• Umpqua Holdings Corporation
email this
  • Umpqua Holdings Corporation Meets Earnings Expectations and Continues Strong Loan and Deposit Growth; Loan Charge-Offs for the Quarter Near Record Low Level
    Company Release - 07/15/2003 05:00

    PORTLAND, Ore.--(BUSINESS WIRE)--July 15, 2003--Umpqua Holdings Corporation (Nasdaq:UMPQ), parent company of Umpqua Bank and of Strand, Atkinson, Williams & York, Inc., today announced operating earnings of $8.80 million, a 67% increase over the same period one-year ago, or $0.31 per diluted share for the second quarter of 2003.

    Operating earnings are defined as the company's earnings before deduction of merger-related expenses, which are reported in periods with significant merger-related activities. Net income is operating earnings minus merger-related expenses. During the second quarter, the Company completed all milestones related to the Centennial Bancorp acquisition.

    "Management is particularly pleased with Umpqua's operating earnings for this past quarter," said Ray Davis, President and Chief Executive Officer of Umpqua Holdings Corporation. "The current interest rate environment has created pressure on our net interest margin and the value of our mortgage servicing rights. We were able to off-set this charge to earnings by selling a small portion of our municipal bonds, which had significantly appreciated due to the lower interest rate environment."

    Net income for the second quarter of 2003 was $8.13 million or $0.28 per diluted share compared to $8.38 million or $0.29 for the first quarter of 2003.

    The following table presents a reconciliation of net income to operating earnings, with merger-related expenses displayed for each period presented:

    
    (Dollars in 000's, except per share     Q2 2003   Q1 2003    Q2 2002
     data)                                  -------   --------   --------
    Net Income                              $8,132$8,380$5,282
    
    Add Back: Merger related expense, net
     of tax                                    672        409          -
                                            -------   --------   --------
        Operating Earnings                  $8,804$8,789$5,282
                                            =======   ========   ========
    Earnings per diluted share:             Q2 2003   Q1 2003    Q2 2002
    ---------------------------             -------   --------   --------
        Net Income                          $ 0.28$ 0.29$ 0.26
    
        Operating Earnings                  $ 0.31$ 0.31$ 0.26

    "During the quarter the company continued to benefit from significant organic growth in loans and deposits while recording one of the best quarters on record for net loan charge-offs," Davis said.

    The acquisition of Centennial Bancorp, which closed on November 15, 2002, was accounted for under the purchase accounting method, and Centennial Bancorp's results are included from the date of closing.

    Total consolidated assets of Umpqua Holdings as of June 30, 2003, were $2.75 billion, compared to $2.56 billion at December 31, 2002. Total gross loans and leases, and deposits were $1.88 billion and $2.28 billion, respectively, as of June 30, 2003, compared to $1.78 billion and $2.10 billion, respectively, as of December 31, 2002.

    The following table presents annualized 2003 growth, based on growth achievements through June 2003:

    
    
                                                           Annualized
    (dollars in thousands) Jun 30, 2003Dec 31, 2002    Growth Rate
                           -------------  --------------  -------------
    Loans and Leases         $1,877,238$1,778,315             11%
    Deposits                 $2,282,909$2,103,790             17%
    Assets                   $2,747,057$2,555,964             15%
    

    Non-interest bearing demand deposits grew 13.6% over the last 91 days alone and now constitute 27% of Umpqua Bank's deposit base.

    Non-interest income for the second quarter of 2003 grew to $11.79 million, an increase of 15% over the first quarter of 2003 and an increase of 96% over the second quarter of 2002. Revenue from mortgage banking was $2.84 million in the second quarter of 2003, compared to $4.28 million in the first quarter of 2003 and $2.22 million in the second quarter of 2002. The company recorded an additional $1.7 million increase in the mortgage servicing right (MSR) valuation reserve during the second quarter of 2003 resulting from increased prepayment speed forecasts. The company also recognized $2.1 million in securities gains during the second quarter of 2003, used to offset the MSR impairment, in addition to $0.6 million in accelerated investment premium amortization resulting from the significant decline in market interest rates and related increase in prepayment speeds on mortgage backed securities.

    Umpqua Bank, Umpqua Holdings largest subsidiary, reports an efficiency ratio before merger-related expenses of 57.69% for the quarter ended June 30, 2003, compared to 55.10% for the quarter ended March 31, 2003, and 57.22% for the quarter ended June 30, 2002.

    The Bank's non-performing loans stand at $21.88 million at June 30, 2003, representing 1.17% of total loans compared to 0.98% at March 31, 2003, and 0.64% at June 30, 2002. Loan charge-offs for the quarter were $466 thousand netted against $294 thousand of loan recoveries, resulting in a net loan charge-off total for the quarter of $172 thousand.

    About Umpqua Holdings Corporation

    Umpqua Holdings Corporation (Nasdaq:UMPQ) is the parent company of Umpqua Bank, an Oregon state-chartered bank recognized for its entrepreneurial approach, innovative use of technology, and distinctive banking solutions. Umpqua Bank has 64 stores throughout Oregon and Southwest Washington. Umpqua Holdings also owns a retail brokerage subsidiary, Strand, Atkinson, Williams & York, Inc. which has nine locations throughout Oregon and Southwest Washington and offers brokerage services within Umpqua Bank stores. Additionally, Umpqua Holdings' Private Client Services Division provides tailored financial services and products to individual customers. Umpqua Holdings Corporation is headquartered in Portland, Ore. For more information, visit www.umpquabank.com/investor.

    Umpqua Holdings Corporation will conduct a quarterly earnings conference call Tuesday, July 15, 2003, at 10:00 a.m. PST where the Company will discuss second-quarter results and plans for the remainder of the year. There will be a question-and-answer session following the presentation. Shareholders, analysts and other interested parties are invited to join the call by dialing 888-603-9230 a few minutes before 10:00 a.m. The password is "UMPQUA." A rebroadcast can be found approximately one hour after the conference call by dialing 800-839-5154, or by visiting www.umpquabank.com/investor.

    This press release includes forward-looking statements, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Statements that expressly or implicitly predict future results, performance or events are forward-looking statements. The words "anticipate," "believe," "expect", "estimate", "intend" and words or phrases of similar meaning are intended to identify forward-looking statements. These statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated. Factors that could cause or contribute to those differences include, but are not limited to, general economic conditions, either nationally or regionally that could result in increased loan losses, interest rate fluctuations, pricing pressure and other competitive factors, potential delays or problems with integrating prior acquisitions, the ability to attract new deposits and loans, changes in legal or regulatory requirements, competition in the retail brokerage industry, general stock market conditions and changes in technology. Readers are encouraged to review the risk factors stated in the Company's 10-K and other reports filed with the SEC and are cautioned not to place undue reliance on forward-looking statements. The Company does not intend to update these forward-looking statements. All written and oral forward-looking statements attributable to the Company and/or persons acting on its behalf are expressly qualified by this disclosure.

    Umpqua Holdings Corporation
                      Consolidated Statements of Income
                                 (unaudited)
    
                                                Quarter ended:
                                      -----------------------------------
    Dollars in thousands, except       June 30,   March 31,    June 30,
     per-share data                      2003        2003        2002
                                      ----------- ----------- -----------
    Interest income
      Loans and leases                   $30,962$31,383$20,261
      Investments taxable                  2,395       2,967       1,985
      Investments tax exempt                 720         802         721
      Temporary investments                  187         151         165
      Other interest and dividends            16          14          17
                                      ----------- ----------- -----------
        Total interest income             34,280      35,317      23,149
    Interest expense
      Deposits                             6,267       6,480       5,098
      Repurchase agreements and
        fed funds purchased                  106         109          76
      Trust preferred securities             914         937           -
      Other borrowings                       193         212         254
                                      ----------- ----------- -----------
        Total interest expense             7,480       7,738       5,428
    Net interest income                   26,800      27,579      17,721
    Provision for credit losses              950       1,475         600
    Noninterest income
      Service charges                      3,350       3,020       1,877
      Brokerage fees                       2,370       1,939       2,331
      Mortgage banking revenue             2,835       4,279       2,216
      Gain (loss) on sale of
       securities                          2,136           7        (900)
      Other income                         1,099       1,045         477
                                      ----------- ----------- -----------
    Total noninterest income              11,790      10,290       6,001
    Noninterest expense
      Salaries and benefits               13,170      12,899       8,568
      Occupancy and equipment              3,947       3,582       2,213
      Other                                6,912       6,200       4,108
      Merger related expenses              1,050         638           -
                                      ----------- ----------- -----------
    Total noninterest expense             25,079      23,319      14,889
    Income before income taxes            12,561      13,075       8,233
    Income taxes                           4,429       4,695       2,951
                                      ----------- ----------- -----------
    Net income                            $8,132$8,380$5,282
                                      =========== =========== ===========
    
    Weighted average shares
    outstanding                       28,283,843  28,157,475  20,041,973
    
    Weighted average diluted
    shares outstanding                28,667,926  28,570,144  20,318,704
    
    Basic earnings per share               $0.29$0.30$0.26
    Diluted earnings per share             $0.28$0.29$0.26
    Umpqua Holdings Corporation
                      Consolidated Statements of Income
                                 (unaudited)
    
                                                     Six months ended:
                                                  -----------------------
                                                   June 30,    June 30,
    Dollars in thousands, except per-share data      2003        2002
                                                  ----------- -----------
    Interest income
      Loans and leases                               $62,346$40,192
      Investments taxable                              5,361       4,270
      Investments tax exempt                           1,523       1,450
      Temporary investments                              338         270
      Other interest and dividends                        30          32
                                                  ----------- -----------
        Total interest income                         69,598      46,214
    Interest expense
      Deposits                                        12,748      10,382
      Repurchase agreements and                          214
        fed funds purchased                                          157
      Trust preferred securities                       1,851           -
      Other borrowings                                   405         584
                                                  ----------- -----------
        Total interest expense                        15,218      11,123
    Net interest income                               54,380      35,091
    Provision for credit losses                        2,425       1,604
    Noninterest income
      Service charges                                  6,370       3,961
      Brokerage fees                                   4,309       4,505
      Mortgage banking revenue                         7,113       3,895
      Gain (loss) on sale of securities                2,143        (899)
      Other income                                     2,145       1,019
                                                  ----------- -----------
    Total noninterest income                          22,080      12,481
    Noninterest expense
      Salaries and benefits                           26,070      17,277
      Occupancy and equipment                          7,529       4,312
      Other                                           13,111       8,217
      Merger related expenses                          1,688       1,520
                                                  ----------- -----------
    Total noninterest expense                         48,398      31,326
      Income before income taxes                      25,637      14,642
    Income taxes                                       9,124       5,399
                                                  ----------- -----------
    Net income                                       $16,513$9,243
                                                  =========== ===========
    
    Weighted average shares
    outstanding                                   28,221,008  20,001,545
    
    Weighted average diluted
    shares outstanding                            28,600,479  20,251,045
    
    Basic earnings per share                           $0.59$0.46
    Diluted earnings per share                         $0.58$0.46
    Umpqua Holdings Corporation
                         Consolidated Balance Sheets
                                 (unaudited)
    
    Dollars in thousands,        June 30,      March 31,       June 30,
     except per-share data         2003           2003           2002
                                -----------    -----------    -----------
    Assets:
      Cash and cash
       equivalents                $184,262$154,274$140,023
      Trading account
       securities                    1,833            670          2,770
      Investments available
       for sale                    351,209        355,079        177,246
      Investments held to
       maturity                     17,836         18,251         20,074
      Loans held for sale           62,926         42,239         21,414
      Loans and leases           1,877,238      1,823,311      1,051,008
      Less:  Allowance for
       credit losses               (25,316)       (24,538)       (14,698)
                                -----------    -----------    -----------
        Loans and leases, net    1,851,922      1,798,773      1,036,310
      Federal Home Loan Bank
       stock                         4,891          4,828          8,415
      Premises and equipment,
       net                          62,853         61,339         39,264
      Other real estate owned        2,504          3,430          1,384
      Mortgage servicing
       rights, net                   9,274         10,179          7,068
      Goodwill and other
       intangibles                 160,547        161,181         26,117
      Other assets                  37,000         35,672          9,626
                                -----------    -----------    -----------
                                $2,747,057$2,645,915$1,489,711
                                ===========    ===========    ===========
    
    Liabilities:
      Deposits                  $2,282,909$2,178,769$1,278,086
      Securities sold under
       agreements to repurchase
        and fed funds purchased     33,581         34,675         26,227
      Borrowings                    22,105         24,162         24,058
      Trust preferred
       securities                   75,000         75,000              -
      Other liabilities             28,358         34,840         15,963
                                -----------    -----------    -----------
        Total liabilities        2,441,953      2,347,446      1,344,334
    
    Shareholders' equity:
      Common stock                 229,780        228,899         93,951
      Retained earnings             73,724         66,724         48,675
      Accumulated other
       comprehensive
        income                       1,600          2,846          2,751
                                -----------    -----------    -----------
        Total shareholders'
         equity                    305,104        298,469        145,377
                                -----------    -----------    -----------
    Total liabilities and
     shareholders' equity       $2,747,057$2,645,915$1,489,711
                                ===========    ===========    ===========
    
    Common shares outstanding
     at period end              28,331,279     28,234,620     20,108,342
    Book value per share            $10.77$10.57$7.23
    Tangible book value per share    $5.10$4.86$5.93
    Tangible equity               $144,557$137,288$119,260
    Umpqua Holdings Corporation
                                Loan Portfolio
    
                                       June 30,    March 31,    December
    Dollars in thousands                 2003        2003       31, 2002
                                      ----------- ----------- -----------
    Loans and leases by purpose:
      Commercial real estate            $886,543$841,492$817,691
      Residential real estate             78,578      79,636      79,708
      Construction                       265,753     281,223     270,116
                                      ----------- ----------- -----------
        Total real estate              1,230,874   1,202,351   1,167,515
      Commercial                         596,778     566,677     551,852
      Leases                               9,082       9,271       9,594
      Consumer                            39,905      44,959      48,647
      Other                                  599          53         707
                                      ----------- ----------- -----------
    Total loans and leases            $1,877,238$1,823,311$1,778,315
                                      =========== =========== ===========
    
                                       Quarter     Quarter     Year to
                                        Ended       Ended        date
                                       June 30,   March 31,    December
                                         2003        2003      31, 2002
                                      ----------- ----------- -----------
    Allowance for credit losses
      Balance beginning of period        $24,538$24,731$13,221
        Provision for credit losses          950       1,475       3,888
        Net (charge-offs) recoveries        (172)     (1,668)     (2,234)
        Acquisitions                           -           -       9,856
                                      ----------- ----------- -----------
      Balance end of period              $25,316$24,538$24,731
                                      =========== =========== ===========
    
    Net charge-offs to average
      loans and leases (annualized)         0.04%       0.38%       0.20%
    Allowance for credit losses to
      loans and leases                      1.35%       1.35%       1.39%
    Allowance for credit losses to
      nonperforming loans and leases         116%        138%        134%
    Non-performing loans and leases
      to total loans and leases             1.17%       0.98%       1.03%
    
    Non-performing assets
      Non-performing loans and leases    $21,879$17,816$18,395
      Real estate owned                    2,504       3,430       2,209
                                      ----------- ----------- -----------
    Total non-performing assets          $24,383$21,246$20,604
                                      =========== =========== ===========
    
                                         Deposits by Type
    
                              June 30, 2003March 31, 2003
                         -----------------------  -----------------------
                           Amount        Mix        Amount        Mix
                         ----------- -----------  ----------- -----------
    Demand, non interest
     bearing               $617,326        27.0%    $543,319        24.9%
    Demand, interest
     bearing                877,765        38.4%     843,187        38.7%
    Savings                 181,131         7.9%     167,715         7.7%
    Time                    606,687        26.6%     624,548        28.7%
                         ----------- -----------  ----------- -----------
    Total Deposits       $2,282,909       100.0%  $2,178,769       100.0%
                         =========== ===========  =========== ===========
    
    Umpqua Holdings Corporation
                               Selected Ratios
                                                  Quarter ended:
                                          -------------------------------
                                          June 30,   March 31,  June 30,
                                            2003       2003       2002
                                          ---------  ---------  ---------
    Net Interest Spread:
      Yield on loans and leases               6.65%      6.95%      7.68%
      Yield on investments (1)                3.83%      4.98%      6.43%
      Yield on temporary investments          1.18%      1.17%      1.79%
                                          ---------  ---------  ---------
        Total yield on earning assets         6.05%      6.51%      7.33%
    
      Cost of interest bearing deposits       1.53%      1.61%      2.17%
      Cost of securities sold under
        agreements to repurchase and fed
         funds purchased                      1.43%      1.43%      1.52%
      Cost of borrowings                      3.38%      3.56%      3.57%
      Cost of trust preferred                 4.89%      5.07%      0.00%
                                          ---------  ---------  ---------
        Total cost of interest bearing
         liabilities                          1.69%      1.78%      2.19%
    
    
    Net interest spread                       4.36%      4.73%      5.14%
    
    Net interest margin                       4.74%      5.10%      5.63%
    
    Before Merger Related Expenses:
    ------------------------------------
    Return on average assets                  1.34%      1.38%      1.48%
    Return on average equity                 11.72%     12.17%     14.82%
    Return on average tangible equity        25.19%     27.04%     18.14%
    
    After Merger Related Expenses:
    ------------------------------------
    Return on average assets                  1.24%      1.32%      1.48%
    Return on average equity                 10.83%     11.61%     14.82%
    Return on average tangible equity        23.27%     25.78%     18.14%
    
    Bank Only Ratios:
    ------------------------------------
    Umpqua bank efficiency ratio before
     merger expenses                         57.69%     55.10%     57.22%
    Umpqua bank net interest margin           4.90%      5.27%      5.64%
    
    (1) Tax exempt interest has been adjusted to a taxable equivalent
     basis using a 35% tax rate.
    
    Umpqua Holdings Corporation
                               Selected Ratios
    
                                                      Six months ended:
                                                     --------------------
                                                     June 30,   June 30,
                                                        2003       2002
                                                     ---------  ---------
    Net Interest Spread:
      Yield on loans and leases                          6.80%      7.75%
      Yield on investments (1)                           4.38%      6.49%
      Yield on temporary investments                     1.18%      1.71%
                                                     ---------  ---------
        Total yield on earning assets                    6.28%      7.40%
    
      Cost of interest bearing deposits                  1.57%      2.23%
      Cost of securities sold under agreements to
        repurchase and fed funds purchased               1.43%      1.37%
      Cost of borrowings                                 3.47%      3.80%
      Cost of trust preferred                            4.98%      0.00%
                                                     ---------  ---------
        Total cost of interest bearing liabilities       1.74%      2.26%
    
    
    Net interest spread                                  4.54%      5.14%
    
    Net interest margin                                  4.92%      5.65%
    
    Before Merger Related Expenses:
    -----------------------------------------------
    Return on average assets                             1.36%      1.45%
    Return on average equity                            11.94%     14.64%
    Return on average tangible equity                   26.08%     17.80%
    
    After Merger Related Expenses:
    -----------------------------------------------
    Return on average assets                             1.28%      1.31%
    Return on average equity                            11.21%     13.24%
    Return on average tangible equity                   24.48%     16.10%
    
    Bank Only Ratios:
    -----------------------------------------------
    Umpqua bank efficiency ratio before merger
     expenses                                           56.40%     57.79%
    Umpqua bank net interest margin                      5.08%      5.65%
    
    (1) Tax exempt interest has been adjusted to a taxable equivalent
     basis using a 35% tax rate.
    
    
        CONTACT: Umpqua Holdings CorporationRay Davis, 503-546-2490
                 raydavis@umpquabank.com
                 or
                 Dan Sullivan, 503-546-2492
                 dansullivan@umpquabank.com
    
        SOURCE: Umpqua Holdings Corporation