• Umpqua Holdings Corporation
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  • CORRECTING and REPLACING Umpqua Reports First Quarter 2016 Results
    Company Release - 04/20/2016 16:15

    Net earnings of $47.5 million, or $0.22 per common share

    Operating earnings1 of $63.9 million, or $0.29 per common share

    12% annualized loan and lease growth (before sales and transfers) and 10% annualized deposit growth

    Credit quality, capital and liquidity all remained strong

    PORTLAND, Ore.--(BUSINESS WIRE)-- In the paragraph titled "Earnings Conference Call Information," the fourth and fifth sentences are corrected to read: To join the call, please dial (888) 708-5678 ten minutes prior to the start time and enter conference ID: 5991746. A re-broadcast will be available approximately two hours after the call by dialing (888) 203-1112 and entering conference ID 5991746. (Instead of: To join the call, please dial (888) 471-3840 ten minutes prior to the start time and enter conference ID: 370250. A re-broadcast will be available approximately two hours after the call by dialing (888) 203-1112 and entering conference ID 370250.)

    The corrected release reads:

    UMPQUA REPORTS FIRST QUARTER 2016 RESULTS

    Net earnings of $47.5 million, or $0.22 per common share

    Operating earnings1 of $63.9 million, or $0.29 per common share

    12% annualized loan and lease growth (before sales and transfers) and 10% annualized deposit growth

    Credit quality, capital and liquidity all remained strong

    Umpqua Holdings Corporation (NASDAQ: UMPQ) (the “Company”) reported net earnings available to common shareholders of $47.5 million for the first quarter of 2016, compared to $62.9 million for the fourth quarter of 2015 and $47.0 million for the first quarter of 2015. Earnings per diluted common share were $0.22 for the first quarter of 2016, compared to $0.28 for the fourth quarter of 2015 and $0.21 for the first quarter of 2015.

    “Umpqua delivered solid financial performance in the first quarter, highlighted by robust growth in both loans and deposits, and reductions in core expenses,” said Ray Davis, president and CEO of Umpqua Holdings Corporation. “Our loan-to-deposit ratio was at 93 percent, as we continue to proactively manage asset concentrations and portfolio mix through diversified loan and lease growth and targeted sales. We continue to make good progress in advancing our technology, innovation, and customer delivery through our new subsidiary, Pivotus Ventures, and look forward to sharing further developments in the near future.”

    Reconciliation of Net Earnings (GAAP) to Operating Earnings (non-GAAP):

    The Company’s financial results include several significant items which have been excluded in the presentation of operating earnings, which is a non-GAAP financial measure. A summary of these items, and a reconciliation of earnings available to common shareholders (GAAP) to operating earnings (non-GAAP), is presented below. More information is provided in the non-GAAP financial measures section of this release, which we urge you to read.

        Quarter Ended
    (In thousands, except per share data)

    Mar 31,
    2016

       

    Dec 31,
    2015

       

    Sep 30,
    2015

       

    Jun 30,
    2015

       

    Mar 31,
    2015

    Net earnings available to common shareholders $ 47,540     $ 62,923     $ 57,523     $ 54,691     $ 47,045
    Adjustments:
    Merger related expenses 3,450 3,712 5,991 21,797 14,082
    Net loss on junior subordinated debentures carried at fair value 1,572 1,589 1,590 1,572 1,555
    Loss from change in fair value of MSR asset 20,625 469 10,103 423 9,728
    Loss (gain) from change in fair value of swap derivative 1,793 (715 ) 1,181 (1,408 ) 781
    Gain on investment securities, net (696 ) (2,567 ) (220 ) (19 ) (116 )
    Goodwill impairment 142
    Exit or disposal costs 347                          
    Total pre-tax adjustments 27,233 2,488 18,645 22,365 26,030
    Income tax effect (1) (10,836 )     (995 )     (7,458 )     (8,946 )     (10,412 )
    Net adjustments 16,397       1,493       11,187       13,419       15,618  
    Operating earnings $ 63,937       $ 64,416       $ 68,710       $ 68,110       $ 62,663  
     

    Earnings per diluted share:

    Earnings available to common shareholders $ 0.22 $ 0.28 $ 0.26 $ 0.25 $ 0.21
    Operating earnings $ 0.29 $ 0.29 $ 0.31 $ 0.31 $ 0.28
     
    (1) Income tax effect of pro forma operating earnings adjustments at 40% for tax-deductible items.
     
     

    Financial Highlights (compared to prior quarter):

    • Net earnings decreased, while operating earnings1 remained flat:
      • Net interest income decreased by $2.1 million, driven by one fewer day in the quarter and a 3 basis point decline in net interest margin;
      • Non-interest income decreased by $23.4 million, reflecting a charge of $20.6 million related to negative fair value adjustments to the mortgage servicing rights (“MSR”) asset and a charge of $1.8 million related to a decline in the fair value of debt capital market swap derivatives, both driven by the decline in long-term interest rates during the quarter. Excluding the impact of non-operating items1, total non-interest income increased by $1.1 million, driven primarily by higher mortgage banking revenue;
      • Non-interest expense decreased by $1.9 million. Excluding the impact of non-operating items1, total non-interest expense decreased by $2.1 million, driven by lower core expenses in most categories, partially offset by higher seasonal payroll taxes and a higher loss on other real estate owned;
    • Strong balance sheet:
      • Net loan and lease growth of $94.1 million, or 2% annualized, including $139.1 million of loan sales and $256.0 million of loans transferred to held for sale. Gross loan and lease growth (prior to the impact of loan sales and transfers) of $489.2 million, or 12% annualized;
      • Deposit growth of $455.8 million, or 10% annualized;
      • Loan to deposit ratio decreased to 93%;
    • Prudently managed capital:
      • Book value per share increased by 1% sequentially to $17.62 per share and tangible book value per share1 increased by 2% sequentially to $9.30;
      • Estimated total risk-based capital ratio of 14.2% and estimated Tier 1 common to risk weighted assets ratio of 11.2%;
      • Paid quarterly cash dividend of $0.16 per common share; and
      • Repurchased 235,000 shares of common stock for $3.5 million.

    Balance Sheet

    Total consolidated assets were $23.9 billion as of March 31, 2016, compared to $23.4 billion as of December 31, 2015 and $23.0 billion as of March 31, 2015. Including secured off-balance sheet lines of credit, the Company had total available liquidity of $8.0 billion as of March 31, 2016, representing 33% of total assets and 44% of total deposits.

    Gross loans and leases were $16.9 billion as of March 31, 2016, an increase of $94.1 million, or 2% annualized, from $16.8 billion as of December 31, 2015. During the first quarter of 2016, the Company sold $129.4 million of multi-family loans and $9.7 million of purchase credit impaired commercial real estate loans. In addition, $170.8 million of portfolio residential mortgage loans and $85.2 million of multi-family loans were transferred to held for sale, and are expected to be sold during the second quarter of 2016. Excluding the combined impact of the loan sales and transfers to held for sale, gross loan growth was $489.2 million, or 12% annualized.

    Total deposits were $18.2 billion as of March 31, 2016, an increase of $455.8 million, or 10% annualized, from $17.7 billion as of December 31, 2015. This increase was primarily attributable to growth in demand, savings and money market deposits.

    Net Interest Income

    Net interest income was down $2.1 million from the prior quarter, driven primarily by one less day in the quarter and a 3 basis point decrease in net interest margin. These were partially offset by balance sheet growth and a $3.4 million linked quarter increase in the level of interest income arising from the accretion of the credit discount recorded on loans acquired from Sterling.

    The Company’s net interest margin was 4.34% for the first quarter of 2016, down from 4.37% for the fourth quarter of 2015. This decrease reflects lower average yields on interest-earning assets, as well as a 3 basis point increase in the cost of interest-bearing liabilities, partially offset by the increase in the level of accretion of the credit discount.

    Credit Quality

    Under acquisition accounting, loans (including those considered non-performing) acquired from Sterling were recorded at their estimated fair value, and the related allowance for loan losses was eliminated. As a result, the Company wrote down the value of the loan and lease portfolio acquired from Sterling as of the acquisition date. The credit portion of the fair value mark is not reflected in the reported allowance for loan and lease losses, or its related allowance coverage ratios, but we believe should be considered when comparing the current quarter ratios to similar ratios in periods prior to the acquisition of Sterling.

    Loans acquired with significant deteriorated credit quality are accounted for as purchased credit impaired pools. Accordingly, loans included in the purchased credit impaired pools are not reported as non-performing loans based upon their individual performance status.

    During the first quarter of 2016, the Company reported $16.5 million of accretion related to the Sterling credit discount in interest income, as compared to $13.1 million in the prior quarter. Of the current quarter's accretion, $6.5 million was accelerated from purchased credit impaired loan pools, driven by the sale of a small pool of impaired loans. As of March 31, 2016, the purchased non-credit impaired loans had approximately $65.1 million of remaining credit discount that will accrete into interest income over the life of the loans, and the purchased credit impaired loan pools had approximately $38.8 million of remaining total discount.

    The allowance for loan and lease losses was $130.2 million, or 0.77% of loans and leases, as of March 31, 2016. To provide better comparability to prior periods, this pro-forma ratio would have been approximately 1.4% after grossing up the allowance for loan and lease losses and the loans and leases by the amount of the credit discount remaining as of quarter-end. This compares to a pro-forma ratio of approximately 1.5% as of December 31, 2015.

    The provision for loan and lease losses was $4.8 million for the first quarter of 2016, a slight increase from the prior quarter. Charge-offs, net of recoveries, were $4.9 million for the first quarter of 2016, compared to $4.4 million in the prior quarter.

    Non-performing assets increased to $72.6 million, or 0.30% of total assets, as of March 31, 2016, compared to $66.7 million, or 0.29% of total assets, as of December 31, 2015. This increase was attributable to a group of delinquent Ginnie Mae residential mortgage loans, which were repurchased out of the servicing pool to be mitigated internally.

    Non-interest Income

    Total reported non-interest income was $46.0 million for the first quarter of 2016, down $23.4 million from the prior quarter. The current quarter non-interest income included a charge of $20.6 million related to negative fair value adjustments to the MSR asset, attributable to the decline in long-term interest rates during the quarter, and its impact on the prepayment speed assumption for the MSR asset. Also included was a charge of $1.8 million related to a decline in the fair value of debt capital market swap derivatives, driven by the decline in long-term interest rates during the quarter.

    On an operating basis1, non-interest income increased by $1.1 million from the prior quarter, driven primarily by higher revenue from the origination and sale of residential mortgages. Home lending gain on sale margin increased to 3.72%, as compared to 3.19% in the prior quarter. For sale mortgage originations decreased by 4% from the prior quarter level, reflecting normal seasonality but partially offset by an increase in refinance activity due to the decline in long-term interest rates. Of the current quarter’s mortgage production, 58% related to purchase activity, as compared to 63% for the prior quarter and 45% for the same period in the prior year.

    Revenue related to the servicing of residential mortgage loans increased by 1% from the prior quarter, and has increased by 18% from the same period in the prior year, consistent with the growth in residential mortgage loans serviced for others.

    Non-interest Expense

    Non-interest expense was $184.0 million for the first quarter of 2016, which included $3.5 million of merger-related expenses. This compares to $185.9 million, including $3.7 million of merger-related expenses for the fourth quarter of 2015.

    On an operating basis1, non-interest expense decreased by $2.1 million from the prior quarter. This decrease was primarily driven by lower occupancy, marketing and other expense, and was partially offset by a $1.6 million linked quarter increase in loss on other real estate owned. Salaries and benefits expense in the first quarter of 2016 included a $3.4 million increase in seasonal payroll taxes.

    Capital

    As of March 31, 2016, the Company’s book value per share increased to $17.62, from $17.48 in the prior quarter, and its tangible book value per common share1 increased to $9.30, from $9.16 in the prior quarter. During the first quarter of 2016, the Company repurchased 235,000 shares of common stock for $3.5 million.

    The Company’s estimated total risk-based capital ratio was 14.2% and its estimated Tier 1 common to risk weighted assets ratio was 11.2% as of March 31, 2016, consistent with the prior quarter level. The Company remains above current “well-capitalized” regulatory minimums. The regulatory capital ratios as of March 31, 2016 are estimates, pending completion and filing of the Company’s regulatory reports.

    1  

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

     

    Non-GAAP Financial Measures

    In addition to results presented in accordance with generally accepted accounting principles in the United States of America (GAAP), this press release contains certain non-GAAP financial measures. The Company believes that certain non-GAAP financial measures provide investors with information useful in understanding the Company’s financial performance; however, readers of this document are urged to review these non-GAAP financial measures in conjunction with the GAAP results as reported.

    The Company incurs significant expenses related to the completion and integration of mergers and acquisitions. It also recognizes gains or losses on its junior subordinated debentures carried at fair value resulting from changes in interest rates and the estimated market credit risk adjusted spread that do not directly correlate with the Company’s operating performance. Additionally, it may recognize goodwill impairment losses that have no direct effect on the Company’s or the Bank’s cash balances, liquidity, or regulatory capital ratios. The Company recognizes gains and losses related to the change in the fair value of its MSR, which are primarily tied to movements in interest rates, and are not indicative of the fundamental operating activities for the period. It also recognizes gains or losses related to the change in the fair value of its swap derivatives, which are driven by movements in interest rates and are beyond our control. On occasion, the Company may sell certain securities in its investment portfolio, and recognize an associated gain or loss, which can be highly discretionary based on the timing of the sales, market opportunities, and interest rates, and therefore are not reflective of the Company's operating performance. The Company also may incur expenses related to the exit or disposal of certain business activities, such as the consolidation of bank branches, which do not reflect the on-going operating performance of the Company. Lastly, the Company may recognize one-time bargain purchase gains on certain acquisitions that are not reflective of the Company’s on-going earnings power.

    Accordingly, management believes that our operating results are best measured on a comparative basis excluding the after-tax impact of merger-related expenses, gains or losses on junior subordinated debentures measured at fair value, gains or losses from the change in fair value of the MSR, gains or losses from the change in fair value of the swap derivative, net gains or losses in investment securities, exit or disposal costs and other charges related to business combinations such as goodwill impairment charges or bargain purchase gains. The Company defines operating earnings as earnings available to common shareholders before these items, and calculates operating earnings per diluted share by dividing operating earnings by the same diluted share total used in determining diluted earnings per common share.

    The following table provides the reconciliation of net earnings available to common shareholders (GAAP) to operating earnings (non-GAAP), and earnings per diluted common share (GAAP) to operating earnings per diluted share (non-GAAP) for the periods presented:

        Quarter Ended   % Change
    (In thousands, except per share data)

    Mar 31,
    2016

     

    Dec 31,
    2015

     

    Sep 30,
    2015

     

    Jun 30,
    2015

     

    Mar 31,
    2015

    Seq.
    Quarter

     

    Year over
    Year

    Net earnings available to common shareholders $ 47,540   $ 62,923   $ 57,523   $ 54,691   $ 47,045 (24 )%   1 %
    Adjustments:
    Merger related expenses 3,450 3,712 5,991 21,797 14,082 (7 )% (76 )%
    Net loss on junior subordinated debentures carried at fair value 1,572 1,589 1,590 1,572 1,555 (1 )% 1 %
    Loss from change in fair value of MSR asset 20,625 469 10,103 423 9,728 nm 112 %
    Loss (gain) from change in fair value of swap derivative 1,793 (715 ) 1,181 (1,408 ) 781 nm 130 %
    Gain on investment securities, net (696 ) (2,567 ) (220 ) (19 ) (116 ) (73 )% 500 %
    Goodwill impairment 142 nm nm
    Exit or disposal costs 347                   nm nm
    Total pre-tax adjustments 27,233 2,488 18,645 22,365 26,030 995 % 5 %
    Income tax effect (1) (10,836 )   (995 )   (7,458 )   (8,946 )   (10,412 ) 989 % 4 %
    Net adjustments 16,397     1,493     11,187     13,419     15,618   998 % 5 %
    Operating earnings $ 63,937     $ 64,416     $ 68,710     $ 68,110     $ 62,663   (1 )% 2 %
     

    Earnings per diluted share:

    Earnings available to common shareholders $ 0.22 $ 0.28 $ 0.26 $ 0.25 $ 0.21 (21 )% 5 %
    Operating earnings $ 0.29 $ 0.29 $ 0.31 $ 0.31 $ 0.28 0 % 4 %
     
    (1) Income tax effect of pro forma operating earnings adjustments at 40% for tax-deductible items.
    nm = not meaningful.
     
     

    The following tables provide the reconciliation of non-interest income (GAAP) to non-interest income, on an operating basis, (non-GAAP), and non-interest expense (GAAP) to non-interest expense, on an operating basis, (non-GAAP) for the periods presented:

        Quarter Ended
    (Dollars in thousands)

    Mar 31,
    2016

       

    Dec 31,
    2015

       

    Sep 30,
    2015

       

    Jun 30,
    2015

       

    Mar 31,
    2015

    Non-interest income (GAAP) $ 45,951     $ 69,345     $ 61,372     $ 81,102     $ 63,905
    Adjustments:
    Net loss on junior subordinated debentures carried at fair value 1,572 1,589 1,590 1,572 1,555
    Loss from change in fair value of MSR asset 20,625 469 10,103 423 9,728
    Loss (gain) from change in fair value of swap derivative 1,793 (715 ) 1,181 (1,408 ) 781
    Gain on investment securities, net (696 )     (2,567 )     (220 )     (19 )     (116 )
    Non-interest income (operating basis) $ 69,245       $ 68,121       $ 74,026       $ 81,670       $ 75,853  
     
     
    Quarter Ended

    Mar 31,
    2016

       

    Dec 31,
    2015

       

    Sep 30,
    2015

       

    Jun 30,
    2015

       

    Mar 31,
    2015

    Non-interest expense (GAAP) $ 183,989 $ 185,911 183,194 $ 201,918 $ 192,619
    Adjustments:
    Merger related expenses (3,450 ) (3,712 ) (5,991 ) (21,797 ) (14,082 )
    Goodwill impairment (142 )
    Exit or disposal costs (347 )                        
    Non-interest expense (operating basis) $ 180,050       $ 182,199       $ 177,203       $ 180,121       $ 178,537  
     
     

    Management believes tangible common equity and the tangible common equity ratio are meaningful measures of capital adequacy because they provide a meaningful base for period-to-period and company-to-company comparisons, which management believes will assist investors in assessing the capital of the Company and the ability to absorb potential losses. Tangible common equity is calculated as total shareholders' equity less goodwill and other intangible assets, net (excluding MSRs). Tangible assets are total assets less goodwill and other intangible assets, net (excluding MSRs). The tangible common equity ratio is calculated as tangible common shareholders’ equity divided by tangible assets.

    The following table provides reconciliations of ending shareholders’ equity (GAAP) to ending tangible common equity (non-GAAP), and ending assets (GAAP) to ending tangible assets (non-GAAP).

    (In thousands, except per share data)     Mar 31, 2016     Dec 31, 2015     Sep 30, 2015     Jun 30, 2015     Mar 31, 2015
    Total shareholders' equity $ 3,878,630     $ 3,849,334     $ 3,835,552     $ 3,804,179     $ 3,800,970
    Subtract:
    Goodwill and other intangible assets, net 1,830,599       1,833,301       1,836,954       1,839,760       1,842,567  
    Tangible common shareholders' equity $ 2,048,031       $ 2,016,033       $ 1,998,598       $ 1,964,419       $ 1,958,403  
    Total assets $ 23,921,531 $ 23,387,205 $ 23,162,304 $ 22,793,331 $ 22,953,158
    Subtract:
    Goodwill and other intangible assets, net 1,830,599       1,833,301       1,836,954       1,839,760       1,842,567  
    Tangible assets $ 22,090,932       $ 21,553,904       $ 21,325,350       $ 20,953,571       $ 21,110,591  
    Common shares outstanding at period end 220,171 220,171 220,217 220,280 220,454
     
    Common equity ratio 16.21 % 16.46 % 16.56 % 16.69 % 16.56 %
    Tangible common equity ratio 9.27 % 9.35 % 9.37 % 9.38 % 9.28 %
    Book value per common share $ 17.62 $ 17.48 $ 17.42 $ 17.27 $ 17.24
    Tangible book value per common share $ 9.30 $ 9.16 $ 9.08 $ 8.92 $ 8.88
     
     

    About Umpqua Holdings Corporation

    Umpqua Holdings Corporation (NASDAQ: UMPQ) is the parent company of Umpqua Bank, an Oregon-based community bank recognized for its entrepreneurial approach, innovative use of technology, and distinctive banking solutions. Umpqua Bank has locations across Oregon, Washington, California, Idaho and Nevada. Umpqua Holdings also owns a retail brokerage subsidiary, Umpqua Investments, Inc., which has locations in Umpqua Bank stores and in dedicated offices in Oregon. Umpqua Private Bank serves high net worth individuals and nonprofits, providing trust and investment services. Umpqua Holdings Corporation is headquartered in Portland, Oregon. For more information, visit www.umpquaholdingscorp.com.

    Earnings Conference Call Information

    The Company will host its first quarter 2016 earnings conference call on Thursday, April 21, 2016, at 10:00 a.m. PT (1:00 p.m. ET). During the call, the Company will provide an update on recent activities and discuss its first quarter 2016 financial results. There will be a live question-and-answer session following the presentation. To join the call, please dial (888) 708-5678 ten minutes prior to the start time and enter conference ID: 5991746. A re-broadcast will be available approximately two hours after the call by dialing (888) 203-1112 and entering conference ID 5991746. The earnings conference call will also be available as an audiocast, which can be accessed on the Company’s investor relations page at www.umpquaholdingscorp.com. A slide presentation to accompany the call will also be posted on the website before the call.

    Forward-Looking Statements

    This press release includes forward-looking statements within the meaning of the “Safe-Harbor” provisions of the Private Securities Litigation Reform Act of 1995, which management believes are a benefit to shareholders. These statements are necessarily subject to risk and uncertainty and actual results could differ materially due to various risk factors, including those set forth from time to time in our filings with the SEC. You should not place undue reliance on forward-looking statements and we undertake no obligation to update any such statements. In this press release we make forward-looking statements about credit discount accretion related to loans acquired from Sterling Financial Corporation, loan and lease growth and loan sales, and planned investments and results of new initiatives.Risks that could cause results to differ from forward-looking statements we make are set forth in our filings with the SEC and include, without limitation, prolonged low interest rate environment; unanticipated weakness in loan demand or loan pricing; deterioration in the economy; lack of strategic growth opportunities or our failure to execute on those opportunities; our inability to effectively manage problem credits; our ability to successfully develop and market new products and technology; changes in laws or regulations; and changes in general economic conditions.

    Umpqua Holdings Corporation
    Consolidated Statements of Income
    (Unaudited)
       
    Quarter Ended% Change
    (In thousands, except per share data)

    Mar 31,
    2016

     

    Dec 31,
    2015

     

    Sep 30,
    2015

     

    Jun 30,
    2015

     

    Mar 31,
    2015

    Seq.
    Quarter

     

    Year over
    Year

    Interest income:          
    Loans and leases $ 217,928 $ 219,440 $ 218,975 $ 217,143 $ 213,875 (1 )% 2 %
    Interest and dividends on investments:
    Taxable 13,055 12,654 11,882 11,517 11,789 3 % 11 %
    Exempt from federal income tax 2,235 2,363 2,393 2,410 2,481 (5 )% (10 )%
    Dividends 366 326 112 169 101 12 % 262 %
    Temporary investments & interest bearing deposits 480   422   440   549   825   14 % (42 )%
    Total interest income 234,064 235,205 233,802 231,788 229,071 0 % 2 %
    Interest expense:
    Deposits 8,413 7,905 7,450 7,381 7,103 6 % 18 %
    Repurchase agreements 36 39 43 43 48 (8 )% (25 )%
    Term debt 4,186 3,885 3,629 3,492 3,464 8 % 21 %
    Junior subordinated debentures 3,727     3,542     3,465     3,406     3,337   5 % 12 %
    Total interest expense 16,362 15,371 14,587 14,322 13,952 6 % 17 %
    Net interest income 217,702 219,834 219,215 217,466 215,119 (1 )% 1 %
    Provision for loan and lease losses 4,823 4,545 8,153 11,254 12,637 6 % (62 )%
    Non-interest income:
    Service charges on deposits 14,516 15,039 15,616 14,811 14,274 (3 )% 2 %
    Brokerage revenue 4,094 4,061 5,003 4,648 4,769 1 % (14 )%
    Residential mortgage banking revenue, net 15,426 32,440 24,041 40,014 28,227 (52 )% (45 )%
    Gain on investment securities, net 696 2,567 220 19 116 (73 )% 500 %
    Gain on loan sales 2,371 1,729 5,212 8,711 6,728 37 % (65 )%
    Loss on junior subordinated debentures carried at fair value (1,572 ) (1,589 ) (1,590 ) (1,572 ) (1,555 ) (1 )% 1 %
    BOLI income 2,139 1,841 2,165 2,043 2,302 16 % (7 )%
    Other income 8,281     13,257     10,705     12,428     9,044   (38 )% (8 )%
    Total non-interest income 45,951 69,345 61,372 81,102 63,905 (34 )% (28 )%
    Non-interest expense:
    Salaries and employee benefits 106,538 106,203 106,482 110,807 107,444 0 % (1 )%
    Occupancy and equipment, net 38,295 38,722 37,235 34,868 32,150 (1 )% 19 %
    Intangible amortization 2,560 2,806 2,806 2,807 2,806 (9 )% (9 )%
    FDIC assessments 3,721 3,742 3,369 3,155 3,214 (1 )% 16 %
    Loss (gain) on other real estate owned, net 1,389 (242 ) (158 ) 480 1,814 nm (23 )%
    Merger related expenses 3,450 3,712 5,991 21,797 14,082 (7 )% (76 )%
    Goodwill impairment 142 nm nm
    Other expense 27,894   30,968   27,469   28,004   31,109   (10 )% (10 )%
    Total non-interest expense 183,989 185,911 183,194 201,918 192,619 (1 )% (4 )%
    Income before provision for income taxes 74,841 98,723 89,240 85,396 73,768 (24 )% 1 %
    Provision for income taxes 27,272     35,704     31,633     30,612     26,639   (24 )% 2 %
    Net income 47,569 63,019 57,607 54,784 47,129 (25 )% 1 %
    Dividends and undistributed earnings allocated to participating securities 29     96     84     93     84   (70 )% (65 )%
    Net earnings available to common shareholders $ 47,540     $ 62,923     $ 57,523     $ 54,691     $ 47,045   (24 )% 1 %
     
    Weighted average basic shares outstanding 220,227 220,202 220,297 220,463 220,349 0 % 0 %
    Weighted average diluted shares outstanding 221,052 220,930 220,904 221,150 221,051 0 % 0 %
    Earnings per common share – basic $ 0.22 $ 0.29 $ 0.26 $ 0.25 $ 0.21 (24 )% 5 %
    Earnings per common share – diluted $ 0.22 $ 0.28 $ 0.26 $ 0.25 $ 0.21 (21 )% 5 %
    nm = not meaningful
     
     
    Umpqua Holdings Corporation
    Consolidated Balance Sheets
    (Unaudited)
     
                % Change
    (In thousands, except per share data)

    Mar 31,
    2016

     

    Dec 31,
    2015

     

    Sep 30,
    2015

     

    Jun 30,
    2015

     

    Mar 31,
    2015

    Seq.
    Quarter

     

    Year over
    Year

    Assets:  
    Cash and due from banks $ 299,871 $ 277,645 $ 283,773 $ 364,256 $ 292,558 8 % 2 %
    Interest bearing cash and temporary investments 613,049 496,080 673,843 515,691 1,088,316 24 % (44 )%
    Investment securities:
    Trading, at fair value 9,791 9,586 9,509 10,005 10,452 2 % (6 )%
    Available for sale, at fair value 2,542,535 2,522,539 2,482,478 2,557,245 2,535,121 1 % 0 %
    Held to maturity, at amortized cost 4,525 4,609 4,699 4,807 4,953 (2 )% (9 )%
    Loans held for sale 659,264 363,275 398,015 419,704 406,487 81 % 62 %
    Loans and leases 16,941,428 16,847,360 16,387,934 15,974,197 15,548,957 1 % 9 %
    Allowance for loan and lease losses (130,243 )   (130,322 )   (130,133 )   (127,071 )   (120,104 ) 0 % 8 %
    Loans and leases, net 16,811,185 16,717,038 16,257,801 15,847,126 15,428,853 1 % 9 %
    Restricted equity securities 47,545 46,949 46,904 46,917 117,218 1 % (59 )%
    Premises and equipment, net 322,822 328,734 330,306 331,208 322,925 (2 )% 0 %
    Goodwill 1,787,651 1,787,793 1,788,640 1,788,640 1,788,640 0 % 0 %
    Other intangible assets, net 42,948 45,508 48,314 51,120 53,927 (6 )% (20 )%
    Residential mortgage servicing rights, at fair value 117,172 131,817 124,814 127,206 116,365 (11 )% 1 %
    Other real estate owned 20,411 22,307 23,892 23,038 32,064 (8 )% (36 )%
    Bank owned life insurance 293,703 291,892 297,321 295,551 294,697 1 % 0 %
    Deferred tax assets, net 108,865 138,082 149,320 181,245 198,778 (21 )% (45 )%
    Other assets 240,194     203,351     242,675     229,572     261,804   18 % (8 )%
    Total assets $ 23,921,531     $ 23,387,205     $ 23,162,304     $ 22,793,331     $ 22,953,158   2 % 4 %
    Liabilities:
    Deposits $ 18,162,974 $ 17,707,189 $ 17,467,024 $ 17,145,046 $ 17,222,566 3 % 5 %
    Securities sold under agreements to repurchase 325,203 304,560 323,722 325,711 321,202 7 % 1 %
    Term debt 903,382 888,769 889,358 889,997 965,675 2 % (6 )%
    Junior subordinated debentures, at fair value 256,917 255,457 253,665 252,214 250,652 1 % 2 %
    Junior subordinated debentures, at amortized cost 101,173 101,254 101,334 101,415 101,496 0 % 0 %
    Other liabilities 293,252     280,642     291,649     274,769     290,597   4 % 1 %
    Total liabilities 20,042,901 19,537,871 19,326,752 18,989,152 19,152,188 3 % 5 %
    Shareholders' equity:
    Common stock 3,518,792 3,520,591 3,517,751 3,517,557 3,521,201 0 % 0 %
    Retained earnings 343,421 331,301 303,729 281,573 260,128 4 % 32 %
    Accumulated other comprehensive income (loss) 16,417     (2,558 )   14,072     5,049     19,641   nm (16 )%

    Total shareholders' equity

    3,878,630     3,849,334     3,835,552     3,804,179     3,800,970   1 % 2 %
    Total liabilities and shareholders' equity $ 23,921,531     $ 23,387,205     $ 23,162,304     $ 22,793,331     $ 22,953,158   2 % 4 %
     
    Common shares outstanding at period end 220,171 220,171 220,217 220,280 220,454 0 % 0 %
    Book value per common share $ 17.62 $ 17.48 $ 17.42 $ 17.27 $ 17.24 1 % 2 %
    Tangible book value per common share $ 9.30 $ 9.16 $ 9.08 $ 8.92 $ 8.88 2 % 5 %
    Tangible equity - common $ 2,048,031 $ 2,016,033 $ 1,998,598 $ 1,964,419 $ 1,958,403 2 % 5 %
    Tangible common equity to tangible assets 9.27 % 9.35 % 9.37 % 9.38 % 9.28 % (0.08 ) (0.01 )
    nm = not meaningful
     
     
    Umpqua Holdings Corporation
    Loan & Lease Portfolio
    (Unaudited)
                 
    (Dollars in thousands)

    Mar 31,
    2016

     

    Dec 31,
    2015

     

    Sep 30,
    2015

     

    Jun 30,
    2015

     

    Mar 31,
    2015

    % Change
    Amount   Amount   Amount   Amount   Amount

    Seq.
    Quarter

     

    Year over
    Year

    Loans & leases:

    Commercial real estate:
    Non-owner occupied term, net $ 3,165,154 $ 3,140,845 $ 3,148,288 $ 3,294,359 $ 3,303,629 1 % (4 )%
    Owner occupied term, net 2,731,228 2,691,921 2,655,340 2,636,800 2,577,484 1 % 6 %
    Multifamily, net 2,945,826 3,074,918 2,961,609 2,859,884 2,764,403 (4 )% 7 %
    Commercial construction, net 343,519 301,892 287,757 244,354 238,303 14 % 44 %
    Residential development, net 121,025 99,459 94,380 76,734 81,160 22 % 49 %
    Commercial:
    Term, net 1,437,992 1,425,009 1,398,346 1,374,528 1,411,043 1 % 2 %
    Lines of credit & other, net 1,041,516 1,043,076 1,014,523 981,897 993,814 0 % 5 %
    Leases & equipment finance, net 791,798 729,161 679,033 630,695 570,492 9 % 39 %
    Residential real estate:
    Mortgage, net 2,865,445 2,890,223 2,740,228 2,533,042 2,330,325 (1 )% 23 %
    Home equity lines & loans, net 943,254 923,667 910,287 882,596 863,269 2 % 9 %
    Consumer & other, net 554,671     527,189     498,143     459,308     415,035   5 % 34 %
    Total, net of deferred fees and costs $ 16,941,428     $ 16,847,360     $ 16,387,934     $ 15,974,197     $ 15,548,957   1 % 9 %
     

    Loan & leases mix:

    Commercial real estate:
    Non-owner occupied term, net 19 % 19 % 19 % 20 % 20 %
    Owner occupied term, net 16 % 16 % 16 % 17 % 17 %
    Multifamily, net 17 % 18 % 17 % 17 % 17 %
    Commercial construction, net 2 % 2 % 2 % 2 % 2 %
    Residential development, net 1 % 1 % 1 % % 1 %
    Commercial:
    Term, net 8 % 9 % 9 % 9 % 9 %
    Lines of credit & other, net 6 % 6 % 6 % 6 % 6 %
    Leases & equipment finance, net 5 % 4 % 4 % 4 % 4 %
    Residential real estate:
    Mortgage, net 17 % 17 % 17 % 16 % 15 %
    Home equity lines & loans, net 6 % 5 % 6 % 6 % 6 %
    Consumer & other, net 3 %   3 %   3 %   3 %   3 %
    Total 100 %   100 %   100 %   100 %   100 %
     
     
    Umpqua Holdings Corporation
    Deposits by Type/Core Deposits
    (Unaudited)
                 
    (Dollars in thousands)

    Mar 31,
    2016

     

    Dec 31,
    2015

     

    Sep 30,
    2015

     

    Jun 30,
    2015

     

    Mar 31,
    2015

    % Change
    Amount   Amount   Amount   Amount   Amount

    Seq.
    Quarter

     

    Year over
    Year

    Deposits:

    Demand, non-interest bearing $ 5,460,310 $ 5,318,591 $ 5,207,129 $ 4,927,526 $ 4,930,642 3 % 11 %
    Demand, interest bearing 2,178,446 2,157,376 2,098,223 2,090,595 2,085,368 1 % 4 %
    Money market 6,814,160 6,599,516 6,514,174 6,374,624 6,287,165 3 % 8 %
    Savings 1,213,049 1,136,809 1,102,611 1,058,337 1,022,829 7 % 19 %
    Time 2,497,009     2,494,897     2,544,887     2,693,964     2,896,562   0 % (14 )%
    Total $ 18,162,974     $ 17,707,189     $ 17,467,024     $ 17,145,046     $ 17,222,566   3 % 5 %
     
    Total core deposits (1) $ 16,559,943 $ 16,102,743 $ 15,940,229 $ 15,529,997 $ 15,304,001 3 % 8 %
     

    Deposit mix:

    Demand, non-interest bearing 30 % 30 % 30 % 29 % 29 %
    Demand, interest bearing 12 % 12 % 12 % 12 % 12 %
    Money market 37 % 37 % 37 % 37 % 36 %
    Savings 7 % 6 % 6 % 6 % 6 %
    Time 14 %   15 %   15 %   16 %   17 %

    Total

    100 %   100 %   100 %   100 %   100 %
     

    Number of open accounts:

    Demand, non-interest bearing 375,913 371,745 370,128 367,086 368,701
    Demand, interest bearing 85,731 86,745 88,171 90,021 85,082
    Money market 56,927 57,194 57,622 58,156 61,991
    Savings 156,846 154,176 153,534 152,404 150,989
    Time 47,794     47,672     48,168     49,983     52,179  
    Total 723,211     717,532     717,623     717,650     718,942  
     

    Average balance per account:

    Demand, non-interest bearing $ 14.5 $ 14.3 $ 14.1 $ 13.4 $ 13.4
    Demand, interest bearing 25.4 24.9 23.8 23.2 24.5
    Money market 119.7 115.4 113.1 109.6 101.4
    Savings 7.7 7.4 7.2 6.9 6.8
    Time 52.2 52.3 52.8 53.9 55.5
    Total $ 25.1 $ 24.7 $ 24.3 $ 23.9 $ 24.0
     

    (1) Core deposits are defined as total deposits less time deposits greater than $100,000.

     
     

    Umpqua Holdings Corporation

    Credit Quality – Non-performing Assets
    (Unaudited)
                 
    Quarter Ended% Change
    (Dollars in thousands)

    Mar 31,
    2016

     

    Dec 31,
    2015

     

    Sep 30,
    2015

     

    Jun 30,
    2015

     

    Mar 31,
    2015

    Seq.
    Quarter

     

    Year over
    Year

    Non-performing assets:

    Loans and leases on non-accrual status $ 30,045 $ 29,215 $ 30,989 $ 33,572 $ 40,246 3 % (25 )%
    Loans and leases past due 90+ days & accruing 22,144   15,169   9,967   13,529   10,416   46 % 113 %
    Total non-performing loans and leases 52,189 44,384 40,956 47,101 50,662 18 % 3 %
    Other real estate owned 20,411     22,307     23,892     23,038     32,064   (8 )% (36 )%
    Total $ 72,600     $ 66,691     $ 64,848     $ 70,139     $ 82,726   9 % (12 )%
     
    Performing restructured loans and leases $ 31,409 $ 31,355 $ 35,706 $ 37,023 $ 60,896 0 % (48 )%
    Loans and leases past due 31-89 days $ 29,054 $ 28,423 $ 28,919 $ 25,553 $ 20,488 2 % 42 %
    Loans and leases past due 31-89 days to total loans and leases 0.17 % 0.17 % 0.18 % 0.16 % 0.13 %
    Non-performing loans and leases to total loans and leases 0.31 % 0.26 % 0.25 % 0.29 % 0.33 %
    Non-performing assets to total assets 0.30 % 0.29 % 0.28 % 0.31 % 0.36 %
     
     
    Umpqua Holdings Corporation
    Credit Quality – Allowance for Loan and Lease Losses
    (Unaudited)
      Quarter Ended   % Change
    (Dollars in thousands)

    Mar 31,
    2016

     

    Dec 31,
    2015

     

    Sep 30,
    2015

     

    Jun 30,
    2015

     

    Mar 31,
    2015

    Seq.
    Quarter

     

    Year over
    Year

    Allowance for loan and lease losses:

             
    Balance beginning of period $ 130,322 $ 130,133 $ 127,071 $ 120,104 $ 116,167
    Provision for loan and lease losses 4,823 4,545 8,153 11,254 12,637 6 % (62 )%
    Charge-offs (7,850 ) (7,108 ) (8,476 ) (7,442 ) (12,545 ) 10 % (37 )%
    Recoveries 2,948     2,752     3,385     3,155     3,845   7 % (23 )%

    Net charge-offs

    (4,902 )   (4,356 )   (5,091 )   (4,287 )   (8,700 ) 13 % (44 )%
    Total allowance for loan and lease losses 130,243 130,322 130,133 127,071 120,104 0 % 8 %
    Reserve for unfunded commitments 3,482     3,574     3,081     2,864     3,194   (3 )% 9 %
    Total allowance for credit losses $ 133,725     $ 133,896     $ 133,214     $ 129,935     $ 123,298   0 % 8 %
     
    Net charge-offs to average loans and leases (annualized) 0.12 % 0.10 % 0.13 % 0.11 % 0.23 %
    Recoveries to gross charge-offs 37.55 % 38.72 % 39.94 % 42.39 % 30.65 %
    Allowance for loan and lease losses to loans and leases 0.77 % 0.77 % 0.79 % 0.80 % 0.77 %
    Allowance for credit losses to loans and leases 0.79 % 0.79 % 0.81 % 0.81 % 0.79 %
     
     
    Umpqua Holdings Corporation
    Selected Ratios
    (Unaudited)
             
    Quarter Ended% Change

    Mar 31,
    2016

     

    Dec 31,
    2015

     

    Sep 30,
    2015

     

    Jun 30,
    2015

     

    Mar 31,
    2015

    Seq.
    Quarter

     

    Year over
    Year

    Average Rates:

       
    Yield on loans and leases 5.08 % 5.19 % 5.29 % 5.46 % 5.59 % (0.11 ) (0.51 )
    Yield on loans held for sale 4.08 % 3.80 % 4.07 % 3.24 % 3.81 % 0.28 0.27
    Yield on taxable investments 2.32 % 2.26 % 2.11 % 2.03 % 2.14 % 0.06 0.18
    Yield on tax-exempt investments (1) 4.73 % 4.76 % 4.73 % 4.67 % 4.74 % (0.03 ) (0.01 )
    Yield on interest bearing cash and temporary investments 0.54 % 0.28 % 0.25 % 0.26 % 0.25 % 0.26 0.29
    Total yield on earning assets (1) 4.67 % 4.68 % 4.71 % 4.77 % 4.80 % (0.01 ) (0.13 )
     
    Cost of interest bearing deposits 0.27 % 0.26 % 0.24 % 0.24 % 0.24 % 0.01 0.03

    Cost of securities sold under agreements to repurchase and fed funds purchased

    0.05 % 0.05 % 0.05 % 0.05 % 0.06 % (0.01 )
    Cost of term debt 1.88 % 1.73 % 1.62 % 1.51 % 1.42 % 0.15 0.46
    Cost of junior subordinated debentures 4.20 % 3.96 % 3.89 % 3.88 % 3.86 % 0.24 0.34
    Total cost of interest bearing liabilities 0.47 % 0.44 % 0.42 % 0.41 % 0.41 % 0.03 0.06
     
    Net interest spread (1) 4.20 % 4.24 % 4.29 % 4.36 % 4.39 % (0.04 ) (0.19 )
    Net interest margin – Consolidated (1) 4.34 % 4.37 % 4.42 % 4.48 % 4.51 % (0.03 ) (0.17 )
    Net interest margin – Bank (1) 4.41 % 4.44 % 4.49 % 4.55 % 4.57 % (0.03 ) (0.16 )
     

    As reported (GAAP):

    Return on average assets 0.82 % 1.08 % 0.99 % 0.96 % 0.84 % (0.26 ) (0.02 )
    Return on average tangible assets 0.89 % 1.17 % 1.08 % 1.05 % 0.92 % (0.28 ) (0.03 )
    Return on average common equity 4.93 % 6.49 % 5.97 % 5.76 % 5.02 % (1.56 ) (0.09 )
    Return on average tangible common equity 9.34 % 12.41 % 11.51 % 11.16 % 9.73 % (3.07 ) (0.39 )
    Efficiency ratio – Consolidated 69.48 % 64.02 % 65.00 % 67.35 % 68.71 % 5.46 0.77
    Efficiency ratio – Bank 67.29 % 62.40 % 63.08 % 65.74 % 67.07 % 4.89 0.22
     

    Operating basis (non-GAAP): (2)

    Return on average assets 1.10 % 1.10 % 1.19 % 1.20 % 1.12 % (0.02 )
    Return on average tangible assets 1.19 % 1.20 % 1.29 % 1.30 % 1.22 % (0.01 ) (0.03 )
    Return on average common equity 6.63 % 6.64 % 7.13 % 7.17 % 6.68 % (0.01 ) (0.05 )
    Return on average tangible common equity 12.57 % 12.70 % 13.74 % 13.89 % 12.96 % (0.13 ) (0.39 )
    Efficiency ratio – Consolidated 62.49 % 63.00 % 60.17 % 59.96 % 61.09 % (0.51 ) 1.40
    Efficiency ratio – Bank 60.89 % 61.72 % 58.84 % 58.68 % 59.84 % (0.83 ) 1.05
    (1)   Tax exempt interest has been adjusted to a taxable equivalent basis using a 35% tax rate.
    (2) Operating earnings is calculated as earnings available to common shareholders excluding the after-tax impact of merger-related expenses, gains or losses on junior subordinated debentures carried at fair value, gains or losses from the change in fair value of the MSR, gains or losses from the change in fair value of the swap derivative, net gains or losses in investment securities, exit or disposal costs, bargain purchase gain on acquisitions and goodwill impairment.
     
     
    Umpqua Holdings Corporation
    Average Balances
    (Unaudited)
     
    Quarter Ended   % Change
    (Dollars in thousands)

    Mar 31,
    2016

     

    Dec 31,
    2015

     

    Sep 30,
    2015

     

    Jun 30,
    2015

     

    Mar 31,
    2015

    Seq.
    Quarter

     

    Year over
    Year

    Temporary investments & interest bearing cash $ 356,674   $ 608,250   $ 693,114   $ 861,775   $ 1,323,671 (41 )%   (73 )%
    Investment securities, taxable 2,311,589 2,293,429 2,276,698 2,303,879 2,227,301 1 % 4 %
    Investment securities, tax-exempt 287,085 302,443 307,960 313,899 318,643 (5 )% (10 )%
    Loans held for sale 297,732 334,428 357,905 368,111 272,450 (11 )% 9 %
    Loans and leases 17,007,929     16,514,740     16,155,395     15,730,269     15,336,742   3 % 11 %
    Total interest earning assets 20,261,009 20,053,290 19,791,072 19,577,933 19,478,807 1 % 4 %
    Goodwill & other intangible assets, net 1,832,046 1,835,821 1,838,740 1,841,535 1,842,390 0 % (1 )%
    Total assets 23,415,252 23,196,213 22,946,464 22,781,479 22,692,183 1 % 3 %
     
    Non-interest bearing demand deposits 5,289,810 5,285,992 5,108,430 4,852,455 4,808,891 0 % 10 %
    Interest bearing deposits 12,411,005     12,249,333     12,225,691     12,274,814     12,190,835   1 % 2 %
    Total deposits 17,700,815 17,535,325 17,334,121 17,127,269 16,999,726 1 % 4 %
    Interest bearing liabilities 13,976,678 13,812,644 13,798,350 13,880,480 13,842,219 1 % 1 %
     
    Shareholders’ equity - common 3,878,540 3,847,587 3,822,201 3,807,703 3,804,036 1 % 2 %
    Tangible common equity (1) 2,046,494 2,011,766 1,983,461 1,966,168 1,961,646 2 % 4 %
    (1)   Average tangible common equity is a non-GAAP financial measure. Average tangible common equity is calculated as average common shareholders’ equity less average goodwill and other intangible assets, net (excluding MSRs).
     
     
    Umpqua Holdings Corporation
    Residential Mortgage Banking Activity
    (unaudited)
       
    Quarter Ended% Change
    (Dollars in thousands)

    Mar 31,
    2016

     

    Dec 31,
    2015

     

    Sep 30,
    2015

     

    Jun 30,
    2015

     

    Mar 31,
    2015

    Seq.
    Quarter

     

    Year over
    Year

    Residential mortgage servicing rights:

             
    Residential mortgage loans serviced for others $ 13,304,468 $ 13,047,266 $ 12,693,451 $ 12,302,866 $ 11,874,910 2 % 12 %
    MSR asset, at fair value 117,172 131,817 124,814 127,206 116,365 (11 )% 1 %
    MSR as % of serviced portfolio 0.88 % 1.01 % 0.98 % 1.03 % 0.98 %

    Residential mortgage banking revenue:

    Origination and sale $ 28,409 $ 25,363 $ 26,904 $ 33,667 $ 31,498 12 % (10 )%
    Servicing 7,642 7,546 7,240 6,770 6,457 1 % 18 %
    Change in fair value of MSR asset (20,625 )   (469 )   (10,103 )   (423 )   (9,728 ) nm 112 %
    Total $ 15,426     $ 32,440     $ 24,041     $ 40,014     $ 28,227   (52 )% (45 )%
     

    Closed loan volume:

    Closed loan volume - portfolio $ 332,918 $ 352,465 $ 446,088 $ 446,712 $ 311,149 (6 )% 7 %
    Closed loan volume - for-sale 764,076     794,820     843,720     997,225     862,155   (4 )% (11 )%
    Closed loan volume - total $ 1,096,994     $ 1,147,285     $ 1,289,808     $ 1,443,937     $ 1,173,304   (4 )% (7 )%
     

    Gain on sale margin:

    Based on for-sale volume 3.72 % 3.19 % 3.19 % 3.38 % 3.65 % 0.53 0.07
     
    nm = not meaningful

    Umpqua Holdings Corporation
    Ron Farnsworth, 503-727-4108
    EVP/Chief Financial Officer
    ronfarnsworth@umpquabank.com
    or
    Bradley Howes, 503-727-4226
    SVP/Director of Investor Relations
    bradhowes@umpquabank.com

    Source: Umpqua Holdings Corporation