Umpqua : Reports Second Quarter 2019 Results

PORTLAND, Ore., July 17, 2019 /PRNewswire/ -- Umpqua Holdings Corporation (NASDAQ: UMPQ) (the "Company") reported net income of $111.8 million for the second quarter of 2019, compared to $74.0 million for the first quarter of 2019 and $66.0 million for the second quarter of 2018.  Earnings per diluted common share were $0.51 for the second quarter of 2019, compared to $0.34 for the first quarter of 2019 and $0.30 for the second quarter of 2018.

"Umpqua's strong deposit growth of $575 million and loan and lease growth of $547 million demonstrate our focus on the growth initiatives within our Next Gen strategy," said Cort O'Haver, president and CEO of Umpqua Holdings Corporation. "Last quarter we made several strategic moves to enhance the Company's long-term profitability. These included an opportunistic sale of our Visa Class B shares, which generated proceeds to strategically re-balance our securities portfolio and continue to invest in efficient, revenue-generating businesses. We've also begun the process of selling material portions of our mortgage servicing rights portfolio to reduce volatility and expect the sale of the first tranche to close in the fourth quarter. We also continue to innovate and invest in our human digital banking experience and are pleased with the early results and strong customer response to our Go-To app, which launched in April."

Notable items that impacted the second quarter 2019 financial results included:

• $81.9 million gain on sale for all shares of Visa Class B stock held by the Company, partially offset by a $7.2 million loss on debt securities.
• $24.7 million loss on fair value change of the MSR asset attributable to the decrease in long-term interest rates during the quarter, compared to a $14.0 million loss in the prior quarter and a $5.4 million loss in the same period of the prior year.
• $4.0 million loss related to the fair value of the debt capital market swap derivatives attributable to the decrease in long-term interest rates during the quarter, compared to a loss of $2.5 million in the prior quarter and a gain of $0.3 million in the same period of the prior year.
• $1.5 million of exit and disposal costs, compared to $1.4 million in the prior quarter and $2.6 million in the same period of the prior year.

Second Quarter 2019 Highlights (compared to prior quarter):

• Net interest income decreased by $10.5 million on a quarter to quarter basis primarily driven by higher levels of bond premium amortization as the decrease in long-term rates during the second quarter resulted in higher prepayment speeds compared to the prior quarter;
• Provision for loan and lease losses increased by $5.7 million, due to growth in the overall loan portfolio;
• Net charge-offs decreased by one basis point to 0.26% of average loans and leases (annualized);
• Non-interest income increased by $76.1 million, driven primary by the $81.9 million gain resulting from the sale of the Visa Class B stock and partially offset by a $7.2 million loss on debt securities;
• Non-interest expense increased by $8.8 million, driven primarily by higher mortgage banking-related expenses, higher loss on OREO, higher marketing expenses, partially offset by a seasonal decrease in payroll taxes and lower group insurance charges;
• Non-performing assets to total assets improved to 0.28% from 0.32%;
• Estimated total risk-based capital ratio of 13.7% and estimated Tier 1 common to risk weighted assets ratio of 10.9%;
• Declared a quarterly cash dividend of $0.21 per common share.

Balance Sheet
Total consolidated assets were $28.0 billion as of June 30, 2019, compared to $27.4 billion as of March 31, 2019 and $26.5 billion as of June 30, 2018.  Including secured off-balance sheet lines of credit, total available liquidity was $10.5 billion as of June 30, 2019, representing 38% of total assets and 48% of total deposits.

Gross loans and leases were $21.0 billion as of June 30, 2019, an increase of $547.4 million relative to March 31, 2019.  Strong loan production in the commercial loan category as well as residential real estate fueled the balance sheet growth.

Total deposits were $21.8 billion as of June 30, 2019, an increase of $575.1 million from $21.2 billion as of March 31, 2019.  This increase was attributable to growth in non-interest bearing demand deposits of $275.5 million and money market deposit growth of $319.8 million.

Net Interest Income
Net interest income was $227.2 million for the second quarter of 2019, down $10.5 million from the prior quarter.  This decrease was primarily attributable to taxable bond premium amortization of $10.4 million in the second quarter compared to $1.6 million in the first quarter of 2019.

The Company's net interest margin was 3.70% for the second quarter of 2019, down 33 basis points from 4.03% for the first quarter of 2019 primarily driven by the aforementioned higher levels of bond premium amortization and higher  cost of interest bearing deposits compared to the prior quarter.

Credit Quality
The allowance for loan and lease losses was $151.1 million, or 0.72% of loans and leases, as of June 30, 2019, which was up from $144.9 million, or 0.71% of loans and leases, as of March 31, 2019.  The provision for loan and lease losses was $19.4 million for the second quarter of 2019, an increase of $5.7 million from the prior quarter level, driven primarily by growth in the loan portfolio.  Net charge-offs decreased by one basis point to 0.26% of average loans and leases (annualized).  As of June 30, 2019, non-performing assets were 0.28% of total assets, compared to 0.32% as of March 31, 2019 and 0.34% as of June 30, 2018.

Non-interest Income
Non-interest income was $121.8 million for the second quarter of 2019, up $76.1 million from the prior quarter,  reflecting the nonrecurring $81.9 million gain on sale of Visa Class B stock.

Revenue from the origination and sale of residential mortgages was $23.2 million for the second quarter of 2019, an increase of $8.8 million from the prior quarter.  This increase reflects a sequential quarter increase of 43% in for-sale mortgage origination volume and an increase of 37 basis points in the home lending gain on sale margin to 3.32% for the second quarter of 2019.  Of the current quarter's mortgage production, 70% related to purchase activity, compared to 71% for the prior quarter and 81% for the same period of the prior year.

Non-interest Expense
Non-interest expense was $180.4 million for the second quarter of 2019, up $8.8 million from the prior quarter level.  This increase was driven primarily by higher mortgage banking-related expenses, higher loss on OREO, and higher marketing expenses, partially offset by a seasonal decrease in payroll taxes and lower group insurance charges.

Capital
As of June 30, 2019, the Company's tangible book value per common share¹ was $10.97, compared to $10.44 in the prior quarter and $9.84 in the same period of the prior year.  During the second quarter of 2019, the Company declared a dividend of $0.21 per common share.

The Company's estimated total risk-based capital ratio was 13.7% and its estimated Tier 1 common to risk weighted assets ratio was 10.9% as of June 30, 2019.  The Company remains above current "well-capitalized" regulatory minimums.  The regulatory capital ratios as of June 30, 2019 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 these 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.

Management believes tangible common equity and the tangible common equity ratio are useful 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)		Jun 30, 2019				Mar 31, 2019				Dec 31, 2018				Sep 30, 2018				Jun 30, 2018
Total shareholders' equity		$	4,228,507			$	4,112,326			$	4,056,442			$	4,003,893			$	3,981,087
Subtract:
Goodwill		1,787,651				1,787,651				1,787,651				1,787,651				1,787,651
Other intangible assets, net		21,155				22,560				23,964				25,506				27,047
Tangible common shareholders' equity		$	2,419,701			$	2,302,115			$	2,244,827			$	2,190,736			$	2,166,389
Total assets		$	27,986,075			$	27,355,625			$	26,939,781			$	26,615,067			$	26,480,601
Subtract:
Goodwill		1,787,651				1,787,651				1,787,651				1,787,651				1,787,651
Other intangible assets, net		21,155				22,560				23,964				25,506				27,047
Tangible assets		$	26,177,269			$	25,545,414			$	25,128,166			$	24,801,910			$	24,665,903
Common shares outstanding at period end		220,499				220,457				220,255				220,238				220,205
Total shareholders' equity to total assets ratio		15.11		%		15.03		%		15.06		%		15.04		%		15.03		%
Tangible common equity ratio		9.24		%		9.01		%		8.93		%		8.83		%		8.78		%
Book value per common share		$	19.18			$	18.65			$	18.42			$	18.18			$	18.08
Tangible book value per common share		$	10.97			$	10.44			$	10.19			$	9.95			$	9.84

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 customer experience, 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 Holdings Corporation is headquartered in Portland, Oregon. For more information, visit umpquabank.com.

Earnings Conference Call Information
The Company will host its second quarter 2019 earnings conference call on July 18, 2019, 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 second quarter 2019 financial results.  There will be a live question-and-answer session following the presentation.  To join the call, please dial [phone] ten minutes prior to the start time and enter conference ID: 942314.  A re-broadcast will be available approximately two hours after the call by dialing [phone] and entering conference ID 2627879.  The earnings conference call will also be available as an audiocast, which can be accessed on the Company's investor relations page at umpquabank.com.

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 strategic investments, fee income initiatives, sale of MSR and MSR fair value volatility. 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; the effect of interest rate increases on the cost of deposits; 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 ability to effectively manage problem credits; our ability to successfully implement efficiency and operational excellence initiatives on time and in amounts projected; our ability to successfully develop and market new products and technology; and changes in laws or regulations.

Umpqua Holdings Corporation
Consolidated Statements of Income
(Unaudited)
		Quarter Ended																				% Change
(In thousands, except per share data)		Jun 30, 2019				Mar 31, 2019				Dec 31, 2018				Sep 30, 2018				Jun 30, 2018				Seq. Quarter			Year over Year
Interest income:
Loans and leases		$	264,110			$	258,747			$	254,093			$	246,410			$	242,123			2	%		9	%
Interest and dividends on investments:
Taxable		10,287				19,956				27,381				24,435				8,499				(48)	%		21	%
Exempt from federal income tax		1,921				2,114				2,135				2,048				2,057				(9)	%		(7)	%
Dividends		574				517				538				549				433				11	%		33	%
Temporary investments and interest bearing deposits		4,708				925				2,621				2,800				2,080				409	%		126	%
Total interest income		281,600				282,259				286,768				276,242				255,192				0	%		10	%
Interest expense:
Deposits		43,591				34,094				30,124				25,692				21,259				28	%		105	%
Securities sold under agreement to repurchase and federal funds purchased		403				810				185				103				155				(50)	%		160	%
Term debt		4,563				3,683				3,326				3,439				3,478				24	%		31	%
Junior subordinated debentures		5,881				5,987				5,743				5,640				5,400				(2)	%		9	%
Total interest expense		54,438				44,574				39,378				34,874				30,292				22	%		80	%
Net interest income		227,162				237,685				247,390				241,368				224,900				(4)	%		1	%
Provision for loan and lease losses		19,352				13,684				17,219				11,711				13,319				41	%		45	%
Non-interest income:
Service charges on deposits		15,953				15,278				16,035				15,574				15,520				4	%		3	%
Brokerage revenue		3,980				3,810				4,178				3,947				4,161				4	%		(4)	%
Residential mortgage banking revenue, net		9,529				11,231				15,150				31,484				33,163				(15)	%		(71)	%
(Loss) gain on sale of debt securities, net		(7,186)				—				—				—				14				nm			nm
Gain (loss) on equity securities, net		82,607				695				410				(462)				(1,432)				nm			nm
Gain on loan sales, net		3,333				769				2,484				2,772				1,348				333	%		147	%
BOLI income		2,093				2,168				2,116				2,051				2,060				(3)	%		2	%
Other income		11,514				11,789				16,438				17,022				16,817				(2)	%		(32)	%
Total non-interest income		121,823				45,740				56,811				72,388				71,651				166	%		70	%
Non-interest expense:
Salaries and employee benefits		104,049				100,658				102,109				103,575				113,340				3	%		(8)	%
Occupancy and equipment, net		36,032				36,245				35,949				36,530				37,584				(1)	%		(4)	%
Intangible amortization		1,405				1,404				1,542				1,541				1,542				0	%		(9)	%
FDIC assessments		2,837				2,942				2,619				4,303				4,692				(4)	%		(40)	%
Loss (gain) on other real estate owned, net		2,678				(51)				1,125				(128)				(92)				nm			nm
Other expenses		33,414				30,394				35,144				33,471				38,506				10	%		(13)	%
Total non-interest expense		180,415				171,592				178,488				179,292				195,572				5	%		(8)	%
Income before provision for income taxes		149,218				98,149				108,494				122,753				87,660				52	%		70	%
Provision for income taxes		37,408				24,116				28,183				31,772				21,661				55	%		73	%
Net income		$	111,810			$	74,033			$	80,311			$	90,981			$	65,999			51	%		69	%
Weighted average basic shares outstanding		220,487				220,366				220,247				220,224				220,283				0	%		0	%
Weighted average diluted shares outstanding		220,719				220,655				220,668				220,620				220,647				0	%		0	%
Earnings per common share – basic		$	0.51			$	0.34			$	0.36			$	0.41			$	0.30			50	%		70	%
Earnings per common share – diluted		$	0.51			$	0.34			$	0.36			$	0.41			$	0.30			50	%		70	%
nm = not meaningful

 

Umpqua Holdings Corporation
Consolidated Statements of Income
(Unaudited)
		Six Months Ended								% Change
(In thousands, except per share data)		Jun 30, 2019				Jun 30, 2018				Year over Year
Interest income:
Loans and leases		$	522,857			$	471,611			11	%
Interest and dividends on investments:
Taxable		30,243				24,198				25	%
Exempt from federal income tax		4,035				4,185				(4)	%
Dividends		1,091				901				21	%
Temporary investments and interest bearing deposits		5,633				3,244				74	%
Total interest income		563,859				504,139				12	%
Interest expense:
Deposits		77,685				36,869				111	%
Securities sold under agreement to repurchase and federal funds purchased		1,213				218				456	%
Term debt		8,246				6,839				21	%
Junior subordinated debentures		11,868				10,332				15	%
Total interest expense		99,012				54,258				82	%
Net interest income		464,847				449,881				3	%
Provision for loan and lease losses		33,036				26,975				22	%
Non-interest income:
Service charges on deposits		31,231				30,515				2	%
Brokerage revenue		7,790				8,355				(7)	%
Residential mortgage banking revenue, net		20,760				71,601				(71)	%
(Loss) gain on sale of debt securities, net		(7,186)				14				nm
Gain (loss) on equity securities, net		83,302				(1,432)				nm
Gain on loan sales, net		4,102				2,578				59	%
BOLI income		4,261				4,130				3	%
Other income		23,303				34,457				(32)	%
Total non-interest income		167,563				150,218				12	%
Non-interest expense:
Salaries and employee benefits		204,707				219,891				(7)	%
Occupancy and equipment, net		72,277				76,245				(5)	%
Intangible amortization		2,809				3,083				(9)	%
FDIC assessments		5,779				9,172				(37)	%
Loss (gain) on other real estate owned, net		2,627				(130)				nm
Other expenses		63,808				73,424				(13)	%
Total non-interest expense		352,007				381,685				(8)	%
Income before provision for income taxes		247,367				191,439				29	%
Provision for income taxes		61,524				46,468				32	%
Net income		$	185,843			$	144,971			28	%
Weighted average basic shares outstanding		220,427				220,326				0	%
Weighted average diluted shares outstanding		220,692				220,760				0	%
Earnings per common share – basic		$	0.84			$	0.66			27	%
Earnings per common share – diluted		$	0.84			$	0.66			27	%
nm = not meaningful

 

Umpqua Holdings Corporation Consolidated Balance Sheets
(Unaudited)
																					% Change
(In thousands, except per share data)	Jun 30, 2019				Mar 31, 2019				Dec 31, 2018				Sep 30, 2018				Jun 30, 2018				Seq. Quarter			Year over Year
Assets:
Cash and due from banks	$	342,508			$	296,967			$	335,419			$	308,938			$	314,513			15	%		9	%
Interest bearing cash and temporary investments	691,283				605,841				287,218				570,321				488,499				14	%		42	%
Investment securities:
Equity and other, at fair value	66,358				63,327				61,841				62,454				64,297				5	%		3	%
Available for sale, at fair value	2,698,398				2,894,778				2,977,108				2,864,394				2,854,398				(7)	%		(5)	%
Held to maturity, at amortized cost	3,416				3,478				3,606				3,672				3,586				(2)	%		(5)	%
Loans held for sale, at fair value	356,645				240,302				166,461				289,537				432,642				48	%		(18)	%
Loans and leases	20,953,371				20,405,997				20,422,666				19,854,033				19,639,494				3	%		7	%
Allowance for loan and lease losses	(151,069)				(144,872)				(144,871)				(144,026)				(144,556)				4	%		5	%
Net loans and leases	20,802,302				20,261,125				20,277,795				19,710,007				19,494,938				3	%		7	%
Restricted equity securities	43,063				47,466				40,268				40,269				42,320				(9)	%		2	%
Premises and equipment, net	210,285				217,595				227,423				237,456				245,954				(3)	%		(15)	%
Operating lease right-of-use assets	112,752				109,807				—				—				—				3	%		nm
Goodwill	1,787,651				1,787,651				1,787,651				1,787,651				1,787,651				0	%		0	%
Other intangible assets, net	21,155				22,560				23,964				25,506				27,047				(6)	%		(22)	%
Residential mortgage servicing rights, at fair value	139,780				158,946				169,025				175,038				166,217				(12)	%		(16)	%
Other real estate owned	8,423				10,488				10,958				11,774				12,101				(20)	%		(30)	%
Bank owned life insurance	316,435				314,303				313,626				311,922				309,844				1	%		2	%
Other assets	385,621				320,991				257,418				216,128				236,594				20	%		63	%
Total assets	$	27,986,075			$	27,355,625			$	26,939,781			$	26,615,067			$	26,480,601			2	%		6	%
Liabilities:
Deposits	$	21,819,013			$	21,243,894			$	21,137,486			$	20,892,774			$	20,744,526			3	%		5	%
Securities sold under agreements to repurchase	308,052				288,944				297,151				286,975				273,666				7	%		13	%
Term debt	821,712				932,420				751,788				751,764				801,739				(12)	%		2	%
Junior subordinated debentures, at fair value	277,028				294,121				300,870				282,846				280,669				(6)	%		(1)	%
Junior subordinated debentures, at amortized cost	88,610				88,667				88,724				88,781				88,838				0	%		0	%
Operating lease liabilities	121,742				118,520				—				—				—				3	%		nm
Deferred tax liability, net	57,757				45,202				25,846				22,413				27,255				28	%		112	%
Other liabilities	263,654				231,531				281,474				285,621				282,821				14	%		(7)	%
Total liabilities	23,757,568				23,243,299				22,883,339				22,611,174				22,499,514				2	%		6	%
Shareholders' equity:
Common stock	3,514,391				3,511,731				3,512,874				3,510,949				3,509,146				0	%		0	%
Retained earnings	695,003				629,877				602,482				568,619				524,031				10	%		33	%
Accumulated other comprehensive income (loss)	19,113				(29,282)				(58,914)				(75,675)				(52,090)				(165)	%		(137)	%
Total shareholders' equity	4,228,507				4,112,326				4,056,442				4,003,893				3,981,087				3	%		6	%
Total liabilities and shareholders' equity	$	27,986,075			$	27,355,625			$	26,939,781			$	26,615,067			$	26,480,601			2	%		6	%
Common shares outstanding at period end	220,499				220,457				220,255				220,238				220,205				0	%		0	%
Book value per common share	$	19.18			$	18.65			$	18.42			$	18.18			$	18.08			3	%		6	%
Tangible book value per common share	$	10.97			$	10.44			$	10.19			$	9.95			$	9.84			5	%		11	%
Tangible equity - common	$	2,419,701			$	2,302,115			$	2,244,827			$	2,190,736			$	2,166,389			5	%		12	%
Tangible common equity to tangible assets	9.24		%		9.01		%		8.93		%		8.83		%		8.78		%		0.23			0.46
nm = not meaningful

 

Umpqua Holdings Corporation
Loan and Lease Portfolio
(Unaudited)
(Dollars in thousands)		Jun 30, 2019				Mar 31, 2019				Dec 31, 2018				Sep 30, 2018				Jun 30, 2018				% Change
		Amount				Amount				Amount				Amount				Amount				Seq. Quarter			Year over Year
Loans and leases:
Commercial real estate:
Non-owner occupied term, net		$	3,537,084			$	3,476,972			$	3,573,065			$	3,527,357			$	3,518,982			2	%		1	%
Owner occupied term, net		2,396,674				2,449,648				2,480,371				2,474,845				2,473,734				(2)	%		(3)	%
Multifamily, net		3,341,547				3,302,936				3,304,763				3,225,538				3,185,923				1	%		5	%
Construction & development, net		732,932				686,107				736,254				646,684				568,562				7	%		29	%
Residential development, net		199,421				205,963				196,890				198,518				183,114				(3)	%		9	%
Commercial:
Term, net		2,271,346				2,185,322				2,232,923				2,149,376				2,106,658				4	%		8	%
Lines of credit & other, net		1,280,587				1,229,092				1,169,525				1,133,508				1,152,853				4	%		11	%
Leases & equipment finance, net		1,449,579				1,378,686				1,330,155				1,282,128				1,265,843				5	%		15	%
Residential:
Mortgage, net		3,995,643				3,768,955				3,635,073				3,468,569				3,405,775				6	%		17	%
Home equity loans & lines, net		1,215,215				1,170,252				1,176,477				1,143,351				1,132,329				4	%		7	%
Consumer & other, net		533,343				552,064				587,170				604,159				645,721				(3)	%		(17)	%
Total loans, net of deferred fees and costs		$	20,953,371			$	20,405,997			$	20,422,666			$	19,854,033			$	19,639,494			3	%		7	%
Loan and leases mix:
Commercial real estate:
Non-owner occupied term, net		17		%		17		%		17		%		18		%		18		%
Owner occupied term, net		11		%		12		%		12		%		13		%		13		%
Multifamily, net		16		%		16		%		16		%		16		%		16		%
Construction & development, net		3		%		3		%		4		%		3		%		3		%
Residential development, net		1		%		1		%		1		%		1		%		1		%
Commercial:
Term, net		11		%		11		%		11		%		11		%		11		%
Lines of credit & other, net		6		%		6		%		6		%		6		%		6		%
Leases & equipment finance, net		7		%		7		%		6		%		6		%		6		%
Residential:
Mortgage, net		19		%		18		%		18		%		17		%		17		%
Home equity loans & lines, net		6		%		6		%		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)		Jun 30, 2019				Mar 31, 2019				Dec 31, 2018				Sep 30, 2018				Jun 30, 2018				% Change
		Amount				Amount				Amount				Amount				Amount				Seq. Quarter			Year over Year
Deposits:
Demand, non-interest bearing		$	6,771,087			$	6,495,562			$	6,667,467			$	6,859,411			$	6,819,325			4	%		(1)	%
Demand, interest bearing		2,355,473				2,341,441				2,340,471				2,320,560				2,321,691				1	%		1	%
Money market		6,789,036				6,469,286				6,645,390				6,325,808				6,161,907				5	%		10	%
Savings		1,446,332				1,479,509				1,492,685				1,499,872				1,465,154				(2)	%		(1)	%
Time		4,457,085				4,458,096				3,991,473				3,887,123				3,976,449				0	%		12	%
Total		$	21,819,013			$	21,243,894			$	21,137,486			$	20,892,774			$	20,744,526			3	%		5	%
Total core deposits (1)		$	18,529,797			$	17,903,754			$	18,190,402			$	18,012,992			$	17,743,888			3	%		4	%
Deposit mix:
Demand, non-interest bearing		31		%		31		%		32		%		33		%		33		%
Demand, interest bearing		11		%		11		%		11		%		11		%		11		%
Money market		31		%		30		%		31		%		30		%		30		%
Savings		7		%		7		%		7		%		7		%		7		%
Time		20		%		21		%		19		%		19		%		19		%
Total		100		%		100		%		100		%		100		%		100		%
Number of open accounts:
Demand, non-interest bearing		409,235				406,039				406,240				404,913				402,771
Demand, interest bearing		76,686				76,712				77,099				77,546				77,918
Money market		58,158				56,602				56,196				55,895				55,393
Savings		160,708				161,039				161,656				162,387				162,414
Time		60,571				58,210				54,388				52,482				51,073
Total		765,358				758,602				755,579				753,223				749,569
Average balance per account:
Demand, non-interest bearing		$	16.5			$	16.0			$	16.4			$	16.9			$	16.9
Demand, interest bearing		30.7				30.5				30.4				29.9				29.8
Money market		116.7				114.3				118.3				113.2				111.2
Savings		9.0				9.2				9.2				9.2				9.0
Time		73.6				76.6				73.4				74.1				77.9
Total		$	28.5			$	28.0			$	28.0			$	27.7			$	27.7

(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)		Jun 30, 2019				Mar 31, 2019				Dec 31, 2018				Sep 30, 2018				Jun 30, 2018				Seq. Quarter			Year over Year
Non-performing assets:
Loans and leases on non-accrual status		$	35,022			$	44,586			$	50,823			$	54,059			$	43,392			(21)	%		(19)	%
Loans and leases past due 90+ days and accruing (1)		35,700				31,424				36,444				33,812				34,535				14	%		3	%
Total non-performing loans and leases		70,722				76,010				87,267				87,871				77,927				(7)	%		(9)	%
Other real estate owned		8,423				10,488				10,958				11,774				12,101				(20)	%		(30)	%
Total non-performing assets		$	79,145			$	86,498			$	98,225			$	99,645			$	90,028			(9)	%		(12)	%
Performing restructured loans and leases		$	15,267			$	15,726			$	13,924			$	14,531			$	27,167			(3)	%		(44)	%
Loans and leases past due 31-89 days		$	40,619			$	53,009			$	37,373			$	33,825			$	44,734			(23)	%		(9)	%
Loans and leases past due 31-89 days to total loans and leases		0.19		%		0.26		%		0.18		%		0.17		%		0.23		%
Non-performing loans and leases to total loans and leases (1)		0.34		%		0.37		%		0.43		%		0.44		%		0.40		%
Non-performing assets to total assets(1)		0.28		%		0.32		%		0.36		%		0.37		%		0.34		%

(1)	Excludes non-performing mortgage loans guaranteed by Ginnie Mae, which Umpqua has the unilateral right to repurchase but has not done so, totaling $5.4 million, $158,000, $8.9 million, $8.0 million, and $9.2 million at June 30, 2019, March 31, 2019, December 31, 2018, September 30, 2018, and June 30, 2018, respectively.

 

Umpqua Holdings Corporation
Credit Quality – Allowance for Loan and Lease Losses
(Unaudited)
		Quarter Ended																				% Change
(Dollars in thousands)		Jun 30, 2019				Mar 31, 2019				Dec 31, 2018				Sep 30, 2018				Jun 30, 2018				Seq. Quarter			Year over Year
Allowance for loan and lease losses:
Balance beginning of period		$	144,872			$	144,871			$	144,026			$	144,556			$	141,933
Provision for loan and lease losses		19,352				13,684				17,219				11,711				13,319				41	%		45	%
Charge-offs		(16,707)				(17,152)				(19,527)				(15,896)				(14,815)				(3)	%		13	%
Recoveries		3,552				3,469				3,153				3,655				4,119				2	%		(14)	%
Net charge-offs		(13,155)				(13,683)				(16,374)				(12,241)				(10,696)				(4)	%		23	%
Total allowance for loan and lease losses		151,069				144,872				144,871				144,026				144,556				4	%		5	%
Reserve for unfunded commitments		4,857				4,654				4,523				4,294				4,130				4	%		18	%
Total allowance for credit losses		$	155,926			$	149,526			$	149,394			$	148,320			$	148,686			4	%		5	%
Net charge-offs to average loans and leases (annualized)		0.26		%		0.27		%		0.32		%		0.25		%		0.22		%
Recoveries to gross charge-offs		21.26		%		20.23		%		16.15		%		22.99		%		27.80		%
Allowance for loan and lease losses to loans and leases		0.72		%		0.71		%		0.71		%		0.73		%		0.74		%
Allowance for credit losses to loans and leases		0.74		%		0.73		%		0.73		%		0.75		%		0.76		%

 

Umpqua Holdings Corporation
Credit Quality – Allowance for Loan and Lease Losses
(Unaudited)
		Six Months Ended								% Change
(Dollars in thousands)		Jun 30, 2019				Jun 30, 2018				Year over Year
Allowance for loan and lease losses:
Balance beginning of period		$	144,871			$	140,608
Provision for loan and lease losses		33,036				26,975				22	%
Charge-offs		(33,859)				(30,627)				11	%
Recoveries		7,021				7,600				(8)	%
Net charge-offs		(26,838)				(23,027)				17	%
Total allowance for loan and lease losses		151,069				144,556				5	%
Reserve for unfunded commitments		4,857				4,130				18	%
Total allowance for credit losses		$	155,926			$	148,686			5	%
Net charge-offs to average loans and leases (annualized)		0.26		%		0.24		%
Recoveries to gross charge-offs		20.74		%		24.81		%

 

Umpqua Holdings Corporation
Selected Ratios
(Unaudited)
		Quarter Ended															% Change
		Jun 30, 2019			Mar 31, 2019			Dec 31, 2018			Sep 30, 2018			Jun 30, 2018			Seq. Quarter			Year over Year
Average Rates:
Yield on loans held for sale		5.03	%		5.95	%		5.81	%		5.27	%		4.86	%		(0.92)			0.17
Yield on loans and leases		5.07	%		5.06	%		4.97	%		4.89	%		4.91	%		0.01			0.16
Yield on taxable investments		1.62	%		2.96	%		4.11	%		3.72	%		1.31	%		(1.34)			0.31
Yield on tax-exempt investments (1)		3.42	%		3.59	%		3.70	%		3.61	%		3.64	%		(0.17)			(0.22)
Yield on interest bearing cash and temporary investments		2.41	%		2.44	%		2.25	%		1.99	%		1.82	%		(0.03)			0.59
Total yield on earning assets (1)		4.59	%		4.79	%		4.81	%		4.67	%		4.41	%		(0.20)			0.18
Cost of interest bearing deposits		1.16	%		0.97	%		0.85	%		0.73	%		0.62	%		0.19			0.54
Cost of securities sold under agreements
to repurchase and fed funds purchased		0.55	%		0.88	%		0.26	%		0.15	%		0.22	%		(0.33)			0.33
Cost of term debt		2.03	%		1.88	%		1.75	%		1.73	%		1.74	%		0.15			0.29
Cost of junior subordinated debentures		6.17	%		6.24	%		6.13	%		6.06	%		5.89	%		(0.07)			0.28
Total cost of interest bearing liabilities		1.31	%		1.14	%		1.00	%		0.90	%		0.80	%		0.17			0.51
Net interest spread (1)		3.28	%		3.65	%		3.81	%		3.77	%		3.61	%		(0.37)			(0.33)
Net interest margin (1)		3.70	%		4.03	%		4.15	%		4.09	%		3.89	%		(0.33)			(0.19)
Performance Ratios:
Return on average assets		1.62	%		1.12	%		1.19	%		1.36	%		1.02	%		0.50			0.60
Return on average tangible assets		1.73	%		1.20	%		1.28	%		1.46	%		1.09	%		0.53			0.64
Return on average common equity		10.80	%		7.34	%		7.90	%		9.00	%		6.64	%		3.46			4.16
Return on average tangible common equity		19.14	%		13.17	%		14.34	%		16.42	%		12.18	%		5.97			6.96
Efficiency ratio – Consolidated		51.64	%		60.44	%		58.58	%		57.06	%		65.84	%		(8.80)			(14.20)
Efficiency ratio – Bank		50.16	%		58.57	%		57.67	%		54.70	%		63.04	%		(8.41)			(12.88)

(1)	Tax exempt interest has been adjusted to a taxable equivalent basis using a 21% tax rate.

 

Umpqua Holdings Corporation
Selected Ratios
(Unaudited)
		Six Months Ended						% Change
		Jun 30, 2019			Jun 30, 2018			Year over Year
Average Rates:
Yield on loans held for sale		5.41	%		4.57	%		0.84
Yield on loans and leases		5.07	%		4.87	%		0.20
Yield on taxable investments		2.30	%		1.82	%		0.48
Yield on tax-exempt investments (1)		3.51	%		3.66	%		(0.15)
Yield on interest bearing cash and temporary investments		2.42	%		1.72	%		0.70
Total yield on earning assets (1)		4.69	%		4.44	%		0.25
Cost of interest bearing deposits		1.07	%		0.55	%		0.52
Cost of securities sold under agreements
to repurchase and fed funds purchased		0.74	%		0.15	%		0.59
Cost of term debt		1.96	%		1.72	%		0.24
Cost of junior subordinated debentures		6.20	%		5.62	%		0.58
Total cost of interest bearing liabilities		1.23	%		0.73	%		0.50
Net interest spread (1)		3.46	%		3.71	%		(0.25)
Net interest margin (1)		3.86	%		3.96	%		(0.10)
Performance Ratios:
Return on average assets		1.37	%		1.13	%		0.24
Return on average tangible assets		1.47	%		1.22	%		0.25
Return on average common equity		9.09	%		7.34	%		1.75
Return on average tangible common equity		16.21	%		13.50	%		2.71
Efficiency ratio – Consolidated		55.58	%		63.50	%		(7.92)
Efficiency ratio – Bank		53.94	%		61.12	%		(7.18)

(1)	Tax exempt interest has been adjusted to a taxable equivalent basis using a 21% tax rate.

 

Umpqua Holdings Corporation Average Balances
(Unaudited)
	Quarter Ended																				% Change
(Dollars in thousands)	Jun 30, 2019				Mar 31, 2019				Dec 31, 2018				Sep 30, 2018				Jun 30, 2018				Seq. Quarter			Year over Year
Temporary investments and interest bearing cash	$	783,703			$	153,347			$	462,621			$	558,597			$	458,133			411	%		71	%
Investment securities, taxable	2,683,472				2,757,644				2,716,616				2,687,635				2,723,406				(3)	%		(1)	%
Investment securities, tax-exempt	271,633				287,366				282,998				278,937				279,158				(5)	%		(3)	%
Loans held for sale	264,445				187,656				238,958				320,494				326,427				41	%		(19)	%
Loans and leases	20,605,963				20,388,988				20,051,674				19,709,113				19,387,537				1	%		6	%
Total interest earning assets	24,609,216				23,775,001				23,752,867				23,554,776				23,174,661				4	%		6	%
Goodwill and other intangible assets, net	1,809,583				1,811,007				1,812,487				1,814,000				1,815,529				0	%		0	%
Total assets	27,709,310				26,811,621				26,672,224				26,461,526				26,076,142				3	%		6	%
Non-interest bearing demand deposits	6,556,090				6,505,615				6,828,730				6,865,676				6,645,689				1	%		(1)	%
Interest bearing deposits	15,069,198				14,304,325				14,138,852				13,897,141				13,745,089				5	%		10	%
Total deposits	21,625,288				20,809,940				20,967,582				20,762,817				20,390,778				4	%		6	%
Interest bearing liabilities	16,646,949				15,858,561				15,547,250				15,331,529				15,199,900				5	%		10	%
Shareholders' equity - common	4,153,175				4,091,174				4,035,125				4,011,856				3,988,825				2	%		4	%
Tangible common equity (1)	2,343,592				2,280,167				2,222,638				2,197,856				2,173,296				3	%		8	%

 

Umpqua Holdings Corporation Average Balances
(Unaudited)
		Six Months Ended								% Change
(Dollars in thousands)		Jun 30, 2019				Jun 30, 2018				Year over Year
Temporary investments and interest bearing cash		$	470,266			$	381,328			23	%
Investment securities, taxable		2,720,353				2,758,235				(1)	%
Investment securities, tax-exempt		279,456				282,860				(1)	%
Loans held for sale		226,263				296,992				(24)	%
Loans and leases		20,498,075				19,239,586				7	%
Total interest earning assets		24,194,413				22,959,001				5	%
Goodwill and other intangible assets, net		1,810,291				1,816,294				0	%
Total assets		27,262,945				25,856,690				5	%
Non-interest bearing demand deposits		6,530,992				6,548,566				0	%
Interest bearing deposits		14,688,875				13,619,723				8	%
Total deposits		21,219,867				20,168,289				5	%
Interest bearing liabilities		16,254,933				15,086,460				8	%
Shareholders' equity - common		4,122,346				3,981,948				4	%
Tangible common equity (1)		2,312,055				2,165,654				7	%

(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 Average Rates and Balances
(Unaudited)
(dollars in thousands)	Quarter Ended
	June 30, 2019											March 31, 2019											June 30, 2018
	Average Balance				Interest Income or Expense				Average Yields or Rates			Average Balance				Interest Income or Expense				Average Yields or Rates			Average Balance				Interest Income or Expense				Average Yields or Rates
INTEREST-EARNING ASSETS:
Loans held for sale	$	264,445			$	3,326			5.03	%		$	187,656			$	2,790			5.95	%		$	326,427			$	3,967			4.86	%
Loans and leases (1)	20,605,963				260,784				5.07	%		20,388,988				255,957				5.06	%		19,387,537				238,156				4.91	%
Taxable securities	2,683,472				10,861				1.62	%		2,757,644				20,473				2.96	%		2,723,406				8,932				1.31	%
Non-taxable securities (2)	271,633				2,325				3.42	%		287,366				2,580				3.59	%		279,158				2,539				3.64	%
Temporary investments and interest-bearing cash	783,703				4,708				2.41	%		153,347				925				2.44	%		458,133				2,080				1.82	%
Total interest-earning assets	24,609,216				$	282,004			4.59	%		23,775,001				282,725				4.79	%		23,174,661				$	255,674			4.41	%
Other assets	3,100,094											3,036,620											2,901,481
Total assets	$	27,709,310										$	26,811,621										$	26,076,142
INTEREST-BEARING LIABILITIES:
Interest-bearing demand deposits	$	2,332,535			$	2,798			0.48	%		$	2,319,718			$	2,640			0.46	%		$	2,322,359			$	1,565			0.27	%
Money market deposits	6,747,290				15,351				0.91	%		6,391,721				11,017				0.70	%		6,332,372				5,896				0.37	%
Savings deposits	1,454,908				410				0.11	%		1,488,530				270				0.07	%		1,456,625				252				0.07	%
Time deposits	4,534,465				25,032				2.21	%		4,104,356				20,167				1.99	%		3,633,733				13,546				1.50	%
Total interest-bearing deposits	15,069,198				43,591				1.16	%		14,304,325				34,094				0.97	%		13,745,089				21,259				0.62	%
Repurchase agreements and federal funds purchased	292,057				403				0.55	%		371,336				810				0.88	%		285,338				155				0.22	%
Term debt	903,164				4,563				2.03	%		793,797				3,683				1.88	%		801,768				3,478				1.74	%
Junior subordinated debentures	382,530				5,881				6.17	%		389,103				5,987				6.24	%		367,705				5,400				5.89	%
Total interest-bearing liabilities	16,646,949				$	54,438			1.31	%		15,858,561				$	44,574			1.14	%		15,199,900				$	30,292			0.80	%
Non-interest-bearing deposits	6,556,090											6,505,615											6,645,689
Other liabilities	353,096											356,271											241,728
Total liabilities	23,556,135											22,720,447											22,087,317
Common equity	4,153,175											4,091,174											3,988,825
Total liabilities and shareholders' equity	$	27,709,310										$	26,811,621										$	26,076,142
NET INTEREST INCOME					$	227,566										$	238,151										$	225,382
NET INTEREST SPREAD									3.28	%										3.65	%										3.61	%
NET INTEREST INCOME TO EARNING ASSETS OR NET INTEREST MARGIN (1), (2)									3.70	%										4.03	%										3.89	%

(1)	Non-accrual loans and leases are included in the average balance.
(2)	Tax-exempt income has been adjusted to a tax equivalent basis at a 21% tax rate. The amount of such adjustment was an addition to recorded income of approximately $404,000 for the three months ended June 30, 2019 as compared to $466,000 for March 31, 2019 and $482,000 for June 30, 2018.

 

Umpqua Holdings Corporation Average Rates and Balances
(Unaudited)
(dollars in thousands)	Six Months Ended
	June 30, 2019											June 30, 2018
	Average Balance				Interest Income or Expense				Average Yields or Rates			Average Balance				Interest Income or Expense				Average Yields or Rates
INTEREST-EARNING ASSETS:
Loans held for sale	$	226,263			$	6,116			5.41	%		$	296,992			$	6,782			4.57	%
Loans and leases (1)	20,498,075				516,741				5.07	%		19,239,586				464,829				4.87	%
Taxable securities	2,720,353				31,334				2.30	%		2,758,235				25,099				1.82	%
Non-taxable securities (2)	279,456				4,905				3.51	%		282,860				5,179				3.66	%
Temporary investments and interest-bearing cash	470,266				5,633				2.42	%		381,328				3,244				1.72	%
Total interest-earning assets	24,194,413				$	564,729			4.69	%		22,959,001				$	505,133			4.44	%
Other assets	3,068,532											2,897,689
Total assets	$	27,262,945										$	25,856,690
INTEREST-BEARING LIABILITIES:
Interest-bearing demand deposits	$	2,326,162			$	5,438			0.47	%		$	2,322,793			$	2,775			0.24	%
Money market deposits	6,570,488				26,368				0.81	%		6,618,629				11,609				0.35	%
Savings deposits	1,471,626				680				0.09	%		1,459,824				414				0.06	%
Time deposits	4,320,599				45,199				2.11	%		3,218,477				22,071				1.38	%
Total interest-bearing deposits	14,688,875				77,685				1.07	%		13,619,723				36,869				0.55	%
Repurchase agreements and federal funds purchased	331,477				1,213				0.74	%		294,150				218				0.15	%
Term debt	848,783				8,246				1.96	%		802,031				6,839				1.72	%
Junior subordinated debentures	385,798				11,868				6.20	%		370,556				10,332				5.62	%
Total interest-bearing liabilities	16,254,933				$	99,012			1.23	%		15,086,460				$	54,258			0.73	%
Non-interest-bearing deposits	6,530,992											6,548,566
Other liabilities	354,674											239,716
Total liabilities	23,140,599											21,874,742
Common equity	4,122,346											3,981,948
Total liabilities and shareholders' equity	$	27,262,945										$	25,856,690
NET INTEREST INCOME					$	465,717										$	450,875
NET INTEREST SPREAD									3.46	%										3.71	%
NET INTEREST INCOME TO EARNING ASSETS OR NET INTEREST MARGIN (1), (2)									3.86	%										3.96	%

(1)	Non-accrual loans and leases are included in the average balance.
(2)	Tax-exempt income has been adjusted to a tax equivalent basis at a 21% tax rate. The amount of such adjustment was an addition to recorded income of approximately $870,000 for the six months ended June 30, 2019 as compared to $1.0 million for the same period in 2018.

 

Umpqua Holdings Corporation Residential Mortgage Banking Activity
(Unaudited)
		Quarter Ended																				% Change
(Dollars in thousands)		Jun 30, 2019				Mar 31, 2019				Dec 31, 2018				Sep 30, 2018				Jun 30, 2018				Seq. Quarter			Year over Year
Residential mortgage banking revenue:
Origination and sale		$	23,151			$	14,373			$	16,665			$	20,983			$	28,159			61	%		(18)	%
Servicing		11,036				10,824				11,555				10,302				10,407				2	%		6	%
Change in fair value of MSR asset:
Changes due to collection/realization of expected cash flows over time		(6,905)				(6,431)				(6,425)				(6,007)				(5,903)				7	%		17	%
Changes due to valuation inputs or assumptions		(17,753)				(7,535)				(6,645)				6,206				500				136	%		(3,651)	%
Total		$	9,529			$	11,231			$	15,150			$	31,484			$	33,163			(15)	%		(71)	%
Closed loan volume:
Portfolio		$	481,878			$	318,612			$	312,524			$	323,941			$	294,581			51	%		64	%
For-sale		698,150				487,090				589,355				756,924				839,489				43	%		(17)	%
Total		$	1,180,028			$	805,702			$	901,879			$	1,080,865			$	1,134,070			46	%		4	%
Gain on sale margin:
Based on for-sale volume		3.32		%		2.95		%		2.83		%		2.77		%		3.35		%		0.37			(0.03)
Residential mortgage servicing rights:
Balance, beginning of period		$	158,946			$	169,025			$	175,038			$	166,217			$	164,760			(6)	%		(4)	%
Additions for new MSR capitalized		5,492				3,887				7,057				8,622				6,860				41	%		(20)	%
Changes in fair value of MSR asset:
Changes due to collection/realization of expected cash flows over time		(6,905)				(6,431)				(6,425)				(6,007)				(5,903)				7	%		17	%
Changes due to valuation inputs or assumptions		(17,753)				(7,535)				(6,645)				6,206				500				136	%		(3,651)	%
Balance, end of period		$	139,780			$	158,946			$	169,025			$	175,038			$	166,217			(12)	%		(16)	%
Residential mortgage loans serviced for others		$	15,796,102			$	15,902,587			$	15,978,885			$	15,810,455			$	15,508,182			(1)	%		2	%
MSR as % of serviced portfolio		0.88		%		1.00		%		1.06		%		1.11		%		1.07		%		(0.12)			(0.19)

 

Umpqua Holdings Corporation Residential Mortgage Banking Activity
(Unaudited)
		Six Months Ended								% Change
(Dollars in thousands)		Jun 30, 2019				Jun 30, 2018				Year over Year
Residential mortgage banking revenue:
Origination and sale		$	37,524			$	50,996			(26)	%
Servicing		21,860				20,929				4	%
Change in fair value of MSR asset:
Changes due to collection/realization of expected cash flows over time		(13,336)				(12,101)				10	%
Changes due to valuation inputs or assumptions		(25,288)				11,777				(315)	%
Total		$	20,760			$	71,601			(71)	%
Closed loan volume:
Portfolio		$	800,490			$	532,364			50	%
For-sale		1,185,240				1,526,715				(22)	%
Total		$	1,985,730			$	2,059,079			(4)	%
Gain on sale margin:
Based on for-sale volume		3.17		%		3.34		%		(0.17)
Residential mortgage servicing rights:
Balance, beginning of period		$	169,025			$	153,151			10	%
Additions for new MSR capitalized		9,379				13,390				(30)	%
Changes in fair value of MSR asset:
Changes due to collection/realization of expected cash flows over time		(13,336)				(12,101)				10	%
Changes due to valuation inputs or assumptions		(25,288)				11,777				(315)	%
Balance, end of period		$	139,780			$	166,217			(16)	%

 

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SOURCE Umpqua Holdings Corporation