Attached files

file filename
EX-99.2 - THIRD QUARTER 2018 INVESTOR PRESENTATION - UMPQUA HOLDINGS CORPumpqq32018earningspresen.htm
8-K - 8-K - UMPQUA HOLDINGS CORPumpq-201809308k.htm

EXHIBIT 99.1 
 
 umpquaholdingsimage.jpg
  
Contacts:
Ron Farnsworth
Bradley Howes
EVP/Chief Financial Officer
SVP/Director of Investor Relations
Umpqua Holdings Corporation
Umpqua Holdings Corporation
503-727-4108
503-727-4226
ronfarnsworth@umpquabank.com
bradhowes@umpquabank.com
 
UMPQUA REPORTS THIRD QUARTER 2018 RESULTS

Net earnings of $91.0 million, or $0.41 per common share
Strong quarterly deposit growth of $398.8 million, offset by $250.6 million of intentional run-off from brokered deposits, for net deposit growth of $148.2 million
Operational excellence initiatives helping drive lower expenses, 3Q efficiency ratio improved to 57.06%

PORTLAND, Ore. – October 17, 2018 Umpqua Holdings Corporation (NASDAQ: UMPQ) (the “Company”) reported net earnings available to common shareholders of $91.0 million for the third quarter of 2018, compared to $66.0 million for the second quarter of 2018 and $63.8 million for the third quarter of 2017. Earnings per diluted common share were $0.41 for the third quarter of 2018, compared to $0.30 for the second quarter of 2018 and $0.29 for the third quarter of 2017.

“Our financial performance improved significantly during the third quarter, driven by stronger net interest income and lower core expenses,” said Cort O'Haver, president and CEO of Umpqua Holdings Corporation. “The benefits from our operational excellence initiatives are starting to take hold, with an 8% reduction in non-interest expense and a 57% quarterly efficiency ratio. Net interest income was also stronger, benefiting from a very strong core deposit quarter, along with continued growth in the loan and lease portfolio. As we continue to build on the foundation of Umpqua Next Gen, our focus remains on completing the operational excellence initiatives and continuing to advance our human digital strategy, which will drive enhanced profitability and long-term shareholder value.”

Notable items that impacted the third quarter 2018 financial results included:

$3.5 million in restructuring charges related to operational excellence initiatives, all in professional fees. This compares to $8.2 million in the prior quarter, including $4.1 million in severance-related expense and $4.1 million in professional fees.
$7.0 million increase in interest income on taxable investment securities related to a further refinement of accounting methodology on the interest method for residential mortgage-backed securities and collateralized mortgage obligations. In the second quarter of 2018, the Company took an out of period adjustment related to an initial change in accounting methodology, resulting in a decrease in interest income on taxable investment securities of $7.2 million. Excluding the impacts from these adjustments, interest income on taxable investment securities would have increased by $1.7 million over the prior quarter level.
$0.2 million positive adjustment related to the fair value change of the MSR asset, compared to a $5.4 million negative adjustment in the prior quarter and a $9.2 million negative adjustment in the same period of the prior year.


Umpqua Reports Third Quarter 2018 Results
October 17, 2018
Page 2


$0.2 million gain related to the fair value change of the debt capital market swap derivatives, compared to a gain of $0.3 million in the prior quarter and a loss of $0.2 million in the same period of the prior year.
$1.0 million of exit or disposal costs, compared to $2.6 million in the prior quarter and $1.6 million in the same period of the prior year.
$0.5 million unrealized holding loss on equity securities, compared to a loss of $1.4 million in the prior quarter and no gain or loss recorded in the same period of the prior year.

Third Quarter 2018 Highlights (compared to prior quarter):

Net interest income increased by $16.5 million. Excluding the impact of the changes in accounting methodology to the interest method for residential mortgage-backed securities and collateralized mortgage obligations (see notable items above), net interest income increased by $2.3 million. This increase was primarily attributable to a higher average balance of loans and leases;
Provision for loan and lease losses decreased by $1.6 million, driven primarily by improvement in the loan and lease portfolio, while net charge-offs increased by three basis points to 0.25% of average loans and leases (annualized);
Non-interest income increased by $0.7 million, reflecting higher gains on portfolio loan sales and a lower unrealized holding loss on equity securities, partially offset by lower residential mortgage banking revenue;
Non-interest expense decreased by $16.3 million, driven primarily by lower restructuring charges (see notable items above), lower mortgage banking-related expense, lower salaries and benefits related to operational excellence initiatives and lower exit or disposal costs;
Non-performing assets to total assets was 0.37%;
Estimated total risk-based capital ratio of 13.7% and estimated Tier 1 common to risk weighted assets ratio of 10.8%; and
Increased the quarterly cash dividend by 5% to $0.21 per common share.

Balance Sheet
Total consolidated assets were $26.6 billion as of September 30, 2018, compared to $26.5 billion as of June 30, 2018 and $25.6 billion as of September 30, 2017. Including secured off-balance sheet lines of credit, total available liquidity was $10.8 billion as of September 30, 2018, representing 40% of total assets and 51% of total deposits.
 
Gross loans and leases were $19.9 billion as of September 30, 2018, an increase of $214.5 million from $19.6 billion as of June 30, 2018. This increase reflects balanced growth within the commercial term, construction & development, multifamily, and residential mortgage loan portfolios. This growth was partially offset by a decline in consumer loans attributable to the Company's decision to wind down its indirect auto loan business, along with $41.7 million of portfolio residential mortgage loans sold.
 
Total deposits were $20.9 billion as of September 30, 2018, an increase of $148.2 million from $20.7 billion as of June 30, 2018. This increase was attributable to higher balances of non-interest bearing demand, savings and money market deposits, partially offset by lower time deposits related primarily to the intentional run-off of wholesale brokered deposits.
 
Net Interest Income
Net interest income was $241.4 million for the third quarter of 2018, up $16.5 million from the prior quarter. Excluding the impact of the changes in accounting methodology to the interest method for residential mortgage-backed securities and collateralized mortgage obligations (see notable items above), net interest income would have increased by $2.3 million, which was attributable to higher average balances of loans and leases and interest bearing cash.



Umpqua Reports Third Quarter 2018 Results
October 17, 2018
Page 3


The Company’s net interest margin was 4.09% for the third quarter of 2018, up 20 basis points from 3.89% for the second quarter of 2018. Excluding the impact of the changes in accounting methodology to the interest method for residential mortgage-backed securities and collateralized mortgage obligations (see notable items above), net interest margin would have decreased by 5 basis points on a linked quarter basis. This decrease was primarily attributable to lower accretion related to acquired loans, which decreased to $4.9 million for the third quarter of 2018, compared to $7.9 million in the prior quarter. Excluding the impacts from the accounting change and the lower level of accretion, net interest margin increased by one basis point from the prior quarter level.

Credit Quality
The allowance for loan and lease losses was $144.0 million, or 0.73% of loans and leases, as of September 30, 2018, compared to $144.6 million, or 0.74% of loans and leases, as of June 30, 2018. The provision for loan and lease losses was $11.7 million for the third quarter of 2018, a decrease of $1.6 million from the prior quarter level, driven primarily by an improvement in the loan and lease portfolio. Net charge-offs increased by three basis points to 0.25% of average loans and leases (annualized). As of September 30, 2018, non-performing assets were 0.37% of total assets, compared to 0.34% as of June 30, 2018 and 0.30% as of September 30, 2017.

Non-interest Income
Non-interest income was $72.4 million for the third quarter of 2018, up $0.7 million from the prior quarter, reflecting a higher fair value of the MSR asset (see notable items above), higher gains on portfolio loan sales and a lower unrealized holding loss on equity securities, partially offset by lower net revenue from the origination and sale of residential mortgages.

Net revenue from the origination and sale of residential mortgages was $21.0 million for the third quarter of 2018, down $7.2 million from the prior quarter. This decrease reflects a 10% linked quarter decrease in for-sale mortgage origination volume, and a 58 basis point decrease in the home lending gain on sale margin to 2.77% for the third quarter of 2018. The decrease in the home lending gain on sale margin was primarily related to a decline in the mortgage rate lock pipeline. Of the current quarter’s mortgage production, 82% related to purchase activity, compared to 81% for the prior quarter and 74% for the same period of the prior year.

Non-interest Expense
Non-interest expense was $179.3 million for the third quarter of 2018, down $16.3 million from the prior quarter level. This decrease was driven primarily by lower salaries and benefits expense, resulting from the Company's organizational simplification and design phase of the operational excellence initiatives, along with a $4.7 million decline in restructuring charges, and a $1.8 million decrease in mortgage banking-related expense, consistent with the decrease in mortgage originations. Exit or disposal costs decreased by $1.6 million from the prior quarter level.

Capital
As of September 30, 2018, the Company’s tangible book value per common share1 was $9.95, compared to $9.84 in the prior quarter and $9.66 in the same period of the prior year. During the third quarter of 2018, the Company increased its quarterly cash dividend by 5% to $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 10.8% as of September 30, 2018. The Company remains above current “well-capitalized” regulatory minimums. The regulatory capital ratios as of September 30, 2018 are estimates, pending completion and filing of the Company’s regulatory reports.

Presentation of Prior Period Financials
Certain prior period amounts in the financial statements presented in this earnings release have been re-stated from prior earnings releases, due to prior period adjustments as disclosed in the notes to the financial statements for the June 30, 2018 Form 10-Q. Additional explanation will be included in Note 1 to the financial statements for the quarter ended September 30, 2018 as part of the Form 10-Q.



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 Third Quarter 2018 Results
October 17, 2018
Page 4


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)
 
Sep 30, 2018
 
Jun 30, 2018
 
Mar 31, 2018
 
Dec 31, 2017
 
Sep 30, 2017
Total shareholders' equity
 
$
4,003,893

 
$
3,981,087

 
$
3,969,767

 
$
3,969,367

 
$
3,946,461

Subtract:
 
 

 
 

 
 
 
 
 
 

Goodwill
 
1,787,651

 
1,787,651

 
1,787,651

 
1,787,651

 
1,787,651

Other intangible assets, net
 
25,506

 
27,047

 
28,589

 
30,130

 
31,819

Tangible common shareholders' equity
 
$
2,190,736

 
$
2,166,389

 
$
2,153,527

 
$
2,151,586

 
$
2,126,991

Total assets
 
$
26,615,067

 
$
26,480,601

 
$
25,816,402

 
$
25,680,447

 
$
25,632,339

Subtract:
 
 

 
 

 
 
 
 
 
 

Goodwill
 
1,787,651

 
1,787,651

 
1,787,651

 
1,787,651

 
1,787,651

Other intangible assets, net
 
25,506

 
27,047

 
28,589

 
30,130

 
31,819

Tangible assets
 
$
24,801,910

 
$
24,665,903

 
$
24,000,162

 
$
23,862,666

 
$
23,812,869

Common shares outstanding at period end
 
220,238

 
220,205

 
220,461

 
220,149

 
220,225

 
 
 
 
 
 
 
 
 
 
 
Total shareholders' equity to total assets ratio
 
15.04
%
 
15.03
%
 
15.38
%
 
15.46
%
 
15.40
%
Tangible common equity ratio
 
8.83
%
 
8.78
%
 
8.97
%
 
9.02
%
 
8.93
%
Book value per common share
 
$
18.18

 
$
18.08

 
$
18.01

 
$
18.03

 
$
17.92

Tangible book value per common share
 
$
9.95

 
$
9.84

 
$
9.77

 
$
9.77

 
$
9.66




Umpqua Reports Third Quarter 2018 Results
October 17, 2018
Page 5


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, and Pivotus Ventures, an enterprise software and innovation company headquartered in Silicon Valley. Umpqua Holdings Corporation is headquartered in Portland, Oregon. For more information, visit umpquabank.com.
 
Earnings Conference Call Information
The Company will host its third quarter 2018 earnings conference call on Thursday, October 18, 2018, 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 third quarter 2018 financial results. There will be a live question-and-answer session following the presentation. To join the call, please dial (888) 220-8474 ten minutes prior to the start time and enter conference ID: 3108656. A re-broadcast will be available approximately two hours after the call by dialing (888) 203-1112 and entering conference ID 3108656. 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 corporate initiatives and related profitability and cost savings. 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 Reports Third Quarter 2018 Results
October 17, 2018
Page 6


Umpqua Holdings Corporation
Consolidated Statements of Income
(Unaudited)
 
 
Quarter Ended
 
% Change
(In thousands, except per share data)
 
Sep 30, 2018
 
Jun 30, 2018
 
Mar 31, 2018
 
Dec 31, 2017
 
Sep 30, 2017
 
Seq. Quarter
 
Year over Year
Interest income:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loans and leases
 
$
246,410

 
$
242,123

 
$
229,488

 
$
225,538

 
$
226,068

 
2
 %
 
9
 %
Interest and dividends on investments:
 
 
 
 

 
 
 
 
 
 
 


 


Taxable
 
24,435

 
8,499

 
15,699

 
14,857

 
13,979

 
188
 %
 
75
 %
Exempt from federal income tax
 
2,048

 
2,057

 
2,128

 
2,121

 
2,125

 
0
 %
 
(4
)%
Dividends
 
549

 
433

 
468

 
386

 
357

 
27
 %
 
54
 %
Temporary investments and interest bearing deposits
 
2,800

 
2,080

 
1,164

 
1,565

 
934

 
35
 %
 
200
 %
Total interest income
 
276,242

 
255,192

 
248,947

 
244,467

 
243,463

 
8
 %
 
13
 %
Interest expense:
 
 

 
 

 
 

 
 

 
 

 


 


Deposits
 
25,692

 
21,259

 
15,610

 
13,241

 
12,052

 
21
 %
 
113
 %
Securities sold under agreement to repurchase and federal funds purchased
 
103

 
155

 
63

 
43

 
81

 
(34
)%
 
27
 %
Term debt
 
3,439

 
3,478

 
3,361

 
3,496

 
3,491

 
(1
)%
 
(1
)%
Junior subordinated debentures
 
5,640

 
5,400

 
4,932

 
4,734

 
4,628

 
4
 %
 
22
 %
Total interest expense
 
34,874

 
30,292

 
23,966

 
21,514

 
20,252

 
15
 %
 
72
 %
Net interest income
 
241,368

 
224,900

 
224,981

 
222,953

 
223,211

 
7
 %
 
8
 %
Provision for loan and lease losses
 
11,711

 
13,319

 
13,656

 
12,928

 
11,997

 
(12
)%
 
(2
)%
Non-interest income:
 
 

 
 

 
 

 
 

 
 

 


 


Service charges on deposits
 
15,574

 
15,520

 
14,995

 
15,413

 
15,849

 
0
 %
 
(2
)%
Brokerage revenue
 
3,947

 
4,161

 
4,194

 
4,226

 
3,832

 
(5
)%
 
3
 %
Residential mortgage banking revenue, net
 
31,484

 
33,163

 
38,438

 
42,118

 
33,430

 
(5
)%
 
(6
)%
Gain (loss) on sale of investment securities, net
 

 
14

 

 

 
(6
)
 
(100
)%
 
(100
)%
Unrealized holding losses on equity securities
 
(462
)
 
(1,432
)
 

 

 

 
(68
)%
 
nm

Gain on loan sales, net
 
2,772

 
1,348

 
1,230

 
3,688

 
9,260

 
106
 %
 
(70
)%
Loss on junior subordinated debentures carried at fair value
 

 

 

 
(10,010
)
 
(1,590
)
 
0
 %
 
(100
)%
BOLI income
 
2,051

 
2,060

 
2,070

 
2,015

 
2,041

 
0
 %
 
0
 %
Other income
 
17,022

 
16,817

 
17,640

 
13,000

 
13,877

 
1
 %
 
23
 %
Total non-interest income
 
72,388

 
71,651

 
78,567

 
70,450

 
76,693

 
1
 %
 
(6
)%
Non-interest expense:
 
 

 
 

 
 

 
 

 
 

 


 


Salaries and employee benefits
 
103,575

 
113,340

 
106,551

 
114,414

 
108,732

 
(9
)%
 
(5
)%
Occupancy and equipment, net
 
36,530

 
37,584

 
38,661

 
37,269

 
37,648

 
(3
)%
 
(3
)%
Intangible amortization
 
1,541

 
1,542

 
1,541

 
1,689

 
1,689

 
0
 %
 
(9
)%
FDIC assessments
 
4,303

 
4,692

 
4,480

 
2,075

 
4,405

 
(8
)%
 
(2
)%
Gain on other real estate owned, net
 
(128
)
 
(92
)
 
(38
)
 
(83
)
 
(99
)
 
39
 %
 
29
 %
Merger related expenses
 

 

 

 

 
6,664

 
0
 %
 
(100
)%
Other expenses
 
33,471

 
38,506

 
34,918

 
37,422

 
29,315

 
(13
)%
 
14
 %
Total non-interest expense
 
179,292

 
195,572

 
186,113

 
192,786

 
188,354

 
(8
)%
 
(5
)%
Income before provision for income taxes
 
122,753

 
87,660

 
103,779

 
87,689

 
99,553

 
40
 %
 
23
 %
Provision for income taxes
 
31,772

 
21,661

 
24,807

 
12,438

 
35,746

 
47
 %
 
(11
)%
Net income
 
90,981

 
65,999

 
78,972

 
75,251

 
63,807

 
38
 %
 
43
 %
Dividends and undistributed earnings allocated to participating securities
 
5

 
4

 
6

 
15

 
14

 
25
 %
 
(64
)%
Net earnings available to common shareholders
 
$
90,976

 
$
65,995

 
$
78,966

 
$
75,236

 
$
63,793

 
38
 %
 
43
 %
 
 
 
 
 
 
 
 
 
 
 
 


 


Weighted average basic shares outstanding
 
220,224

 
220,283

 
220,370

 
220,194

 
220,215

 
0
 %
 
0
 %
Weighted average diluted shares outstanding
 
220,620

 
220,647

 
220,825

 
220,873

 
220,755

 
0
 %
 
0
 %
Earnings per common share – basic
 
$
0.41

 
$
0.30

 
$
0.36

 
$
0.34

 
$
0.29

 
37
 %
 
41
 %
Earnings per common share – diluted
 
$
0.41

 
$
0.30

 
$
0.36

 
$
0.34

 
$
0.29

 
37
 %
 
41
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
nm = not meaningful
 
 

 
 

 
 

 
 

 
 

 
 
 
 


Umpqua Reports Third Quarter 2018 Results
October 17, 2018
Page 7


Umpqua Holdings Corporation
Consolidated Statements of Income
(Unaudited)
 
 
Nine Months Ended
 
% Change
(In thousands, except per share data)
 
Sep 30, 2018
 
Sep 30, 2017
 
Year over Year
Interest income
 
 
 
 
 
 
Loans and leases
 
$
718,021

 
$
645,780

 
11
 %
Interest and dividends on investments:
 
 
 
 
 


Taxable
 
48,633

 
43,130

 
13
 %
Exempt from federal income tax
 
6,233

 
6,604

 
(6
)%
Dividends
 
1,450

 
1,105

 
31
 %
Temporary investments and interest bearing deposits
 
6,044

 
2,815

 
115
 %
Total interest income
 
780,381

 
699,434

 
12
 %
Interest expense
 
 

 
 
 


Deposits
 
62,561

 
32,341

 
93
 %
Securities sold under agreement to repurchase and federal funds purchased
 
321

 
432

 
(26
)%
Term debt
 
10,278

 
10,663

 
(4
)%
Junior subordinated debentures
 
15,972

 
13,266

 
20
 %
Total interest expense
 
89,132

 
56,702

 
57
 %
Net interest income
 
691,249

 
642,732

 
8
 %
Provision for loan and lease losses
 
38,686

 
34,326

 
13
 %
Non-interest income
 
 

 
 
 


Service charges on deposits
 
46,089

 
46,056

 
0
 %
Brokerage revenue
 
12,302

 
11,857

 
4
 %
Residential mortgage banking revenue, net
 
103,085

 
94,158

 
9
 %
Gain on sale of investment securities, net
 
14

 
27

 
(48
)%
Unrealized holding losses on equity securities
 
(1,894
)
 

 
nm

Gain on loan sales, net
 
5,350

 
14,324

 
(63
)%
Loss on junior subordinated debentures carried at fair value
 

 
(4,717
)
 
(100
)%
BOLI income
 
6,181

 
6,199

 
0
 %
Other income
 
51,479

 
40,133

 
28
 %
Total non-interest income
 
222,606

 
208,037

 
7
 %
Non-interest expense
 
 

 
 
 


Salaries and employee benefits
 
323,466

 
323,766

 
0
 %
Occupancy and equipment, net
 
112,775

 
113,276

 
0
 %
Intangible amortization
 
4,624

 
5,067

 
(9
)%
FDIC assessments
 
13,475

 
12,939

 
4
 %
Gain on other real estate owned, net
 
(258
)
 
(474
)
 
(46
)%
Merger related expenses
 

 
9,324

 
(100
)%
Other expenses
 
106,895

 
91,191

 
17
 %
Total non-interest expense
 
560,977

 
555,089

 
1
 %
Income before provision for income taxes
 
314,192

 
261,354

 
20
 %
Provision for income taxes
 
78,240

 
94,292

 
(17
)%
Net income
 
235,952

 
167,062

 
41
 %
Dividends and undistributed earnings allocated to participating securities
 
15

 
40

 
(63
)%
Net earnings available to common shareholders
 
$
235,937

 
$
167,022

 
41
 %
 
 
 
 
 
 


Weighted average basic shares outstanding
 
220,292

 
220,270

 
0
 %
Weighted average diluted shares outstanding
 
220,751

 
220,793

 
0
 %
Earnings per common share – basic
 
$
1.07

 
$
0.76

 
41
 %
Earnings per common share – diluted
 
$
1.07

 
$
0.76

 
41
 %
 
 
 
 
 
 
 
nm = not meaningful
 
 

 
 

 
 



Umpqua Reports Third Quarter 2018 Results
October 17, 2018
Page 8


Umpqua Holdings Corporation
Consolidated Balance Sheets
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
% Change
(In thousands, except per share data)
 
Sep 30, 2018
 
Jun 30, 2018
 
Mar 31, 2018
 
Dec 31, 2017
 
Sep 30, 2017
 
Seq. Quarter
 
Year over Year
Assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and due from banks
 
$
308,938

 
$
314,513

 
$
304,681

 
$
330,856

 
$
304,760

 
(2
)%
 
1
 %
Interest bearing cash and temporary investments
 
570,321

 
488,499

 
264,508

 
303,424

 
540,806

 
17
 %
 
5
 %
Investment securities:
 
 

 
 

 
 

 
 

 
 

 


 


Equity and other, at fair value
 
62,454

 
64,297

 
63,295

 
12,255

 
11,919

 
(3
)%
 
424
 %
Available for sale, at fair value
 
2,864,394

 
2,854,398

 
2,947,414

 
3,065,769

 
3,047,358

 
0
 %
 
(6
)%
Held to maturity, at amortized cost
 
3,672

 
3,586

 
3,667

 
3,803

 
3,905

 
2
 %
 
(6
)%
Loans held for sale, at fair value
 
289,537

 
432,642

 
299,739

 
259,518

 
417,470

 
(33
)%
 
(31
)%
Loans and leases
 
19,854,033

 
19,639,494

 
19,255,348

 
19,019,192

 
18,614,438

 
1
 %
 
7
 %
Allowance for loan and lease losses
 
(144,026
)
 
(144,556
)
 
(141,933
)
 
(140,608
)
 
(139,503
)
 
0
 %
 
3
 %
Loans and leases, net
 
19,710,007

 
19,494,938

 
19,113,415

 
18,878,584

 
18,474,935

 
1
 %
 
7
 %
Restricted equity securities
 
40,269

 
42,320

 
43,501

 
43,508

 
45,509

 
(5
)%
 
(12
)%
Premises and equipment, net
 
237,456

 
245,954

 
259,354

 
269,182

 
276,316

 
(3
)%
 
(14
)%
Goodwill
 
1,787,651

 
1,787,651

 
1,787,651

 
1,787,651

 
1,787,651

 
0
 %
 
0
 %
Other intangible assets, net
 
25,506

 
27,047

 
28,589

 
30,130

 
31,819

 
(6
)%
 
(20
)%
Residential mortgage servicing rights, at fair value
 
175,038

 
166,217

 
164,760

 
153,151

 
141,225

 
5
 %
 
24
 %
Other real estate owned
 
11,774

 
12,101

 
13,055

 
11,734

 
4,160

 
(3
)%
 
183
 %
Bank owned life insurance
 
311,922

 
309,844

 
307,745

 
306,864

 
305,572

 
1
 %
 
2
 %
Other assets
 
216,128

 
236,594

 
215,028

 
224,018

 
238,934

 
(9
)%
 
(10
)%
Total assets
 
$
26,615,067

 
$
26,480,601

 
$
25,816,402

 
$
25,680,447

 
$
25,632,339

 
1
 %
 
4
 %
Liabilities:
 
 

 
 

 
 

 
 

 
 

 


 


Deposits
 
$
20,892,774

 
$
20,744,526

 
$
20,106,856

 
$
19,948,300

 
$
19,851,910

 
1
 %
 
5
 %
Securities sold under agreements to repurchase
 
286,975

 
273,666

 
291,984

 
294,299

 
321,542

 
5
 %
 
(11
)%
Term debt
 
751,764

 
801,739

 
801,868

 
802,357

 
852,306

 
(6
)%
 
(12
)%
Junior subordinated debentures, at fair value
 
282,846

 
280,669

 
278,410

 
277,155

 
266,875

 
1
 %
 
6
 %
Junior subordinated debentures, at amortized cost
 
88,781

 
88,838

 
88,895

 
100,609

 
100,690

 
0
 %
 
(12
)%
Deferred tax liability, net
 
22,413

 
27,255

 
24,151

 
21,930

 
26,898

 
(18
)%
 
(17
)%
Other liabilities
 
285,621

 
282,821

 
254,471

 
266,430

 
265,657

 
1
 %
 
8
 %
Total liabilities
 
22,611,174

 
22,499,514

 
21,846,635

 
21,711,080

 
21,685,878

 
0
 %
 
4
 %
Shareholders' equity:
 
 

 
 

 
 

 
 

 
 

 


 


Common stock
 
3,510,949

 
3,509,146

 
3,515,506

 
3,517,258

 
3,516,558

 
0
 %
 
0
 %
Retained earnings
 
568,619

 
524,031

 
502,215

 
477,101

 
437,427

 
9
 %
 
30
 %
Accumulated other comprehensive loss
 
(75,675
)
 
(52,090
)
 
(47,954
)
 
(24,992
)
 
(7,524
)
 
45
 %
 
906
 %
Total shareholders' equity
 
4,003,893

 
3,981,087

 
3,969,767

 
3,969,367

 
3,946,461

 
1
 %
 
1
 %
Total liabilities and shareholders' equity
 
$
26,615,067

 
$
26,480,601

 
$
25,816,402

 
$
25,680,447

 
$
25,632,339

 
1
 %
 
4
 %
 
 
 
 
 
 
 
 
 
 
 
 


 


Common shares outstanding at period end
 
220,238

 
220,205

 
220,461

 
220,149

 
220,225

 
0
 %
 
0
 %
Book value per common share
 
$
18.18

 
$
18.08

 
$
18.01

 
$
18.03

 
$
17.92

 
1
 %
 
1
 %
Tangible book value per common share
 
$
9.95

 
$
9.84

 
$
9.77

 
$
9.77

 
$
9.66

 
1
 %
 
3
 %
Tangible equity - common
 
$
2,190,736

 
$
2,166,389

 
$
2,153,527

 
$
2,151,586

 
$
2,126,991

 
1
 %
 
3
 %
Tangible common equity to tangible assets
 
8.83
%
 
8.78
%
 
8.97
%
 
9.02
%
 
8.93
%
 
0.05

 
(0.10
)


Umpqua Reports Third Quarter 2018 Results
October 17, 2018
Page 9


Umpqua Holdings Corporation
Loan and Lease Portfolio
(Unaudited)
(Dollars in thousands)
 
Sep 30, 2018
 
Jun 30, 2018
 
Mar 31, 2018
 
Dec 31, 2017
 
Sep 30, 2017
 
% Change
 
 
Amount
 
Amount
 
Amount
 
Amount
 
Amount
 
Seq. Quarter
 
Year over Year
Loans and leases:
 
 

 
 

 
 

 
 
 
 
 
 

 
 

Commercial real estate:
 
 

 
 

 
 

 
 
 
 
 
 

 
 

Non-owner occupied term, net
 
$
3,527,357

 
$
3,518,982

 
$
3,519,366

 
$
3,483,197

 
$
3,466,977

 
0
 %
 
2
 %
Owner occupied term, net
 
2,474,845

 
2,473,734

 
2,464,705

 
2,476,654

 
2,456,216

 
0
 %
 
1
 %
Multifamily, net
 
3,225,538

 
3,185,923

 
3,103,794

 
3,060,616

 
2,965,722

 
1
 %
 
9
 %
Construction & development, net
 
646,684

 
568,562

 
522,670

 
540,696

 
521,656

 
14
 %
 
24
 %
Residential development, net
 
198,518

 
183,114

 
179,954

 
165,941

 
186,399

 
8
 %
 
7
 %
Commercial:
 
 
 
 
 
 
 
 
 
 
 


 


Term, net
 
2,149,376

 
2,106,658

 
2,025,052

 
1,944,925

 
1,819,395

 
2
 %
 
18
 %
Lines of credit & other, net
 
1,133,508

 
1,152,853

 
1,147,123

 
1,166,275

 
1,134,857

 
(2
)%
 
0
 %
Leases & equipment finance, net
 
1,282,128

 
1,265,843

 
1,228,709

 
1,167,503

 
1,137,733

 
1
 %
 
13
 %
Residential real estate:
 
 
 
 
 
 
 
 
 
 
 


 


Mortgage, net
 
3,468,569

 
3,405,775

 
3,275,088

 
3,182,888

 
3,084,709

 
2
 %
 
12
 %
Home equity loans & lines, net
 
1,143,351

 
1,132,329

 
1,103,048

 
1,097,877

 
1,073,144

 
1
 %
 
7
 %
   Consumer & other, net
 
604,159

 
645,721

 
685,839

 
732,620

 
767,630

 
(6
)%
 
(21
)%
Total, net of deferred fees and costs
 
$
19,854,033

 
$
19,639,494

 
$
19,255,348

 
$
19,019,192

 
$
18,614,438

 
1
 %
 
7
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loan and leases mix:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial real estate:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   Non-owner occupied term, net
 
18
%
 
18
%
 
18
%
 
18
%
 
19
%
 
 
 
 
   Owner occupied term, net
 
13
%
 
13
%
 
13
%
 
13
%
 
13
%
 
 
 
 
   Multifamily, net
 
16
%
 
16
%
 
16
%
 
16
%
 
16
%
 
 
 
 
Construction & development, net
 
3
%
 
3
%
 
3
%
 
3
%
 
3
%
 
 
 
 
Residential development, net
 
1
%
 
1
%
 
1
%
 
1
%
 
1
%
 
 
 
 
Commercial:
 
 

 
 
 


 


 


 
 
 
 
Term, net
 
11
%
 
11
%
 
11
%
 
10
%
 
10
%
 
 
 
 
Lines of credit & other, net
 
6
%
 
6
%
 
6
%
 
6
%
 
6
%
 
 
 
 
Leases & equipment finance, net
 
6
%
 
6
%
 
6
%
 
6
%
 
6
%
 
 
 
 
Residential real estate:
 
 

 


 


 


 


 
 
 
 
Mortgage, net
 
17
%
 
17
%
 
17
%
 
17
%
 
17
%
 
 
 
 
Home equity loans & lines, net
 
6
%
 
6
%
 
6
%
 
6
%
 
6
%
 
 
 
 
   Consumer & other, net
 
3
%
 
3
%
 
3
%
 
4
%
 
3
%
 
 
 
 
Total
 
100
%
 
100
%
 
100
%
 
100
%
 
100
%
 
 
 
 




Umpqua Reports Third Quarter 2018 Results
October 17, 2018
Page 10


Umpqua Holdings Corporation
Deposits by Type/Core Deposits
(Unaudited)
(Dollars in thousands)
 
Sep 30, 2018
 
Jun 30, 2018
 
Mar 31, 2018
 
Dec 31, 2017
 
Sep 30, 2017
 
% Change
 
 
Amount
 
Amount
 
Amount
 
Amount
 
Amount
 
Seq. Quarter
 
Year over Year
Deposits:
 
 

 
 

 
 

 
 
 
 
 
 

 
 

Demand, non-interest bearing
 
$
6,859,411

 
$
6,819,325

 
$
6,699,399

 
$
6,505,628

 
$
6,571,471

 
1
 %
 
4
 %
Demand, interest bearing
 
2,320,560

 
2,321,691

 
2,354,873

 
2,384,133

 
2,394,240

 
0
 %
 
(3
)%
Money market
 
6,325,808

 
6,161,907

 
6,546,704

 
7,037,891

 
6,700,261

 
3
 %
 
(6
)%
Savings
 
1,499,872

 
1,465,154

 
1,482,560

 
1,446,860

 
1,444,801

 
2
 %
 
4
 %
Time
 
3,887,123

 
3,976,449

 
3,023,320

 
2,573,788

 
2,741,137

 
(2
)%
 
42
 %
Total
 
$
20,892,774

 
$
20,744,526

 
$
20,106,856

 
$
19,948,300

 
$
19,851,910

 
1
 %
 
5
 %
 
 
 
 
 
 
 
 
 
 
 
 


 


Total core deposits (1)
 
$
18,012,992

 
$
17,743,888

 
$
18,007,169

 
$
18,263,802

 
$
18,005,730

 
2
 %
 
0
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Deposit mix:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Demand, non-interest bearing
 
33
%
 
33
%
 
33
%
 
33
%
 
33
%
 
 
 
 
Demand, interest bearing
 
11
%
 
11
%
 
12
%
 
12
%
 
12
%
 
 
 
 
Money market
 
30
%
 
30
%
 
33
%
 
35
%
 
34
%
 
 
 
 
Savings
 
7
%
 
7
%
 
7
%
 
7
%
 
7
%
 
 
 
 
Time
 
19
%
 
19
%
 
15
%
 
13
%
 
14
%
 
 
 
 
Total
 
100
%
 
100
%
 
100
%
 
100
%
 
100
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of open accounts:
 
 

 
 

 
 

 
 
 
 

 
 

 
 

Demand, non-interest bearing
 
404,913

 
402,771

 
399,721

 
397,427

 
394,755

 


 


Demand, interest bearing
 
77,546

 
77,918

 
78,181

 
78,853

 
79,899

 


 


Money market
 
55,895

 
55,393

 
54,752

 
55,175

 
55,659

 


 


Savings
 
162,387

 
162,414

 
162,841

 
162,453

 
162,556

 


 


Time
 
52,482

 
51,073

 
48,529

 
46,861

 
47,129

 


 


Total
 
753,223

 
749,569

 
744,024

 
740,769

 
739,998

 


 


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average balance per account:
 
 

 
 

 
 

 
 
 
 

 
 

 
 

Demand, non-interest bearing
 
$
16.9

 
$
16.9

 
$
16.8

 
$
16.4

 
$
16.6

 
 

 
 

Demand, interest bearing
 
29.9

 
29.8

 
30.1

 
30.2

 
30.0

 
 

 
 

Money market
 
113.2

 
111.2

 
119.6

 
127.6

 
120.4

 
 

 
 

Savings
 
9.2

 
9.0

 
9.1

 
8.9

 
8.9

 
 

 
 

Time
 
74.1

 
77.9

 
62.3

 
54.9

 
58.2

 
 

 
 

Total
 
$
27.7

 
$
27.7

 
$
27.0

 
$
26.9

 
$
26.8

 
 

 
 

 
(1) Core deposits are defined as total deposits less time deposits greater than $100,000.




Umpqua Reports Third Quarter 2018 Results
October 17, 2018
Page 11


 
Umpqua Holdings Corporation
Credit Quality – Non-performing Assets
 (Unaudited)
 
 
Quarter Ended
 
% Change
(Dollars in thousands)
 
Sep 30, 2018
 
Jun 30, 2018
 
Mar 31, 2018
 
Dec 31, 2017
 
Sep 30, 2017
 
Seq. Quarter
 
Year over Year
Non-performing assets:
 
 

 
 

 
 
 
 
 
 

 
 

 
 

Loans and leases on non-accrual status
 
$
54,059

 
$
43,392

 
$
45,702

 
$
51,355

 
$
44,478

 
25
 %
 
22
 %
Loans and leases past due 90+ days and accruing (1)
 
33,812

 
34,535

 
25,456

 
30,963

 
29,058

 
(2
)%
 
16
 %
Total non-performing loans and leases
 
87,871

 
77,927

 
71,158

 
82,318

 
73,536

 
13
 %
 
19
 %
Other real estate owned
 
11,774

 
12,101

 
13,055

 
11,734

 
4,160

 
(3
)%
 
183
 %
Total non-performing assets
 
$
99,645

 
$
90,028

 
$
84,213

 
$
94,052

 
$
77,696

 
11
 %
 
28
 %
 
 
 
 
 
 
 
 
 
 
 
 


 


Performing restructured loans and leases
 
$
14,531

 
$
27,167

 
$
31,677

 
$
32,168

 
$
45,830

 
(47
)%
 
(68
)%
Loans and leases past due 31-89 days
 
$
33,825

 
$
44,734

 
$
38,569

 
$
43,853

 
$
32,164

 
(24
)%
 
5
 %
Loans and leases past due 31-89 days to total loans and leases
 
0.17
%
 
0.23
%
 
0.20
%
 
0.23
%
 
0.17
%
 
 

 
 

Non-performing loans and leases to total loans and leases (1)
 
0.44
%
 
0.40
%
 
0.37
%
 
0.43
%
 
0.40
%
 
 

 
 

Non-performing assets to total assets(1)
 
0.37
%
 
0.34
%
 
0.33
%
 
0.37
%
 
0.30
%
 
 

 
 


(1) 
Excludes non-performing mortgage loans guaranteed by Ginnie Mae, which Umpqua has the unilateral right to repurchase but has not done so, totaling $8.0 million, $9.2 million, $6.3 million, $12.4 million, and $12.3 million at September 30, 2018, June 30, 2018, March 31, 2018, December 31, 2017, and September 30, 2017, respectively.



Umpqua Reports Third Quarter 2018 Results
October 17, 2018
Page 12


Umpqua Holdings Corporation
Credit Quality – Allowance for Loan and Lease Losses
 (Unaudited)
 
 
Quarter Ended
 
% Change
(Dollars in thousands)
 
Sep 30, 2018
 
Jun 30, 2018
 
Mar 31, 2018
 
Dec 31, 2017
 
Sep 30, 2017
 
Seq. Quarter
 
Year over Year
Allowance for loan and lease losses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance beginning of period
 
$
144,556

 
$
141,933

 
$
140,608

 
$
139,503

 
$
136,867

 
 
 
 
Provision for loan and lease losses
 
11,711

 
13,319

 
13,656

 
12,928

 
11,997

 
(12
)%
 
(2
)%
Charge-offs
 
(15,896
)
 
(14,815
)
 
(15,812
)
 
(15,751
)
 
(13,222
)
 
7
 %
 
20
 %
Recoveries
 
3,655

 
4,119

 
3,481

 
3,928

 
3,861

 
(11
)%
 
(5
)%
Net charge-offs
 
(12,241
)
 
(10,696
)
 
(12,331
)
 
(11,823
)
 
(9,361
)
 
14
 %
 
31
 %
Total allowance for loan and lease losses
 
144,026

 
144,556

 
141,933

 
140,608

 
139,503

 
0
 %
 
3
 %
Reserve for unfunded commitments
 
4,294

 
4,130

 
4,129

 
3,963

 
3,932

 
4
 %
 
9
 %
Total allowance for credit losses
 
$
148,320

 
$
148,686

 
$
146,062

 
$
144,571

 
$
143,435

 
0
 %
 
3
 %
 
 
 

 
 

 
 
 
 
 
 

 
 

 
 

Net charge-offs to average loans and leases (annualized)
 
0.25
%
 
0.22
%
 
0.26
%
 
0.25
%
 
0.20
%
 
 

 
 

Recoveries to gross charge-offs
 
22.99
%
 
27.80
%
 
22.01
%
 
24.94
%
 
29.20
%
 
 
 
 

Allowance for loan and lease losses to loans and leases
 
0.73
%
 
0.74
%
 
0.74
%
 
0.74
%
 
0.75
%
 
 

 
 

Allowance for credit losses to loans and leases
 
0.75
%
 
0.76
%
 
0.76
%
 
0.76
%
 
0.77
%
 
 

 
 


Umpqua Holdings Corporation
Credit Quality – Allowance for Loan and Lease Losses
(Unaudited)
 
 
Nine Months Ended
 
% Change
(Dollars in thousands)
 
Sep 30, 2018
 
Sep 30, 2017
 
Year over Year
Allowance for loan and lease losses:
 
 
 
 
Balance beginning of period
 
$
140,608

 
$
133,984

 
 
Provision for loan and lease losses
 
38,686

 
34,326

 
13
 %
Charge-offs
 
(46,523
)
 
(40,168
)
 
16
 %
Recoveries
 
11,255

 
11,361

 
(1
)%
Net charge-offs
 
(35,268
)
 
(28,807
)
 
22
 %
Total allowance for loan and lease losses
 
144,026

 
139,503

 
3
 %
Reserve for unfunded commitments
 
4,294

 
3,932

 
9
 %
Total allowance for credit losses
 
$
148,320

 
$
143,435

 
3
 %
 
 
 

 
 

 
 
Net charge-offs to average loans and leases (annualized)
 
0.24
%
 
0.21
%
 
 
Recoveries to gross charge-offs
 
24.19
%
 
28.28
%
 
 





Umpqua Reports Third Quarter 2018 Results
October 17, 2018
Page 13


Umpqua Holdings Corporation
Selected Ratios
(Unaudited)
 
 
Quarter Ended
 
% Change
 
 
Sep 30, 2018
 
Jun 30, 2018
 
Mar 31, 2018
 
Dec 31, 2017
 
Sep 30, 2017
 
Seq. Quarter
 
Year over Year
Average Rates:
 
 

 
 

 
 

 
 
 
 

 
 
 
 
Yield on loans held for sale
 
5.27
%
 
4.86
%
 
4.21
%
 
3.99
%
 
3.89
%
 
0.41

 
1.38

Yield on loans and leases
 
4.89
%
 
4.91
%
 
4.80
%
 
4.72
%
 
4.78
%
 
(0.02
)
 
0.11

Yield on taxable investments
 
3.72
%
 
1.31
%
 
2.31
%
 
2.17
%
 
2.00
%
 
2.41

 
1.72

Yield on tax-exempt investments (1)
 
3.61
%
 
3.64
%
 
3.68
%
 
4.49
%
 
4.59
%
 
(0.03
)
 
(0.98
)
Yield on interest bearing cash and temporary investments
 
1.99
%
 
1.82
%
 
1.55
%
 
1.22
%
 
1.47
%
 
0.17

 
0.52

Total yield on earning assets (1)
 
4.67
%
 
4.41
%
 
4.43
%
 
4.31
%
 
4.36
%
 
0.26

 
0.31

 
 
 
 
 
 
 
 
 
 
 
 


 


Cost of interest bearing deposits
 
0.73
%
 
0.62
%
 
0.47
%
 
0.40
%
 
0.36
%
 
0.11

 
0.37

Cost of securities sold under agreements
 
 

 
 

 
 

 
 
 
 
 


 


to repurchase and fed funds purchased
 
0.15
%
 
0.22
%
 
0.08
%
 
0.06
%
 
0.10
%
 
(0.07
)
 
0.05

Cost of term debt
 
1.73
%
 
1.74
%
 
1.70
%
 
1.67
%
 
1.63
%
 
(0.01
)
 
0.10

Cost of junior subordinated debentures
 
6.06
%
 
5.89
%
 
5.36
%
 
5.11
%
 
5.02
%
 
0.17

 
1.04

Total cost of interest bearing liabilities
 
0.90
%
 
0.80
%
 
0.65
%
 
0.58
%
 
0.55
%
 
0.10

 
0.35

 
 
 
 
 
 
 
 
 
 
 
 


 


Net interest spread (1)
 
3.77
%
 
3.61
%
 
3.78
%
 
3.73
%
 
3.81
%
 
0.16

 
(0.04
)
Net interest margin (1)
 
4.09
%
 
3.89
%
 
4.00
%
 
3.93
%
 
4.00
%
 
0.20

 
0.09

 
 
 
 
 
 
 
 
 
 
 
 


 


Performance Ratios:
 
 

 
 

 
 

 
 
 
 
 


 


Return on average assets
 
1.36
%
 
1.02
%
 
1.25
%
 
1.17
%
 
1.00
%
 
0.34

 
0.36

Return on average tangible assets
 
1.46
%
 
1.09
%
 
1.35
%
 
1.26
%
 
1.08
%
 
0.37

 
0.38

Return on average common equity
 
9.00
%
 
6.64
%
 
8.06
%
 
7.54
%
 
6.41
%
 
2.36

 
2.59

Return on average tangible common equity
 
16.42
%
 
12.18
%
 
14.84
%
 
13.93
%
 
11.90
%
 
4.24

 
4.52

Efficiency ratio – Consolidated
 
57.06
%
 
65.84
%
 
61.21
%
 
65.46
%
 
62.58
%
 
(8.78
)
 
(5.52
)
Efficiency ratio – Bank
 
54.70
%
 
63.04
%
 
59.24
%
 
61.61
%
 
60.60
%
 
(8.34
)
 
(5.90
)

(1) Tax exempt interest has been adjusted to a taxable equivalent basis using a 21% tax rate for 2018 and a 35% tax rate for 2017.



Umpqua Reports Third Quarter 2018 Results
October 17, 2018
Page 14


Umpqua Holdings Corporation
Selected Ratios
(Unaudited)
 
 
Nine Months Ended
 
% Change
 
 
Sep 30, 2018
 
Sep 30, 2017
 
Year over Year
Average Rates:
 
 

 
 

 
 
Yield on loans held for sale
 
4.81
%
 
3.67
%
 
1.14

Yield on loans and leases
 
4.87
%
 
4.72
%
 
0.15

Yield on taxable investments
 
2.44
%
 
2.06
%
 
0.38

Yield on tax-exempt investments (1)
 
3.65
%
 
4.66
%
 
(1.01
)
Yield on interest bearing cash and temporary investments
 
1.83
%
 
0.96
%
 
0.87

Total yield on earning assets (1)
 
4.51
%
 
4.29
%
 
0.22

 
 
 
 
 
 


Cost of interest bearing deposits
 
0.61
%
 
0.33
%
 
0.28

Cost of securities sold under agreements
 
 

 
 

 


to repurchase and fed funds purchased
 
0.15
%
 
0.16
%
 
(0.01
)
Cost of term debt
 
1.72
%
 
1.67
%
 
0.05

Cost of junior subordinated debentures
 
5.77
%
 
4.87
%
 
0.90

Total cost of interest bearing liabilities
 
0.79
%
 
0.52
%
 
0.27

 
 
 
 
 
 


Net interest spread (1)
 
3.72
%
 
3.77
%
 
(0.05
)
Net interest margin (1)
 
4.00
%
 
3.94
%
 
0.06

 
 
 
 
 
 


Performance Ratios:
 
 

 
 

 


Return on average assets
 
1.21
%
 
0.90
%
 
0.31

Return on average tangible assets
 
1.30
%
 
0.97
%
 
0.33

Return on average common equity
 
7.90
%
 
5.70
%
 
2.20

Return on average tangible common equity
 
14.49
%
 
10.65
%
 
3.84

Efficiency ratio – Consolidated
 
61.29
%
 
64.98
%
 
(3.69
)
Efficiency ratio – Bank
 
58.91
%
 
62.78
%
 
(3.87
)
        
(1) Tax exempt interest has been adjusted to a taxable equivalent basis using a 21% tax rate for 2018 and a 35% tax rate for 2017.



Umpqua Reports Third Quarter 2018 Results
October 17, 2018
Page 15


Umpqua Holdings Corporation
Average Balances
(Unaudited)
 
 
Quarter Ended
 
% Change
(Dollars in thousands)
 
Sep 30, 2018
 
Jun 30, 2018
 
Mar 31, 2018
 
Dec 31, 2017
 
Sep 30, 2017
 
Seq. Quarter
 
Year over Year
Temporary investments and interest bearing cash
 
$
558,597

 
$
458,133

 
$
303,670

 
$
509,187

 
$
253,015

 
22
 %
 
121
 %
Investment securities, taxable
 
2,687,635

 
2,723,406

 
2,793,449

 
2,804,530

 
2,867,292

 
(1
)%
 
(6
)%
Investment securities, tax-exempt
 
278,937

 
279,158

 
286,603

 
286,345

 
281,139

 
0
 %
 
(1
)%
Loans held for sale
 
320,494

 
326,427

 
267,231

 
370,564

 
420,282

 
(2
)%
 
(24
)%
Loans and leases
 
19,709,113

 
19,387,537

 
19,089,713

 
18,703,202

 
18,471,446

 
2
 %
 
7
 %
Total interest earning assets
 
23,554,776

 
23,174,661

 
22,740,666

 
22,673,828

 
22,293,174

 
2
 %
 
6
 %
Goodwill and other intangible assets, net
 
1,814,000

 
1,815,529

 
1,817,068

 
1,818,730

 
1,820,394

 
0
 %
 
0
 %
Total assets
 
26,461,526

 
26,076,142

 
25,625,869

 
25,599,516

 
25,245,613

 
1
 %
 
5
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-interest bearing demand deposits
 
6,865,676

 
6,645,689

 
6,450,364

 
6,611,493

 
6,354,591

 
3
 %
 
8
 %
Interest bearing deposits
 
13,897,141

 
13,745,089

 
13,492,965

 
13,281,502

 
13,155,462

 
1
 %
 
6
 %
Total deposits
 
20,762,817

 
20,390,778

 
19,943,329

 
19,892,995

 
19,510,053

 
2
 %
 
6
 %
Interest bearing liabilities
 
15,331,529

 
15,199,900

 
14,971,759

 
14,790,883

 
14,705,842

 
1
 %
 
4
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Shareholders’ equity - common
 
4,011,856

 
3,988,825

 
3,974,788

 
3,960,987

 
3,946,559

 
1
 %
 
2
 %
Tangible common equity (1)
 
2,197,856

 
2,173,296

 
2,157,720

 
2,142,257

 
2,126,165

 
1
 %
 
3
 %
Umpqua Holdings Corporation
Average Balances
(Unaudited)
 
 
Nine Months Ended
% Change
(Dollars in thousands)
 
Sep 30, 2018
 
Sep 30, 2017
 
Year over Year
Temporary investments and interest bearing cash
 
$
441,067

 
$
392,399

 
12
 %
Investment securities, taxable
 
2,734,443

 
2,866,842

 
(5
)%
Investment securities, tax-exempt
 
281,538

 
286,693

 
(2
)%
Loans held for sale
 
304,912

 
388,263

 
(21
)%
Loans and leases
 
19,397,476

 
17,989,577

 
8
 %
Total interest earning assets
 
23,159,436

 
21,923,774

 
6
 %
Goodwill and other intangible assets, net
 
1,815,521

 
1,822,063

 
0
 %
Total assets
 
26,055,479

 
24,897,096

 
5
 %
 
 
 
 
 
 
 
Non-interest bearing demand deposits
 
6,655,431

 
6,065,119

 
10
 %
Interest bearing deposits
 
13,713,213

 
13,104,218

 
5
 %
Total deposits
 
20,368,644

 
19,169,337

 
6
 %
Interest bearing liabilities
 
15,169,048

 
14,675,845

 
3
 %
 
 
 
 
 
 
 
Shareholders’ equity - common
 
3,991,773

 
3,918,978

 
2
 %
Tangible common equity (1)
 
2,176,252

 
2,096,915

 
4
 %

(1) Average tangible common equity is a non-GAAP financial measure. Average tangible common equity is calculated as average common shareholders’ equity less average goodwill and other intangible assets, net (excluding MSRs).




Umpqua Reports Third Quarter 2018 Results
October 17, 2018
Page 16


Umpqua Holdings Corporation
Average Rates and Balances
(unaudited)
(dollars in thousands)
Quarter Ended
 
September 30, 2018
 
June 30, 2018
 
September 30, 2017
 
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
$
320,494

 
$
4,220

 
5.27
%
 
$
326,427

 
$
3,967

 
4.86
%
 
$
420,282

 
$
4,090

 
3.89
%
Loans and leases (1)
19,709,113

 
242,190

 
4.89
%
 
19,387,537

 
238,156

 
4.91
%
 
18,471,446

 
221,978

 
4.78
%
Taxable securities
2,687,635

 
24,984

 
3.72
%
 
2,723,406

 
8,932

 
1.31
%
 
2,867,292

 
14,336

 
2.00
%
Non-taxable securities (2)
278,937

 
2,519

 
3.61
%
 
279,158

 
2,539

 
3.64
%
 
281,139

 
3,223

 
4.59
%
Temporary investments and interest-bearing cash
558,597

 
2,800

 
1.99
%
 
458,133

 
2,080

 
1.82
%
 
253,015

 
934

 
1.47
%
Total interest-earning assets
23,554,776

 
$
276,713

 
4.67
%
 
23,174,661

 
255,674

 
4.41
%
 
22,293,174

 
$
244,561

 
4.36
%
Allowance for loan and lease losses
(145,873
)
 
 
 
 
 
(144,598
)
 
 

 
 
 
(138,924
)
 
 
 
 
Other assets
3,052,623

 
 
 
 
 
3,046,079

 
 
 
 
 
3,091,363

 
 
 
 
Total assets
$
26,461,526

 
 
 
 
 
$
26,076,142

 
 
 
 
 
$
25,245,613

 
 
 
 
INTEREST-BEARING LIABILITIES:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing demand deposits
$
2,369,092

 
$
2,241

 
0.38
%
 
$
2,322,359

 
$
1,565

 
0.27
%
 
$
2,358,102

 
$
1,066

 
0.18
%
Money market deposits
6,150,199

 
6,820

 
0.44
%
 
6,332,372

 
5,896

 
0.37
%
 
6,625,514

 
3,323

 
0.20
%
Savings deposits
1,483,687

 
452

 
0.12
%
 
1,456,625

 
252

 
0.07
%
 
1,441,931

 
172

 
0.05
%
Time deposits
3,894,163

 
16,179

 
1.65
%
 
3,633,733

 
13,546

 
1.50
%
 
2,729,915

 
7,491

 
1.09
%
Total interest-bearing deposits
13,897,141

 
25,692

 
0.73
%
 
13,745,089

 
21,259

 
0.62
%
 
13,155,462

 
12,052

 
0.36
%
Repurchase agreements and federal funds purchased
278,131

 
103

 
0.15
%
 
285,338

 
155

 
0.22
%
 
332,246

 
81

 
0.10
%
Term debt
787,074

 
3,439

 
1.73
%
 
801,768

 
3,478

 
1.74
%
 
852,250

 
3,491

 
1.63
%
Junior subordinated debentures
369,183

 
5,640

 
6.06
%
 
367,705

 
5,400

 
5.89
%
 
365,884

 
4,628

 
5.02
%
Total interest-bearing liabilities
15,331,529

 
$
34,874

 
0.90
%
 
15,199,900

 
$
30,292

 
0.80
%
 
14,705,842

 
$
20,252

 
0.55
%
Non-interest-bearing deposits
6,865,676

 
 
 
 
 
6,645,689

 
 
 
 
 
6,354,591

 
 
 
 
Other liabilities
252,465

 
 
 
 
 
241,728

 
 
 
 
 
238,621

 
 
 
 
Total liabilities
22,449,670

 
 
 
 
 
22,087,317

 
 
 
 
 
21,299,054

 
 
 
 
Common equity
4,011,856

 
 
 
 
 
3,988,825

 
 
 
 
 
3,946,559

 
 
 
 
Total liabilities and shareholders' equity
$
26,461,526

 
 
 
 
 
$
26,076,142

 
 
 
 
 
$
25,245,613

 
 
 
 
NET INTEREST INCOME
 
 
$
241,839

 
 
 
 
 
$
225,382

 
 
 
 
 
$
224,309

 
 
NET INTEREST SPREAD
 
 
 
 
3.77
%
 
 
 
 
 
3.61
%
 
 
 
 
 
3.81
%
AVERAGE YIELD ON EARNING ASSETS (1), (2)
 
 
 
 
4.67
%
 
 
 
 
 
4.41
%
 
 
 
 
 
4.36
%
INTEREST EXPENSE TO EARNING ASSETS
 
 
 
 
0.58
%
 
 
 
 
 
0.52
%
 
 
 
 
 
0.36
%
NET INTEREST INCOME TO EARNING ASSETS OR NET INTEREST MARGIN (1), (2)
 
 
 
 
4.09
%
 
 
 
 
 
3.89
%
 
 
 
 
 
4.00
%
(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 for 2018 and a 35% tax rate for 2017. The amount of such adjustment was an addition to recorded income of approximately $471,000 for the three months ended September 30, 2018 as compared to $482,000 for June 30, 2018 and $1.1 million for September 30, 2017



Umpqua Reports Third Quarter 2018 Results
October 17, 2018
Page 17


Umpqua Holdings Corporation Average Rates and Balances
(unaudited)
(dollars in thousands)
Nine Months Ended
 
September 30, 2018
 
September 30, 2017
 
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
$
304,912

 
$
11,002

 
4.81
%
 
$
388,263

 
$
10,678

 
3.67
%
Loans and leases (1)
19,397,476

 
707,019

 
4.87
%
 
17,989,577

 
635,102

 
4.72
%
Taxable securities
2,734,443

 
50,083

 
2.44
%
 
2,866,842

 
44,235

 
2.06
%
Non-taxable securities (2)
281,538

 
7,697

 
3.65
%
 
286,693

 
10,029

 
4.66
%
Temporary investments and interest-bearing cash
441,067

 
6,044

 
1.83
%
 
392,399

 
2,815

 
0.96
%
Total interest-earning assets
23,159,436

 
$
781,845

 
4.51
%
 
21,923,774

 
$
702,859

 
4.29
%
Allowance for loan and lease losses
(144,306
)
 
 
 
 
 
(137,538
)
 
 
 
 
Other assets
3,040,349

 
 
 
 
 
3,110,860

 
 
 
 
Total assets
$
26,055,479

 
 
 
 
 
$
24,897,096

 
 
 
 
INTEREST-BEARING LIABILITIES:
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing demand deposits
$
2,338,396

 
$
5,016

 
0.29
%
 
$
2,312,201

 
$
2,509

 
0.15
%
Money market deposits
6,460,770

 
18,429

 
0.38
%
 
6,725,754

 
8,967

 
0.18
%
Savings deposits
1,467,866

 
866

 
0.08
%
 
1,402,942

 
446

 
0.04
%
Time deposits
3,446,181

 
38,250

 
1.48
%
 
2,663,321

 
20,419

 
1.03
%
Total interest-bearing deposits
13,713,213

 
62,561

 
0.61
%
 
13,104,218

 
32,341

 
0.33
%
Repurchase agreements and federal funds purchased
288,751

 
321

 
0.15
%
 
354,955

 
432

 
0.16
%
Term debt
796,991

 
10,278

 
1.72
%
 
852,285

 
10,663

 
1.67
%
Junior subordinated debentures
370,093

 
15,972

 
5.77
%
 
364,387

 
13,266

 
4.87
%
Total interest-bearing liabilities
15,169,048

 
$
89,132

 
0.79
%
 
14,675,845

 
$
56,702

 
0.52
%
Non-interest-bearing deposits
6,655,431

 
 
 
 
 
6,065,119

 
 
 
 
Other liabilities
239,227

 
 
 
 
 
237,154

 
 
 
 
Total liabilities
22,063,706

 
 
 
 
 
20,978,118

 
 
 
 
Common equity
3,991,773

 
 
 
 
 
3,918,978

 
 
 
 
Total liabilities and shareholders' equity
$
26,055,479

 
 
 
 
 
$
24,897,096

 
 
 
 
NET INTEREST INCOME
 
 
$
692,713

 
 
 
 
 
$
646,157

 
 
NET INTEREST SPREAD
 
 
 
 
3.72
%
 
 
 
 
 
3.77
%
AVERAGE YIELD ON EARNING ASSETS (1), (2)
 
 
 
 
4.51
%
 
 
 
 
 
4.29
%
INTEREST EXPENSE TO EARNING ASSETS
 
 
 
 
0.51
%
 
 
 
 
 
0.35
%
NET INTEREST INCOME TO EARNING ASSETS OR NET INTEREST MARGIN (1), (2)
 
 
 
 
4.00
%
 
 
 
 
 
3.94
%
(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 for 2018 and a 35% tax rate for 2017. The amount of such adjustment was an addition to recorded income of approximately $1.5 million for the nine months ended September 30, 2018 as compared to $3.4 million for the same period in 2017



Umpqua Reports Third Quarter 2018 Results
October 17, 2018
Page 18



Umpqua Holdings Corporation
Residential Mortgage Banking Activity
(unaudited)
 
 
Quarter Ended
 
% Change
(Dollars in thousands)
 
Sep 30, 2018
 
Jun 30, 2018
 
Mar 31, 2018
 
Dec 31, 2017
 
Sep 30, 2017
 
Seq. Quarter
 
Year over Year
Residential mortgage servicing rights:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Residential mortgage loans serviced for others
 
$
15,810,455

 
$
15,508,182

 
$
15,442,915

 
$
15,336,597

 
$
15,007,942

 
2
 %
 
5
 %
MSR asset, at fair value
 
175,038

 
166,217

 
164,760

 
153,151

 
141,225

 
5
 %
 
24
 %
MSR as % of serviced portfolio
 
1.11
%
 
1.07
%
 
1.07
 %
 
1.00
%
 
0.94
%
 
0.04

 
0.17

Residential mortgage banking revenue:
 
 

 
 

 
 
 
 
 
 

 


 


Origination and sale
 
$
20,983

 
$
28,159

 
$
22,837

 
$
29,864

 
$
32,784

 
(25
)%
 
(36
)%
Servicing
 
10,302

 
10,407

 
10,522

 
10,287

 
9,879

 
(1
)%
 
4
 %
Change in fair value of MSR asset
 
199

 
(5,403
)
 
5,079

 
1,967

 
(9,233
)
 
(104
)%
 
(102
)%
Total
 
$
31,484

 
$
33,163

 
$
38,438

 
$
42,118

 
$
33,430

 
(5
)%
 
(6
)%
 
 
 
 
 
 
 
 
 
 
 
 


 


Closed loan volume:
 
 
 
 
 
 
 
 
 
 
 


 


Closed loan volume - portfolio
 
$
323,941

 
$
294,581

 
$
237,783

 
$
265,718

 
$
336,362

 
10
 %
 
(4
)%
Closed loan volume - for-sale
 
756,924

 
839,489

 
687,226

 
850,453

 
891,063

 
(10
)%
 
(15
)%
Closed loan volume - total
 
$
1,080,865

 
$
1,134,070

 
$
925,009

 
$
1,116,171

 
$
1,227,425

 
(5
)%
 
(12
)%
 
 
 
 
 
 
 
 
 
 
 
 


 


Gain on sale margin:
 
 
 
 
 
 
 
 
 
 
 


 


Based on for-sale volume
 
2.77
%
 
3.35
%
 
3.32
 %
 
3.51
%
 
3.68
%
 
(0.58
)
 
(0.91
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine Months Ended
 
% Change
 
 
 
 
 
 
 
 
(Dollars in thousands)
 
Sep 30, 2018
 
Sep 30, 2017
 
Year over Year
 
 
 
 
 
 
 
 
Residential mortgage banking revenue:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Origination and sale
 
$
71,979

 
$
89,816

 
(20
)%
 
 
 
 
 
 
 
 
Servicing
 
31,231

 
29,576

 
6
 %
 
 
 
 
 
 
 
 
Change in fair value of MSR asset
 
(125
)
 
(25,234
)
 
(100
)%
 
 
 
 
 
 
 
 
Total
 
$
103,085

 
$
94,158

 
9
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 


 
 
 
 
 
 
 
 
Closed loan volume:
 
 
 
 
 


 
 
 
 
 
 
 
 
Closed loan volume - portfolio
 
$
856,305

 
$
893,718

 
(4
)%
 
 
 
 
 
 
 
 
Closed loan volume - for-sale
 
2,283,639

 
2,563,978

 
(11
)%
 
 
 
 
 
 
 
 
Closed loan volume - total
 
$
3,139,944

 
$
3,457,696

 
(9
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 


 
 
 
 
 
 
 
 
Gain on sale margin:
 
 
 
 
 


 
 
 
 
 
 
 
 
Based on for-sale volume
 
3.15
%
 
3.50
%
 
(0.35
)
 
 
 
 
 
 
 
 



###