 Results
April 15, 2015
Page 15
|
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Umpqua Holdings Corporation Average Balances |
(Unaudited) |
| | | | | | |
| | Quarter Ended | | % Change |
(Dollars in thousands) | | Mar 31, 2015 | | Dec 31, 2014 | | Sep 30, 2014 | | Jun 30, 2014 | | Mar 31, 2014 | | Seq. Quarter | | Year over Year |
Temporary investments & interest bearing cash | | $ | 1,323,671 |
| | $ | 1,368,726 |
| | $ | 849,399 |
| | $ | 672,587 |
| | $ | 705,974 |
| | (3 | )% | | 87 | % |
Investment securities, taxable | | 2,222,174 |
| | 2,169,504 |
| | 2,307,732 |
| | 2,242,414 |
| | 1,562,849 |
| | 2 | % | | 42 | % |
Investment securities, tax-exempt | | 323,852 |
| | 326,858 |
| | 330,902 |
| | 315,488 |
| | 231,520 |
| | (1 | )% | | 40 | % |
Loans held for sale | | 262,777 |
| | 255,830 |
| | 274,834 |
| | 211,694 |
| | 77,234 |
| | 3 | % | | 240 | % |
Loans and leases | | 15,334,555 |
| | 15,300,425 |
| | 15,200,893 |
| | 13,673,887 |
| | 7,732,539 |
| | 0 | % | | 98 | % |
Total interest earning assets | | 19,467,029 |
| | 19,421,343 |
| | 18,963,760 |
| | 17,116,070 |
| | 10,310,116 |
| | 0 | % | | 89 | % |
Goodwill & other intangible assets, net | | 1,842,390 |
| | 1,844,084 |
| | 1,841,668 |
| | 1,656,687 |
| | 776,006 |
| | 0 | % | | 137 | % |
Total assets | | 22,687,515 |
| | 22,625,461 |
| | 22,220,999 |
| | 20,036,742 |
| | 11,638,357 |
| | 0 | % | | 95 | % |
| | | | | | | | | | | | | | |
Non-interest bearing demand deposits | | 4,808,062 |
| | 4,836,517 |
| | 4,558,672 |
| | 3,963,233 |
| | 2,414,001 |
| | (1 | )% | | 99 | % |
Interest bearing deposits | | 12,187,132 |
| | 12,153,481 |
| | 11,948,731 |
| | 10,948,991 |
| | 6,696,029 |
| | 0 | % | | 82 | % |
Total deposits | | 16,995,194 |
| | 16,989,998 |
| | 16,507,403 |
| | 14,912,224 |
| | 9,110,030 |
| | 0 | % | | 87 | % |
Interest bearing liabilities | | 13,838,515 |
| | 13,833,126 |
| | 13,681,205 |
| | 12,521,219 |
| | 7,376,780 |
| | 0 | % | | 88 | % |
| | | | | | | | | | | | | | |
Shareholders’ equity - common | | 3,797,108 |
| | 3,721,003 |
| | 3,712,813 |
| | 3,350,836 |
| | 1,738,680 |
| | 2 | % | | 118 | % |
Tangible common equity (1) | | 1,954,718 |
| | 1,876,919 |
| | 1,871,145 |
| | 1,694,149 |
| | 962,674 |
| | 4 | % | | 103 | % |
(1) Average tangible common equity is a non-GAAP financial measure. Average tangible common equity is calculated as average common shareholders’ equity less average goodwill and other intangible assets, net (excluding MSRs).
Umpqua Reports First Quarter 2015 Results
April 15, 2015
Page 16
|
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Umpqua Holdings Corporation Residential Mortgage Banking Activity |
(unaudited) |
| | | | | | |
| | Quarter Ended | | % Change |
(Dollars in thousands) | | Mar 31, 2015 | | Dec 31, 2014 | | Sep 30, 2014 | | Jun 30, 2014 | | Mar 31, 2014 | | Seq. Quarter | | Year over Year |
Residential mortgage servicing rights: | | | | | | | | | | | | | | |
Residential mortgage loans serviced for others | | $ | 11,874,910 |
| | $ | 11,590,310 |
| | $ | 11,300,947 |
| | $ | 10,838,313 |
| | $ | 4,496,662 |
| | 2 | % | | 164 | % |
MSR asset, at fair value | | 116,365 |
| | 117,259 |
| | 118,725 |
| | 114,192 |
| | 49,220 |
| | (1 | )% | | 136 | % |
MSR as % of serviced portfolio | | 0.98 | % | | 1.01 | % | | 1.05 | % | | 1.05 | % | | 1.09 | % | | |
| | |
|
Residential mortgage banking revenue: | | |
| | |
| | | | | | |
| | |
| | |
|
Origination and sale | | $ | 31,498 |
| | $ | 18,378 |
| | $ | 24,097 |
| | $ | 22,142 |
| | $ | 8,421 |
| | 71 | % | | 274 | % |
Servicing | | 6,457 |
| | 6,306 |
| | 6,178 |
| | 5,359 |
| | 2,970 |
| | 2 | % | | 117 | % |
Change in fair value of MSR asset | | (9,728 | ) | | (8,195 | ) | | (4,279 | ) | | (3,160 | ) | | (952 | ) | | 19 | % | | 922 | % |
Total | | $ | 28,227 |
| | $ | 16,489 |
| | $ | 25,996 |
| | $ | 24,341 |
| | $ | 10,439 |
| | 71 | % | | 170 | % |
| | | | | | | | | | | | | | |
Closed loan volume: | | | | | | | | | | | | | | |
Closed loan volume - portfolio | | $ | 311,149 |
| | $ | 319,779 |
| | $ | 292,154 |
| | $ | 271,228 |
| | $ | 88,819 |
| | (3 | )% | | 250 | % |
Closed loan volume - for sale | | 862,155 |
| | 622,133 |
| | 695,877 |
| | 623,727 |
| | 204,356 |
| | 39 | % | | 322 | % |
Closed loan volume - total | | $ | 1,173,304 |
| | $ | 941,912 |
| | $ | 988,031 |
| | $ | 894,955 |
| | $ | 293,175 |
| | 5 | % | | 237 | % |
| | | | | | | | | | | | | | |
Gain on sale margin: | | | | | | | | | | | | | | |
Based on for sale volume | | 3.65 | % | | 2.95 | % | | 3.46 | % | | 3.55 | % | | 4.12 | % | | 0.70 |
| | (0.47 | ) |
| | | | | | | | | | | | | | |
###
UMPQUA HOLDINGS CORPORATION 1st Quarter 2015 Earnings Conference Call Presentation April 16, 2015
2 Forward-looking Statements This presentation includes forward-looking statements within the meaning of the “Safe-Harbor” provisions of the Private Securities Litigation Reform Act of 1995, which management believes are a benefit to shareholders. These statements are necessarily subject to risk and uncertainty and actual results could differ materially due to various risk factors, including those set forth from time to time in our filings with the SEC. You should not place undue reliance on forward- looking statements and we undertake no obligation to update any such statements. In this press release we make forward-looking statements about the integration of the merger with Sterling Financial Corporation; timing and amount of merger-related synergies; and credit discount accretion related to the merger. Specific risks that could cause results to differ from forward-looking statements 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; Umpqua’s ability to achieve the synergies and earnings accretion contemplated by the Sterling merger; Umpqua’s ability to promptly and effectively integrate the businesses of Sterling and Umpqua; the diversion of management time on issues related to merger integration; changes in laws or regulations; and changes in general economic conditions.
First Quarter 2015 Highlights 3 > (1) Non-GAAP financial measure. A reconciliation to the comparable GAAP measurement is provided in the appendix of this slide presentation. Reported first quarter operating earnings1 of $56.4 million: $11.7 million increase in mortgage banking revenue, driven by an improvement in gain on sale margin and higher volume $1.7 million decrease in non-interest expense (excluding merger-related expense), driven by synergies from reduced store costs, lower services and marketing expenses, and a lower loss on a real estate owned property, partially offset by higher variable mortgage banking expense primarily reflected in salaries and benefits $11.0 million decrease in net interest income, driven by a $6.4 million decrease in interest income related to the Sterling credit discount accretion and two fewer days in the quarter $8.5 million increase in provision for loan and lease losses, driven by higher net charge-offs and stronger loan growth Continued growth in loans and deposits: Loan and lease (gross of sales) growth of $294.1 million, or 8% annualized Deposit growth of $330.5 million, or 8% annualized Capital and liquidity position remained strong: Tangible book value per common share1 increased to $8.88, from $8.79 in the prior quarter Under Basel III rules, estimated total risk-based capital ratio of 14.3% and Tier 1 common to risk weighted assets ratio of 10.8% Interest bearing cash of $1.1 billion, as compared to $1.3 billion in the prior quarter $0.21 $0.27 $0.30 $0.27 $0.26 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Operating Earnings Per Diluted Share (1)
Q1 2015 Q4 2014 Q3 2014 Q2 2014 Q1 2014 Return on average assets 1.01% 1.04% 1.16% 1.08% 0.83% Return on average tangible assets 1.10% 1.13% 1.26% 1.18% 0.89% Return on average common equity 6.03% 6.34% 6.94% 6.49% 5.58% Return on average tangible common equity 11.71% 12.56% 13.78% 12.83% 10.08% Efficiency ratio - consolidated 63.14% 64.23% 59.79% 60.12% 68.22% Net interest margin - consolidated 4.55% 4.69% 4.75% 5.01% 4.28% Non-performing loans and leases to loans and leases 0.33% 0.39% 0.33% 0.35% 0.52% Non-performing assets to total assets 0.36% 0.43% 0.37% 0.37% 0.54% Net charge-offs to average loans and leases (annualized) 0.26% 0.12% 0.14% 0.15% 0.21% Tangible common equity to tangible assets (1) 9.28% 9.31% 9.22% 9.32% 8.64% Basel III - Tier 1 common to risk-weighted asset ratio (2) 10.8% NA NA NA NA Basel III - Total risk-based capital ratio (2) 14.3% NA NA NA NA Basel I - Tier 1 common to risk-weighted asset ratio NA 11.5% 11.2% 10.7% 11.0% Basel I - Total risk-based capital ratio NA 15.2% 14.9% 14.2% 14.7% Key Performance Ratios 4 > (1) Non-GAAP financial measure. A reconciliation to the comparable GAAP measurement is provided at the end of this slide presentation. > (2) Capital ratio estimated for current quarter, pending completion and filing of regulatory reports. Profitability (operating basis)(1) Credit Quality Capital For the quarter ended
Summary Income Statement 5 > Note: tables may not foot due to rounding. > (1) Income tax effect of pro forma operating earnings adjustments at 40% for tax-deductible items. > (2) Non-GAAP financial measure. A reconciliation to the comparable GAAP measurement is provided in the appendix of this slide presentation. ($ in millions except per share da ta ) 1Q 2015 4Q 2014 1Q 2014 Net interest income before provision 217.0$ 228.0$ 107.8$ Provision for loan and lease losses 13.7 5.2 6.0 Net interest income 203.3 222.8 101.9 Non-interest income 63.6 50.3 23.2 Non-interest expense 193.1 190.9 96.5 Income be fore provision for income taxes 73.8 82.2 28.6 Provision for income taxes 26.6 29.6 9.9 Ne t income 47.1 52.6 18.7 Dividends and undistributed earnings allocated to participating securities 0.1 0.1 0.1 Ne t earnings ava ilable to common shareholders 47.0$ 52.4$ 18.5$ Adjustments Net loss on junior subordinated debentures carried at fair value, net of tax 0.9 1.0 0.3 Merger related expenses, net of tax 8.5 6.0 5.1 Opera ting earnings 56.4$ 59.4$ 23.9$ Earnings per diluted share: Earnings available to common shareholders $0.21 $0.24 $0.16 Operating earnings $0.26 $0.27 $0.21 Quarter ended
Net Interest Income and Margin 6 $107.8 $212.3 $225.7 $228.0 $217.0 4.28% 5.01% 4.75% 4.69% 4.55% 2.00% 3.00% 4.00% 5.00% 6.00% 7.00% $0 $50 $100 $150 $200 $250 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Net interest income Net interest margin > Net interest income decreased by $11.0 million from the prior quarter and margin declined by 14 bps • Driven by a $6.4 million decline in Interest income related to credit discount accretion from the Sterling deal and two fewer days in the quarter (in millions) Net interest margin, excluding interest income related to credit discount from Sterling deal and related to 310-30 covered loan PIFs 4.28% 4.25% 4.22% 4.19% 4.12%
Provision for Loan and Lease Losses 7 > Provision for loan and losses increased by $8.5 million from the prior quarter • Driven by higher net charge-offs and stronger loan growth $6.0 $14.7 $14.3 $5.2 $13.7 $0 $2 $4 $6 $8 $10 $12 $14 $16 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Provision for loan and lease losses (in millions)
Non-interest Income 8 > Non-interest income increased by $13.3 million from the prior quarter • Driven by higher mortgage banking revenue and other income, partially offset by a $1.5 million increase in the loss related to the change in fair value of the MSR (in millions) ($5.4) ($6.0) ($3.4) ($2.5) ($2.7) $6.0 $5.2 $16.5 $14.0 $16.2 $0.7 $2.0 $2.2 $2.0 $2.8 $10.4 $24.3 $26.0 $16.5 $28.2 $3.7 $4.6 $4.9 $5.0 $4.8 $7.8 $15.4 $16.1 $15.5 $14.3 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Service charges Brokerage fees Residential mortgage banking revenue, net BOLI income Other income Other misc. $23.2 $50.3 $45.5 $62.2 > (1) Includes net gain on investment securities, loss on junior subordinated debentures carried at fair value, and change in FDIC indemnification asset. (1) $63.6
Mortgage Banking Revenue 9 $8.4 $22.1 $24.1 $18.4 $31.5 $3.0 $5.4 $6.2 $6.3 $6.5 $(1.0) $(3.2) $(4.3) $(8.2) $(9.7) Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Origination and sale Servicing Change in fair value of MSR asset > Total mortgage banking revenue increased by $11.7 million from the prior quarter • Driven by an improvement in gain on sale margin and higher mortgage originations (in millions) $10.4 $24.3 $26.0 $16.5 $28.2
> Total mortgage originations increased by 25% from the prior quarter, and gain on sale margin increased by 70 bps 10 $89 $271 $292 $320 $311 $204 $624 $696 $622 $862 $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Closed mortgage volume Portfolio For Sale (in millions) Mortgage Originations and Gain on Sale Margin $293 $895 $988 $942 4.12% 3.55% 3.46% 2.95% 3.65% 0.02 0.025 0.03 0.035 0.04 0.045 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Gain on sale margin $1,173
Non-interest Expense 11 Non-interest Expense Bridge (excludes merger-related expense) > Non-interest expense (excluding merger-related expenses) decreased by $1.7 million from the prior quarter • Synergies related to reduced store costs occurred late in the quarter, resulting in only $1.0 million of the $12 million annualized savings being realized in Q1 2015 • Achieved $51 million, or 59%, of $87 million (annualized) cost synergy target, in March 2015 > (1) For presentation purposes, non-interest expense excludes merger-related expenses of $10.2 million and $14.1 million for Q4 2014 and Q1 2015, respectively. $180.7 $179.0 (in millions) $(5.0) $3.9 $1.0 $1.8
Selected Balance Sheet 12 ($ in millions) 1Q 2015 4Q 2014 1Q 2014 Total assets 22,953.2$ 22,609.6$ 11,834.8$ Interest bearing deposits 1,087.9 1,322.2 887.6 Investment securities 2,550.5 2,313.8 1,711.7 Loans and leases, gross 15,549.0 15,327.7 7,763.7 Allowance for loan and lease losses (120.1) (116.2) (97.0) Goodwill and other intangibles, net 1,842.6 1,843.0 775.5 Deposits 17,222.6 16,892.1 9,273.6 Securities sold under agreements to repurchase 321.2 313.3 262.5 Term debt 965.7 1,006.4 251.0 Total shareholders' equity 3,801.0 3,777.3 1,730.6 Ratios: Loan to deposit ratio 90.3% 90.7% 83.7% Book value per common share $17.24 17.16$ $15.41 Tangible book value per common share (1) $8.88 8.79$ $8.50 Tangible common equity to tangible assets (1) 9.28% 9.31% 8.64% > (1) Non-GAAP financial measure. A reconciliation to the comparable GAAP measurement is provided in the appendix of this slide presentation.
Loan Growth 13 Loans and Leases (Gross) $6.4 $6.5 $7.2 $7.7 $15.3 $15.5 (in billions) 20% 17% 17% 2% 1% 7% 8% 4% 15% 6% 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 March 31, 2015 > Loan and lease growth (gross of sales) of $294.1 million, or 8% annualized, from the prior quarter • Loan growth was partially offset by quarterly loan sales of $72.8 million, primarily comprised of portfolio residential mortgage loans
29% 12% 36% 6% 17% Demand, non-interest bearing Demand, interest bearing Money market Savings Time Deposit Growth $9.4 $9.2 $9.4 $9.1 $16.9 $17.2 (in billions) Total Deposits As of March 31, 2015 > Total deposits grew by $330.5 million from the prior quarter • Driven by a $177.6 million increase in core deposits > Cost of interest bearing deposits remained low at 0.24% 14
Credit Quality 15 > All of the key credit quality ratios remained strong 1.25% 0.70% 0.76% 0.76% 0.77% 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 3.50% 4.00% Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Allowance for loan and lease losses to loans and leases 0.54% 0.37% 0.37% 0.43% 0.36% 0.00% 0.20% 0.40% 0.60% 0.80% 1.00% Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Non-performing assets to total assets 0.21% 0.15% 0.14% 0.12% 0.26% 0.00% 0.20% 0.40% 0.60% 0.80% 1.00% Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 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 2.2% 2.0% 2.1% 1.8%
Capital Ratios 16 > Under Basel III rules, all regulatory capital ratios remained in excess of well-capitalized and internal policy limits > Focused on deploying / returning excess capital • Current quarterly dividend of $0.15 per share, ~3.5% dividend yield Tangible Common Equity/Tangible Assets Tier 1 Leverage Tier 1 Common Risk Based Tier 1 Risk Based Total Risk Based Q1 2015 Capital Ratios (1) Common TRUP LLR 9.2% 10.8% 11.5% 14.3% 9.28% > (1) Regulatory capital ratios are calculated based on Basel III rules, and 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 18 Quarter Ended % Change (Dollars in thousands, except per share data) Mar 31, 2015 Dec 31, 2014 Sep 30, 2014 Jun 30, 2014 Mar 31, 2014 Seq. Quarter Year over Year Net earnings available to common shareholders $ 47,045 $ 52,436 $ 58,741 $ 17,459 $ 18,538 (10 )% 154 % Adjustments: Net loss on junior subordinated debentures carried at fair value, net of tax (1) 933 953 955 821 325 (2 )% 187 % Merger related expenses, net of tax (1) 8,449 6,038 5,274 35,926 5,073 40 % 67 % Operating earnings $ 56,427 $ 59,427 $ 64,970 $ 54,206 $ 23,936 (5 )% 136 % Earnings per diluted share: Earnings available to common shareholders $ 0.21 $ 0.24 $ 0.27 $ 0.09 $ 0.16 (13 )% 31 % Operating earnings $ 0.26 $ 0.27 $ 0.30 $ 0.27 $ 0.21 (4 )% 24 % (1) Income tax effect of pro forma operating earnings adjustments at 40% for tax-deductible items. nm = not meaningful.
Non-GAAP Reconciliation – Tangible Book Value 19 (Dollars in thousands, except per share data) Mar 31, 2015 Dec 31, 2014 Sep 30, 2014 Jun 30, 2014 Mar 31, 2014 Total shareholders' equity $ 3,800,970 $ 3,777,332 $ 3,748,807 $ 3,725,465 $ 1,730,560 Subtract: Goodwill and other intangible assets, net 1,842,567 1,842,958 1,845,242 1,842,670 775,488 Tangible common shareholders' equity $ 1,958,403 $ 1,934,374 $ 1,903,565 $ 1,882,795 $ 955,072 Total assets $ 22,953,158 $ 22,609,609 $ 22,484,358 $ 22,038,634 $ 11,834,810 Subtract: Goodwill and other intangible assets, net 1,842,567 1,842,958 1,845,242 1,842,670 775,488 Tangible assets $ 21,110,591 $ 20,766,651 $ 20,639,116 $ 20,195,964 $ 11,059,322 Common shares outstanding at period end 220,453,729 220,161,120 217,261,722 217,190,721 112,319,525 Tangible common equity ratio 9.28 % 9.31 % 9.22 % 9.32 % 8.64 % Tangible book value per common share $ 8.88 $ 8.79 $ 8.76 $ 8.67 $ 8.50
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