• Umpqua Holdings Corporation
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  • Umpqua Holdings Reports $0.44 Earnings Per Share, a 42% Increase Over 2004
    Company Release - 10/20/2005 08:00

    PORTLAND, Ore., Oct. 20 /PRNewswire-FirstCall/ -- Umpqua Holdings Corporation (Nasdaq: UMPQ), parent company of Umpqua Bank and Strand, Atkinson, Williams & York, Inc., today announced third quarter 2005 net income of $19.9 million, or $0.44 per diluted share, compared to $13.4 million, or $0.31 per diluted share, for the third quarter of 2004, a 42% increase. On a sequential quarter basis, diluted earnings per share increased 22% from $0.36 to $0.44.

    (Logo: http://www.newscom.com/cgi-bin/prnh/20030917/SFW078LOGO )

    During the third quarter of 2005, the Company recognized a $1.05 million positive fair value adjustment to our mortgage servicing rights portfolio. This fair value adjustment resulted from an increase in mortgage interest rates, and is included as additional mortgage banking revenue on the Company's consolidated statement of income. The Company also recognized a $0.6 million reduction to our state tax provision in the third quarter of 2005. This reduction to the Company's state income tax expense results from an adjustment to state income tax rates which was finalized in the third quarter and is retrospectively applied to the 2005 year. During the second quarter of 2005, the Company incurred an impairment in the fair value of the mortgage servicing right portfolio of $2.1 million, and $1.4 million in gains on the sale of securities. Our definition of core earnings excludes these items, along with merger related expense and discontinued operations. The Company provides the following table to illustrate how core earnings have progressed over time:

    
                                 Three months ended        Sequential Quarter
        Core earnings per
         diluted share:        Q3 2005  Q2 2005  Q3 2004  Variance $ Variance %
          Net income            $0.44    $0.36    $0.31    $0.08       22%
        less non-core items,
         after tax:
          MSR valuation
           recovery (impairment) 0.01   ( 0.03)      --     0.04
          Securities gains         --     0.02       --    (0.02)
          Corporate state
           tax credit            0.01       --       --     0.01
          Discontinued
           operations              --       --       --       --
          Merger related
           expense                 --       --    (0.03)      --
             Core earnings      $0.42    $0.37    $0.34    $0.05       14%
    
    
                                     Nine months ended
                                       September 30,        Year over Year
        Core earnings per
         diluted share:               2005      2004    Variance $  Variance %
          Net income                 $1.13     $0.92      $0.21        23%
        less non-core items,
         after tax:
          MSR valuation
           recovery (impairment)     (0.02)     0.02      (0.04)
          Securities gains            0.02        --       0.02
          Corporate state
           tax credit                 0.01        --       0.01
          Discontinued operations       --      0.01      (0.01)
          Merger related expense        --     (0.06)      0.06
             Core earnings           $1.12     $0.95      $0.17        18%
    
    

    During the third quarter of 2005, the Company had net charge-offs of $0.9 million, or 0.10% of average loans and leases on an annualized basis. Nonperforming loans and leases were $8.3 million at September 30, 2005, representing only 0.22% of total loans and leases. This represents a significant decline from $20.6 million in nonperforming loans and leases at June 30, 2005. Based on the quality of the loan portfolio, there was no provision for loan loss during the third quarter of 2005. The allowance for credit losses was 1.22% at September 30, 2005, as compared to 1.27% at June 30, 2005.

    "This was another very strong quarter for the Company, highlighted by a significant reduction in non-performing assets, minimal net charge-offs and continued strong organic growth in loans and deposits," said Ray Davis, president and chief executive officer of Umpqua Holdings Corporation. "At the same time, our core earnings continue to grow as we deliver our innovative style of banking in the markets we serve."

    Umpqua Bank's net interest margin increased to 5.13% for the third quarter of 2005, compared to 4.93% for the same quarter one year ago and 5.05% for the second quarter of 2005, principally resulting from recent increases in short- term market interest rates.

    Umpqua Bank, Umpqua Holdings' largest subsidiary, reported an efficiency ratio of 50.8% for the third quarter of 2005, compared to 59.0% for the same quarter one year ago, and 53.0% for the second quarter of 2005.

    Total consolidated assets of Umpqua Holdings as of September 30, 2005 were $5.19 billion, compared to $5.04 billion as of June 30, 2005. Total gross loans and leases, and deposits, were $3.70 billion and $4.09 billion, respectively, as of September 30, 2005, compared to $3.61 billion and $3.97 billion, respectively, as of June 30, 2005.

    Strong loan growth resulted in loans increasing $84.8 million during the third quarter of 2005. Deposits increased $120.0 million during the same period. For the year to date, annualized organic growth rates for loans and deposits were 9% and 10%, respectively. Organic growth is defined as growth excluding the increase related to acquisitions on the Company's balance sheet, with all growth subsequent to the acquisition date included as organic.

    As of September 30, 2005 total shareholders' equity was $726.8 million, and tangible book value per share was $7.19. As previously announced, the Company increased its quarterly cash dividend 33% over the prior quarter, to $0.08 per share.

    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. Umpqua believes that providing non-GAAP financial measures provides investors with information useful in understanding Umpqua's financial performance. Umpqua provides measures based on "core earnings," which exclude merger-related expenses, significant non-recurring gains, losses or expenses that are not reflective of continuing operations, and "tangible equity" which excludes intangible assets.

    A reconciliation of these non-GAAP measures to the most comparable GAAP equivalent is included in the attached financial tables or where the non-GAAP measure is presented.

    About Umpqua Holdings Corporation

    Umpqua Holdings Corporation 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 93 locations between Sacramento, Calif. and Bellevue, Wash., along the Oregon and Northern California Coast and in Central Oregon. In 2004, Umpqua Bank launched the Connect Volunteer Network, an innovative, paid volunteer program focused on youth and education. Bank associates volunteered at more than 100 organizations in the program's first year. Umpqua Holdings also owns a retail brokerage subsidiary, Strand, Atkinson, Williams & York, Inc., which has locations in Umpqua Bank stores and in dedicated offices throughout Oregon and Southwest Washington. Umpqua Bank's Private Client Services Division provides tailored financial services and products to individual customers. Umpqua Holdings Corporation is headquartered in Portland, Oregon. For more information, visit www.umpquaholdingscorp.com.

    Umpqua Holdings Corporation will conduct a quarterly earnings conference call Thursday, October 20, 2005, at 10:00 a.m. PDT where management will discuss operating results for the third quarter of 2005. 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 888-791-5525 a few minutes before 10:00 a.m. The password is "UMPQUA." Information to be discussed in the teleconference will be available on the Company's website prior to the call at www.umpquaholdingscorp.com. A rebroadcast can be found approximately one hour after the conference call by dialing 866-393-2013, or by visiting that website.

    Umpqua Holdings Corporation
                            Consolidated Statements of Income
                                       (Unaudited)
                                                     Quarter Ended:
        Dollars in thousands,
         except per share data        September 30,     June 30,    September 30,
                                          2005            2005          2004
        Interest income
         Loans and leases               $65,579         $60,220       $50,875
         Investments taxable              6,558           6,252         7,283
         Investments tax exempt             427             699           748
         Other interest                     617             454           209
         Dividends                           40              38           150
    
          Total interest income          73,221          67,663        59,265
    
        Interest expense
         Deposits                        16,101          13,485         8,941
         Repurchase agreements and
          fed funds purchased               511             407           206
         Trust preferred securities       2,719           2,550         1,979
         Other borrowings                    89             139           730
          Total interest expense         19,420          16,581        11,856
        Net interest income              53,801          51,082        47,409
        Provision for loan losses            --           1,400         1,479
        Non-interest income
         Service charges                  5,778           5,426         5,570
         Brokerage fees                   2,735           2,879         2,736
         Mortgage banking revenue         3,256             228         1,942
         Gain on sale of securities          28           1,398            13
         Other income                     1,985           1,993         1,210
    
          Total non-interest income      13,782          11,924        11,471
    
        Non-interest expense
         Salaries and benefits           20,708          20,361        19,685
         Occupancy and equipment          6,291           6,109         5,688
         Other                           10,084           9,790        10,150
         Merger related expenses             --             161         2,176
    
        Total non-interest expense       37,083          36,421        37,699
        Income before income taxes
         and discontinued operations     30,500          25,185        19,702
        Provision for income tax         10,577           9,179         6,457
        Income from continuing
         operations                      19,923          16,006        13,245
          Income from discontinued
           operation, net of tax             --              --           123
    
        Net income                      $19,923         $16,006       $13,368
    
        Weighted average
         shares outstanding          44,467,888      44,436,323    42,149,082
        Weighted average diluted
         shares outstanding          45,021,879      44,988,322    42,889,713
    
        Earnings per share -- Basic:
         Continuing operations            $0.45           $0.36         $0.31
         Discontinued operations          $0.00           $0.00         $0.01
          Net income                      $0.45           $0.36         $0.32
    
        Earnings per share -- Diluted:
         Continuing operations            $0.44           $0.36         $0.31
         Discontinued operations          $0.00           $0.00         $0.00
          Net income                      $0.44           $0.36         $0.31
    
    
                               Umpqua Holdings Corporation
                            Consolidated Statements of Income
                                       (Unaudited)
                                                    Nine Months Ended:
        Dollars in thousands, except
         per share data                 September 30, 2005September 30, 2004
        Interest income
         Loans and leases                    $182,735             $115,530
         Investments taxable                   19,359               17,126
         Investments tax exempt                 1,839                1,557
         Other interest                         1,304                  293
         Dividends                                121                  312
    
          Total interest income               205,358              134,818
    
        Interest expense
         Deposits                              40,910               20,616
         Repurchase agreements and
          fed funds purchased                   1,419                  528
         Trust preferred securities             7,663                4,222
         Other borrowings                         633                1,439
    
          Total interest expense               50,625               26,805
    
        Net interest income                   154,733              108,013
        Provision for loan losses               2,400                3,654
        Non-interest income
         Service charges                       16,026               11,970
         Brokerage fees                         8,743                8,641
         Mortgage banking revenue               4,834                5,990
         Gain on sale of securities             1,426                   19
         Other income                           5,279                2,269
    
        Total non-interest income              36,308               28,889
    
        Non-interest expense
         Salaries and benefits                 61,348               47,103
         Occupancy and equipment               18,533               13,956
         Other                                 28,796               22,646
         Merger related expenses                  262                2,941
    
        Total noninterest expense             108,939               86,646
    
        Income before income taxes and
         discontinued operations               79,702               46,602
        Provision for income tax               28,754               16,100
        Income from continuing operations      50,948               30,502
          Income from discontinued
           operations, net of tax                  --                  395
        Net income                            $50,948              $30,897
    
        Weighted average
         shares outstanding                44,412,115           33,011,298
        Weighted average diluted
         shares outstanding                44,984,192           33,515,613
    
        Earnings per share -- Basic:
         Continuing operations                  $1.15                $0.92
         Discontinued operations                $0.00                $0.02
          Net income                            $1.15                $0.94
    
        Earnings per share -- Diluted:
         Continuing operations                  $1.13                $0.91
         Discontinued operations                $0.00                $0.01
          Net income                            $1.13                $0.92
    
    
                               Umpqua Holdings Corporation
                               Consolidated Balance Sheets
                                       (Unaudited)
    
        Dollars in thousands,
         except per share data          September 30,     June 30,  September 30,
                                             2005           2005         2004
        Assets:
         Cash and cash equivalents        $172,165       $200,748     $245,557
         Trading account securities            830          1,403        1,539
         Investments available for sale    697,231        571,895      738,538
         Investments held to maturity       10,676         11,735       12,340
         Loans held for sale                20,202         20,301       29,632
         Loans and leases                3,696,820      3,612,004    3,323,137
         Less:  Allowance
          for loan losses                  (43,603)       (44,510)     (43,374)
           Loans and leases, net         3,653,217      3,567,494    3,279,763
         Federal Home Loan Bank stock       14,259         14,298       14,840
         Premises and equipment, net        88,577         88,321       94,928
         Other real estate owned               213            213          641
         Mortgage servicing rights, net     10,729          9,268       11,140
         Goodwill and other intangibles    407,059        407,072      409,516
         Other assets                      111,224        145,867      108,027
        Total assets                    $5,186,382     $5,038,615   $4,946,461
    
        Liabilities:
         Deposits                       $4,092,966     $3,972,920   $3,919,271
         Securities sold under agreements
          to repurchase and fed
          funds purchased                  145,551        127,449       47,752
         Borrowings                          3,236         13,296       88,521
         Notes payable for
          Trust preferred
          securities                       165,847        165,970      166,280
         Other liabilities                  52,018         44,243       52,660
          Total liabilities              4,459,618      4,323,878    4,274,484
    
        Shareholders' equity:
         Common stock                      563,640        563,582      556,995
         Retained earnings                 170,153        153,794      114,494
         Accumulated other comprehensive
          Income (loss)                     (7,029)        (2,639)         488
          Total shareholders' equity       726,764        714,737      671,977
        Total liabilities and
         shareholders' equity           $5,186,382     $5,038,615   $4,946,461
    
    
        Common shares outstanding
         at period end                  44,476,104     44,453,407   43,979,674
        Book value per share                $16.34         $16.08       $15.28
        Tangible book value per share        $7.19          $6.92        $5.97
        Tangible equity                   $319,705       $307,665     $262,461
    
    
                               Umpqua Holdings Corporation
                                      Loan Portfolio
                                       (Unaudited)
    
        Dollars in thousands           September 30,    June 30,    September 30,
                                           2005           2005          2004
        Loans and leases by purpose:
    
         Commercial real estate        $2,023,098     $1,975,218    $1,777,832
         Residential real estate          220,079        217,245       214,518
         Construction                     564,530        503,599       427,863
          Total real estate             2,807,707      2,696,062     2,420,213
         Commercial                       818,861        837,702       766,274
         Leases                            15,800         16,887        19,552
         Consumer                          53,208         59,571        81,592
         Other                              1,244          1,782        35,506
         Total loans and leases        $3,696,820     $3,612,004    $3,323,137
    
    
                                       Quarter Ended Quarter Ended Quarter Ended
        Dollars in thousands            September 30,    June 30,  September 30,
                                            2005          2005          2004
        Allowance for credit losses
         Balance beginning of period      $44,510        $45,360       $27,319
          Provision for credit losses          --          1,400         1,479
          Acquisitions                         --             --        17,257
          Reclassification                     --             --        (1,216)
    
        Charge-offs                        (3,289)        (3,239)       (2,124)
        Less recoveries                     2,382            989           659
          Net recoveries (charge-offs)       (907)        (2,250)       (1,465)
    
        Total Allowance for loan losses    43,603         44,510        43,374
    
        Reserve for unfunded commitments    1,489          1,354         1,216
         Total Allowance for
          credit losses                   $45,092        $45,864       $44,590
    
        Net charge-offs to average
         loans and leases (annualized)      0.10%          0.25%         0.18%
        Recoveries to gross charge-offs       72%            31%           31%
        Allowance for credit losses to
         loans and leases                   1.22%          1.27%         1.34%
        Allowance for credit losses to
         nonperforming loans and leases      546%           223%          160%
        Nonperforming loans and leases
         To total loans and leases          0.22%          0.57%         0.84%
    
        Nonperforming assets
         Nonperforming loans and leases    $8,257        $20,606       $27,796
         Real estate owned                    213            213           641
        Total nonperforming assets         $8,470        $20,819       $28,437
    
    
                               Umpqua Holdings Corporation
                                      Loan Portfolio
                                       (Unaudited)
    
    
                                                  Nine Months       Nine Months
                                                    Ended              Ended
        Dollars in thousands                     September 30,      September 30,
                                                     2005              2004
        Allowance for credit losses
         Balance beginning of period               $44,229           $25,352
          Provision for credit losses                2,400             3,654
          Acquisitions                                  --            17,257
          Reclassification                              --            (1,216)
    
        Charge-offs                                 (7,140)           (2,986)
        Less recoveries                              4,114             1,313
          Net charge-offs                           (3,026)           (1,673)
    
         Total Allowance for loan losses            43,603            43,374
    
        Reserve for unfunded commitments             1,489             1,216
         Total Allowance for credit losses         $45,092           $44,590
    
        Net charge-offs to average
         loans and leases (annualized)               0.11%             0.09%
    
        Recoveries to gross charge-offs                58%               44%
    
    
                                     Deposits by Type
                                       (Unaudited)
    
                               September 30,        June 30,       September 30,
                                   2005               2005             2004
        Dollars in thousands  Amount    Mix     Amount    Mix     Amount    Mix
        Demand, non
         interest bearing  $1,071,940  26.2%   $977,160  24.6%   $935,206  23.9%
        Demand,
         interest bearing   1,631,039  39.8%  1,562,189  39.3%  1,502,899  38.3%
        Savings               393,217   9.6%    445,319  11.2%    531,466  13.6%
        Time                  996,770  24.4%    988,252  24.9%    949,700  24.2%
          Total
           Deposits        $4,092,966 100.0% $3,972,920 100.0% $3,919,271 100.0%
    
    
                               Umpqua Holdings Corporation
                                     Selected Ratios
                                       (Unaudited)
    
                                                      Quarter Ended:
                                           September 30, June 30, September 30,
                                                2005       2005       2004
        Net Interest Spread:
         Yield on loans and leases             7.11%      6.76%      6.35%
         Yield on taxable investments          4.34%      4.27%      4.19%
         Yield on tax-exempt investments (A)   5.84%      6.59%      6.78%
         Yield on temporary investments        3.38%      2.76%      1.55%
          Total yield on earning assets (A)    6.65%      6.36%      5.91%
    
        Cost of interest bearing deposits      2.09%      1.80%      1.29%
        Cost of securities sold
         under agreements
         to repurchase and fed
         funds purchased                       2.52%      2.26%      1.37%
        Cost of borrowings                     2.75%      2.06%      1.78%
        Cost of trust preferred securities     6.50%      6.16%      4.93%
         Total cost of interest bearing
          liabilities                          2.33%      2.03%      1.50%
    
    
        Net interest spread (A)                4.32%      4.33%      4.41%
    
        Net interest margin (A)                4.89%      4.81%      4.73%
    
        Return on average assets               1.55%      1.29%      1.13%
        Return on average tangible assets      1.69%      1.40%      1.23%
        Return on average equity              11.01%      9.11%      8.46%
        Return on average tangible equity     25.43%     21.61%     21.81%
    
        Bank Only Ratios:
        Umpqua Bank efficiency ratio          50.78%     52.95%     59.04%
        Umpqua Bank net interest margin        5.13%      5.05%      4.93%
    
        (A) Tax exempt interest has been adjusted to a taxable equivalent basis
        using a 35% tax rate.
    
    
                               Umpqua Holdings Corporation
                                     Selected Ratios
                                       (Unaudited)
    
                                                          Nine Months Ended:
                                                     September 30,  September 30,
                                                         2005            2004
        Net Interest Spread:
         Yield on loans and leases                       6.84%           6.25%
         Yield on taxable investments                    4.28%           4.02%
         Yield on tax-exempt investments (A)             6.37%           6.70%
         Yield on temporary investments                  2.96%           1.35%
          Total yield on earning assets (A)              6.42%           5.81%
    
        Cost of interest bearing deposits                1.83%           1.28%
        Cost of securities sold under
         agreements to repurchase and
         fed funds purchased                             2.37%           1.05%
        Cost of borrowings                               2.09%           1.82%
        Cost of trust preferred securities               6.17%           4.75%
         Total cost of interest bearing liabilities      2.06%           1.47%
    
    
        Net interest spread (A)                          4.36%           4.34%
    
        Net interest margin (A)                          4.84%           4.66%
    
        Return on average assets                         1.36%           1.15%
        Return on average tangible assets                1.49%           1.23%
        Return on average equity                         9.66%           9.66%
        Return on average tangible equity               22.87%          21.48%
    
        Bank Only Ratios:
        Umpqua Bank efficiency ratio                    52.44%          58.24%
        Umpqua Bank net interest margin                  5.08%           4.84%
    
        (A) Tax exempt interest has been adjusted to a taxable equivalent basis
        using a 35% tax rate.
    
    
                               Umpqua Holdings Corporation
                          Mortgage Banking Statistical Analysis
                                       (unaudited)
    
                                                       Quarter ended:
                                          September 30,   June 30,   September 30,
                                              2005          2005         2004
        Dollars in thousands
        Mortgage Servicing Rights (MSR):
        Mortgage loans serviced
         for others                      $1,015,597    $1,026,088   $1,093,460
    
        MSR Asset (gross)                   $12,871       $12,455      $11,900
        Less: Valuation reserve              (2,142)       (3,187)        (760)
         MSR Asset (net of reserve)         $10,729        $9,268      $11,140
    
        MSR as % of serviced portfolio        1.06%         0.90%        1.02%
    
    
        Mortgage Banking Revenue:
        Origination and sale                 $2,102        $2,156       $2,065
        Servicing                               109           183          196
        MSR valuation reserve change          1,045        (2,111)        (319)
         Total Mortgage Banking Revenue      $3,256          $228       $1,942
    
    
        Diluted earnings per share
         contribution (loss) of
         Mortgage Group                       $0.02       $(0.02)        $0.01
    
    
                                                    Nine Months ended:
                                        September 30, 2005September 30, 2004
        Dollars in thousands
        Mortgage Banking Revenue:
        Origination and sale                   $5,655               $5,241
        Servicing                                 529                 (398)
        MSR valuation reserve change           (1,350)               1,147
         Total Mortgage Banking Revenue        $4,834               $5,990
    
        Diluted earnings per share
         contribution of Mortgage Group         $0.01                $0.04
    
    
    SOURCE  Umpqua Holdings Corporation
        -0-                             10/20/2005
        /CONTACT:  Ray Davis, President/CEO, +1-503-727-4101, or
    raydavis@umpquabank.com, or Dan Sullivan, EVP/CFO, +1-503-727-4103, or
    dansullivan@umpquabank.com, both of Umpqua Holdings Corporation/
        /Photo:  http://www.newscom.com/cgi-bin/prnh/20030917/SFW078LOGO
                 AP Archive:  http://photoarchive.ap.org
                 PRN Photo Desk photodesk@prnewswire.com/
        /Web site:  http://www.umpquaholdingscorp.com/
        (UMPQ)
    
    CO:  Umpqua Holdings Corporation
    ST:  Oregon
    IN:  FIN
    SU:  ERN CCA
    
    JL-EB
    -- SFTH012 --
    8758 10/20/200508:00 EDThttp://www.prnewswire.com