Umpqua Reports Quarterly and Annual Results

Company Release - 1/23/2018 4:15 PM ET

Fourth quarter 2017 net earnings of $82.8 million, or $0.38 per common share
Full-year 2017 net earnings of $246.9 million, or $1.12 per common share
Annual loan and lease growth of $1.6 billion, or 9%, and deposit growth of $927.3 million, or 5%

PORTLAND, Ore., Jan. 23, 2018 (GLOBE NEWSWIRE) -- Umpqua Holdings Corporation (NASDAQ:UMPQ) (the “Company”) reported net earnings available to common shareholders of $82.8 million for the fourth quarter of 2017, compared to $61.3 million for the third quarter of 2017 and $69.2 million for the fourth quarter of 2016.  Earnings per diluted common share were $0.38 for the fourth quarter of 2017, compared to $0.28 for the third quarter of 2017 and $0.31 for the fourth quarter of 2016.

For the twelve months ended December 31, 2017, the Company reported net earnings available to common shareholders of $246.9 million, or $1.12 per diluted common share, up from $232.8 million, or $1.05 per diluted common share, for the twelve months ended December 31, 2016.

“2017 was a pivotal year for Umpqua.  We delivered solid financial performance and strong balance sheet growth, while developing and making good progress on Umpqua Next Gen, our long-term strategic initiative to deliver enhanced profitability while modernizing and evolving the institution to implement our human digital banking strategy,” said Cort O'Haver, president and CEO of Umpqua Holdings Corporation.  “The organization’s discipline and hard work last year has positioned us well for 2018 and beyond.  Building on that foundation, and in light of recent tax reform, Umpqua is planning to accelerate strategic investments in our associates, communities, and digital and technology projects to enhance the customer experience, which we believe will enhance shareholder value.”

Notable items that impacted the fourth quarter 2017 financial results included:

  • $26.9 million net benefit to the provision for income taxes related to a revaluation of the net deferred tax liability and amortization of tax credit investments associated with the passage of the Tax Cuts and Jobs Act ("Tax Act"), partially offset by the non-deductibility of certain executive compensation.
  • In light of the Tax Act, the Company took the opportunity to make additional investments, including expenses of $3.2 million related to employee profit sharing and $2.0 million in donations to the Umpqua Bank Charitable Foundation.
  • $2.0 million gain related to the fair value change of the MSR asset, compared to a negative adjustment of $9.2 million in the prior quarter and a $16.5 million gain in the same period of the prior year.
  • $0.2 million gain related to the fair value change of the debt capital market swap derivatives, compared to a negative adjustment of $0.2 million in the prior quarter and a gain of $4.6 million in the same period of the prior year.
  • $3.1 million of exit or disposal costs, related primarily to planned store consolidations, compared to $1.6 million in the prior quarter and $1.2 million in the same period of the prior year.
  • $10.0 million net loss on junior subordinated debentures carried at fair value, compared to a loss of $1.6 million in both the prior quarter and the same period of the prior year.  The incremental net loss this quarter, relative to prior quarter levels, reflected the change in fair value for continued tightening of market credit spreads.

Full-Year 2017 Highlights (comparisons are to prior year):

  • Gross loan and lease growth of $1.6 billion, or 9%;
  • Deposit growth of $927.3 million, or 5%;
  • Net interest income increased by $15.3 million, driven primarily by higher average balances of loans and leases, partially offset by lower net interest margin and a lower level of accretion of the credit discount;
  • Provision for loan and lease losses increased by $5.6 million primarily due to loan and lease growth, along with a $2.6 million increase in net charge-offs;
  • Non-interest income decreased by $21.1 million, driven primarily by lower residential mortgage banking revenue and the higher net loss on junior subordinated debentures carried at fair value (see notable items above), partially offset by higher other income;
  • Non-interest expense increased by $10.7 million, driven primarily by higher salaries and benefits expense; and
  • Paid dividends of $0.68 per common share, repurchased 325,000 shares of stock, and grew tangible book value1 by 5%, or $0.48 per share.

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.

Fourth Quarter 2017 Highlights (comparisons are to prior quarter):

  • Gross loan and lease growth of $402.4 million, or 9% annualized;
  • Deposit growth of $96.4 million, or 2% annualized;
  • Net interest income was flat, as the growth in the loan and lease portfolio was offset by lower accretion of the credit discount;
  • Provision for loan and lease losses increased by $0.9 million;
  • Non-interest income decreased by $3.4 million, driven primarily by the $8.4 million increase in net loss on junior subordinated debentures carried at fair value (see notable items above) and lower gains from portfolio loan sales, partially offset by higher mortgage banking revenue attributable to a linked quarter increase in the fair value change of the MSR asset;
  • Non-interest expense increased by $4.4 million, reflecting the additional investments resulting from tax reform (see notable items above), partially offset by lower merger-related expense;
  • Non-performing assets to total assets increased to 0.37%, driven primarily by two larger non-performing loans;
  • Estimated total risk-based capital ratio of 14.0% and estimated Tier 1 common to risk weighted assets ratio of 11.0%;
  • Declared quarterly cash dividend of $0.18 per common share; and
  • Repurchased 100,000 shares of common stock for $2.1 million.

Balance Sheet
Total consolidated assets were $25.7 billion as of December 31, 2017, compared to $25.7 billion as of September 30, 2017 and $24.8 billion as of December 31, 2016.  Including secured off-balance sheet lines of credit, total available liquidity was $9.8 billion as of December 31, 2017, representing 38% of total assets and 49% of total deposits.

Gross loans and leases were $19.1 billion as of December 31, 2017, an increase of $402.4 million from $18.7 billion as of September 30, 2017.  This increase reflects balanced growth across the Company's commercial, equipment finance, multifamily and residential real estate portfolios.  During the fourth quarter of 2017, the Company sold $29.8 million of leases and equipment finance loans. 

Total deposits were $19.9 billion as of December 31, 2017, an increase of $96.4 million from $19.9 billion as of September 30, 2017.  This increase was primarily attributable to growth in money market accounts, partially offset by a decline in time deposits.

Net Interest Income
Net interest income was $220.6 million for the fourth quarter of 2017, up $0.2 million from the prior quarter.  This increase was driven primarily by higher average interest-earning assets resulting from the strong growth in loans and leases during the quarter.  This was partially offset by a lower level of accretion of the credit discount on loans acquired from Sterling Financial Corporation (“Sterling”), which decreased by $3.9 million from the prior quarter level.

The Company’s net interest margin was 3.88% for the fourth quarter of 2017, down 6 basis points from 3.94% for the third quarter of 2017.  The linked quarter decrease was driven primarily by the lower level of accretion on purchased credit impaired loans.

Credit Quality
The allowance for loan and lease losses was $140.6 million, or 0.74% of loans and leases, as of December 31, 2017.  During the fourth quarter of 2017, the Company recorded $4.1 million of accretion related to the credit discount on acquired loans from Sterling, compared to $8.0 million in the prior quarter.  As of December 31, 2017, the Sterling purchased non-credit impaired loans had approximately $26.2 million of remaining credit discount that will accrete into interest income over the life of the loans, and the Sterling purchased credit impaired loan pools had approximately $25.4 million of remaining total discount.

The provision for loan and lease losses was $12.9 million for the fourth quarter of 2017, up $0.9 million from the prior quarter level.  Net charge-offs increased by 5 basis points from the prior quarter to 0.25% of average loans and leases for the fourth quarter of 2017 (annualized).  As of December 31, 2017, non-performing assets increased to 0.37% of total assets, from 0.30% as of September 30, 2017 and from 0.25% as of December 31, 2016.  This increase was driven primarily by two larger loans which moved to non-performing status during the quarter.

Non-interest Income
Non-interest income was $72.0 million for the fourth quarter of 2017, down $3.4 million from the prior quarter. The current quarter's non-interest income included gains of $2.0 million and $0.2 million related to fair value changes of the MSR asset and the debt capital market swap derivatives, respectively.  This compares to fair value losses of $9.2 million and $0.2 million for the MSR asset and debt capital market swap derivatives, respectively, during the third quarter of 2017.  The net loss on junior subordinated debentures carried at fair value was $10.0 million for the fourth quarter of 2017, compared to a net loss of $1.6 million in the prior quarter, reflecting the change in fair value related to the continued tightening of market credit spreads.

Net revenue from the origination and sale of residential mortgages was $29.9 million for the fourth quarter of 2017, down $2.9 million from the prior quarter.  For-sale mortgage origination volume decreased by 5% from the prior quarter, while the home lending gain on sale margin decreased by 17 basis points to 3.51% for the fourth quarter of 2017.  Of the current quarter’s mortgage production, 67% related to purchase activity, compared to 74% for the prior quarter and 63% for the same period in the prior year.

Gain on loan sales decreased by $4.3 million from the prior quarter, reflecting a lower level of portfolio loan sales compared to the prior quarter.

Non-interest Expense
Non-interest expense was $192.8 million for the fourth quarter of 2017, up $4.4 million from the prior quarter level.   This increase over the prior quarter level was primarily driven by additional investments made by the Company as a result of the Tax Act, including a $3.2 million increase in salaries and benefits expense related to employee profit sharing and a $2.0 million increase in other expense related to donations to the Umpqua Bank Charitable Foundation.  These were partially offset by lower merger-related expenses.

Capital
As of December 31, 2017, the Company’s tangible book value per share1 increased to $9.98 from $9.83 in the prior quarter.  During the fourth quarter of 2017, the Company repurchased 100,000 shares of common stock for $2.1 million.

The Company’s estimated total risk-based capital ratio was 14.0% and its estimated Tier 1 common equity to risk weighted assets ratio was 11.0% as of December 31, 2017.  The Company remains above current “well-capitalized” regulatory minimums.  The regulatory capital ratios as of December 31, 2017 are estimates, pending completion and filing of the Company’s regulatory reports.

1 "Non-GAAP" financial measure. More information regarding this measurement and a reconciliation to the comparable GAAP measurement is provided under the heading Non-GAAP Financial Measures below.

Non-GAAP Financial Measures
In addition to results presented in accordance with generally accepted accounting principles in the United States of America (GAAP), this press release contains certain non-GAAP financial measures.  The Company believes that 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).

           
(Dollars in thousands, except per share data) Dec 31, 2017 Sep 30, 2017 Jun 30, 2017 Mar 31, 2017 Dec 31, 2016
Total shareholders' equity $4,015,763  $3,985,260  $3,958,845  $3,931,150  $3,916,795 
Subtract:          
Goodwill 1,787,651  1,787,651  1,787,651  1,787,651  1,787,651 
Other intangible assets, net 30,130  31,819  33,508  35,197  36,886 
Tangible common shareholders' equity $2,197,982  $2,165,790  $2,137,686  $2,108,302  $2,092,258 
Total assets $25,742,416  $25,695,663  $25,257,784  $24,861,458  $24,813,119 
Subtract:          
Goodwill 1,787,651  1,787,651  1,787,651  1,787,651  1,787,651 
Other intangible assets, net 30,130  31,819  33,508  35,197  36,886 
Tangible assets $23,924,635  $23,876,193  $23,436,625  $23,038,610  $22,988,582 
Common shares outstanding at period end 220,149  220,225  220,205  220,349  220,177 
           
Common equity ratio 15.60% 15.51% 15.67% 15.81% 15.79%
Tangible common equity ratio 9.19% 9.07% 9.12% 9.15% 9.10%
Book value per common share $18.24  $18.10  $17.98  $17.84  $17.79 
Tangible book value per common share $9.98  $9.83  $9.71  $9.57  $9.50 
                     

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 innovation studio headquartered in Silicon Valley focused on creating key technologies and business models that transform finance and commerce.  Umpqua Holdings Corporation is headquartered in Portland, Oregon. For more information, visit umpquabank.com.

Earnings Conference Call Information
The Company will host its fourth quarter 2017 earnings conference call on Wednesday, January 24, 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 fourth quarter and full-year 2017 financial results.  There will be a live question-and-answer session following the presentation.  To join the call, please dial (877) 440-5803 ten minutes prior to the start time and enter conference ID: 8419276.  A re-broadcast will be available approximately two hours after the call by dialing (888) 203-1112 and entering conference ID 8419276.  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 the timing and impact of digital and technology initiatives and the credit discount accretion related to loans acquired from Sterling.  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 initiatives; 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) Dec 31,
2017
 Sep 30,
2017
 Jun 30,
2017
 Mar 31,
2017
 Dec 31,
2016
 Seq.
Quarter
 Year
over
Year
Interest income:              
Loans and leases $223,206  $223,321  $212,998  $205,996  $209,812  0% 6%
Interest and dividends on investments:              
Taxable 14,857  13,979  15,220  13,931  10,630  6% 40%
Exempt from federal income tax 2,121  2,125  2,237  2,242  2,229  0% (5)%
Dividends 386  357  360  388  336  8% 15%
Temporary investments and interest bearing deposits 1,565  934  324  1,557  1,696  68% (8)%
Total interest income 242,135  240,716  231,139  224,114  224,703  1% 8%
Interest expense:              
Deposits 13,241  12,052  10,641  9,648  9,288  10% 43%
Repurchase agreements and federal funds purchased 43  81  321  30  32  (47)% 34%
Term debt 3,496  3,491  3,662  3,510  3,413  0% 2%
Junior subordinated debentures 4,734  4,628  4,437  4,201  4,174  2% 13%
Total interest expense 21,514  20,252  19,061  17,389  16,907  6% 27%
Net interest income 220,621  220,464  212,078  206,725  207,796  0% 6%
Provision for loan and lease losses 12,928  11,997  10,657  11,672  13,171  8% (2)%
Non-interest income:              
Service charges on deposits 15,413  15,849  15,478  14,729  15,323  (3)% 1%
Brokerage revenue 4,226  3,832  3,903  4,122  4,230  10% 0%
Residential mortgage banking revenue, net 42,118  33,430  33,894  26,834  58,448  26% (28)%
(Loss) gain on investment securities, net   (6) 35  (2)   (100)% 0%
Gain on loan sales 3,688  7,969  3,310  1,754  4,060  (54)% (9)%
Loss on junior subordinated debentures carried at fair value (10,010) (1,590) (1,572) (1,555) (1,589) 530% 530%
BOLI income 2,015  2,041  2,089  2,069  2,107  (1)% (4)%
Other income 14,595  13,877  13,982  12,274  16,041  5% (9)%
Total non-interest income 72,045  75,402  71,119  60,225  98,620  (4)% (27)%
Non-interest expense:              
Salaries and employee benefits 114,414  108,732  108,561  106,473  105,406  5% 9%
Occupancy and equipment, net 37,269  37,648  36,955  38,673  37,618  (1)% (1)%
Intangible amortization 1,689  1,689  1,689  1,689  1,867  0% (10)%
FDIC assessments 2,075  4,405  4,447  4,087  3,985  (53)% (48)%
(Gain) loss on other real estate owned, net (83) (99) (457) 82  (197) (16)% (58)%
Merger related expenses   6,664  1,640  1,020  3,218  (100)% (100)%
Other expense 37,422  29,315  31,186  30,690  31,571  28% 19%
Total non-interest expense 192,786  188,354  184,021  182,714  183,468  2% 5%
Income before provision for income taxes 86,952  95,515  88,519  72,564  109,777  (9)% (21)%
Provision for income taxes 4,105  34,182  31,707  26,561  40,502  (88)% (90)%
Net income 82,847  61,333  56,812  46,003  69,275  35% 20%
Dividends and undistributed earnings allocated to participating securities 16  14  14  12  33  14% (52)%
Net earnings available to common shareholders $82,831  $61,319  $56,798  $45,991  $69,242  35% 20%
               
Weighted average basic shares outstanding 220,194  220,215  220,310  220,287  220,190  0% 0%
Weighted average diluted shares outstanding 220,873  220,755  220,753  220,779  220,756  0% 0%
Earnings per common share – basic $0.38  $0.28  $0.26  $0.21  $0.31  36% 23%
Earnings per common share – diluted $0.38  $0.28  $0.26  $0.21  $0.31  36% 23%
               


 
Umpqua Holdings Corporation
Consolidated Statements of Income
(Unaudited)
     
  Year Ended % Change
(In thousands, except per share data) Dec 31, 2017 Dec 31, 2016 Year
over
Year
Interest income:      
Loans and leases $865,521  $850,067  2%
Interest and dividends on investments:      
Taxable 57,987  46,427  25%
Exempt from federal income tax 8,725  8,828  (1)%
Dividends 1,491  1,399  7%
Temporary investments and interest bearing deposits 4,380  3,918  12%
Total interest income 938,104  910,639  3%
Interest expense:      
Deposits 45,582  35,240  29%
Repurchase agreements and federal funds purchased 475  132  260%
Term debt 14,159  15,005  (6)%
Junior subordinated debentures 18,000  15,674  15%
Total interest expense 78,216  66,051  18%
Net interest income 859,888  844,588  2%
Provision for loan and lease losses 47,254  41,674  13%
Non-interest income:      
Service charges on deposits 61,469  61,268  0%
Brokerage revenue 16,083  17,033  (6)%
Residential mortgage banking revenue, net 136,276  157,863  (14)%
Gain on investment securities, net 27  858  (97)%
Gain on loan sales 16,721  13,356  25%
Loss on junior subordinated debentures carried at fair value (14,727) (6,323) 133%
BOLI income 8,214  8,514  (4)%
Other income 54,728  47,371  16%
Total non-interest income 278,791  299,940  (7)%
Non-interest expense:      
Salaries and employee benefits 438,180  424,830  3%
Occupancy and equipment, net 150,545  151,944  (1)%
Intangible amortization 6,756  8,622  (22)%
FDIC assessments 15,014  15,508  (3)%
Gain on other real estate owned, net (557) (279) 100%
Merger related expenses 9,324  15,313  (39)%
Goodwill impairment   142  nm 
Other expense 128,613  121,075  6%
Total non-interest expense 747,875  737,155  1%
Income before provision for income taxes 343,550  365,699  (6)%
Provision for income taxes 96,555  132,759  (27)%
Net income 246,995  232,940  6%
Dividends and undistributed earnings allocated to participating securities 56  125  (55)%
Net earnings available to common shareholders $246,939  $232,815  6%
       
Weighted average basic shares outstanding 220,251  220,282  0%
Weighted average diluted shares outstanding 220,836  220,908  0%
Earnings per common share – basic $1.12  $1.06  6%
Earnings per common share – diluted $1.12  $1.05  7%
nm = not meaningful      


 
Umpqua Holdings Corporation
Consolidated Balance Sheets
(Unaudited)
            
           % Change
(In thousands, except per share data)Dec 31, 2017 Sep 30, 2017 Jun 30, 2017 Mar 31, 2017 Dec 31, 2016 Seq.
Quarter
 Year
over
Year
Assets:             
Cash and due from banks$330,856  $304,760  $320,027  $262,655  $331,994  9% 0%
Interest bearing cash and temporary investments303,424  540,806  295,937  421,991  1,117,438  (44)% (73)%
Investment securities:             
Trading, at fair value12,255  11,919  11,467  11,241  10,964  3% 12%
Available for sale, at fair value3,065,769  3,047,358  3,132,566  3,243,408  2,701,220  1% 13%
Held to maturity, at amortized cost3,803  3,905  4,017  4,121  4,216  (3)% (10)%
Loans held for sale259,518  417,470  451,350  372,073  387,318  (38)% (33)%
Loans and leases19,080,184  18,677,762  18,321,142  17,829,638  17,508,663  2% 9%
Allowance for loan and lease losses(140,608) (139,503) (136,867) (136,292) (133,984) 1% 5%
Loans and leases, net18,939,576  18,538,259  18,184,275  17,693,346  17,374,679  2% 9%
Restricted equity securities43,508  45,509  45,511  45,522  45,528  (4)% (4)%
Premises and equipment, net269,182  276,316  288,853  293,133  303,882  (3)% (11)%
Goodwill1,787,651  1,787,651  1,787,651  1,787,651  1,787,651  0% 0%
Other intangible assets, net30,130  31,819  33,508  35,197  36,886  (5)% (18)%
Residential mortgage servicing rights, at fair value153,151  141,225  141,832  142,344  142,973  8% 7%
Other real estate owned11,734  4,160  4,804  6,518  6,738  182% 74%
Bank owned life insurance306,864  305,572  303,894  301,777  299,673  0% 2%
Deferred tax assets, net      8,464  34,322  0% (100)%
Other assets224,995  238,934  252,092  232,017  227,637  (6)% (1)%
Total assets$25,742,416  $25,695,663  $25,257,784  $24,861,458  $24,813,119  0% 4%
Liabilities:             
Deposits$19,948,300  $19,851,910  $19,459,950  $19,167,293  $19,020,985  0% 5%
Securities sold under agreements to repurchase294,299  321,542  330,189  304,280  352,948  (8)% (17)%
Term debt802,357  852,306  852,219  852,308  852,397  (6)% (6)%
Junior subordinated debentures, at fair value277,155  266,875  265,423  263,605  262,209  4% 6%
Junior subordinated debentures, at amortized cost100,609  100,690  100,770  100,851  100,931  0% 0%
Deferred tax liability, net37,503  51,423  34,296      (27)% 100%
Other liabilities266,430  265,657  256,092  241,971  306,854  0% (13)%
Total liabilities21,726,653  21,710,403  21,298,939  20,930,308  20,896,324  0% 4%
Shareholders' equity:             
Common stock3,517,258  3,516,558  3,514,094  3,516,537  3,515,299  0% 0%
Retained earnings519,067  476,226  454,802  433,417  422,839  9% 23%
Accumulated other comprehensive loss (1)(20,562) (7,524) (10,051) (18,804) (21,343) 173% (4)%
Total shareholders' equity4,015,763  3,985,260  3,958,845  3,931,150  3,916,795  1% 3%
Total liabilities and shareholders' equity$25,742,416  $25,695,663  $25,257,784  $24,861,458  $24,813,119  0% 4%
              
Common shares outstanding at period end220,149  220,225  220,205  220,349  220,177  0% 0%
Book value per common share$18.24  $18.10  $17.98  $17.84  $17.79  1% 3%
Tangible book value per common share$9.98  $9.83  $9.71  $9.57  $9.50  2% 5%
Tangible equity - common$2,197,982  $2,165,790  $2,137,686  $2,108,302  $2,092,258  1% 5%
Tangible common equity to tangible assets9.19% 9.07% 9.12% 9.15% 9.10% 0.12  0.09 
 

(1) Preliminary. Pending FASB guidance regarding the Financial Reporting Effects of the Tax Cuts and Jobs Act.

 
Umpqua Holdings Corporation
Loan & Lease Portfolio
(Unaudited)
               
(Dollars in thousands) Dec 31, 2017 Sep 30, 2017 Jun 30, 2017 Mar 31, 2017 Dec 31, 2016 % Change
  Amount Amount Amount Amount Amount Seq.
Quarter
 Year
over
Year
Loans & leases:              
Commercial real estate:              
Non-owner occupied term, net $3,491,137  $3,475,243  $3,401,679  $3,410,914  $3,330,442  0% 5%
Owner occupied term, net 2,488,251  2,467,995  2,593,395  2,584,183  2,599,055  1% (4)%
Multifamily, net 3,087,792  2,993,203  2,964,851  2,885,164  2,858,956  3% 8%
Commercial construction, net 540,707  521,666  464,690  471,007  463,625  4% 17%
Residential development, net 165,865  186,400  165,956  145,479  142,984  (11)% 16%
Commercial:              
Term, net 1,944,987  1,819,664  1,686,597  1,620,311  1,508,780  7% 29%
Lines of credit & other, net 1,166,173  1,134,045  1,153,409  1,114,160  1,116,259  3% 4%
Leases & equipment finance, net 1,167,503  1,137,732  1,082,651  1,000,376  950,588  3% 23%
Residential real estate:              
Mortgage, net 3,192,185  3,094,361  3,021,331  2,916,924  2,887,971  3% 11%
Home equity lines & loans, net 1,103,297  1,079,931  1,056,848  1,015,138  1,011,844  2% 9%
  Consumer & other, net 732,287  767,522  729,735  665,982  638,159  (5)% 15%
Total, net of deferred fees and costs $19,080,184  $18,677,762  $18,321,142  $17,829,638  $17,508,663  2% 9%
               
Loan & leases mix:              
Commercial real estate:              
  Non-owner occupied term, net 18% 19% 19% 19% 19%    
  Owner occupied term, net 13% 13% 14% 14% 15%    
  Multifamily, net 16% 16% 16% 16% 16%    
Commercial construction, net 3% 3% 3% 3% 3%    
Residential development, net 1% 1% 1% 1% 1%    
Commercial:              
Term, net 10% 10% 9% 9% 9%    
Lines of credit & other, net 6% 6% 6% 6% 6%    
Leases & equipment finance, net 6% 6% 6% 6% 5%    
Residential real estate:              
Mortgage, net 17% 16% 16% 16% 16%    
Home equity lines & loans, net 6% 6% 6% 6% 6%    
  Consumer & other, net 4% 4% 4% 4% 4%    
  Total 100% 100% 100% 100% 100%    
                    


 
Umpqua Holdings Corporation
Deposits by Type/Core Deposits
(Unaudited)
               
(Dollars in thousands) Dec 31, 2017 Sep 30, 2017 Jun 30, 2017 Mar 31, 2017 Dec 31, 2016 % Change
  Amount Amount Amount Amount Amount Seq.
Quarter
 Year
over
Year
Deposits:              
Demand, non-interest bearing $6,505,628  $6,571,471  $6,112,480  $6,021,585  $5,861,469  (1)% 11%
Demand, interest bearing 2,384,133  2,394,240  2,371,386  2,327,226  2,296,532  0% 4%
Money market 7,037,891  6,700,261  6,755,707  6,784,442  6,932,717  5% 2%
Savings 1,446,860  1,444,801  1,427,677  1,400,330  1,325,757  0% 9%
Time 2,573,788  2,741,137  2,792,700  2,633,710  2,604,510  (6)% (1)%
Total $19,948,300  $19,851,910  $19,459,950  $19,167,293  $19,020,985  0% 5%
               
Total core deposits (1) $18,263,802  $18,005,730  $17,561,956  $17,427,832  $17,318,003  1% 5%
               
Deposit mix:              
Demand, non-interest bearing 33% 33% 32% 31% 31%    
Demand, interest bearing 12% 12% 12% 12% 12%    
Money market 35% 34% 35% 36% 36%    
Savings 7% 7% 7% 7% 7%    
Time 13% 14% 14% 14% 14%    
Total 100% 100% 100% 100% 100%    
               
Number of open accounts:              
Demand, non-interest bearing 397,427  394,755  389,767  385,859  384,040     
Demand, interest bearing 78,853  79,899  80,594  81,570  82,520     
Money market 55,175  55,659  55,795  55,903  56,031     
Savings 162,453  162,556  161,369  160,323  159,080     
Time 46,861  47,129  47,339  47,365  47,705     
Total 740,769  739,998  734,864  731,020  729,376     
               
Average balance per account:              
Demand, non-interest bearing $16.4  $16.6  $15.7  $15.6  $15.3     
Demand, interest bearing 30.2  30.0  29.4  28.5  27.8     
Money market 127.6  120.4  121.1  121.4  123.7     
Savings 8.9  8.9  8.8  8.7  8.3     
Time 54.9  58.2  59.0  55.6  54.6     
Total $26.9  $26.8  $26.5  $26.2  $26.1     
                         

(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) Dec 31,
2017
 Sep 30,
2017
 Jun 30,
2017
 Mar 31,
2017
 Dec 31,
2016
 Seq.
Quarter
 Year
over
Year
Non-performing assets:              
Loans and leases on non-accrual status $51,465  $44,573  $26,566  $28,915  $27,765  15% 85%
Loans and leases past due 90+ days and accruing (1) 30,994  29,073  27,252  23,421  28,369  7% 9%
Total non-performing loans and leases 82,459  73,646  53,818  52,336  56,134  12% 47%
Other real estate owned 11,734  4,160  4,804  6,518  6,738  182% 74%
Total non-preforming assets $94,193  $77,806  $58,622  $58,854  $62,872  21% 50%
               
Performing restructured loans and leases $32,157  $45,813  $52,861  $43,029  $40,667  (30)% (21)%
Loans and leases past due 31-89 days $43,870  $32,251  $31,153  $49,530  $30,425  36% 44%
Loans and leases past due 31-89 days to total loans and leases 0.23% 0.17% 0.17% 0.28% 0.17%    
Non-performing loans and leases to total loans and leases (1) 0.43% 0.39% 0.29% 0.29% 0.32%    
Non-performing assets to total assets (1) 0.37% 0.30% 0.23% 0.24% 0.25%    
                    

(1) Excludes non-performing mortgage loans guaranteed by Ginnie Mae, which Umpqua has the unilateral right to repurchase but has not done so, totaling $12.4 million, $12.3 million, $16.3 million, $5.3 million, and $10.9 million at December 31, 2017, September 30, 2017, June 30, 2017, March 31, 2017, and December 31, 2016, respectively.

 
Umpqua Holdings Corporation
Credit Quality – Allowance for Loan and Lease Losses
 (Unaudited)
               
  Quarter Ended % Change
(Dollars in thousands) Dec 31,
2017
 Sep 30,
2017
 Jun 30,
2017
 Mar 31,
2017
 Dec 31,
2016
 Seq.
Quarter
 Year
over
Year
Allowance for loan and lease losses:            
Balance beginning of period $139,503  $136,867  $136,292  $133,984  $133,692     
Provision for loan and lease losses 12,928  11,997  10,657  11,672  13,171  8% (2)%
Charge-offs (15,751) (13,222) (13,944) (13,002) (16,303) 19% (3)%
Recoveries 3,928  3,861  3,862  3,638  3,424  2% 15%
Net charge-offs (11,823) (9,361) (10,082) (9,364) (12,879) 26% (8)%
Total allowance for loan and lease losses 140,608  139,503  136,867  136,292  133,984  1% 5%
Reserve for unfunded commitments 3,963  3,932  3,816  3,495  3,611  1% 10%
Total allowance for credit losses $144,571  $143,435  $140,683  $139,787  $137,595  1% 5%
               
Net charge-offs to average loans and leases (annualized) 0.25% 0.20% 0.22% 0.22% 0.29%    
Recoveries to gross charge-offs 24.94% 29.20% 27.70% 27.98% 21.00%    
Allowance for loan and lease losses to loans and leases 0.74% 0.75% 0.75% 0.76% 0.77%    
Allowance for credit losses to loans and leases 0.76% 0.77% 0.77% 0.78% 0.79%    
                    


 
Umpqua Holdings Corporation
Credit Quality – Allowance for Loan and Lease Losses
(Unaudited)
  Year Ended % Change
(Dollars in thousands) Dec 31, 2017 Dec 31, 2016 Year over Year
Allowance for credit losses:    
Balance beginning of period $133,984  $130,322   
Provision for loan and lease losses 47,254  41,674  13%
Charge-offs (55,919) (49,923) 12%
Recoveries 15,289  11,911  28%
Net charge-offs (40,630) (38,012) 7%
Total allowance for loan and lease losses 140,608  133,984  5%
Reserve for unfunded commitments 3,963  3,611  10%
Total allowance for credit losses $144,571  $137,595  5%
       
Net charge-offs to average loans and leases 0.22% 0.22%  
Recoveries to gross charge-offs 27.34% 23.86%  
         


 
Umpqua Holdings Corporation
Selected Ratios
(Unaudited)
           
  Quarter Ended % Change
  Dec 31,
2017
 Sep 30,
2017
 Jun 30,
2017
 Mar 31,
2017
 Dec 31,
2016
 Seq.
Quarter
 Year
over
Year
Average Rates:              
Yield on loans and leases 4.65% 4.70% 4.67% 4.65% 4.70% (0.05) (0.05)
Yield on loans held for sale 3.99% 3.89% 3.26% 3.86% 3.79% 0.10  0.20 
Yield on taxable investments 2.17% 2.00% 2.07% 2.10% 1.85% 0.17  0.32 
Yield on tax-exempt investments (1) 4.49% 4.59% 4.64% 4.76% 4.72% (0.10) (0.23)
Yield on temporary investments and interest bearing cash 1.22% 1.47% 1.03% 0.79% 0.56% (0.25) 0.66 
Total yield on earning assets (1) 4.26% 4.30% 4.26% 4.18% 4.14% (0.04) 0.12 
               
Cost of interest bearing deposits 0.40% 0.36% 0.33% 0.30% 0.28% 0.04  0.12 
Cost of securities sold under agreements              
to repurchase and fed funds purchased 0.06% 0.10% 0.32% 0.04% 0.04% (0.04) 0.02 
Cost of term debt 1.67% 1.63% 1.72% 1.67% 1.53% 0.04  0.14 
Cost of junior subordinated debentures 5.11% 5.02% 4.88% 4.70% 4.59% 0.09  0.52 
Total cost of interest bearing liabilities 0.58% 0.55% 0.52% 0.48% 0.46% 0.03  0.12 
               
Net interest spread (1) 3.68% 3.75% 3.74% 3.70% 3.68% (0.07)  
Net interest margin (1) 3.88% 3.94% 3.91% 3.85% 3.83% (0.06) 0.05 
               
Performance Ratios:              
Return on average assets 1.28% 0.96% 0.92% 0.75% 1.11% 0.32  0.17 
Return on average tangible assets 1.38% 1.04% 0.99% 0.81% 1.20% 0.34  0.18 
Return on average common equity 8.22% 6.10% 5.76% 4.74% 7.04% 2.12  1.18 
Return on average tangible common equity 15.08% 11.23% 10.67% 8.83% 13.19% 3.85  1.89 
Efficiency ratio – Consolidated 65.63% 63.43% 64.71% 68.15% 59.65% 2.20  5.98 
Efficiency ratio – Bank 61.76% 61.42% 62.45% 65.75% 57.96% 0.34  3.80 
                      

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

 
Umpqua Holdings Corporation
Selected Ratios
(Unaudited)
     
  Year Ended % Change
  Dec 31, 2017 Dec 31, 2016 Year over
Year
Average Rates:      
Yield on loans and leases 4.67% 4.83% (0.16)
Yield on loans held for sale 3.75% 3.84% (0.09)
Yield on taxable investments 2.09% 2.07% 0.02 
Yield on tax-exempt investments (1) 4.62% 4.71% (0.09)
Yield on temporary investments and interest bearing cash 1.04% 0.53% 0.51 
Total yield on earning assets (1) 4.25% 4.36% (0.11)
       
Cost of interest bearing deposits 0.35% 0.28% 0.07 
Cost of securities sold under agreements      
to repurchase and fed funds purchased 0.14% 0.04% 0.10 
Cost of term debt 1.67% 1.67%  
Cost of junior subordinated debentures 4.93% 4.37% 0.56 
Total cost of interest bearing liabilities 0.53% 0.46% 0.07 
       
Net interest spread (1) 3.72% 3.90% (0.18)
Net interest margin (1) 3.90% 4.04% (0.14)
       
Performance Ratios:      
Return on average assets 0.98% 0.97% 0.01 
Return on average tangible assets 1.06% 1.04% 0.02 
Return on average common equity 6.22% 5.97% 0.25 
Return on average tangible common equity 11.49% 11.25% 0.24 
Efficiency ratio – Consolidated 65.42% 64.15% 1.27 
Efficiency ratio – Bank 62.77% 62.35% 0.42 
          

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

 
Umpqua Holdings Corporation
Average Balances
(Unaudited)
      
 Quarter Ended % Change
(Dollars in thousands)Dec 31,
2017
 Sep 30,
2017
 Jun 30,
2017
 Mar 31,
2017
 Dec 31,
2016
 Seq.
Quarter
 Year
over
Year
Temporary investments and interest bearing cash$509,187  $253,015  $125,886  $804,354  $1,194,904  101% (57)%
Investment securities, taxable2,804,530  2,867,292  3,008,079  2,723,576  2,373,652  (2)% 18%
Investment securities, tax-exempt286,345  281,139  292,553  286,444  287,359  2% 0%
Loans held for sale370,564  420,282  392,183  351,570  482,028  (12)% (23)%
Loans and leases18,765,251  18,537,827  18,024,651  17,598,314  17,386,385  1% 8%
Total interest earning assets22,735,877  22,359,555  21,843,352  21,764,258  21,724,328  2% 5%
Goodwill and other intangible assets, net1,818,730  1,820,394  1,822,032  1,823,799  1,825,491  0% 0%
Total assets25,661,576  25,311,994  24,792,869  24,730,285  24,740,986  1% 4%
              
Non-interest bearing demand deposits6,611,493  6,354,591  5,951,670  5,883,924  5,939,223  4% 11%
Interest bearing deposits13,281,502  13,155,462  13,037,064  13,119,736  13,026,614  1% 2%
Total deposits19,892,995  19,510,053  18,988,734  19,003,660  18,965,837  2% 5%
Interest bearing liabilities14,790,883  14,705,842  14,659,650  14,661,558  14,606,120  1% 1%
              
Shareholders’ equity - common3,998,619  3,989,868  3,956,777  3,936,340  3,914,624  0% 2%
Tangible common equity (1)2,179,889  2,166,474  2,134,745  2,112,541  2,089,133  1% 4%
                     


 
Umpqua Holdings Corporation
Average Balances
(Unaudited)
  Year Ended% Change
(Dollars in thousands) Dec 31, 2017 Dec 31, 2016 Year over Year
Temporary investments and interest bearing cash $421,836  $736,854  (43)%
Investment securities, taxable 2,851,136  2,314,062  23%
Investment securities, tax-exempt 286,605  284,780  1%
Loans held for sale 383,802  416,724  (8)%
Loans and leases 18,235,547  17,258,081  6%
Total interest earning assets 22,178,926  21,010,501  6%
Goodwill and other intangible assets, net 1,821,223  1,828,575  0%
Total assets 25,127,247  24,121,462  4%
       
Non-interest bearing demand deposits 6,202,835  5,616,585  10%
Interest bearing deposits 13,148,903  12,730,866  3%
Total deposits 19,351,738  18,347,451  5%
Interest bearing liabilities 14,704,841  14,320,838  3%
       
Shareholders’ equity - common 3,969,869  3,898,599  2%
Tangible common equity (1) 2,148,646  2,070,024  4%
          

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

 
Umpqua Holdings Corporation
Residential Mortgage Banking Activity
(unaudited)
       
  Quarter Ended % Change
(Dollars in thousands) Dec 31, 2017 Sep 30, 2017 Jun 30, 2017 Mar 31, 2017 Dec 31, 2016 Seq.
Quarter
 Year over
Year
Residential mortgage servicing rights:              
Residential mortgage loans serviced for others $15,336,597  $15,007,942  $14,797,242  $14,541,171  $14,327,368  2% 7%
MSR asset, at fair value 153,151  141,225  141,832  142,344  142,973  8% 7%
MSR as % of serviced portfolio 1.00% 0.94% 0.96% 0.98% 1.00%    
Residential mortgage banking revenue:              
Origination and sale $29,864  $32,784  $32,385  $24,647  $32,386  (9)% (8)%
Servicing 10,287  9,879  9,839  9,858  9,597  4% 7%
Change in fair value of MSR asset 1,967  (9,233) (8,330) (7,671) 16,465  (121)% (88)%
Total $42,118  $33,430  $33,894  $26,834  $58,448  26% (28)%
               
Closed loan volume:              
Closed loan volume - portfolio $265,718  $336,362  $312,022  $245,334  $250,000  (21)% 6%
Closed loan volume - for-sale 850,453  891,063  918,200  754,715  1,061,327  (5)% (20)%
Closed loan volume - total $1,116,171  $1,227,425  $1,230,222  $1,000,049  $1,311,327  (9)% (15)%
               
Gain on sale margin:              
Based on for-sale volume 3.51% 3.68% 3.53% 3.27% 3.05% (0.17) 0.46 
               
  Year Ended % Change        
  Dec 31, 2017 Dec 31, 2016 Year over
Year
        
Residential mortgage banking revenue:              
Origination and sale $119,680  $148,509  (19)%        
Servicing 39,863  35,280  13%        
Change in fair value of MSR asset (23,267) (25,926) (10)%        
Total $136,276  $157,863  (14)%        
               
Closed loan volume:              
Closed loan volume - portfolio $1,159,436  $1,254,492  (8)%        
Closed loan volume - for-sale 3,414,431  3,990,278  (14)%        
Closed loan volume - total $4,573,867  $5,244,770  (13)%        
               
Gain on sale margin:              
Based on for-sale volume 3.51% 3.72% (0.21)        
               
               

Contacts:

Ron FarnsworthBradley Howes
EVP/Chief Financial OfficerSVP/Director of Investor Relations
Umpqua Holdings CorporationUmpqua Holdings Corporation
503-727-4108503-727-4226
ronfarnsworth@umpquabank.combradhowes@umpquabank.com

Source: Umpqua Holdings Corporation