• Umpqua Holdings Corporation
email this
  • Umpqua Holdings Reports Second Quarter $0.42 Operating Earnings Per Diluted Share, a 17% Increase
    Western Sierra acquisition accretive for quarter 
    Company Release - 07/20/2006 08:00

    PORTLAND, Ore., July 20 /PRNewswire-FirstCall/ -- Umpqua Holdings Corporation (Nasdaq: UMPQ), parent company of Umpqua Bank and Strand, Atkinson, Williams & York, Inc., today announced second quarter 2006 operating earnings of $20.6 million, or $0.42 per diluted share, compared to $16.1 million, or $0.36 per diluted share, for the second quarter of 2005, an increase of 17% per diluted share. For the year to date, operating earnings were $38.2 million, or $0.81 per diluted share, compared to $31.2 million, or $0.69 per diluted share for the same period a year ago, also an increase of 17% per diluted share. Operating earnings excludes merger related expense, net of tax.

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

    Including merger expense, net income for the second quarter of 2006 was $19.6 million, or $0.40 per diluted share, compared to $16.0 million, or $0.36 per diluted share for the second quarter of 2005. For the year to date, net income was $37.1 million, or $0.79 per diluted share, compared to $31.0 million, or $0.69 per diluted share for the same period of the prior year.

    
        (Dollars in
         thousands,
         except per                    Quarter ended:           Six months ended:
         share data)         6/30/2006  3/31/2006  6/30/2005  6/30/2006  6/30/2005
    
         Net Income           $19,631    $17,427    $16,006    $37,058    $31,025
         Add Back: Merger
         related expenses,
         net of tax               994        151         97      1,144        157
           Operating Earnings $20,625    $17,578    $16,103    $38,202    $31,182
    
         Earnings per diluted
          share:
           Net Income           $0.40      $0.39      $0.36      $0.79      $0.69
           Operating Earnings   $0.42      $0.39      $0.36      $0.81      $0.69
    

    The Company completed the acquisition of Western Sierra Bancorp on June 2, 2006, in an all stock exchange valued at approximately $354 million. Approximately 12.7 million shares of common stock were issued in connection with the acquisition. This acquisition was accretive to operating earnings by $0.01 per diluted share during the second quarter, based mainly on accelerated synergy realization. Full system integration was completed successfully over the July 15th weekend.

    "With these stores now under the Umpqua brand, all associates immersed in the Umpqua culture, and our marketing efforts now launched in one of the fastest growing markets in the country, we remain well positioned to sustain our organic growth," said Ray Davis, president and chief executive officer of Umpqua Holdings Corporation.

    Total consolidated assets as of June 30, 2006 were $7.2 billion, compared to $5.0 billion a year ago. Total gross loans and leases, and deposits, were $5.3 billion and $5.5 billion, respectively, as of June 30, 2006, compared to $3.6 billion and $4.0 billion, respectively, a year ago.

    The following table presents the year-to-date annualized organic growth rates, which exclude the effects of the Western Sierra Bancorp acquisition:

         (in thousands)                           Loans     Deposits     Assets
         As reported, 6/30/06                  $5,309,078  $5,464,770  $7,178,392
         less: 12/31/05 balances                3,921,631   4,286,266   5,360,639
            Total growth year to date          $1,387,447  $1,178,504  $1,817,753
    
          less: acquisition                     1,022,231   1,016,053   1,491,466
          Organic growth                         $365,216    $162,451    $326,287
    
       Annualized organic growth rate                  19%          8%         12%
    

    During the second quarter of 2006, the Company had net charge-offs of $0.1 million, or 0.01% of average loans and leases on an annualized basis. Non- performing loans and leases were $7.3 million at June 30, 2006, representing only 0.14% of total loans and leases. This represents a decline from 0.19% in non-performing loans and leases on a sequential quarter basis before the acquisition of Western Sierra Bancorp. Based on the quality of the loan portfolio and net recoveries for the year to date, there was no substantial provision for credit losses during the second quarter of 2006, compared to $1.4 million for the same period a year ago. The allowance for credit losses was 1.14% of total loans and leases at June 30, 2006.

    Umpqua Bank, Umpqua Holdings' Bank subsidiary, reported a net interest margin of 4.93% for the second quarter of 2006, compared to 4.95% for first quarter of 2006 and 5.05% for the same quarter a year ago. The decline in margin resulted from increases in short-term market interest rates, which led to an increase in deposit and borrowing costs. The yield on earning assets increased 26 basis points on a sequential quarter basis to 7.22%, while the cost of interest bearing liabilities increased 33 basis points to 3.27%.

    Excluding merger expense, the Bank efficiency ratio was 51.8% for the second quarter of 2006, compared to 52.7% for the same period a year ago.

    As of June 30, 2006, total shareholders' equity was $1.1 billion, and tangible book value per share was $7.46. As previously announced, the Company paid a quarterly cash dividend of $0.12 per share on July 14, 2006.

    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 certain risk factors, including those set forth from time to time in Umpqua's and Western Sierra's filings with the SEC. You should not place undue reliance on forward-looking statements and we undertake no obligation to update any such statements. Specific risks in this press release include whether the company can sustain its rate of organic growth.

    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 "operating earnings," which exclude merger-related expenses. Operating earnings per diluted share is calculated by dividing operating earnings by the same diluted share total used in determining diluted earnings per share.

    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 127 locations stretching from the greater Sacramento area and San Joaquin Valley to Seattle, Wash., as well as along the Oregon and Northern California Coast and in Central Oregon. 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, July 20, 2006, at 10:00 a.m. PDT (1:00 p.m. EDT) during which the Company will discuss second quarter results and provide an update on recent activities, including the Company's recent acquisition of Western Sierra Bancorp. 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 888-577-8991 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 866-415-3311, or by visiting that website.

    
                             Umpqua Holdings Corporation
                          Consolidated Statements of Income
                                     (Unaudited)
    
        Dollars in thousands, except                    Quarter Ended:
         per share data                           June 30,    March 31,   June 30,
                                                   2006        2006        2005
    
        Interest income
          Loans and leases                        $86,004     $73,120     $60,220
          Investments - taxable                     6,693       6,711       6,252
          Investments - tax exempt                    836         722         699
          Other interest                              354         149         454
          Dividends                                    56          44          38
            Total interest income                  93,943      80,746      67,663
    
        Interest expense
          Deposits                                 25,953      21,038      13,485
          Repurchase agreements and fed funds
           purchased                                1,802       2,389         407
          Trust preferred securities                3,376       3,012       2,550
          Other borrowings                          2,055          28         139
            Total interest expense                 33,186      26,467      16,581
        Net interest income                        60,757      54,279      51,082
        Provision for loan losses                      54          21       1,400
        Non-interest income
          Service charges                           6,450       5,484       5,426
          Brokerage fees                            2,534       2,368       2,879
          Mortgage banking revenue                  2,503       1,844         228
          Gain (loss) on sale of securities            (1)         --       1,398
          Other income                              2,320       2,506       1,993
        Total non-interest income                  13,806      12,202      11,924
    
        Non-interest expense
          Salaries and benefits                    23,337      21,801      20,361
          Occupancy and equipment                   7,199       7,168       6,109
          Other                                    11,051       9,760       9,790
          Merger related expenses                   1,656         251         161
    
        Total non-interest expense                 43,243      38,980      36,421
    
        Income before income taxes                 31,266      27,480      25,185
        Provision for income tax                   11,635      10,053       9,179
    
        Net income                                $19,631     $17,427     $16,006
    
        Weighted average shares outstanding    48,528,525  44,658,423  44,436,323
        Weighted average diluted shares
         outstanding                           48,994,482  45,029,063  44,988,322
    
        Earnings per share - Basic                  $0.40       $0.39       $0.36
        Earnings per share - Diluted                $0.40       $0.39       $0.36
    
    
                             Umpqua Holdings Corporation
                          Consolidated Statements of Income
                                     (Unaudited)
    
                                                              Six Months Ended:
                                                            June 30,     June 30,
        Dollars in thousands, except per share data           2006         2005
    
        Interest income
          Loans and leases                                  $159,124     $117,156
          Investments - taxable                               13,404       12,801
          Investments - tax exempt                             1,558        1,412
          Other interest                                         503          687
          Dividends                                              100           81
            Total interest income                            174,689      132,137
        Interest expense
          Deposits                                            46,991       24,809
          Repurchase agreements and fed funds purchased        4,191          908
          Trust preferred securities                           6,388        4,944
          Other borrowings                                     2,083          544
            Total interest expense                            59,653       31,205
        Net interest income                                  115,036      100,932
        Provision for loan losses                                 75        2,400
        Non-interest income
          Service charges                                     11,934       10,248
          Brokerage fees                                       4,902        6,008
          Mortgage banking revenue                             4,347        1,578
          Gain (loss) on sale of securities                       (1)       1,398
          Other income                                         4,826        3,294
        Total non-interest income                             26,008       22,526
        Non-interest expense
          Salaries and benefits                               45,138       40,640
          Occupancy and equipment                             14,367       12,242
          Other                                               20,811       18,712
          Merger related expenses                              1,907          262
        Total noninterest expense                             82,223       71,856
        Income before income taxes                            58,746       49,202
        Provision for income tax                              21,688       18,177
        Net income                                           $37,058      $31,025
    
        Weighted average shares outstanding               46,604,165   44,383,766
        Weighted average diluted shares outstanding       47,111,951   44,972,170
    
        Earnings per share - Basic                             $0.80        $0.70
        Earnings per share - Diluted                           $0.79        $0.69
    
    
                             Umpqua Holdings Corporation
                             Consolidated Balance Sheets
                                     (Unaudited)
    
        Dollars in thousands, except
         per share data                        June 30,    March 31,    June 30,
                                                 2006         2006        2005
    
        Assets:
          Cash and cash equivalents             $238,964    $122,470     $200,748
          Trading account securities                 376         372        1,403
          Investments available for sale         692,910     648,487      571,895
          Investments held to maturity             9,676       7,633       11,735
          Loans held for sale                     18,760      11,760       20,301
          Loans and leases                     5,309,078   4,096,194    3,612,004
          Less:  Allowance for loan losses       (58,516)    (44,546)     (44,510)
            Loans and leases, net              5,250,562   4,051,648    3,567,494
          Restricted equity securities            20,538      14,264       14,298
          Premises and equipment, net            100,040      88,857       88,321
          Other real estate owned                     69          69          213
          Mortgage servicing rights, net          11,550      11,203        9,268
          Goodwill and other intangibles         682,789     408,156      407,072
          Other assets                           152,158     110,925      145,867
        Total assets                          $7,178,392  $5,475,844   $5,038,615
    
        Liabilities:
          Deposits                            $5,464,770  $4,229,648   $3,972,920
          Securities sold under agreements
           to repurchase and fed funds
           purchased                             261,720     272,990      127,449
          Borrowings                              57,081       3,111       13,296
          Notes payable for Trust preferred
         securities                              204,222     165,643      165,970
          Other liabilities                       77,499      53,670       44,243
            Total liabilities                  6,065,292   4,725,062    4,323,878
    
        Shareholders' equity:
          Common stock                           923,309     567,369      563,582
          Retained earnings                      208,335     195,639      153,794
          Accumulated other comprehensive
           loss                                  (18,544)    (12,226)      (2,639)
            Total shareholders' equity         1,113,100     750,782      714,737
        Total liabilities and shareholders'
         equity                               $7,178,392  $5,475,844   $5,038,615
    
        Common shares outstanding at period
         end                                  57,651,533  44,721,027   44,453,407
        Book value per share                      $19.31      $16.79       $16.08
        Tangible book value per share              $7.46       $7.66        $6.92
        Tangible equity                         $430,311    $342,626     $307,665
    
    
                             Umpqua Holdings Corporation
                                    Loan Portfolio
                                     (Unaudited)
    
        Dollars in thousands                    June 30,   March 31,    June 30,
                                                  2006       2006         2005
    
        Loans and leases by purpose:
          Commercial real estate               $2,959,739  $2,225,533  $1,975,218
          Residential real estate                 220,140     216,740     217,245
          Construction                          1,012,303     712,454     503,599
            Total real estate                   4,192,182   3,154,727   2,696,062
          Commercial                            1,047,477     877,102     837,702
          Leases                                   18,192      16,959      16,887
          Consumer                                 48,997      46,593      59,571
          Other                                     2,230         813       1,782
          Total loans and leases               $5,309,078  $4,096,194  $3,612,004
    
                                                 Quarter    Quarter      Quarter
                                                  Ended      Ended        Ended
                                                 June 30,   March 31,    June 30,
        Dollars in thousands                       2006       2006         2005
    
        Allowance for credit losses
          Balance beginning of period             $44,546    $43,885     $45,360
            Provision for credit losses                54         21       1,400
            Acquisition                            14,043         --          --
    
        Charge-offs                                  (947)      (613)     (3,239)
        Less recoveries                               820      1,253         989
            Net recoveries                           (127)       640      (2,250)
    
        Total Allowance for loan losses            58,516     44,546      44,510
    
        Reserve for unfunded commitments            2,145      1,642       1,354
          Total Allowance for credit losses       $60,661    $46,188     $45,864
    
        Net charge-off's (recoveries) to average
         loans and leases (annualized)               0.01%    (0.06)%       0.25%
        Recoveries to gross charge-offs                87%       204%         31%
        Allowance for credit losses to loans
         and leases                                  1.14%      1.13%       1.27%
        Allowance for credit losses to
         nonperforming loans and leases               828%       592%        223%
        Nonperforming loans and leases to total
         loans and leases                            0.14%      0.19%       0.57%
    
        Nonperforming assets:
          Nonperforming loans and leases           $7,330     $7,796     $20,606
          Real estate owned                            69         69         213
        Total nonperforming assets                 $7,399     $7,865     $20,819
    
    
                             Umpqua Holdings Corporation
                                    Loan Portfolio
                                     (Unaudited)
    
                                                            Six Months  Six Months
                                                               Ended       Ended
                                                              June 30,    June 30,
        Dollars in thousands                                    2006        2005
    
        Allowance for credit losses
          Balance beginning of period                          $43,885    $44,229
            Provision for credit losses                             75      2,400
            Acquisitions                                        14,043         --
    
        Charge-offs                                             (1,560)    (3,851)
        Less recoveries                                          2,073      1,732
            Net charge-offs                                        513     (2,119)
    
          Total Allowance for loan losses                       58,516     44,510
    
        Reserve for unfunded commitments                         2,145      1,354
           Total Allowance for credit losses                   $60,661    $45,864
    
        Net (recoveries) charge-offs to average loans and
         leases                                                 (0.02)%      0.12%
    
        Recoveries to gross charge-offs                            133%        45%
    
    
                                   Deposits by Type
                                     (Unaudited)
    
                               June 30,            March 31,          June 30,
                                 2006                2006               2005
    
        Dollars in
         thousands        Amount      Mix      Amount     Mix      Amount     Mix
    
        Demand, non
         interest-
         bearing        $1,264,249   23.1%    $990,803   23.4%    $977,160   24.6%
        Demand,
         interest-
         bearing         2,198,838   40.3%   1,768,347   41.8%   1,562,189   39.3%
        Savings            421,248    7.7%     355,280    8.4%     445,319   11.2%
        Time             1,580,435   28.9%   1,115,218   26.4%     988,252   24.9%
           Total
            Deposits    $5,464,770  100.0%  $4,229,648  100.0%  $3,972,920  100.0%
    
    
                             Umpqua Holdings Corporation
                                   Selected Ratios
                                     (Unaudited)
    
                                                            Quarter Ended:
                                                     June 30,  March 31,  June 30,
                                                       2006      2006       2005
    
        Net Interest Spread:
          Yield on loans and leases                    7.63%      7.37%     6.76%
          Yield on taxable investments                 4.53%      4.44%     4.27%
          Yield on tax-exempt investments(1)           5.56%      5.59%     6.59%
          Yield on temporary investments               4.13%      4.28%     2.76%
            Total yield on earning assets(1)           7.22%      6.96%     6.36%
    
          Cost of interest-bearing deposits            2.93%      2.63%     1.80%
          Cost of securities sold under agreements
           to repurchase and fed funds purchased       4.09%      4.14%     2.26%
          Cost of borrowings                           5.04%      3.62%     2.06%
          Cost of trust preferred securities           7.63%      7.37%     6.16%
            Total cost of interest bearing
             liabilities                               3.27%      2.94%     2.03%
    
        Net interest spread(1)                         3.95%      4.02%     4.33%
        Net interest margin (1)                        4.68%      4.69%     4.81%
    
        Excluding merger related expense(2):
        Return on average assets                       1.37%      1.32%     1.30%
        Return on average tangible assets              1.49%      1.42%     1.41%
        Return on average equity                       9.64%      9.58%     9.17%
        Return on average tangible equity             22.24%     21.22%    21.74%
    
        As reported:
        Return on average assets                       1.31%      1.31%     1.29%
        Return on average tangible assets              1.42%      1.41%     1.40%
        Return on average equity                       9.18%      9.50%     9.11%
        Return on average tangible equity             21.17%     21.04%    21.61%
    
        Bank Only Ratios:
        Umpqua Bank efficiency ratio(2)               51.78%     53.59%    52.71%
        Umpqua Bank net interest margin(1)             4.93%      4.95%     5.05%
    
        (1) Tax exempt interest has been adjusted to a taxable equivalent basis
            using a 35% tax rate.
        (2) Excludes merger related expense, net of tax.
    
    
                             Umpqua Holdings Corporation
                                   Selected Ratios
                                     (Unaudited)
    
                                                                Six Months Ended:
                                                                June 30,  June 30,
                                                                  2006      2005
    
        Net Interest Spread:
          Yield on loans and leases                               7.51%    6.69%
          Yield on taxable investments                            4.49%    4.25%
          Yield on tax-exempt investments(1)                      5.57%    6.53%
          Yield on temporary investments                          4.17%    2.66%
            Total yield on earning assets(1)                      7.10%    6.30%
    
          Cost of interest-bearing deposits                       2.79%    1.69%
          Cost of securities sold under agreements to
           repurchase and fed funds purchased                     4.12%    2.30%
          Cost of borrowings                                      5.02%    2.01%
          Cost of trust preferred securities                      7.51%    6.00%
            Total cost of interest bearing liabilities            3.12%    1.92%
    
        Net interest spread(1)                                    3.98%    4.38%
        Net interest margin(1)                                    4.69%    4.82%
    
        Excluding merger related expense(2):
        Return on average assets                                  1.35%    1.27%
        Return on average tangible assets                         1.46%    1.39%
        Return on average equity                                  9.61%    9.00%
        Return on average tangible equity                        21.76%   21.59%
    
        As reported:
        Return on average assets                                  1.31%    1.27%
        Return on average tangible assets                         1.42%    1.38%
        Return on average equity                                  9.32%    8.95%
        Return on average tangible equity                        21.10%   21.48%
    
        Bank Only Ratios:
        Umpqua Bank efficiency ratio(2)                          52.64%   53.15%
        Umpqua Bank net interest margin(1)                        4.94%    5.05%
    
        (1) Tax exempt interest has been adjusted to a taxable equivalent basis
            using a 35% tax rate.
        (2) Excludes merger related expense, net of tax.
    
    
                             Umpqua Holdings Corporation
                                   Average Balances
                                     (Unaudited)
    
                                                           Quarter Ended:
                                                  June 30,   March 31,   June 30,
        Dollars in thousands                        2006       2006       2005
    
          Loans held for sale                     $14,619      $9,551     $15,463
          Loans and leases                       4,505,246  4,015,579   3,555,336
          Earning assets                         5,236,760  4,721,904   4,286,972
          Goodwill & other intangibles             486,167    408,212     407,364
          Total assets                           6,030,752  5,411,419   4,980,367
    
          Non interest bearing demand deposits   1,048,201    968,506     949,610
          Interest bearing deposits              3,547,093  3,243,784   3,008,406
          Total deposits                         4,595,294  4,212,290   3,958,016
          Interest bearing liabilities           4,064,871  3,646,484   3,273,642
    
          Total shareholders' equity               858,168    744,190     704,466
          Tangible equity                          372,001    335,978     297,102
    
    
                             Umpqua Holdings Corporation
                                   Average Balances
                                     (Unaudited)
    
                                                              Six Months Ended:
                                                             June 30,    June 30,
        Dollars in thousands                                   2006        2005
    
          Loans held for sale                                 $12,099     $14,604
          Loans and leases                                  4,261,765   3,515,475
          Earning assets                                    4,980,754   4,251,650
          Goodwill & other intangibles                        447,405     407,760
          Total assets                                      5,722,796   4,944,583
    
          Non interest bearing demand deposits              1,008,573     922,414
          Interest bearing deposits                         3,396,277   2,968,383
          Total deposits                                    4,404,850   3,890,797
          Interest bearing liabilities                      3,856,833   3,268,976
    
          Total shareholders' equity                          801,494     699,039
          Tangible equity                                     354,089     291,279
    
    
                             Umpqua Holdings Corporation
                        Mortgage Banking Statistical Analysis
                                     (unaudited)
    
                                                        Quarter Ended:
                                              June 30,    March 31,     June 30,
                                                2006         2006         2005
    
        Dollars in thousands
    
        Mortgage Servicing Rights (MSR):
        Mortgage loans serviced for others   $1,004,148   $1,014,680   $1,026,088
    
        MSR Asset (gross)                       $13,735      $13,610      $12,455
        Less: Valuation reserve                  (2,185)      (2,407)      (3,187)
           MSR Asset (net of reserve)           $11,550      $11,203       $9,268
    
        MSR as % of serviced portfolio             1.15%        1.10%        0.90%
    
        Dollars in thousands, except per
         share data
        Mortgage Banking Revenue:
        Origination and sale                     $1,937       $1,523       $2,156
        Servicing                                   344          354          183
        MSR valuation reserve change                222          (33)      (2,111)
           Total Mortgage Banking Revenue        $2,503       $1,844         $228
    
    
                                                               Six Months Ended:
                                                              June 30,    June 30,
                                                                2006        2005
    
        Dollars in thousands
    
        Mortgage Banking Revenue:
        Origination and sale                                   $3,460      $3,553
        Servicing                                                 698         420
        MSR valuation reserve change                              189      (2,395)
           Total Mortgage Banking Revenue                      $4,347      $1,578
    

    SOURCE Umpqua Holdings Corp.