Umpqua Holdings Corporation (NASDAQ: UMPQ) (the “Company”) reported net earnings available to common shareholders of $17.1 million for the second quarter of 2014, as compared to $18.7 million for the first quarter 2014, and $26.1 million for the second quarter of 2013. Earnings per diluted common share was $0.09 for the second quarter of 2014, as compared to $0.17 for the first quarter of 2014, and $0.23 for the second quarter of 2013.
Operating earnings1, which represent earnings available to common shareholders before gains or losses on junior subordinated debentures carried at fair value, net of tax, and merger related expenses, net of tax, were $53.9 million for the second quarter of 2014, as compared to $24.0 million for the first quarter of 2014, and $26.9 million for the second quarter of 2013. Operating earnings per diluted common share was $0.27 for the second quarter of 2014, as compared to $0.21 for the first quarter of 2014, and $0.24 for the second quarter of 2013.
“Our results this quarter reflect our ability to continue to grow Umpqua in a profitable manner,” said Ray Davis, president and CEO of Umpqua Holdings Corporation. “The Company's second quarter 2014 performance includes strong organic loan and deposit growth, a higher net interest margin, increased mortgage banking revenues and strong credit quality, while at the same time completing the Sterling acquisition. We remain on track with the integration, and believe we are well-positioned to leverage the franchise value of the combined company to drive future growth.”
Second Quarter 2014 Financial Highlights:
-
Delivered improved operating results:
- Adjusted net interest margin1 increased to 4.85%, from 4.12% in the prior quarter;
- Efficiency ratio (operating basis)1 improved to 60.33%, from 68.34% in the prior quarter;
- Return on average tangible common equity (operating basis)1 improved to 12.76%;
-
Continued to generate organic loan growth and gather core deposits:
- Non-covered loans and leases grew organically (exclusive of loans acquired or divested) by $338.0 million, partially offset by $44.4 million in loan sales, for net growth of $293.6 million, or 8% annualized;
- Deposits grew organically (exclusive of deposits acquired or divested) by $188.5 million, or 5% annualized;
-
Credit quality remained strong:
- Non-covered, non-performing assets to total assets decreased to 0.36%, from 0.53% for the prior quarter;
-
Disciplined capital management:
- Tangible common equity ratio1 of 9.34%, up from 8.67% in the prior quarter;
- Tangible book value per share1 of $8.69, up 2% from $8.54 in the prior quarter;
- Estimated total risk-based capital of 14.7% and Tier 1 common to risk weighted asset ratio of 11.0%;
- Declared a dividend of $0.15 per common share;
For the six months ended June 30, 2014, the Company reported net earnings available to common shareholders of $35.8 million, or $0.23 per diluted common share, as compared to $49.2 million, or $0.44 per diluted common share, for the six months ended June 30, 2013. For the six months ended June 30, 2014, operating earnings1 were $77.9 million, or $0.50 per diluted common share, as compared to $51.3 million, or $0.46 per diluted common share, for the six months ended June 30, 2013.
Acquisition of Sterling Financial
The Company completed its acquisition of Sterling Financial Corporation (“Sterling”) on April 18, 2014, and as required under purchase accounting rules, recorded Sterling’s balance sheet at its estimated fair value as of that date. After fair value adjustments, Umpqua Bank acquired assets totaling $9.9 billion, loans and leases (including loans held for sale) totaling $7.3 billion, and deposits totaling $7.1 billion.
The results of operations from Sterling have been included in the Company’s current quarter results since the completion of the acquisition beginning on April 19, 2014.
Subsequent to the acquisition, and prior to the end of the second quarter of 2014, the Company completed the required divestiture of six branches to another financial institution, in which it sold $83.0 million of non-covered loans and $224.6 million of deposits.
The table below provides additional information related to the preliminary fair value determinations of the assets acquired and the liabilities assumed as a result of the acquisition of Sterling.
(In thousands) | ||||||
April 18, 2014 | ||||||
Fair value of consideration to Sterling shareholders: | ||||||
Cash paid | $ | 136,200 | ||||
Liability recorded for warrants | 6,453 | |||||
Fair value of common shares issued | 1,939,497 | |||||
Fair value of warrants, common stock options, and restricted stock exchanged | 50,317 | |||||
Total purchase price | 2,132,467 | |||||
Fair value of assets acquired: | ||||||
Cash and cash equivalents | $ | 253,067 | ||||
Investment securities | 1,378,300 | |||||
Loans held for sale | 215,208 | |||||
Non-covered loans and leases, net | 7,122,989 | |||||
Premises and equipment, net | 124,881 | |||||
Residential mortgage servicing rights | 62,770 | |||||
Other intangible assets, net | 54,561 | |||||
Non-covered other real estate owned | 8,140 | |||||
Bank owned life insurance | 193,246 | |||||
Deferred tax asset, net | 295,371 | |||||
Accrued interest receivable | 23,553 | |||||
Other assets | 147,338 | |||||
Total assets acquired | 9,879,424 | |||||
Fair value of liabilities assumed: | ||||||
Deposits | 7,086,052 | |||||
Securities sold under agreements to repurchase | 584,746 | |||||
Term debt | 854,737 | |||||
Junior subordinated debentures | 156,171 | |||||
Other liabilities | 80,679 | |||||
Total liabilities assumed | $ | 8,762,385 | ||||
Net assets acquired | 1,117,039 | |||||
Preliminary goodwill | $ | 1,015,428 |
The net assets acquired from Sterling were recorded at their estimated fair value as of the date of acquisition. Subsequent to the acquisition, the Company paid off the majority of the Sterling repurchase agreements, which was funded by the sale of investment securities.
For the second quarter of 2014, the Sterling acquisition was 32% accretive to operating earnings per share1. Under Generally Accepted Accounting Principles, the Sterling allowance for loan losses was eliminated and a fair value discount of approximately $315 million was recorded against the loans. This included a credit discount of approximately $264 million as of the date of acquisition. Of this credit discount, approximately $180 million is expected to accrete into interest income over the life of the Sterling loan portfolio. During the second quarter of 2014, $24.5 million of the credit discount accreted into interest income.
New loans originated by the former Sterling workforce since April 19, 2014 are accounted for separately from the discounted acquired loans. As a result, the Company recognized $7.7 million in provision for loan losses, related primarily to new loan production, along with loans that matured and renewed, from the former Sterling offices.
Together, the accretion from the credit discount, offset by the provision for loan losses related to new production by former Sterling offices, added $10.1 million to net income, or $0.05 per diluted share. Excluding the net items above, the Sterling acquisition was 7% accretive to operating earnings per share1 for the second quarter of 2014. This is in line with the previously announced earnings per share accretion target of 12% following full realization of cost synergies.
Integration efforts are proceeding as planned, with previously announced store consolidations in process, system conversions scheduled through early 2015, and the organization chart finalized on the date of acquisition. Cost synergies are on track to the previously announced target of $87 million (annualized), which are expected to be fully realized following system conversions.
Balance Sheet
Total consolidated assets were $22.0 billion as of June 30, 2014, as compared to $11.8 billion as of March 31, 2014 and $11.4 billion as of June 30, 2013. Total gross loans and leases (covered and non-covered) and deposits, were $15.1 billion and $16.3 billion, respectively, as of June 30, 2014, as compared to $7.8 billion and $9.3 billion, respectively, as of March 31, 2014, and $7.2 billion and $9.0 billion, respectively, as of June 30, 2013.
Total non-covered loans and leases held for investment increased to $14.8 billion as of June 30, 2014, as compared to $7.4 billion as of March 31, 2014 and $6.8 billion as of June 30, 2013. This included organic growth (exclusive of loans acquired via Sterling acquisition and loans sold as part of branch divestiture) of $338.0 million from the prior quarter. This growth was partially offset by other loan sales of $44.4 million during the quarter, which included $24.0 million in multifamily loans and $20.4 million in government guaranteed loans, resulting in net organic loan growth of $293.6 million.
Total covered loans were $297.6 million as of June 30, 2014, a $44.7 million decline from the prior quarter and a $121.4 million decline from the same period in the prior year. This portfolio will continue to decrease over time as loan payments are received, covered loans are refinanced or modified out of loss sharing, and as troubled credits are resolved and worked out. The Company did not acquire any covered loans as a result of the acquisition of Sterling.
Total deposits increased to $16.3 billion as of June 30, 2014, as compared to $9.3 billion as of March 31, 2014 and $9.0 billion as of June 30, 2013. This included organic growth (exclusive of deposits acquired via Sterling acquisition and deposits sold as part of branch divestiture) of $188.5 million from the prior quarter.
Including secured off-balance sheet lines of credit, total available liquidity to the Company was $7.0 billion as of June 30, 2014, representing 32% of total assets and 43% of total deposits. This compares to total available liquidity to the Company of $4.5 billion, or 38% of total assets and 48% of total deposits, as of March 31, 2014.
Net Interest Income
Net interest income was $212.3 million for the second quarter of 2014, up $104.4 million from the prior quarter and $118.4 million from the same period in the prior year. The increases from prior periods were primarily driven by the acquisition of Sterling, along with continued organic loan growth. Net interest income for the second quarter of 2014 included interest income arising from the accretion of the credit discount recorded on the loans acquired from the acquisition of Sterling.
The Company’s net interest margin was 5.01% for the second quarter of 2014, as compared to 4.28% for the first quarter of 2014, and 3.73% for the second quarter of 2013. The increases from prior periods were primarily driven by the acquisition of Sterling, an improvement in the yield earned on interest-earnings assets, and a slightly lower cost of funds.
Adjusted Net Interest Income1
The Company’s adjusted net interest income and margin excludes gains on covered loan disposals, and interest and fee reversals related to non-accrual loans.
Loan disposal activities within the covered loan portfolio, either through loans being paid off in full or transferred to OREO, result in gains within covered loan interest income to the extent assets received in satisfaction of debt (such as cash or the net realizable value of OREO received) exceed the allocated carrying value of the loan disposed of from the pool. Loan disposal activities contributed $7.1 million of interest income for the second quarter of 2014, as compared to $4.3 million for the first quarter of 2014 and $4.2 million for the second quarter of 2013. While dispositions of covered loans positively impact interest income and net interest margin, the Company recognizes a corresponding decrease to the change in the FDIC indemnification asset within non-interest income that partially offsets the impact to net income. Interest and fee reversals related to non-accrual loans during the second quarter of 2014 totaled $450 thousand, as compared to $122 thousand for the first quarter of 2014 and $33 thousand for second quarter of 2013.
Adjusted net interest income was $207.0 million for the second quarter of 2014, as compared to $104.8 million for the first quarter of 2014 and $90.8 million for the second quarter of 2013. The Company’s adjusted net interest margin was 4.85% for the second quarter of 2014, as compared to 4.12% for the first quarter of 2014 and 3.57% for the second quarter of 2013.
Non-Interest Income
Total non-interest income was $44.5 million for the second quarter of 2014, up $21.5 million from the prior quarter and $10.0 million from the same period in the prior year. The increases from prior periods were primarily driven by the acquisition of Sterling.
Residential mortgage banking revenue, which includes income generated from the origination and sale of residential mortgage loans, income from the servicing of residential mortgage loans and changes to the fair value of the residential mortgage servicing rights (“MSR”) asset, increased to $24.3 million for the second quarter of 2014, up $13.9 million from the prior quarter, and flat with the same period in the prior year. The linked quarter increase was primarily driven by the acquisition of Sterling, partially offset by a decrease in the fair value of the MSR asset due to a decline in mortgage interest rates, which resulted in a loss of $3.2 million for the quarter.
The Company’s gain on sale margin, as a percentage of total residential mortgage production, was 2.47% for the second quarter of 2014, down from 2.87% in the prior quarter, primarily related to the acquisition of Sterling. Of the current quarter’s mortgage production, 74% related to purchase activity, as compared to 69% for the prior quarter and 49% for the same period in the prior year.
As of June 30, 2014, the Company serviced $10.8 billion of residential mortgage loans for others, and its related MSR asset was valued at $114.2 million, or 1.05% of the total serviced portfolio principal balance. This compares to $4.5 billion of residential mortgage loans serviced for others as of March 31, 2014, with a related MSR asset of $49.2 million, or 1.09% of the total serviced portfolio principal balance. As of June 30 2013, the Company serviced $3.9 billion of residential mortgage loans serviced for others, and its related MSR asset was valued at $38.2 million, or 0.98% of the total serviced portfolio principal balance.
Total other non-interest income decreased by $1.4 million from the prior quarter and by $2.7 million from the same period in the prior year. The largest recurring component of other non-interest income is Debt Capital Markets revenue, which was a loss of $1.2 million for the second quarter of 2014, as compared to a gain of $0.8 million for the first quarter of 2014 and a gain of $2.4 million for the second quarter of 2013. The decrease from the prior quarter was primarily driven by a fair value loss on the related swap derivatives.
Non-interest Expense
Non-interest expense was $214.1 million for the second quarter of 2014, which included $57.5 million of merger-related expenses. This compares to $96.5 million, including $6.0 million of merger-related expenses, for the first quarter of 2014 and $87.9 million, including $0.8 million of merger-related expenses, for the second quarter of 2013. The increase in the Company’s non-interest expense from the prior quarter was primarily driven by increased salaries, benefits, and occupancy and equipment expenses associated with Sterling. The second quarter of 2014 run-rate does not reflect the full benefit of the anticipated merger cost synergies.
On an operating basis1, which excludes merger-related expenses, the Company’s efficiency ratio was 60.33% for the second quarter of 2014, an improvement from 68.34% for the first quarter of 2014 and 66.97% for the second quarter of 2013.
Income taxes
The Company recorded a provision for income taxes of $10.7 million for the second quarter of 2014, representing an effective tax rate of 38% for the quarter. The increase in the quarterly effective tax rate was driven by higher actual and projected income resulting from the acquisition of Sterling. This increased the year-to-date effective tax rate to 36%, which is the anticipated full-year 2014 effective tax rate.
Capital
As of June 30, 2014, the Company’s tangible book value per common share1 was $8.69 and its ratio of tangible common equity to tangible assets1 was 9.34%. These are up from $8.54 and 8.67%, respectively, from the prior quarter.
The Company made no open market or privately negotiated purchases of common stock under the Company’s previously announced share repurchase plan during the second quarter of 2014. The Company may repurchase up to 12.0 million of additional shares under this plan.
The Company’s estimated total risk-based capital ratio was 14.7% as of June 30, 2014, and its estimated Tier 1 common to risk weighted assets ratio was 11.0% of June 30, 2014. The Company remains well above current “well-capitalized” regulatory minimums. These capital ratios, as of June 30, 2014, are estimates pending completion and filing of the Company’s regulatory reports.
On July 2, 2013, federal banking regulators approved the final proposed rules that revise the regulatory capital rules to incorporate certain revisions by the Basel Committee on Banking Supervision to the Basel capital framework (“Basel III”). Under Basel III, the Company's combined trust preferred issuances must be phased out of Tier 1 and into Tier 2 capital (75% in 2015 and 100% in 2016). As of June 30, 2014, the total par value of trust preferred securities was $461.2 million. In addition, the Company is required under Basel III to exclude the entire deferred tax asset related to net operating losses (“NOLs”) from Tier 1 capital. As of June 30, 2014, the Company’s total deferred tax asset was $260.0 million, and the portion related to NOLs was $214.5 million.
Credit Quality – Non-covered Loan Portfolio
Under purchase accounting rules, loans (including those considered non-performing) acquired from Sterling were recorded at their estimated fair value, and the related allowance for loan losses was eliminated. As a result, the Company wrote down the value of the non-covered loan and lease portfolio acquired from Sterling. This credit mark is not reflected in the reported allowance for loan losses, or its related allowance coverage ratios, but should be considered when comparing the current quarter ratios to prior periods.
The allowance for non-covered loan losses was $98.0 million, or 0.66% of non-covered loans and leases, as of June 30, 2014. To provide better comparability to prior periods, this ratio would have been approximately 2.2% after grossing up the allowance for loan losses and the non-covered loans and leases by the amount of the remaining credit mark remaining as of quarter-end. The allowance for non-covered loan losses to non-covered loans and leases was 1.17% as of March 31, 2014 and 1.26% as of June 30, 2013.
The provision for non-covered loan losses was $15.4 million for the second quarter of 2014, up from $5.4 million for the first quarter of 2014 and $3.0 million for the second quarter of 2013. Of the second quarter of 2014 provision for loan losses, $7.7 million related to new loan production from former Sterling offices, $5.5 million related to growth in the Financial Pacific Leasing portfolio, and the remaining amount was driven primarily by organic loan growth from legacy Umpqua Bank.
Non-covered, non-performing assets were $79.4 million, or 0.36% of total assets, as of June 30, 2014, as compared to $62.2 million, or 0.53% of total assets, as of March 31, 2014, and $68.1 million, or 0.60% of total assets, as of June 30, 2013. The level of non-covered, non-performing assets increased from prior periods as a result of the merger with Sterling and expected fluctuations in the legacy Umpqua portfolio, while the ratio of non-covered, non-performing assets to total assets decreased due to the increase in total assets.
Non-covered loans past due 30 to 89 days were $28.9 million, or 0.19% of non-covered loans and leases, as of June 30, 2014, as compared to $29.4 million, or 0.40% of non-covered loans and leases, as of March 31, 2014, and $22.0 million, or 0.32% of non-covered loans and leases, as of June 30, 2013. The decreases in the ratio of non-covered loans past due 30 to 89 days to non-covered loans and leases from prior periods were due to the increase in non-covered loans and leases. Non-covered restructured loans on accrual status were $67.5 million as of June 30, 2014, as compared to $67.9 million as of March 31, 2014, and $73.9 million as of June 30, 2013.
1 “Non-GAAP” financial measure. More information regarding this measurement and a reconciliation to the comparable GAAP measurement is provided under the heading Non-GAAP Financial Measures below.
Non-GAAP Financial Measures
In addition to results presented in accordance with generally accepted accounting principles in the United States of America (GAAP), this press release contains certain non-GAAP financial measures. The Company believes that certain non-GAAP financial measures provide investors with information useful in understanding the Company’s financial performance; however, readers of this report are urged to review these non-GAAP financial measures in conjunction with the GAAP results as reported.
The Company recognizes gains or losses on its junior subordinated debentures carried at fair value resulting from changes in interest rates and the estimated market credit risk adjusted spread that do not directly correlate with the Company’s operating performance. Also, the Company incurs significant expenses related to the completion and integration of mergers and acquisitions. Additionally, it may recognize goodwill impairment losses that have no direct effect on the Company’s or the Bank’s cash balances, liquidity, or regulatory capital ratios. Lastly, the Company may recognize one-time bargain purchase gains on certain acquisitions that are not reflective of the Company’s on-going earnings power. Accordingly, management believes that our operating results are best measured on a comparative basis excluding the impact of gains or losses on junior subordinated debentures measured at fair value, net of tax, merger-related expenses, net of tax, and other charges related to business combinations such as goodwill impairment charges or bargain purchase gains, net of tax. The Company defines operating earnings as earnings available to common shareholders before gains or losses on junior subordinated debentures carried at fair value, net of tax, bargain purchase gains on acquisitions, net of tax, merger related expenses, net of tax, and goodwill impairment, and we calculate operating earnings per diluted share by dividing operating earnings by the same diluted share total used in determining diluted earnings per common share.
The following table provides the reconciliation of earnings available to common shareholders (GAAP) to operating earnings (non-GAAP), and earnings per diluted common share (GAAP) to operating earnings per diluted share (non-GAAP) for the periods presented:
Quarter Ended: | % Change | |||||||||||||||||||||||||
(Dollars in thousands, except per share data) | Jun 30, | Mar 31, | Dec 31, | Sep 30, | Jun 30, | Seq. | Year over | |||||||||||||||||||
Net earnings available to common shareholders | $ | 17,138 | $ | 18,651 | $ | 25,058 | $ | 23,281 | $ | 26,056 | (8 | )% | (34 | )% | ||||||||||||
Adjustments: | ||||||||||||||||||||||||||
Net loss on junior subordinated debentures carried at fair value, net of tax (1) | 821 | 325 | 332 | 332 | 328 | 153 | % | 150 | % | |||||||||||||||||
Merger related expenses, net of tax (1) | 35,926 | 5,073 | 2,502 | 2,914 | 486 | 608 | % | nm | ||||||||||||||||||
Operating earnings | $ | 53,885 | $ | 24,049 | $ | 27,892 | $ | 26,527 | $ | 26,870 | 124 | % | 101 | % | ||||||||||||
Earnings per diluted share: | ||||||||||||||||||||||||||
Earnings available to common shareholders | $ | 0.09 | $ | 0.17 | $ | 0.22 | $ | 0.21 | $ | 0.23 | (47 | )% | (61 | )% | ||||||||||||
Operating earnings | $ | 0.27 | $ | 0.21 | $ | 0.25 | $ | 0.24 | $ | 0.24 | 29 | % | 13 | % | ||||||||||||
Six Months Ended: | % Change | |||||||||||||||||||||||||
Jun 30, | Jun 30, | Year over | ||||||||||||||||||||||||
Net earnings available to common shareholders | $ | 35,789 | $ | 49,234 | (27 | )% | ||||||||||||||||||||
Adjustments: | ||||||||||||||||||||||||||
Net loss on junior subordinated debentures carried at fair value, net of tax (1) | 1,147 | 653 | 76 | % | ||||||||||||||||||||||
Merger related expenses, net of tax (1) | 40,999 | 1,405 | nm | |||||||||||||||||||||||
Operating earnings | $ | 77,935 | $ | 51,292 | 52 | % | ||||||||||||||||||||
Earnings per diluted share: | ||||||||||||||||||||||||||
Earnings available to common shareholders | $ | 0.23 | $ | 0.44 | (48 | )% | ||||||||||||||||||||
Operating earnings | $ | 0.50 | $ | 0.46 | 9 | % | ||||||||||||||||||||
(1) Income tax effect of pro forma operating earnings adjustments at 40% for tax-deductible items. | ||||||||||||||||||||||||||
nm = not meaningful. | ||||||||||||||||||||||||||
Management believes adjusted net interest income and adjusted net interest margin are useful financial measures because they enable investors to evaluate the underlying growth or compression in these values excluding interest income adjustments related to credit quality. Management uses these measures to evaluate adjusted net interest income operating results exclusive of credit costs, in order to monitor our effectiveness in growing higher interest yielding assets and managing our cost of interest bearing liabilities over time. Adjusted net interest income is calculated as net interest income, adjusting tax exempt interest income to its taxable equivalent, adding back interest and fee reversals related to new non-accrual loans during the period, and deducting the interest income gains recognized from loan disposition activities within covered loan pools. Adjusted net interest margin is calculated by dividing annualized adjusted net interest income by a period’s average interest earning assets.
The following table provides the reconciliation of net interest income (GAAP) to adjusted net interest income (non-GAAP), and net interest margin (GAAP) to adjusted net interest margin (non-GAAP) for the periods presented:
Quarter Ended: | % Change | ||||||||||||||||||||||||||
(Dollars in thousands) | Jun 30, 2014 | Mar 31, 2014 | Dec 31, 2013 | Sep 30, 2013 | Jun 30, 2013 | Seq. | Year over | ||||||||||||||||||||
Net interest income | $ | 212,259 | $ | 107,838 | $ | 110,074 | $ | 106,809 | $ | 93,893 | 97 | % | 126 | % | |||||||||||||
Tax equivalent adjustment (1) | 1,394 | 1,092 | 1,119 | 1,137 | 1,153 | 28 | % | 21 | % | ||||||||||||||||||
Net interest income (1) | 213,653 | 108,930 | 111,193 | 107,946 | 95,046 | 96 | % | 125 | % | ||||||||||||||||||
Adjustments: | |||||||||||||||||||||||||||
Interest and fee reversals (recoveries) on non-accrual loans | 450 | 122 | (399 | ) | 203 | 33 | 269 | % | nm | ||||||||||||||||||
Covered loan disposal gains | (7,128 | ) | (4,259 | ) | (3,908 | ) | (1,836 | ) | (4,237 | ) | 67 | % | 68 | % | |||||||||||||
Adjusted net interest income (1) | $ | 206,975 | $ | 104,793 | $ | 106,886 | $ | 106,313 | $ | 90,842 | 98 | % | 128 | % | |||||||||||||
Average interest earning assets | $ | 17,116,070 | $ | 10,310,116 | $ | 10,292,996 | $ | 10,136,677 | $ | 10,218,611 | 66 | % | 67 | % | |||||||||||||
Net interest margin – consolidated (1) | 5.01 | % | 4.28 | % | 4.29 | % | 4.22 | % | 3.73 | % | |||||||||||||||||
Adjusted net interest margin – consolidated (1) | 4.85 | % | 4.12 | % | 4.12 | % | 4.16 | % | 3.57 | % | |||||||||||||||||
Six Months Ended: | % Change | ||||||||||||||||||||||||||
Jun 30, 2014 | Jun 30, 2013 | Year over Year | |||||||||||||||||||||||||
Net interest income | $ | 320,097 | $ | 188,082 | 70 | % | |||||||||||||||||||||
Tax equivalent adjustment (1) | 2,486 | 2,323 | 7 | % | |||||||||||||||||||||||
Net interest income (1) | 322,583 | 190,405 | 69 | % | |||||||||||||||||||||||
Adjustments: | |||||||||||||||||||||||||||
Interest and fee reversals on non-accrual loans | 572 | 1,118 | (49 | )% | |||||||||||||||||||||||
Covered loan disposal gains | (11,387 | ) | (7,391 | ) | 54 | % | |||||||||||||||||||||
Adjusted net interest income (1) | $ | 311,768 | $ | 184,132 | 69 | % | |||||||||||||||||||||
Average interest earning assets | $ | 13,731,892 | $ | 10,234,539 | 34 | % | |||||||||||||||||||||
Net interest margin – consolidated (1) | 4.74 | % | 3.75 | % | |||||||||||||||||||||||
Adjusted net interest margin – consolidated (1) | 4.58 | % | 3.63 | % | |||||||||||||||||||||||
(1) Tax equivalent basis. Tax exempt interest has been adjusted to a taxable equivalent basis using a 35% tax rate. | |||||||||||||||||||||||||||
nm = not meaningful. | |||||||||||||||||||||||||||
Management believes tangible common equity and the tangible common equity ratio are meaningful measures of capital adequacy because they provide a meaningful base for period-to-period and company-to-company comparisons, which management believes will assist investors in assessing the capital of the Company and the ability to absorb potential losses. Tangible common equity is calculated as total shareholders' equity less goodwill and other intangible assets, net (excluding MSRs). Tangible assets are total assets less goodwill and other intangible assets, net (excluding MSRs). The tangible common equity ratio is calculated as tangible common shareholders’ equity divided by tangible assets.
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) | Jun 30, 2014 | Mar 31, 2014 | Dec 31, 2013 | Sep 30, 2013 | Jun 30, 2013 | |||||||||||||||
Total shareholders' equity | $ | 3,729,060 | $ | 1,734,476 | $ | 1,727,426 | $ | 1,725,995 | $ | 1,715,352 | ||||||||||
Subtract: | ||||||||||||||||||||
Goodwill and other intangible assets, net | 1,842,670 | 775,488 | 776,683 | 778,094 | 682,971 | |||||||||||||||
Tangible common shareholders' equity | $ | 1,886,390 | $ | 958,988 | $ | 950,743 | $ | 947,901 | $ | 1,032,381 | ||||||||||
Total assets | $ | 22,042,229 | $ | 11,838,726 | $ | 11,636,112 | $ | 11,569,297 | $ | 11,392,208 | ||||||||||
Subtract: | ||||||||||||||||||||
Goodwill and other intangible assets, net | 1,842,670 | 775,488 | 776,683 | 778,094 | 682,971 | |||||||||||||||
Tangible assets | $ | 20,199,559 | $ | 11,063,238 | $ | 10,859,429 | $ | 10,791,203 | $ | 10,709,237 | ||||||||||
Common shares outstanding at period end | 217,190,721 | 112,319,525 | 111,973,203 | 111,928,762 | 111,898,620 | |||||||||||||||
Tangible common equity ratio | 9.34 | % | 8.67 | % | 8.75 | % | 8.78 | % | 9.64 | % | ||||||||||
Tangible book value per common share | $ | 8.69 | $ | 8.54 | $ | 8.49 | $ | 8.47 | $ | 9.23 | ||||||||||
About Umpqua Holdings Corporation
Umpqua Holdings Corporation (NASDAQ: UMPQ) is the parent company of Umpqua Bank, an Oregon-based community bank recognized for its entrepreneurial approach, innovative use of technology, and distinctive banking solutions. Umpqua Bank has locations across Idaho, Washington, Oregon, California and Northern Nevada. Umpqua Holdings also owns a retail brokerage subsidiary, Umpqua Investments, Inc., which has locations in Umpqua Bank stores and in dedicated offices in Oregon. Umpqua Private Bank serves high net worth individuals and nonprofits, providing trust and investment services. Umpqua Holdings Corporation is headquartered in Portland, Oregon. For more information, visit www.umpquaholdingscorp.com.
Earnings Conference Call Information
The Company will host its second quarter 2014 earnings conference call on Thursday, July 24, 2014, at 10:00 a.m. PST (1:00 p.m. EST). During the call, the Company will provide an update on recent activities and discuss its second quarter 2014 financial results. There will be a live question-and-answer session following the presentation. To join the call, please dial (888) 349-9582 ten minutes prior to the start time and enter conference ID: 3191295. A re-broadcast will be available approximately two hours after the call by dialing (888) 203-1112 and entering conference ID 3191295. The earnings conference call will also be available as an audiocast, which can be accessed on the Company’s investor relations page at www.umpquaholdingscorp.com. A slide presentation to accompany the call will also be posted on the website before the call.
Forward-Looking Statements
This press release includes forward-looking statements within the meaning of the “Safe-Harbor” provisions of the Private Securities Litigation Reform Act of 1995, which management believes are a benefit to shareholders. These statements are necessarily subject to risk and uncertainty and actual results could differ materially due to various risk factors, including those set forth from time to time in our filings with the SEC. You should not place undue reliance on forward-looking statements and we undertake no obligation to update any such statements. In this press release we make forward-looking statements about size and growth potential from the acquisition of Sterling Financial Corporation; the integration of the merger with Sterling Financial Corporation; merger-related synergies and systems conversions; and credit discount accretion related to the merger. Specific risks that could cause results to differ from the forward-looking statements are set forth in our filings with the SEC and include, without limitation, changes in the discounted cash flow model used to determine the fair value of subordinated debentures; prolonged low interest rate environment; unanticipated weakness in loan demand or loan pricing; deterioration in the economy; material reductions in revenue or material increases in expenses; lack of strategic growth opportunities or our failure to execute on those opportunities; our inability to effectively manage problem credits; certain loan assets becoming ineligible for loss sharing; unanticipated increases in the cost of deposits; the consequences of a phase-out of junior subordinated debentures from Tier 1 capital; Umpqua’s ability to achieve the synergies and earnings accretion contemplated by the Sterling merger; Umpqua’s ability to promptly and effectively integrate the businesses of Sterling and Umpqua and complete system conversions; the diversion of management time on issues related to merger integration; changes in laws or regulations; and changes in general economic conditions.
Umpqua Holdings Corporation | ||||||||||||||||||||||||||
Consolidated Statements of Income | ||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||
Quarter Ended: | % Change | |||||||||||||||||||||||||
(In thousands, except per share data) | Jun 30, | Mar 31, | Dec 31, | Sep 30, | Jun 30, | Seq. | Year over | |||||||||||||||||||
Interest income: | ||||||||||||||||||||||||||
Non-covered loans and leases | $ | 193,061 | $ | 91,268 | $ | 93,032 | $ | 93,706 | $ | 78,434 | 112 | % | 146 | % | ||||||||||||
Covered loans and leases | 15,931 | 12,718 | 13,330 | 11,837 | 14,750 | 25 | % | 8 | % | |||||||||||||||||
Interest and dividends on investments: | ||||||||||||||||||||||||||
Taxable | 12,712 | 9,291 | 9,517 | 7,882 | 8,103 | 37 | % | 57 | % | |||||||||||||||||
Exempt from federal income tax | 2,653 | 2,112 | 2,173 | 2,200 | 2,237 | 26 | % | 19 | % | |||||||||||||||||
Dividends | 128 | 50 | 87 | 51 | 90 | 156 | % | 42 | % | |||||||||||||||||
Temporary investments & interest bearing deposits | 482 | 441 | 399 | 284 | 401 | 9 | % | 20 | % | |||||||||||||||||
Total interest income | 224,967 | 115,880 | 118,538 | 115,960 | 104,015 | 94 | % | 116 | % | |||||||||||||||||
Interest expense: | ||||||||||||||||||||||||||
Deposits | 6,075 | 3,848 | 4,168 | 4,845 | 5,864 | 58 | % | 4 | % | |||||||||||||||||
Repurchase agreements and fed funds purchased | 203 | 41 | 42 | 35 | 33 | 395 | % | 515 | % | |||||||||||||||||
Term debt | 3,364 | 2,273 | 2,332 | 2,338 | 2,305 | 48 | % | 46 | % | |||||||||||||||||
Junior subordinated debentures | 3,066 | 1,880 | 1,922 | 1,933 | 1,920 | 63 | % | 60 | % | |||||||||||||||||
Total interest expense | 12,708 | 8,042 | 8,464 | 9,151 | 10,122 | 58 | % | 26 | % | |||||||||||||||||
Net interest income | 212,259 | 107,838 | 110,074 | 106,809 | 93,893 | 97 | % | 126 | % | |||||||||||||||||
Provision for non-covered loan and lease losses | 15,399 | 5,400 | 3,840 | 3,008 | 2,993 | 185 | % | 415 | % | |||||||||||||||||
(Recapture of) provision for covered loan and lease losses | (703 | ) | 571 | (1,369 | ) | (1,904 | ) | (3,072 | ) | (223 | )% | (77 | )% | |||||||||||||
Non-interest income: | ||||||||||||||||||||||||||
Service charges | 15,371 | 7,767 | 8,108 | 8,374 | 7,478 | 98 | % | 106 | % | |||||||||||||||||
Brokerage fees | 4,566 | 3,725 | 3,584 | 3,854 | 3,662 | 23 | % | 25 | % | |||||||||||||||||
Residential mortgage banking revenue, net | 24,341 | 10,439 | 15,957 | 15,071 | 24,289 | 133 | % | 0 | % | |||||||||||||||||
Net gain on investment securities | 976 | — | 191 | 3 | 8 | nm | nm | |||||||||||||||||||
Loss on junior subordinated debentures carried at fair value | (1,369 | ) | (542 | ) | (554 | ) | (554 | ) | (547 | ) | 153 | % | 150 | % | ||||||||||||
Change in FDIC indemnification asset | (5,601 | ) | (4,840 | ) | (5,708 | ) | (6,474 | ) | (8,294 | ) | 16 | % | (32 | )% | ||||||||||||
BOLI income | 1,967 | 736 | 621 | 763 | 910 | 167 | % | 116 | % | |||||||||||||||||
Other income | 4,278 | 5,722 | 4,586 | 5,107 | 6,991 | (25 | )% | (39 | )% | |||||||||||||||||
Total non-interest income | 44,529 | 23,007 | 26,785 | 26,144 | 34,497 | 94 | % | 29 | % | |||||||||||||||||
Non-interest expense: | ||||||||||||||||||||||||||
Salaries and employee benefits | 95,560 | 53,218 | 52,720 | 53,699 | 52,067 | 80 | % | 84 | % | |||||||||||||||||
Net occupancy and equipment | 28,746 | 16,501 | 16,254 | 16,019 | 15,059 | 74 | % | 91 | % | |||||||||||||||||
Intangible amortization | 2,808 | 1,194 | 1,186 | 1,186 | 1,205 | 135 | % | 133 | % | |||||||||||||||||
FDIC assessments | 2,575 | 1,863 | 1,922 | 1,709 | 1,672 | 38 | % | 54 | % | |||||||||||||||||
Net loss (gain) on non-covered other real estate owned | 178 | (18 | ) | 1,416 | (27 | ) | (146 | ) | nm | (222 | )% | |||||||||||||||
Net loss (gain) on covered other real estate owned | 80 | (46 | ) | (19 | ) | (68 | ) | (62 | ) | (274 | )% | (229 | )% | |||||||||||||
Merger related expenses | 57,531 | 5,983 | 1,639 | 4,856 | 810 | 862 | % | 7,003 | % | |||||||||||||||||
Other expense | 26,653 | 17,823 | 20,246 | 18,230 | 17,326 | 50 | % | 54 | % | |||||||||||||||||
Total non-interest expense | 214,131 | 96,518 | 95,364 | 95,604 | 87,931 | 122 | % | 144 | % | |||||||||||||||||
Income before provision for income taxes | 27,961 | 28,356 | 39,024 | 36,245 | 40,538 | (1 | )% | (31 | )% | |||||||||||||||||
Provision for income taxes | 10,740 | 9,592 | 13,754 | 12,768 | 14,285 | 12 | % | (25 | )% | |||||||||||||||||
Net income | 17,221 | 18,764 | 25,270 | 23,477 | 26,253 | (8 | )% | (34 | )% | |||||||||||||||||
Dividends and undistributed earnings allocated to participating securities | 83 | 113 | 212 | 196 | 197 | (27 | )% | (58 | )% | |||||||||||||||||
Net earnings available to common shareholders | $ | 17,138 | $ | 18,651 | $ | 25,058 | $ | 23,281 | $ | 26,056 | (8 | )% | (34 | )% | ||||||||||||
Weighted average basic shares outstanding | 196,312 | 112,170 | 111,949 | 111,912 | 111,954 | 75 | % | 75 | % | |||||||||||||||||
Weighted average diluted shares outstanding | 197,638 | 112,367 | 112,214 | 112,195 | 112,145 | 76 | % | 76 | % | |||||||||||||||||
Earnings per common share – basic | $ | 0.09 | $ | 0.17 | $ | 0.22 | $ | 0.21 | $ | 0.23 | (47 | )% | (61 | )% | ||||||||||||
Earnings per common share – diluted | $ | 0.09 | $ | 0.17 | $ | 0.22 | $ | 0.21 | $ | 0.23 | (47 | )% | (61 | )% | ||||||||||||
nm = not meaningful | ||||||||||||||||||||||||||
Umpqua Holdings Corporation | |||||||||||
Consolidated Statements of Income | |||||||||||
(Unaudited) | |||||||||||
Six Months Ended: | % Change | ||||||||||
(In thousands, except per share data) | Jun 30, 2014 | Jun 30, 2013 | Year over | ||||||||
Interest income | |||||||||||
Non-covered loans and leases | $ | 284,329 | $ | 156,979 | 81 | % | |||||
Covered loans and leases | 28,649 | 29,330 | (2 | )% | |||||||
Interest and dividends on investments: | |||||||||||
Taxable | 21,990 | 16,747 | 31 | % | |||||||
Exempt from federal income tax | 4,721 | 4,525 | 4 | % | |||||||
Dividends | 178 | 114 | 56 | % | |||||||
Temporary investments & interest bearing deposits | 980 | 653 | 50 | % | |||||||
Total interest income | 340,847 | 208,348 | 64 | % | |||||||
Interest expense | |||||||||||
Deposits | 9,923 | 11,742 | (15 | )% | |||||||
Repurchase agreements and fed funds purchased | 244 | 64 | 281 | % | |||||||
Term debt | 5,637 | 4,578 | 23 | % | |||||||
Junior subordinated debentures | 4,946 | 3,882 | 27 | % | |||||||
Total interest expense | 20,750 | 20,266 | 2 | % | |||||||
Net interest income | 320,097 | 188,082 | 70 | % | |||||||
Provision for non-covered loan and lease losses | 20,799 | 9,981 | 108 | % | |||||||
Recapture of provision for covered loan and lease losses | (132 | ) | (2,840 | ) | (95 | )% | |||||
Non-interest income | |||||||||||
Service charges | 23,138 | 14,470 | 60 | % | |||||||
Brokerage fees | 8,291 | 7,298 | 14 | % | |||||||
Residential mortgage banking revenue, net | 34,780 | 47,857 | (27 | )% | |||||||
Net gain on investment securities | 976 | 15 | nm | ||||||||
Loss on junior subordinated debentures carried at fair value | (1,911 | ) | (1,089 | ) | 75 | % | |||||
Change in FDIC indemnification asset | (10,441 | ) | (13,367 | ) | (22 | )% | |||||
BOLI Income | 2,703 | 1,670 | 62 | % | |||||||
Other income | 10,000 | 11,658 | (14 | )% | |||||||
Total non-interest income | 67,536 | 68,512 | (1 | )% | |||||||
Non-interest expense | |||||||||||
Salaries and employee benefits | 148,776 | 103,572 | 44 | % | |||||||
Net occupancy and equipment | 45,247 | 29,794 | 52 | % | |||||||
Intangible amortization | 4,002 | 2,409 | 66 | % | |||||||
FDIC assessments | 4,438 | 3,323 | 34 | % | |||||||
Net loss (gain) on non-covered other real estate owned | 160 | (276 | ) | nm | |||||||
Net loss on covered other real estate owned | 34 | 222 | (85 | )% | |||||||
Merger related expenses | 63,514 | 2,341 | nm | ||||||||
Other expense | 44,478 | 32,308 | 38 | % | |||||||
Total non-interest expense | 310,649 | 173,693 | 79 | % | |||||||
Income before provision for income taxes | 56,317 | 75,760 | (26 | )% | |||||||
Provision for income taxes | 20,332 | 26,146 | (22 | )% | |||||||
Net income | 35,985 | 49,614 | (27 | )% | |||||||
Dividends and undistributed earnings allocated to participating securities | 196 | 380 | (48 | )% | |||||||
Net earnings available to common shareholders | $ | 35,789 | $ | 49,234 | (27 | )% | |||||
Weighted average basic shares outstanding | 154,473 | 111,946 | 38 | % | |||||||
Weighted average diluted shares outstanding | 155,276 | 112,133 | 38 | % | |||||||
Earnings per common share – basic | $ | 0.23 | $ | 0.44 | (48 | )% | |||||
Earnings per common share – diluted | $ | 0.23 | $ | 0.44 | (48 | )% | |||||
nm = not meaningful | |||||||||||
Umpqua Holdings Corporation Consolidated Balance Sheets | ||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||
% Change | ||||||||||||||||||||||||||
(In thousands, except per share data) | Jun 30, 2014 | Mar 31, 2014 | Dec 31, 2013 | Sep 30, 2013 | Jun 30, 2013 | Seq. | Year over | |||||||||||||||||||
Assets: | ||||||||||||||||||||||||||
Cash and due from banks | $ | 347,152 | $ | 196,963 | $ | 178,685 | $ | 193,188 | $ | 143,409 | 76 | % | 142 | % | ||||||||||||
Interest bearing deposits | 492,739 | 887,620 | 611,224 | 503,369 | 659,817 | (44 | )% | (25 | )% | |||||||||||||||||
Temporary investments | 529 | 525 | 514 | 534 | 1,768 | 1 | % | (70 | )% | |||||||||||||||||
Investment securities: | ||||||||||||||||||||||||||
Trading, at fair value | 9,420 | 4,498 | 5,958 | 4,012 | 3,863 | 109 | % | 144 | % | |||||||||||||||||
Available for sale, at fair value | 2,588,969 | 1,701,730 | 1,790,978 | 1,910,082 | 2,083,755 | 52 | % | 24 | % | |||||||||||||||||
Held to maturity, at amortized cost | 5,519 | 5,465 | 5,563 | 5,766 | 3,741 | 1 | % | 48 | % | |||||||||||||||||
Loans held for sale | 322,912 | 73,106 | 104,664 | 113,993 | 173,994 | 342 | % | 86 | % | |||||||||||||||||
Non-covered loans and leases | 14,830,345 | 7,411,108 | 7,354,403 | 7,228,904 | 6,787,117 | 100 | % | 119 | % | |||||||||||||||||
Allowance for non-covered loan and lease losses | (97,995 | ) | (86,709 | ) | (85,314 | ) | (84,694 | ) | (85,836 | ) | 13 | % | 14 | % | ||||||||||||
Non-covered loans and leases, net | 14,732,350 | 7,324,399 | 7,269,089 | 7,144,210 | 6,701,281 | 101 | % | 120 | % | |||||||||||||||||
Covered loans and leases, net | 297,610 | 342,263 | 363,992 | 397,083 | 419,059 | (13 | )% | (29 | )% | |||||||||||||||||
Restricted equity securities | 122,194 | 29,948 | 30,685 | 31,444 | 32,112 | 308 | % | 281 | % | |||||||||||||||||
Premises and equipment, net | 310,407 | 180,199 | 177,680 | 173,876 | 170,145 | 72 | % | 82 | % | |||||||||||||||||
Goodwill | 1,779,732 | 764,304 | 764,305 | 764,530 | 668,218 | 133 | % | 166 | % | |||||||||||||||||
Other intangible assets, net | 62,938 | 11,184 | 12,378 | 13,564 | 14,753 | 463 | % | 327 | % | |||||||||||||||||
Residential mortgage servicing rights, at fair value | 114,192 | 49,220 | 47,765 | 41,853 | 38,192 | 132 | % | 199 | % | |||||||||||||||||
Non-covered other real estate owned | 26,172 | 22,034 | 21,833 | 18,249 | 13,235 | 19 | % | 98 | % | |||||||||||||||||
Covered other real estate owned | 1,810 | 1,746 | 2,102 | 2,980 | 3,484 | 4 | % | (48 | )% | |||||||||||||||||
FDIC indemnification asset | 11,293 | 18,362 | 23,174 | 29,427 | 36,263 | (38 | )% | (69 | )% | |||||||||||||||||
Bank owned life insurance | 292,714 | 97,589 | 96,938 | 96,276 | 95,459 | 200 | % | 207 | % | |||||||||||||||||
Deferred tax assets, net | 259,993 | 11,393 | 16,627 | 20,342 | 22,747 | nm | nm | |||||||||||||||||||
Other assets | 263,584 | 116,178 | 111,958 | 104,519 | 106,913 | 127 | % | 147 | % | |||||||||||||||||
Total assets | $ | 22,042,229 | $ | 11,838,726 | $ | 11,636,112 | $ | 11,569,297 | $ | 11,392,208 | 86 | % | 93 | % | ||||||||||||
Liabilities: | ||||||||||||||||||||||||||
Deposits | $ | 16,323,000 | $ | 9,273,583 | $ | 9,117,660 | $ | 9,067,240 | $ | 8,956,325 | 76 | % | 82 | % | ||||||||||||
Securities sold under agreements to repurchase | 315,025 | 262,483 | 224,882 | 215,310 | 176,447 | 20 | % | 79 | % | |||||||||||||||||
Term debt | 1,057,915 | 250,964 | 251,494 | 252,017 | 252,543 | 322 | % | 319 | % | |||||||||||||||||
Junior subordinated debentures, at fair value | 246,077 | 87,800 | 87,274 | 86,718 | 86,159 | 180 | % | 186 | % | |||||||||||||||||
Junior subordinated debentures, at amortized cost | 101,737 | 101,818 | 101,899 | 101,979 | 102,060 | 0 | % | 0 | % | |||||||||||||||||
Other liabilities | 269,415 | 127,602 | 125,477 | 120,038 | 103,322 | 111 | % | 161 | % | |||||||||||||||||
Total liabilities | 18,313,169 | 10,104,250 | 9,908,686 | 9,843,302 | 9,676,856 | 81 | % | 89 | % | |||||||||||||||||
Shareholders' equity: | ||||||||||||||||||||||||||
Common stock | 3,512,507 | 1,514,969 | 1,514,485 | 1,513,225 | 1,512,657 | 132 | % | 132 | % | |||||||||||||||||
Retained earnings | 204,109 | 219,686 | 217,917 | 209,597 | 203,058 | (7 | )% | 1 | % | |||||||||||||||||
Accumulated other comprehensive income (loss) | 12,444 | (179 | ) | (4,976 | ) | 3,173 | (363 | ) | nm | nm | ||||||||||||||||
Total shareholders' equity | 3,729,060 | 1,734,476 | 1,727,426 | 1,725,995 | 1,715,352 | 115 | % | 117 | % | |||||||||||||||||
Total liabilities and shareholders' equity | $ | 22,042,229 | $ | 11,838,726 | $ | 11,636,112 | $ | 11,569,297 | $ | 11,392,208 | 86 | % | 93 | % | ||||||||||||
Common shares outstanding at period end | 217,190,721 | 112,319,525 | 111,973,203 | 111,928,762 | 111,898,620 | 93 | % | 94 | % | |||||||||||||||||
Book value per common share | $ | 17.17 | $ | 15.44 | $ | 15.43 | $ | 15.42 | $ | 15.33 | 11 | % | (100 | )% | ||||||||||||
Tangible book value per common share | $ | 8.69 | $ | 8.54 | $ | 8.49 | $ | 8.47 | $ | 9.23 | 2 | % | (100 | )% | ||||||||||||
Tangible equity - common | $ | 1,886,390 | $ | 958,988 | $ | 950,743 | $ | 947,901 | $ | 1,032,381 | 97 | % | 83 | % | ||||||||||||
Tangible common equity to tangible assets | 9.34 | % | 8.67 | % | 8.75 | % | 8.78 | % | 9.64 | % | 8 | % | (3 | )% | ||||||||||||
nm = not meaningful | ||||||||||||||||||||||||||
Umpqua Holdings Corporation | ||||||||||||||||||||||||||
Non-covered Loan & Lease Portfolio | ||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||
(Dollars in thousands) | Jun 30, 2014 | Mar 31, 2014 | Dec 31, 2013 | Sep 30, 2013 | Jun 30, 2013 | % Change | ||||||||||||||||||||
Amount | Amount | Amount | Amount | Amount | Seq. | Year over | ||||||||||||||||||||
Non-covered loans & leases: | ||||||||||||||||||||||||||
Commercial real estate: | ||||||||||||||||||||||||||
Non-owner occupied term, net | $ | 3,348,029 | $ | 2,311,952 | $ | 2,328,260 | $ | 2,382,430 | $ | 2,341,657 | 45 | % | 43 | % | ||||||||||||
Owner occupied term, net | 2,666,128 | 1,282,482 | 1,259,583 | 1,230,417 | 1,221,853 | 108 | % | 118 | % | |||||||||||||||||
Multifamily, net | 2,482,995 | 400,927 | 403,537 | 379,395 | 353,852 | 519 | % | 602 | % | |||||||||||||||||
Commercial construction, net | 261,767 | 229,262 | 245,231 | 246,583 | 225,747 | 14 | % | 16 | % | |||||||||||||||||
Residential development, net | 91,690 | 89,510 | 88,413 | 78,756 | 66,607 | 2 | % | 38 | % | |||||||||||||||||
Commercial: | ||||||||||||||||||||||||||
Term, net | 1,104,206 | 735,004 | 770,845 | 768,926 | 769,647 | 50 | % | 43 | % | |||||||||||||||||
Lines of credit & other, net | 1,322,167 | 1,005,800 | 987,360 | 950,954 | 941,673 | 31 | % | 40 | % | |||||||||||||||||
Leases & equipment finance, net | 463,784 | 388,418 | 361,591 | 335,580 | 51,924 | 19 | % | 793 | % | |||||||||||||||||
Residential real estate: | ||||||||||||||||||||||||||
Mortgage, net | 1,958,597 | 651,042 | 597,201 | 553,285 | 511,446 | 201 | % | 283 | % | |||||||||||||||||
Home equity lines & loans, net | 799,171 | 268,497 | 264,269 | 258,610 | 260,382 | 198 | % | 207 | % | |||||||||||||||||
Consumer & other, net | 331,811 | 48,214 | 48,113 | 43,968 | 42,329 | 588 | % | 684 | % | |||||||||||||||||
Total, net of deferred fees and costs | $ | 14,830,345 | $ | 7,411,108 | $ | 7,354,403 | $ | 7,228,904 | $ | 6,787,117 | 100 | % | 119 | % | ||||||||||||
Non-covered loan & leases mix: | ||||||||||||||||||||||||||
Commercial real estate: | ||||||||||||||||||||||||||
Non-owner occupied term | 23 | % | 31 | % | 33 | % | 32 | % | 34 | % | ||||||||||||||||
Owner occupied term | 18 | % | 17 | % | 17 | % | 17 | % | 18 | % | ||||||||||||||||
Multifamily | 17 | % | 5 | % | 5 | % | 5 | % | 5 | % | ||||||||||||||||
Commercial construction | 2 | % | 3 | % | 3 | % | 3 | % | 3 | % | ||||||||||||||||
Residential development | 1 | % | 1 | % | 1 | % | 1 | % | 1 | % | ||||||||||||||||
Commercial: | ||||||||||||||||||||||||||
Term | 7 | % | 10 | % | 10 | % | 11 | % | 11 | % | ||||||||||||||||
Lines of credit & other | 9 | % | 14 | % | 13 | % | 13 | % | 14 | % | ||||||||||||||||
Leases & equipment finance | 3 | % | 5 | % | 5 | % | 5 | % | 1 | % | ||||||||||||||||
Residential real estate: | ||||||||||||||||||||||||||
Mortgage | 13 | % | 9 | % | 8 | % | 8 | % | 8 | % | ||||||||||||||||
Home equity lines & loans | 5 | % | 4 | % | 4 | % | 4 | % | 4 | % | ||||||||||||||||
Consumer & other | 2 | % | 1 | % | 1 | % | 1 | % | 1 | % | ||||||||||||||||
Total | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % |
Umpqua Holdings Corporation | ||||||||||||||||||||||||||
Covered Loan & Lease Portfolio, Net | ||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||
(Dollars in thousands) | Jun 30, 2014 | Mar 31, 2014 | Dec 31, 2013 | Sep 30, 2013 | Jun 30, 2013 | % Change | ||||||||||||||||||||
Amount | Amount | Amount | Amount | Amount | Seq. | Year over | ||||||||||||||||||||
Covered loans & leases: | ||||||||||||||||||||||||||
Commercial real estate: | ||||||||||||||||||||||||||
Non-owner occupied term, net | $ | 166,969 | $ | 197,067 | $ | 204,052 | $ | 216,354 | $ | 229,874 | (15 | )% | (27 | )% | ||||||||||||
Owner occupied term, net | 47,034 | 48,447 | 48,673 | 54,332 | 57,446 | (3 | )% | (18 | )% | |||||||||||||||||
Multifamily, net | 23,409 | 27,079 | 37,185 | 40,052 | 40,891 | (14 | )% | (43 | )% | |||||||||||||||||
Commercial construction, net | 1,972 | 2,779 | 2,803 | 6,654 | 6,783 | (29 | )% | (71 | )% | |||||||||||||||||
Residential development, net | 2,562 | 6,083 | 6,311 | 7,468 | 7,025 | (58 | )% | (64 | )% | |||||||||||||||||
Commercial: | ||||||||||||||||||||||||||
Term, net | 7,516 | 7,861 | 13,280 | 13,864 | 17,394 | (4 | )% | (57 | )% | |||||||||||||||||
Lines of credit & other, net | 8,357 | 8,929 | 6,302 | 10,583 | 9,503 | (6 | )% | (12 | )% | |||||||||||||||||
Residential real estate: | ||||||||||||||||||||||||||
Mortgage, net | 18,272 | 21,664 | 22,175 | 23,161 | 24,879 | (16 | )% | (27 | )% | |||||||||||||||||
Home equity lines & loans, net | 17,736 | 18,501 | 19,119 | 20,037 | 20,769 | (4 | )% | (15 | )% | |||||||||||||||||
Consumer & other, net | 3,783 | 3,853 | 4,092 | 4,578 | 4,495 | (2 | )% | (16 | )% | |||||||||||||||||
Total, net | $ | 297,610 | $ | 342,263 | $ | 363,992 | $ | 397,083 | $ | 419,059 | (13 | )% | (29 | )% | ||||||||||||
Covered loans & leases Mix: | ||||||||||||||||||||||||||
Commercial real estate: | ||||||||||||||||||||||||||
Non-owner occupied term | 55 | % | 58 | % | 56 | % | 54 | % | 54 | % | ||||||||||||||||
Owner occupied term | 16 | % | 14 | % | 13 | % | 14 | % | 14 | % | ||||||||||||||||
Multifamily | 8 | % | 8 | % | 10 | % | 10 | % | 10 | % | ||||||||||||||||
Commercial construction | 1 | % | 1 | % | 1 | % | 2 | % | 2 | % | ||||||||||||||||
Residential development | 1 | % | 2 | % | 2 | % | 2 | % | 2 | % | ||||||||||||||||
Commercial: | ||||||||||||||||||||||||||
Term | 3 | % | 2 | % | 4 | % | 3 | % | 4 | % | ||||||||||||||||
Lines of credit & other | 3 | % | 3 | % | 2 | % | 3 | % | 2 | % | ||||||||||||||||
Residential real estate: | ||||||||||||||||||||||||||
Mortgage | 6 | % | 6 | % | 6 | % | 6 | % | 6 | % | ||||||||||||||||
Home equity lines & loans | 6 | % | 5 | % | 5 | % | 5 | % | 5 | % | ||||||||||||||||
Consumer & other | 1 | % | 1 | % | 1 | % | 1 | % | 1 | % | ||||||||||||||||
Total | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % |
Covered loan & lease portfolio balances represent the loan portfolios acquired through the assumption of Evergreen Bank on January 22, 2010, Rainier Pacific Bank on February 26, 2010, and Nevada Security Bank on June 18, 2010, from the FDIC through whole bank purchase and assumption agreements with loss sharing.
Umpqua Holdings Corporation | ||||||||||||||||||||||||||
Deposits by Type/Core Deposits | ||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||
(Dollars in thousands) | Jun 30, 2014 | Mar 31, 2014 | Dec 31, 2013 | Sep 30, 2013 | Jun 30, 2013 | % Change | ||||||||||||||||||||
Amount | Amount | Amount | Amount | Amount | Seq. | Year over | ||||||||||||||||||||
Deposits: | ||||||||||||||||||||||||||
Demand, non-interest bearing | $ | 4,363,710 | $ | 2,465,606 | $ | 2,436,477 | $ | 2,421,008 | $ | 2,218,536 | 77 | % | 97 | % | ||||||||||||
Demand, interest bearing | 1,869,626 | 1,182,634 | 1,233,070 | 1,179,351 | 1,128,361 | 58 | % | 66 | % | |||||||||||||||||
Money market | 5,973,197 | 3,526,368 | 3,349,946 | 3,283,085 | 3,254,117 | 69 | % | 84 | % | |||||||||||||||||
Savings | 912,073 | 578,238 | 560,699 | 551,327 | 513,317 | 58 | % | 78 | % | |||||||||||||||||
Time | 3,204,394 | 1,520,737 | 1,537,468 | 1,632,469 | 1,841,994 | 111 | % | 74 | % | |||||||||||||||||
Total | $ | 16,323,000 | $ | 9,273,583 | $ | 9,117,660 | $ | 9,067,240 | $ | 8,956,325 | 76 | % | 82 | % | ||||||||||||
Total core deposits (1) | $ | 14,171,946 | $ | 8,205,636 | $ | 8,052,280 | $ | 7,926,734 | $ | 7,655,237 | 73 | % | 85 | % | ||||||||||||
Deposit mix: | ||||||||||||||||||||||||||
Demand, non-interest bearing | 26 | % | 27 | % | 26 | % | 27 | % | 24 | % | ||||||||||||||||
Demand, interest bearing | 11 | % | 13 | % | 14 | % | 13 | % | 13 | % | ||||||||||||||||
Money market | 37 | % | 38 | % | 37 | % | 36 | % | 36 | % | ||||||||||||||||
Savings | 6 | % | 6 | % | 6 | % | 6 | % | 6 | % | ||||||||||||||||
Time | 20 | % | 16 | % | 17 | % | 18 | % | 21 | % | ||||||||||||||||
Total | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | ||||||||||||||||
Number of open accounts: | ||||||||||||||||||||||||||
Demand, non-interest bearing | 363,378 | 190,298 | 187,088 | 186,975 | 187,026 | |||||||||||||||||||||
Demand, interest bearing | 88,162 | 46,291 | 48,643 | 49,226 | 50,136 | |||||||||||||||||||||
Money market | 65,216 | 34,913 | 35,303 | 35,909 | 36,555 | |||||||||||||||||||||
Savings | 149,877 | 84,686 | 84,144 | 84,448 | 84,784 | |||||||||||||||||||||
Time | 56,285 | 22,755 | 23,688 | 24,618 | 26,653 | |||||||||||||||||||||
Total | 722,918 | 378,943 | 378,866 | 381,176 | 385,154 | |||||||||||||||||||||
Average balance per account: | ||||||||||||||||||||||||||
Demand, non-interest bearing | $ | 12.3 | $ | 13.0 | $ | 13.0 | $ | 12.9 | $ | 11.9 | ||||||||||||||||
Demand, interest bearing | 21.2 | 25.5 | 25.3 | 24.0 | 22.5 | |||||||||||||||||||||
Money market | 91.6 | 101.0 | 94.9 | 91.4 | 89.0 | |||||||||||||||||||||
Savings | 6.1 | 6.8 | 6.7 | 6.5 | 6.1 | |||||||||||||||||||||
Time | 56.9 | 66.8 | 64.9 | 66.3 | 69.1 | |||||||||||||||||||||
Total | $ | 22.7 | $ | 24.5 | $ | 24.1 | $ | 23.8 | $ | 23.3 | ||||||||||||||||
(1) Core deposits are defined as total deposits less time deposits greater than $100,000. | ||||||||||||||||||||||||||
Umpqua Holdings Corporation | ||||||||||||||||||||||||||
Credit Quality – Non-performing Assets | ||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||
Quarter Ended: | % Change | |||||||||||||||||||||||||
(Dollars in thousands) | Jun 30, 2014 | Mar 31, 2014 | Dec 31, 2013 | Sep 30, 2013 | Jun 30, 2013 | Seq. | Year over | |||||||||||||||||||
Non-covered, non-performing assets: | ||||||||||||||||||||||||||
Non-covered loans and leases on non-accrual status | $ | 48,358 | $ | 37,884 | $ | 31,891 | $ | 39,805 | $ | 48,855 | 28 | % | (1 | )% | ||||||||||||
Non-covered loans and leases past due 90+ days & accruing | 4,919 | 2,269 | 3,430 | 4,936 | 6,052 | 117 | % | (19 | )% | |||||||||||||||||
Total non-performing loans and leases | 53,277 | 40,153 | 35,321 | 44,741 | 54,907 | 33 | % | (3 | )% | |||||||||||||||||
Non-covered other real estate owned | 26,172 | 22,034 | 21,833 | 18,249 | 13,235 | 19 | % | 98 | % | |||||||||||||||||
Total | $ | 79,449 | $ | 62,187 | $ | 57,154 | $ | 62,990 | $ | 68,142 | 28 | % | 17 | % | ||||||||||||
Non-covered performing restructured loans and leases | $ | 67,464 | $ | 67,897 | $ | 68,791 | $ | 69,497 | $ | 73,884 | (1 | )% | (9 | )% | ||||||||||||
Non-covered loans and leases past due 31-89 days | $ | 28,913 | $ | 29,416 | $ | 15,290 | $ | 22,060 | $ | 21,964 | (2 | )% | 32 | % | ||||||||||||
Non-covered loans and leases past due 31-89 days to non-covered loans and leases | 0.19 | % | 0.40 | % | 0.21 | % | 0.31 | % | 0.32 | % | ||||||||||||||||
Non-covered, non-performing loans and leases to non-covered loans and leases | 0.36 | % | 0.54 | % | 0.48 | % | 0.62 | % | 0.81 | % | ||||||||||||||||
Non-covered, non-performing assets to total assets | 0.36 | % | 0.53 | % | 0.49 | % | 0.54 | % | 0.60 | % | ||||||||||||||||
Covered non-performing assets: | ||||||||||||||||||||||||||
Covered loans and leases on non-accrual status | $ | — | $ | — | $ | — | $ | — | $ | — | nm | nm | ||||||||||||||
Total non-performing loans and leases | — | — | — | — | — | nm | nm | |||||||||||||||||||
Covered other real estate owned | 1,810 | 1,746 | 2,102 | 2,980 | 3,484 | 4 | % | (48 | )% | |||||||||||||||||
Total | $ | 1,810 | $ | 1,746 | $ | 2,102 | $ | 2,980 | $ | 3,484 | 4 | % | (48 | )% | ||||||||||||
Covered non-performing loans and leases to covered loans and leases | — | % | — | % | — | % | — | % | — | % | ||||||||||||||||
Covered non-performing assets to total assets | 0.01 | % | 0.01 | % | 0.02 | % | 0.03 | % | 0.03 | % | ||||||||||||||||
Total non-performing assets: | ||||||||||||||||||||||||||
Loans and leases on non-accrual status | $ | 48,358 | $ | 37,884 | 31,891 | 39,805 | $ | 48,855 | 28 | % | (1 | )% | ||||||||||||||
Loans and leases past due 90+ days & accruing | 4,919 | 2,269 | 3,430 | 4,936 | 6,052 | 117 | % | (19 | )% | |||||||||||||||||
Total non-performing loans and leases | 53,277 | 40,153 | 35,321 | 44,741 | 54,907 | 33 | % | (3 | )% | |||||||||||||||||
Other real estate owned | 27,982 | 23,780 | 23,935 | 21,229 | 16,719 | 18 | % | 67 | % | |||||||||||||||||
Total | $ | 81,259 | $ | 63,933 | $ | 59,256 | $ | 65,970 | $ | 71,626 | 27 | % | 13 | % | ||||||||||||
Non-performing loans and leases to loans and leases | 0.35 | % | 0.52 | % | 0.46 | % | 0.59 | % | 0.76 | % | ||||||||||||||||
Non-performing assets to total assets | 0.37 | % | 0.54 | % | 0.51 | % | 0.57 | % | 0.63 | % | ||||||||||||||||
Umpqua Holdings Corporation | ||||||||||||||||||||||||||
Credit Quality – Allowance for Non-covered Credit Losses | ||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||
Quarter Ended: | % Change | |||||||||||||||||||||||||
(Dollars in thousands) | Jun 30, 2014 | Mar 31, 2014 | Dec 31, 2013 | Sep 30, 2013 | Jun 30, 2013 | Seq. | Year over | |||||||||||||||||||
Allowance for non-covered credit losses: | ||||||||||||||||||||||||||
Balance beginning of period | $ | 86,709 | $ | 85,314 | $ | 84,694 | $ | 85,836 | $ | 84,692 | ||||||||||||||||
Provision for non-covered loan and lease losses | 15,399 | 5,400 | 3,840 | 3,008 | 2,993 | 185 | % | 415 | % | |||||||||||||||||
Charge-offs | (5,814 | ) | (5,565 | ) | (11,349 | ) | (6,317 | ) | (4,604 | ) | 4 | % | 26 | % | ||||||||||||
Recoveries | 1,701 | 1,560 | 8,129 | 2,167 | 2,755 | 9 | % | (38 | )% | |||||||||||||||||
Net charge-offs | (4,113 | ) | (4,005 | ) | (3,220 | ) | (4,150 | ) | (1,849 | ) | 3 | % | 122 | % | ||||||||||||
Total allowance for non-covered loan and lease losses | 97,995 | 86,709 | 85,314 | 84,694 | 85,836 | 13 | % | 14 | % | |||||||||||||||||
Reserve for unfunded commitments | 4,845 | 1,417 | 1,436 | 1,375 | 1,327 | 242 | % | 265 | % | |||||||||||||||||
Total allowance for non-covered credit losses | $ | 102,840 | $ | 88,126 | $ | 86,750 | $ | 86,069 | $ | 87,163 | 17 | % | 18 | % | ||||||||||||
Net charge-offs to average non-covered loans and leases (annualized) | 0.12 | % | 0.22 | % | 0.18 | % | 0.23 | % | 0.11 | % | ||||||||||||||||
Recoveries to gross charge-offs | 29.26 | % | 28.03 | % | 71.63 | % | 34.30 | % | 59.84 | % | ||||||||||||||||
Allowance for non-covered loan losses to non-covered loans and leases | 0.66 | % | 1.17 | % | 1.16 | % | 1.17 | % | 1.26 | % | ||||||||||||||||
Allowance for non-covered credit losses to non-covered loans and leases | 0.69 | % | 1.19 | % | 1.18 | % | 1.19 | % | 1.28 | % | ||||||||||||||||
Six Months Ended: | % Change | |||||||||||||||||||||||||
(Dollars in thousands) | Jun 30, 2014 | Jun 30, 2013 | Year over | |||||||||||||||||||||||
Allowance for non-covered credit losses: | ||||||||||||||||||||||||||
Balance beginning of period | $ | 85,314 | $ | 85,391 | ||||||||||||||||||||||
Provision for non-covered loan and lease losses | 20,799 | 9,981 | 108 | % | ||||||||||||||||||||||
Charge-offs | (11,379 | ) | (13,329 | ) | (15 | )% | ||||||||||||||||||||
Recoveries | 3,261 | 3,793 | (14 | )% | ||||||||||||||||||||||
Net charge-offs | (8,118 | ) | (9,536 | ) | (15 | )% | ||||||||||||||||||||
Total allowance for non-covered loan and lease losses | 97,995 | 85,836 | 14 | % | ||||||||||||||||||||||
Reserve for unfunded commitments | 4,845 | 1,327 | 265 | % | ||||||||||||||||||||||
Total allowance for non-covered credit losses | $ | 102,840 | $ | 87,163 | 18 | % | ||||||||||||||||||||
Net charge-offs to average non-covered loans and leases (annualized) | 0.16 | % | 0.29 | % | ||||||||||||||||||||||
Recoveries to gross charge-offs | 28.66 | % | 28.46 | % | ||||||||||||||||||||||
Umpqua Holdings Corporation | |||||||||||||||||||||
Selected Ratios | |||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||
Quarter Ended: | % Change | ||||||||||||||||||||
Jun 30, | Mar 31, | Dec 31, | Sep 30, | Jun 30, | Seq. | Year over | |||||||||||||||
Average Rates: | |||||||||||||||||||||
Yield on non-covered loans and leases | 5.71 | % | 4.96 | % | 5.00 | % | 5.12 | % | 4.59 | % | 0.75 | 1.12 | |||||||||
Yield on covered loans and leases | 20.07 | % | 14.82 | % | 13.99 | % | 11.67 | % | 13.82 | % | 5.25 | 6.25 | |||||||||
Yield on taxable investments | 2.29 | % | 2.39 | % | 2.31 | % | 1.77 | % | 1.59 | % | (0.10 | ) | 0.70 | ||||||||
Yield on tax-exempt investments (1) | 5.19 | % | 5.54 | % | 5.56 | % | 5.62 | % | 5.34 | % | (0.35 | ) | (0.15 | ) | |||||||
Yield on temporary investments & interest bearing cash | 0.25 | % | 0.25 | % | 0.25 | % | 0.25 | % | 0.26 | % | — | (0.01 | ) | ||||||||
Total yield on earning assets (1) | 5.30 | % | 4.60 | % | 4.61 | % | 4.58 | % | 4.13 | % | 0.70 | 1.17 | |||||||||
Cost of interest bearing deposits | 0.22 | % | 0.23 | % | 0.25 | % | 0.29 | % | 0.35 | % | (0.01 | ) | (0.13 | ) | |||||||
Cost of securities sold under agreements to repurchase and fed funds purchased | 0.25 | % | 0.07 | % | 0.07 | % | 0.07 | % | 0.08 | % | 0.18 | 0.17 | |||||||||
Cost of term debt | 1.45 | % | 3.67 | % | 3.68 | % | 3.67 | % | 3.66 | % | (2.22 | ) | (2.21 | ) | |||||||
Cost of junior subordinated debentures | 3.87 | % | 4.03 | % | 4.04 | % | 4.08 | % | 4.10 | % | (0.16 | ) | (0.23 | ) | |||||||
Total cost of interest bearing liabilities | 0.41 | % | 0.44 | % | 0.46 | % | 0.50 | % | 0.55 | % | (0.03 | ) | (0.14 | ) | |||||||
Net interest spread (1) | 4.90 | % | 4.16 | % | 4.15 | % | 4.08 | % | 3.58 | % | 0.74 | 1.32 | |||||||||
Net interest margin – Consolidated (1) | 5.01 | % | 4.28 | % | 4.29 | % | 4.22 | % | 3.73 | % | 0.73 | 1.28 | |||||||||
Net interest margin – Bank (1) | 5.07 | % | 4.35 | % | 4.35 | % | 4.30 | % | 3.80 | % | 0.72 | 1.27 | |||||||||
As reported (GAAP): | |||||||||||||||||||||
Return on average assets | 0.34 | % | 0.65 | % | 0.86 | % | 0.81 | % | 0.91 | % | (0.31 | ) | (0.57 | ) | |||||||
Return on average tangible assets | 0.37 | % | 0.70 | % | 0.92 | % | 0.86 | % | 0.97 | % | (0.33 | ) | (0.60 | ) | |||||||
Return on average common equity | 2.05 | % | 4.35 | % | 5.73 | % | 5.36 | % | 6.04 | % | (2.30 | ) | (3.99 | ) | |||||||
Return on average tangible common equity | 4.06 | % | 7.86 | % | 10.38 | % | 9.79 | % | 10.00 | % | (3.80 | ) | (5.94 | ) | |||||||
Efficiency ratio – Consolidated | 82.94 | % | 73.15 | % | 69.12 | % | 71.30 | % | 67.88 | % | 9.79 | 15.06 | |||||||||
Efficiency ratio – Bank | 81.37 | % | 71.18 | % | 67.30 | % | 69.30 | % | 65.56 | % | 10.19 | 15.81 | |||||||||
Operating basis (non-GAAP): (2) | |||||||||||||||||||||
Return on average assets | 1.08 | % | 0.84 | % | 0.95 | % | 0.92 | % | 0.94 | % | 0.24 | 0.14 | |||||||||
Return on average tangible assets | 1.18 | % | 0.90 | % | 1.02 | % | 0.99 | % | 1.00 | % | 0.28 | 0.18 | |||||||||
Return on average common equity | 6.45 | % | 5.61 | % | 6.38 | % | 6.11 | % | 6.23 | % | 0.84 | 0.22 | |||||||||
Return on average tangible common equity | 12.76 | % | 10.13 | % | 11.56 | % | 11.15 | % | 10.31 | % | 2.63 | 2.45 | |||||||||
Efficiency ratio – Consolidated | 60.33 | % | 68.34 | % | 67.66 | % | 67.40 | % | 66.97 | % | (8.01 | ) | (6.64 | ) | |||||||
Efficiency ratio – Bank | 59.15 | % | 66.60 | % | 66.10 | % | 65.63 | % | 64.93 | % | (7.45 | ) | (5.78 | ) | |||||||
(1) Tax exempt interest has been adjusted to a taxable equivalent basis using a 35% tax rate. | |||||||||||||||||||||
(2) Operating earnings is calculated as earnings available to common shareholders excluding gain (loss) on junior subordinated debentures carried at fair value, net of tax, bargain purchase gain on acquisitions, net of tax, goodwill impairment, and merger related expenses, net of tax. | |||||||||||||||||||||
Umpqua Holdings Corporation | |||||||||
Selected Ratios | |||||||||
(Unaudited) | |||||||||
Six Months Ended: | % Change | ||||||||
Jun 30, 2014 | Jun 30, 2013 | Year over | |||||||
Average Rates: | |||||||||
Yield on non-covered loans and leases | 5.44 | % | 4.62 | % | 0.82 | ||||
Yield on covered loans and leases | 17.34 | % | 13.32 | % | 4.02 | ||||
Yield on taxable investments | 2.33 | % | 1.55 | % | 0.78 | ||||
Yield on tax-exempt investments (1) | 5.33 | % | 5.33 | % | — | ||||
Yield on temporary investments & interest bearing cash | 0.25 | % | 0.26 | % | (0.01 | ) | |||
Total yield on earning assets (1) | 5.04 | % | 4.15 | % | 0.89 | ||||
Cost of interest bearing deposits | 0.23 | % | 0.34 | % | (0.11 | ) | |||
Cost of securities sold under agreements to repurchase and fed funds purchased | 0.18 | % | 0.09 | % | 0.09 | ||||
Cost of term debt | 1.91 | % | 3.65 | % | (1.74 | ) | |||
Cost of junior subordinated debentures | 3.93 | % | 4.12 | % | (0.19 | ) | |||
Total cost of interest bearing liabilities | 0.42 | % | 0.55 | % | (0.13 | ) | |||
Net interest spread (1) | 4.62 | % | 3.60 | % | 1.02 | ||||
Net interest margin – Consolidated (1) | 4.74 | % | 3.75 | % | 0.99 | ||||
Net interest margin – Bank (1) | 4.80 | % | 3.82 | % | 0.98 | ||||
As reported (GAAP): | |||||||||
Return on average assets | 0.46 | % | 0.87 | % | (0.41 | ) | |||
Return on average tangible assets | 0.49 | % | 0.92 | % | (0.43 | ) | |||
Return on average common equity | 2.83 | % | 5.74 | % | (2.91 | ) | |||
Return on average tangible common equity | 5.42 | % | 9.50 | % | (4.08 | ) | |||
Efficiency ratio – Consolidated | 79.63 | % | 67.08 | % | 12.55 | ||||
Efficiency ratio – Bank | 77.96 | % | 64.72 | % | 13.24 | ||||
Operating basis (non-GAAP): (2) | |||||||||
Return on average assets | 0.99 | % | 0.90 | % | 0.09 | ||||
Return on average tangible assets | 1.07 | % | 0.96 | % | 0.11 | ||||
Return on average common equity | 6.17 | % | 5.98 | % | 0.19 | ||||
Return on average tangible common equity | 11.81 | % | 9.89 | % | 1.92 | ||||
Efficiency ratio – Consolidated | 63.04 | % | 65.90 | % | (2.86 | ) | |||
Efficiency ratio – Bank | 61.64 | % | 63.80 | % | (2.16 | ) | |||
(1) Tax exempt interest has been adjusted to a taxable equivalent basis using a 35% tax rate. | |||||||||
(2) Operating earnings is calculated as earnings available to common shareholders excluding gain (loss) on junior subordinated debentures carried at fair value, net of tax, bargain purchase gain on acquisitions, net of tax, goodwill impairment, and merger related expenses, net of tax. | |||||||||
Umpqua Holdings Corporation Average Balances | ||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||
Quarter Ended: | % Change | |||||||||||||||||||||||||
(Dollars in thousands) | Jun 30, 2014 | Mar 31, 2014 | Dec 31, 2013 | Sep 30, 2013 | Jun 30, 2013 | Seq. | Year over | |||||||||||||||||||
Temporary investments & interest bearing cash | $ | 672,587 | $ | 705,974 | $ | 625,405 | $ | 443,148 | $ | 622,209 | (5 | )% | 8 | % | ||||||||||||
Investment securities, taxable | 2,242,414 | 1,562,849 | 1,664,716 | 1,788,567 | 2,062,819 | 43 | % | 9 | % | |||||||||||||||||
Investment securities, tax-exempt | 315,488 | 231,520 | 236,552 | 237,545 | 253,975 | 36 | % | 24 | % | |||||||||||||||||
Loans held for sale | 211,694 | 77,234 | 89,553 | 136,261 | 140,802 | 174 | % | 50 | % | |||||||||||||||||
Non-covered loans and leases | 13,355,455 | 7,384,555 | 7,298,622 | 7,128,753 | 6,710,803 | 81 | % | 99 | % | |||||||||||||||||
Covered loans and leases | 318,432 | 347,984 | 378,148 | 402,403 | 428,003 | (8 | )% | (26 | )% | |||||||||||||||||
Total interest earning assets | 17,116,070 | 10,310,116 | 10,292,996 | 10,136,677 | 10,218,611 | 66 | % | 67 | % | |||||||||||||||||
Goodwill & other intangible assets, net | 1,656,687 | 776,006 | 777,188 | 779,294 | 683,446 | 113 | % | 142 | % | |||||||||||||||||
Total assets | 20,036,742 | 11,638,357 | 11,624,424 | 11,460,729 | 11,447,868 | 72 | % | 75 | % | |||||||||||||||||
Non-interest bearing demand deposits | 3,963,233 | 2,414,001 | 2,452,554 | 2,317,932 | 2,210,760 | 64 | % | 79 | % | |||||||||||||||||
Interest bearing deposits | 10,948,991 | 6,696,029 | 6,661,933 | 6,691,579 | 6,803,879 | 64 | % | 61 | % | |||||||||||||||||
Total deposits | 14,912,224 | 9,110,030 | 9,114,487 | 9,009,511 | 9,014,639 | 64 | % | 65 | % | |||||||||||||||||
Interest bearing liabilities | 12,521,219 | 7,376,780 | 7,326,763 | 7,320,460 | 7,409,284 | 70 | % | 69 | % | |||||||||||||||||
Shareholders’ equity - common | 3,350,836 | 1,738,680 | 1,734,583 | 1,722,881 | 1,728,354 | 93 | % | 94 | % | |||||||||||||||||
Tangible common equity (1) | 1,694,149 | 962,674 | 957,395 | 943,587 | 1,044,908 | 76 | % | 62 | % | |||||||||||||||||
Umpqua Holdings Corporation Average Balances | |||||||||||
(Unaudited) | |||||||||||
Six Months Ended: | % Change | ||||||||||
(Dollars in thousands) | Jun 30, 2014 | Jun 30, 2013 | Year over Year | ||||||||
Temporary investments & interest bearing cash | $ | 689,188 | $ | 503,470 | 37 | % | |||||
Investment securities, taxable | 1,904,508 | 2,182,326 | (13 | )% | |||||||
Investment securities, tax-exempt | 273,736 | 257,137 | 6 | % | |||||||
Loans held for sale | 144,835 | 164,281 | (12 | )% | |||||||
Non-covered loans and leases | 10,386,511 | 6,683,436 | 55 | % | |||||||
Covered loans and leases | 333,114 | 443,889 | (25 | )% | |||||||
Total interest earning assets | 13,731,892 | 10,234,539 | 34 | % | |||||||
Goodwill & other intangible assets, net | 1,218,780 | 684,035 | 78 | % | |||||||
Total assets | 15,860,749 | 11,472,221 | 38 | % | |||||||
Non-interest bearing demand deposits | 3,192,896 | 2,183,089 | 46 | % | |||||||
Interest bearing deposits | 8,834,259 | 6,870,186 | 29 | % | |||||||
Total deposits | 12,027,155 | 9,053,275 | 33 | % | |||||||
Interest bearing liabilities | 9,963,210 | 7,462,223 | 34 | % | |||||||
Shareholders’ equity - common | 2,549,211 | 1,729,440 | 47 | % | |||||||
Tangible common equity (1) | 1,330,432 | 1,045,405 | 27 | % |
(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) | Jun 30, 2014 | Mar 31, 2014 | Dec 31, 2013 | Sep 30, 2013 | Jun 30, 2013 | Seq. | Year over | |||||||||||||||||||
Residential mortgage servicing rights: | ||||||||||||||||||||||||||
Residential mortgage loans serviced for others | $ | 10,838,313 | $ | 4,496,662 | $ | 4,362,499 | $ | 4,195,759 | $ | 3,911,273 | 141 | % | 177 | % | ||||||||||||
MSR asset, at fair value | 114,192 | 49,220 | 47,765 | 41,853 | 38,192 | 132 | % | 199 | % | |||||||||||||||||
MSR as % of serviced portfolio | 1.05 | % | 1.09 | % | 1.09 | % | 1.00 | % | 0.98 | % | ||||||||||||||||
Residential mortgage banking revenue: | ||||||||||||||||||||||||||
Origination and sale | $ | 22,142 | $ | 8,421 | $ | 9,915 | $ | 12,764 | $ | 20,381 | 163 | % | 9 | % | ||||||||||||
Servicing | 5,359 | 2,970 | 2,911 | 2,718 | 2,521 | 80 | % | 113 | % | |||||||||||||||||
Change in fair value of MSR asset | (3,160 | ) | (952 | ) | 3,131 | (411 | ) | 1,387 | 232 | % | (328 | )% | ||||||||||||||
Total | $ | 24,341 | $ | 10,439 | $ | 15,957 | $ | 15,071 | $ | 24,289 | 133 | % | 0 | % | ||||||||||||
Closed loan volume: | ||||||||||||||||||||||||||
Closed loan volume - total | $ | 894,955 | $ | 293,175 | $ | 359,569 | $ | 463,036 | $ | 599,268 | 205 | % | 49 | % | ||||||||||||
Closed loan volume - for sale | $ | 623,727 | $ | 204,356 | $ | 271,541 | $ | 357,371 | $ | 518,039 | 205 | % | 20 | % | ||||||||||||
Gain on sale margin: | ||||||||||||||||||||||||||
Based on total volume | 2.47 | % | 2.87 | % | 2.76 | % | 2.76 | % | 3.40 | % | (0.40 | ) | (0.93 | ) | ||||||||||||
Based on for sale volume | 3.55 | % | 4.12 | % | 3.65 | % | 3.57 | % | 3.93 | % | (0.57 | ) | (0.38 | ) | ||||||||||||
Six Months Ended: | % Change | |||||||||||||||||||||||||
Jun 30, 2014 | Jun 30, 2013 | Year over | ||||||||||||||||||||||||
Residential mortgage banking revenue: | ||||||||||||||||||||||||||
Origination and sale | $ | 30,563 | $ | 43,438 | (30 | )% | ||||||||||||||||||||
Servicing | 8,329 | 4,766 | 75 | % | ||||||||||||||||||||||
Change in fair value of MSR asset | (4,112 | ) | (347 | ) | 1,085 | % | ||||||||||||||||||||
Total | $ | 34,780 | $ | 47,857 | (27 | )% | ||||||||||||||||||||
Closed loan volume: | ||||||||||||||||||||||||||
Closed loan volume - total | $ | 1,188,129 | $ | 1,108,273 | 7 | % | ||||||||||||||||||||
Closed loan volume - for sale | 828,083 | 971,847 | (15 | )% | ||||||||||||||||||||||
Gain on sale margin: | ||||||||||||||||||||||||||
Based on total volume | 2.57 | % | 3.92 | % | (1.35 | ) | ||||||||||||||||||||
Based on for sale volume | 3.69 | % | 4.47 | % | (0.78 | ) |
Contacts:
Ron Farnsworth, 503-727-4108
EVP/Chief
Financial Officer
ronfarnsworth@umpquabank.com
Bradley
Howes, 503-727-4226
SVP/Director of Investor Relations
bradhowes@umpquabank.com