• Umpqua Holdings Corporation
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  • Umpqua Reports Second Quarter 2016 Results
    Company Release - 07/20/2016 16:15

    Net earnings of $54.3 million, or $0.25 per common share, up from $0.22 in first quarter

    Operating earnings1 of $69.2 million, or $0.31 per common share, up from $0.29 in first quarter

    Top-line revenue growth reflecting robust mortgage banking business and strong loan and lease growth

    Continued progress in organization-wide efficiency initiatives

    PORTLAND, Ore.--(BUSINESS WIRE)-- Umpqua Holdings Corporation (NASDAQ: UMPQ) (the “Company”) reported net earnings available to common shareholders of $54.3 million for the second quarter of 2016, compared to $47.5 million for the first quarter of 2016 and $54.7 million for the second quarter of 2015. Earnings per diluted common share were $0.25 for the second quarter of 2016, compared to $0.22 for the first quarter of 2016 and $0.25 for the second quarter of 2015.

    “Despite the continuing low interest rate environment, Umpqua's financial performance for the second quarter was solid; highlighted by strong performance in the mortgage banking business and double-digit growth in loans and leases, combined with further reductions in the core expense base from ongoing efficiency initiatives,” said Ray Davis, president and CEO of Umpqua Holdings Corporation. “We recognize that ongoing margin pressure increases our need to become as efficient as possible, while not eroding the quality of the customer service experience the company provides. As we move into the second half of the year, our loan pipeline remains at record levels and further efficiency initiatives are in process. We will also continue to look for, and take advantage of, growth opportunities such as our FinPac and Pivotus subsidiaries.”

    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)

    Jun 30,
    2016

     

    Mar 31,
    2016

     

    Dec 31,
    2015

     

    Sep 30,
    2015

     

    Jun 30,
    2015

    Net earnings available to common shareholders $ 54,255   $ 47,540   $ 62,923   $ 57,523   $ 54,691
    Adjustments:
    Loss from change in fair value of MSR asset 13,940 20,625 469 10,103 423
    Gain on investment securities, net (162 ) (696 ) (2,567 ) (220 ) (19 )
    Net loss on junior subordinated debentures carried at fair value 1,572 1,572 1,589 1,590 1,572
    Loss (gain) from change in fair value of swap derivative 1,493 1,793 (715 ) 1,181 (1,408 )
    Merger related expenses 6,634 3,450 3,712 5,991 21,797
    Goodwill impairment 142
    Exit or disposal costs 1,434     347              
    Total pre-tax adjustments 24,911 27,233 2,488 18,645 22,365
    Income tax effect (1) (9,965 )   (10,836 )   (995 )   (7,458 )   (8,946 )
    Net adjustments 14,946     16,397     1,493     11,187     13,419  
    Operating earnings $ 69,201     $ 63,937     $ 64,416     $ 68,710     $ 68,110  
     

    Earnings per diluted share:

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

    Financial Highlights (compared to prior quarter):

    • Delivered solid financial performance:
      • Net interest income decreased by $8.5 million, primarily driven by a lower level of credit discount accretion recorded on loans acquired from Sterling, as well as lower average yields on interest-earning assets. Net interest income in the first quarter of 2016 included $6.5 million of accelerated credit discount accreted from the sale of purchase credit impaired loans, which did not recur in the second quarter of 2016;
      • Provision for loan and lease losses increased by $5.8 million, driven primarily by higher net charge-offs;
      • Non-interest income increased by $28.7 million, driven primarily by increased for sale mortgage originations and a higher home lending gain on sale margin, along with increased services charges, income from portfolio loan sales and debt capital markets revenue. Current period non-interest income includes a charge of $13.9 million related to negative fair value adjustments to the mortgage servicing rights (“MSR”) asset and a charge of $1.5 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 $22.3 million;
      • Non-interest expense increased by $4.5 million. Excluding the impact of non-operating items1, total non-interest expense increased by $393,000, and included a $5.9 million increase in mortgage banking expenses related to higher mortgage origination volume;
    • Strong balance sheet:
      • Loan and lease growth of $399.7 million, or 9% annualized, including $135.7 million of loan sales and $9.8 million of loans transferred to held for sale. Gross loan and lease growth (prior to the impact of loan sales and transfers) of $545.2 million, or 13% annualized;
      • Deposit growth of $95.5 million, or 2% annualized, which included large seasonal outflows related to tax payments;
      • Loan to deposit ratio increased to 95% from 93%;
    • Prudently managed capital:
      • Book value per share increased to $17.70 per share from $17.62 per share, and tangible book value per share1 increased to $9.41 from $9.30 per share;
      • Estimated total risk-based capital ratio of 14.1% and estimated Tier 1 common to risk weighted assets ratio of 10.9%; and
      • Paid quarterly cash dividend of $0.16 per common share.

    Balance Sheet

    Total consolidated assets were $24.1 billion as of June 30, 2016, compared to $23.9 billion as of March 31, 2016 and $22.8 billion as of June 30, 2015. Including secured off-balance sheet lines of credit, the Company had total available liquidity of $7.8 billion as of June 30, 2016, representing 32% of total assets and 43% of total deposits.

    Gross loans and leases were $17.4 billion as of June 30, 2016, an increase of $399.7 million, or 9% annualized, from $17.0 billion as of March 31, 2016. During the second quarter of 2016, the Company sold $135.7 million of portfolio residential mortgage loans. In addition, $9.8 million of portfolio residential mortgage loans were transferred to held for sale, and are expected to be sold during the third quarter of 2016. Excluding the combined impact of the loan sales and transfers to held for sale, gross loan growth was $545.2 million, or 13% annualized.

    Total deposits were $18.3 billion as of June 30, 2016, an increase of $95.5 million, or 2% annualized, from $18.2 billion as of March 31, 2016. This increase was primarily attributable to growth in savings and time deposits, and was partially offset by seasonal deposit outflows related to tax payments.

    Net Interest Income

    Net interest income was down $8.5 million from the prior quarter, driven primarily by a $6.4 million linked quarter decline in the level of interest income arising from the accretion of the credit discount recorded on loans acquired from Sterling, along with lower average yields on interest-earnings assets. These decreases were partially offset by growth in earning assets.

    The Company’s net interest margin was 4.08% for the second quarter of 2016, down from 4.34% for the first quarter of 2016. This decrease reflects the lower level of accretion of the credit discount, as well as lower average yields on interest-earning assets resulting from the continued low interest-rate environment and the Company's ongoing efforts to manage the target long-term portfolio mix.

    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 second quarter of 2016, the Company reported $10.1 million of accretion related to the Sterling credit discount in interest income, as compared to $16.5 million in the prior quarter. As of June 30, 2016, the purchased non-credit impaired loans had approximately $57.5 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 $37.4 million of remaining total discount.

    The allowance for loan and lease losses was $131.0 million, or 0.76% of loans and leases, as of June 30, 2016. To provide better comparability to prior periods, on a pro-forma basis this ratio would have been approximately 1.3% as of June 30, 2016 and 1.4% as of March 31, 2016, after grossing up the allowance for loan and lease losses and total loans and leases by the amount of the credit discount remaining as of the respective quarter-end.

    The provision for loan and lease losses was $10.6 million for the second quarter of 2016, a $5.8 million increase from the prior quarter level. This increase was driven primarily by higher charge-offs, net of recoveries, which increased to $9.8 million for the second quarter of 2016, compared to $4.9 million in the prior quarter. Non-performing assets decreased to $64.6 million, or 0.27% of total assets, as of June 30, 2016, compared to $72.6 million, or 0.30% of total assets, as of March 31, 2016.

    Non-interest Income

    Total reported non-interest income was $74.7 million for the second quarter of 2016, up $28.7 million from the prior quarter. The current quarter non-interest income included a charge of $13.9 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 $1.5 million related to a decline in the fair value of debt capital market swap derivatives, also driven by the decline in long-term interest rates during the quarter.

    On an operating basis1, non-interest income increased by $22.3 million from the prior quarter, driven primarily by higher revenue from the origination and sale of residential mortgages, service charges, debt capital markets revenue and income related to portfolio loan sales. Home lending gain on sale margin increased to 4.02%, as compared to 3.72% in the prior quarter. For sale mortgage originations increased by 37% from the prior quarter level, reflecting higher seasonal purchase originations and heightened refinance activity due to the decline in long-term interest rates. Of the current quarter’s mortgage production, 70% related to purchase activity, as compared to 58% for the prior quarter and 59% for the same period in the prior year.

    Revenue related to the servicing of residential mortgage loans increased by 13% from the prior quarter, and has increased by 28% from the same period in the prior year. These increases reflect a higher net servicing fee revenue due to the conversion of the Company's customers to its own mortgage servicing platform, along with the growth in residential mortgage loans serviced for others.

    Non-interest Expense

    Non-interest expense was $188.5 million for the second quarter of 2016, which included $6.6 million of merger-related expenses and $1.4 million of exit or disposal costs. This compares to $184.0 million, including $3.5 million of merger-related expenses and $347,000 of exit or disposal costs for the first quarter of 2016.

    On an operating basis1, non-interest expense increased by $393,000 from the prior quarter. Mortgage banking expenses increased by $5.9 million from the prior quarter, consistent with the higher level of mortgage origination volume in the quarter. This increase was mostly offset by lower expense in several other categories, along with a $2.8 million linked quarter decrease in loss on other real estate owned.

    Capital

    As of June 30, 2016, the Company’s book value per share increased to $17.70, from $17.62 in the prior quarter, and its tangible book value per common share1 increased to $9.41, from $9.30 in the prior quarter.

    The Company’s estimated total risk-based capital ratio was 14.1% and its estimated Tier 1 common to risk weighted assets ratio was 10.9% as of June 30, 2016. The Company remains above current “well-capitalized” regulatory minimums. The regulatory capital ratios as of June 30, 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 these 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)

    Jun 30,
    2016

     

    Mar 31,
    2016

     

    Dec 31,
    2015

     

    Sep 30,
    2015

     

    Jun 30,
    2015

    Seq.
    Quarter

     

    Year over
    Year

    Net earnings available to common shareholders $ 54,255   $ 47,540   $ 62,923   $ 57,523   $ 54,691 14 %   (1 )%
    Adjustments:
    Loss from change in fair value of MSR asset 13,940 20,625 469 10,103 423 (32 )% nm
    Gain on investment securities, net (162 ) (696 ) (2,567 ) (220 ) (19 ) (77 )% 753 %
    Net loss on junior subordinated debentures carried at fair value 1,572 1,572 1,589 1,590 1,572 0 % 0 %
    Loss (gain) from change in fair value of swap derivative 1,493 1,793 (715 ) 1,181 (1,408 ) (17 )% (206 )%
    Merger related expenses 6,634 3,450 3,712 5,991 21,797 92 % (70 )%
    Goodwill impairment 142 nm nm
    Exit or disposal costs 1,434     347               313 % nm
    Total pre-tax adjustments 24,911 27,233 2,488 18,645 22,365 (9 )% 11 %
    Income tax effect (1) (9,965 )   (10,836 )   (995 )   (7,458 )   (8,946 ) (8 )% 11 %
    Net adjustments 14,946     16,397     1,493     11,187     13,419   (9 )% 11 %
    Operating earnings $ 69,201     $ 63,937     $ 64,416     $ 68,710     $ 68,110   8 % 2 %
     

    Earnings per diluted share:

    Earnings available to common shareholders $ 0.25 $ 0.22 $ 0.28 $ 0.26 $ 0.25 14 % 0 %
    Operating earnings $ 0.31 $ 0.29 $ 0.29 $ 0.31 $ 0.31 7 % 0 %
     
    Six Months Ended% Change

    Jun 30,
    2016

     

    Jun 30,
    2015

    Year over
    Year

     
    Net earnings available to common shareholders $ 101,795 $ 101,736 0 %
    Adjustments:
    Loss from change in fair value of MSR asset 34,565 10,151 241 %
    Gain on investment securities, net (858 ) (135 ) 536 %
    Net loss on junior subordinated debentures carried at fair value 3,144 3,127 1 %
    Loss (gain) from change in fair value of swap derivative 3,286 (627 ) (624 )%
    Merger related expenses 10,084 35,879 (72 )%
    Goodwill impairment 142 nm
    Exit or disposal costs 1,781       nm
    Total pre-tax adjustments 52,144 48,395 8 %
    Income tax effect (1) (20,801 )   (19,358 ) 7 %
    Net adjustments 31,343     29,037   8 %
    Operating earnings $ 133,138     $ 130,773   2 %
     

    Earnings per diluted share:

    Earnings available to common shareholders $ 0.46 $ 0.46 0 %
    Operating earnings $ 0.60 $ 0.59 2 %
     
    (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)

    Jun 30,
    2016

     

    Mar 31,
    2016

     

    Dec 31,
    2015

     

    Sep 30,
    2015

     

    Jun 30,
    2015

    Non-interest income (GAAP) $ 74,659   $ 45,951   $ 69,345   $ 61,372   $ 81,102
    Adjustments:
    Loss from change in fair value of MSR asset 13,940 20,625 469 10,103 423
    Loss (gain) from change in fair value of swap derivative 1,493 1,793 (715 ) 1,181 (1,408 )
    Net loss on junior subordinated debentures carried at fair value 1,572 1,572 1,589 1,590 1,572
    Gain on investment securities, net (162 )   (696 )   (2,567 )   (220 )   (19 )
    Non-interest income (operating basis) $ 91,502     $ 69,245     $ 68,121     $ 74,026     $ 81,670  
     
    Quarter Ended

    Jun 30,
    2016

     

    Mar 31,
    2016

     

    Dec 31,
    2015

     

    Sep 30,
    2015

     

    Jun 30,
    2015

    Non-interest expense (GAAP) $ 188,511 $ 183,989 185,911 $ 183,194 $ 201,918
    Adjustments:
    Merger related expenses (6,634 ) (3,450 ) (3,712 ) (5,991 ) (21,797 )
    Goodwill impairment (142 )
    Exit or disposal costs (1,434 )   (347 )          

     

    Non-interest expense (operating basis) $ 180,443     $ 180,050     $ 182,199     $ 177,203     $ 180,121  
     
    Six Months Ended
    (Dollars in thousands)

    Jun 30,
    2016

     

    Jun 30,
    2015

    Non-interest income (GAAP) $ 120,610 $ 145,007
    Adjustments:
    Loss from change in fair value of MSR asset 34,565 10,151
    Loss (gain) from change in fair value of swap derivative 3,286 (627 )

     

    Net loss on junior subordinated debentures carried at fair value 3,144 3,127
    Gain on investment securities, net (858 )   (135 )
    Non-interest income (operating basis) $ 160,747     $ 157,523  
     
    Six Months Ended

    Jun 30,
    2016

     

    Jun 30,
    2015

    Non-interest expense (GAAP) $ 372,500 $ 394,537
    Adjustments:
    Merger related expenses (10,084 ) (35,879 )
    Goodwill impairment (142 )
    Exit or disposal costs (1,781 )    
    Non-interest expense (operating basis) $ 360,493     $ 358,658  
     

    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)Jun 30, 2016   Mar 31, 2016   Dec 31, 2015   Sep 30, 2015   Jun 30, 2015
    Total shareholders' equity $ 3,902,158 $ 3,878,630 $ 3,849,334 $ 3,835,552 $ 3,804,179
    Subtract:
    Goodwill 1,787,651 1,787,651 1,787,793 1,788,640 1,788,640
    Other intangible assets, net 40,620     42,948     45,508     48,314     51,120  
    Tangible common shareholders' equity $ 2,073,887     $ 2,048,031     $ 2,016,033     $ 1,998,598     $ 1,964,419  
    Total assets $ 24,132,507 $ 23,935,686 $ 23,406,381 $ 23,181,006 $ 22,807,886
    Subtract:
    Goodwill 1,787,651 1,787,651 1,787,793 1,788,640 1,788,640
    Other intangible assets, net 40,620     42,948     45,508     48,314     51,120  
    Tangible assets $ 22,304,236     $ 22,105,087     $ 21,573,080     $ 21,344,052     $ 20,968,126  
    Common shares outstanding at period end 220,482 220,171 220,171 220,217 220,280
     
    Common equity ratio 16.17 % 16.20 % 16.45 % 16.55 % 16.68 %
    Tangible common equity ratio 9.30 % 9.26 % 9.35 % 9.36 % 9.37 %
    Book value per common share $ 17.70 $ 17.62 $ 17.48 $ 17.42 $ 17.27
    Tangible book value per common share $ 9.41 $ 9.30 $ 9.16 $ 9.08 $ 8.92
     

    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 customer experience, 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, and Pivotus Ventures, an innovation studio headquartered in Silicon Valley focused on creating key technologies and business models that transform finance and commerce. Umpqua Holdings Corporation is headquartered in Portland, Oregon. For more information, visit www.umpquaholdingscorp.com.

    Earnings Conference Call Information

    The Company will host its second quarter 2016 earnings conference call on Thursday, July 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 second quarter 2016 financial results. There will be a live question-and-answer session following the presentation. To join the call, please dial (888) 471-3842 ten minutes prior to the start time and enter conference ID: 4454894. A re-broadcast will be available approximately two hours after the call by dialing (888) 203-1112 and entering conference ID 4454894. 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, growth opportunities at FinPac and with Pivotus Ventures, and results of efficiency 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 inability to successfully implement efficiency initiatives; 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)

    Jun 30,
    2016

     

    Mar 31,
    2016

     

    Dec 31,
    2015

     

    Sep 30,
    2015

     

    Jun 30,
    2015

    Seq.
    Quarter

     

    Year over
    Year

    Interest income:    
    Loans and leases $ 210,290 $ 217,928 $ 219,440 $ 218,975 $ 217,143 (4 )% (3

    )%

    Interest and dividends on investments:
    Taxable 11,963 13,055 12,654 11,882 11,517 (8 )% 4 %
    Exempt from federal income tax 2,183 2,235 2,363 2,393 2,410 (2 )% (9 )%
    Dividends 365 366 326 112 169 0 % 116 %
    Temporary investments & interest bearing deposits 652     480     422     440     549   36 % 19 %
    Total interest income 225,453 234,064 235,205 233,802 231,788 (4 )% (3 )%

    Interest expense:

    Deposits 8,540 8,413 7,905 7,450 7,381 2 % 16 %
    Repurchase agreements 32 36 39 43 43 (11 )% (26 )%
    Term debt 3,848 4,186 3,885 3,629 3,492 (8 )% 10 %
    Junior subordinated debentures 3,835     3,727     3,542     3,465     3,406   3 % 13 %
    Total interest expense 16,255 16,362 15,371 14,587 14,322 (1 )% 13 %
    Net interest income 209,198 217,702 219,834 219,215 217,466 (4 )% (4 )%
    Provision for loan and lease losses 10,589 4,823 4,545 8,153 11,254 120 % (6 )%
    Non-interest income:
    Service charges on deposits 15,667 14,516 15,039 15,616 14,811 8 % 6 %
    Brokerage revenue 4,580 4,094 4,061 5,003 4,648 12 % (1 )%
    Residential mortgage banking revenue, net 36,783 15,426 32,440 24,041 40,014 138 % (8 )%
    Gain on investment securities, net 162 696 2,567 220 19 (77 )% 753 %
    Gain on loan sales 5,640 2,371 1,729 5,212 8,711 138 % (35 )%
    Loss on junior subordinated debentures carried at fair value (1,572 ) (1,572 ) (1,589 ) (1,590 ) (1,572 ) 0 % 0 %
    BOLI income 2,152 2,139 1,841 2,165 2,043 1 % 5 %
    Other income 11,247     8,281     13,257     10,705     12,428   36 % (10 )%
    Total non-interest income 74,659 45,951 69,345 61,372 81,102 62 % (8 )%
    Non-interest expense:
    Salaries and employee benefits 107,545 106,538 106,203 106,482 110,807 1 % (3 )%
    Occupancy and equipment, net 37,850 38,295 38,722 37,235 34,868 (1 )% 9 %
    Intangible amortization 2,328 2,560 2,806 2,806 2,807 (9 )% (17 )%
    FDIC assessments 3,693 3,721 3,742 3,369 3,155 (1 )% 17 %
    (Gain) loss on other real estate owned, net (1,457 ) 1,389 (242 ) (158 ) 480 (205 )% (404 )%
    Merger related expenses 6,634 3,450 3,712 5,991 21,797 92 % (70 )%
    Goodwill impairment 142 nm nm
    Other expense 31,918     27,894     30,968     27,469     28,004   14 % 14 %
    Total non-interest expense 188,511 183,989 185,911 183,194 201,918 2 % (7 )%
    Income before provision for income taxes 84,757 74,841 98,723 89,240 85,396 13 % (1 )%
    Provision for income taxes 30,470     27,272     35,704     31,633     30,612   12 % 0 %
    Net income 54,287 47,569 63,019 57,607 54,784 14 % (1 )%
    Dividends and undistributed earnings allocated to participating securities 32     29     96     84     93   10 % (66 )%
    Net earnings available to common shareholders $ 54,255     $ 47,540     $ 62,923     $ 57,523     $ 54,691   14 % (1 )%
     
    Weighted average basic shares outstanding 220,421 220,227 220,202 220,297 220,463 0 % 0 %
    Weighted average diluted shares outstanding 220,907 221,052 220,930 220,904 221,150 0 % 0 %
    Earnings per common share – basic $ 0.25 $ 0.22 $ 0.29 $ 0.26 $ 0.25 14 % 0 %
    Earnings per common share – diluted $ 0.25 $ 0.22 $ 0.28 $ 0.26 $ 0.25 14

    %

    0 %
    nm = not meaningful

     

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

    Jun 30,
    2016

     

    Jun 30,
    2015

    Year over
    Year

    Interest income  
    Loans and leases $ 428,218 $ 431,018 (1 )%
    Interest and dividends on investments:
    Taxable 25,018 23,306 7 %
    Exempt from federal income tax 4,418 4,891 (10 )%
    Dividends 731 270 171 %
    Temporary investments & interest bearing deposits 1,132     1,374   (18 )%
    Total interest income 459,517 460,859 0 %
    Interest expense
    Deposits 16,953 14,484 17 %
    Repurchase agreements 68 91 (25 )%
    Term debt 8,034 6,956 15 %
    Junior subordinated debentures 7,562     6,743   12 %
    Total interest expense 32,617 28,274 15 %
    Net interest income 426,900 432,585 (1 )%
    Provision for loan and lease losses 15,412 23,891 (35 )%
    Non-interest income
    Service charges on deposits 30,183 29,085 4 %
    Brokerage revenue 8,674 9,417 (8 )%
    Residential mortgage banking revenue, net 52,209 68,241 (23 )%
    Gain on investment securities, net 858 135 536 %
    Gain on loan sales 8,011 15,439 (48 )%
    Loss on junior subordinated debentures carried at fair value (3,144 ) (3,127 ) 1 %
    BOLI Income 4,291 4,345 (1 )%
    Other income 19,528     21,472   (9 )%
    Total non-interest income 120,610 145,007 (17 )%
    Non-interest expense
    Salaries and employee benefits 214,083 218,251 (2 )%
    Occupancy and equipment, net 76,145 67,018 14 %
    Intangible amortization 4,888 5,613 (13 )%
    FDIC assessments 7,414 6,369 16 %
    (Gain) loss on other real estate owned, net (68 ) 2,294 (103 )%
    Merger related expenses 10,084 35,879 (72 )%
    Goodwill impairment 142

    nm

    Other expense 59,812     59,113   1 %
    Total non-interest expense 372,500 394,537 (6 )%
    Income before provision for income taxes 159,598 159,164 0 %
    Provision for income taxes 57,742     57,251   1 %
    Net income 101,856 101,913 0 %
    Dividends and undistributed earnings
    allocated to participating securities 61     177   (66 )%
    Net earnings available to common shareholders $ 101,795     $ 101,736   0 %
     
    Weighted average basic shares outstanding 220,324 220,406 0 %
    Weighted average diluted shares outstanding 221,001 221,088 0 %
    Earnings per common share – basic $ 0.46 $ 0.46 0 %
    Earnings per common share – diluted $ 0.46 $ 0.46 0 %
    nm = not meaningful
     
    Umpqua Holdings Corporation
    Consolidated Balance Sheets
    (Unaudited)
               
    % Change
    (In thousands, except per share data)Jun 30, 2016   Mar 31, 2016   Dec 31, 2015   Sep 30, 2015   Jun 30, 2015

    Seq.
    Quarter

     

    Year over
    Year

    Assets:  
    Cash and due from banks $ 369,535 $ 299,871 $ 277,645 $ 283,773 $ 364,256 23 % 1 %
    Interest bearing cash and temporary investments 535,828 613,049 496,080 673,843 515,691 (13 )% 4 %
    Investment securities:
    Trading, at fair value 10,188 9,791 9,586 9,509 10,005 4 % 2 %
    Available for sale, at fair value 2,482,072 2,542,535 2,522,539 2,482,478 2,557,245 (2 )% (3 )%
    Held to maturity, at amortized cost 4,382 4,525 4,609 4,699 4,807 (3 )% (9 )%
    Loans held for sale 552,681 659,264 363,275 398,015 419,704 (16 )% 32 %
    Loans and leases 17,355,240 16,955,583 16,866,536 16,406,636 15,988,752 2 % 9 %
    Allowance for loan and lease losses (131,042 )   (130,243 )   (130,322 )   (130,133 )   (127,071 ) 1 % 3 %
    Loans and leases, net 17,224,198 16,825,340 16,736,214 16,276,503 15,861,681 2 % 9 %
    Restricted equity securities 47,542 47,545 46,949 46,904 46,917 0 % 1 %
    Premises and equipment, net 312,647 322,822 328,734 330,306 331,208 (3 )% (6 )%
    Goodwill 1,787,651 1,787,651 1,787,793 1,788,640 1,788,640 0 % 0 %
    Other intangible assets, net 40,620 42,948 45,508 48,314 51,120 (5 )% (21 )%
    Residential mortgage servicing rights, at fair value 112,095 117,172 131,817 124,814 127,206 (4 )% (12 )%
    Other real estate owned 16,437 20,411 22,307 23,892 23,038 (19 )% (29 )%
    Bank owned life insurance 295,444 293,703 291,892 297,321 295,551 1 % 0 %
    Deferred tax assets, net 63,038 108,865 138,082 149,320 181,245 (42 )% (65 )%
    Other assets 278,149     240,194     203,351     242,675     229,572   16 % 21 %
    Total assets $ 24,132,507     $ 23,935,686     $ 23,406,381     $ 23,181,006     $ 22,807,886   1 % 6 %
    Liabilities:

    Deposits

    $ 18,258,474 $ 18,162,974 $ 17,707,189 $ 17,467,024 $ 17,145,046 1 % 6 %
    Securities sold under agreements to repurchase 360,234 325,203 304,560 323,722 325,711 11 % 11 %
    Term debt 902,999 903,382 888,769 889,358 889,997 0 % 1 %
    Junior subordinated debentures, at fair value 258,660 256,917 255,457 253,665 252,214 1 % 3 %
    Junior subordinated debentures, at amortized cost 101,093 101,173 101,254 101,334 101,415 0 % 0 %
    Other liabilities 348,889     307,407     299,818     310,351     289,324   13 % 21 %
    Total liabilities 20,230,349 20,057,056 19,557,047 19,345,454 19,003,707 1 % 6 %
    Shareholders' equity:
    Common stock 3,517,240 3,518,792 3,520,591 3,517,751 3,517,557 0 % 0 %
    Retained earnings 362,258 343,421 331,301 303,729 281,573 5 % 29 %
    Accumulated other comprehensive income (loss) 22,660     16,417     (2,558 )   14,072     5,049   38 % 349 %
    Total shareholders' equity 3,902,158     3,878,630     3,849,334     3,835,552     3,804,179   1 % 3 %
    Total liabilities and shareholders' equity $ 24,132,507     $ 23,935,686     $ 23,406,381     $ 23,181,006     $ 22,807,886   1 % 6 %
     
    Common shares outstanding at period end 220,482 220,171 220,171 220,217 220,280 0 % 0 %
    Book value per common share $ 17.70 $ 17.62 $ 17.48 $ 17.42 $ 17.27 0 % 2 %
    Tangible book value per common share $ 9.41 $ 9.30 $ 9.16 $ 9.08 $ 8.92 1 % 5 %
    Tangible equity - common $ 2,073,887 $ 2,048,031 $ 2,016,033 $ 1,998,598 $ 1,964,419 1 % 6 %
    Tangible common equity to tangible assets 9.30 % 9.26 % 9.35 % 9.36 % 9.37 % 0.04 (0.07 )
    nm = not meaningful
     
     
    Umpqua Holdings Corporation
    Loan & Lease Portfolio
    (Unaudited)
                 
    (Dollars in thousands)Jun 30, 2016   Mar 31, 2016   Dec 31, 2015   Sep 30, 2015   Jun 30, 2015% Change
    Amount   Amount   Amount   Amount   Amount

    Seq.
    Quarter

     

    Year over
    Year

    Loans & leases:

    Commercial real estate:
    Non-owner occupied term, net $ 3,230,173 $ 3,165,154 $ 3,140,845 $ 3,148,288 $ 3,294,359 2 % (2 )%
    Owner occupied term, net 2,714,800 2,731,228 2,691,921 2,655,340 2,636,800 (1 )% 3 %
    Multifamily, net 2,972,060 2,945,826 3,074,918 2,961,609 2,859,884 1 % 4 %
    Commercial construction, net 370,600 343,519 301,892 287,757 244,354 8 % 52 %
    Residential development, net 111,941 121,025 99,459 94,380 76,734 (8 )% 46 %
    Commercial:

    Term, net

    1,478,784

    1,437,992

    1,425,009 1,398,346 1,374,528 3 % 8 %
    Lines of credit & other, net 1,123,182 1,041,516 1,043,076 1,014,523 981,897 8 % 14 %
    Leases & equipment finance, net 884,506 791,798 729,161 679,033 630,695 12 % 40 %
    Residential real estate:
    Mortgage, net 2,882,076 2,879,600 2,909,399 2,758,930 2,547,597 0 % 13 %
    Home equity lines & loans, net 989,814 943,254 923,667 910,287 882,596 5 % 12 %
    Consumer & other, net 597,304     554,671     527,189     498,143     459,308   8 % 30 %
    Total, net of deferred fees and costs $ 17,355,240     $ 16,955,583     $ 16,866,536     $ 16,406,636     $ 15,988,752   2 % 9 %
     

    Loan & leases mix:

    Commercial real estate:
    Non-owner occupied term, net 19 % 19 % 19 % 19 % 20 %
    Owner occupied term, net 16 % 16 % 16 % 16 % 16 %
    Multifamily, net 17 % 17 % 18 % 17 % 18 %
    Commercial construction, net 2 % 2 % 2

    %

    2 % 2 %
    Residential development, net 1 % 1 % 1 % 1 % %
    Commercial:
    Term, net 9 % 8 % 9 % 9 % 9 %
    Lines of credit & other, net 6 % 6 % 6 % 6 % 6 %
    Leases & equipment finance, net 4 % 5 % 4 % 4 % 4 %
    Residential real estate:
    Mortgage, net 17 % 17 % 17 % 17 % 16 %
    Home equity lines & loans, net 6 % 6 % 5 % 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)Jun 30, 2016   Mar 31, 2016   Dec 31, 2015   Sep 30, 2015   Jun 30, 2015% Change
    Amount   Amount   Amount   Amount   Amount

    Seq.
    Quarter

     

    Year over
    Year

    Deposits:

     

    Demand, non-interest bearing $ 5,475,986 $ 5,460,310 $ 5,318,591 $ 5,207,129 $ 4,927,526 0 % 11 %
    Demand, interest bearing 2,186,164 2,178,446 2,157,376 2,098,223 2,090,595 0 % 5 %
    Money market 6,782,232 6,814,160 6,599,516 6,514,174 6,374,624 0 % 6 %
    Savings 1,254,675 1,213,049 1,136,809 1,102,611 1,058,337 3 % 19 %
    Time 2,559,417     2,497,009     2,494,897     2,544,887     2,693,964   2 % (5 )%
    Total $ 18,258,474     $ 18,162,974     $ 17,707,189     $ 17,467,024     $ 17,145,046   1 % 6 %
     
    Total core deposits (1) $ 16,598,065 $ 16,559,943 $ 16,102,743 $ 15,940,229 $ 15,529,997 0 % 7 %
     

    Deposit mix:

    Demand, non-interest bearing 30 % 30 % 30 % 30 % 29 %
    Demand, interest bearing 12 % 12 % 12 % 12 % 12 %
    Money market 37 % 37 % 37 % 37 % 37 %
    Savings 7 % 7 % 6 % 6 % 6 %
    Time 14 %   14 %   15 %   15 %   16 %
    Total 100 %   100 %   100 %   100 %  

    100

    %
     

    Number of open accounts:

    Demand, non-interest bearing 379,996

     

    375,913 371,745 370,128 367,086
    Demand, interest bearing 84,434 85,731 86,745 88,171 90,021
    Money market 56,492 56,927 57,194 57,622 58,156
    Savings 157,849 156,846 154,176 153,534 152,404
    Time 47,850     47,794     47,672     48,168     49,983  
    Total 726,621     723,211     717,532    

    717,623

        717,650  
     

    Average balance per account:

    Demand, non-interest bearing $ 14.4 $ 14.5 $ 14.3 $ 14.1 $ 13.4
    Demand, interest bearing 25.9 25.4 24.9 23.8 23.2
    Money market 120.1 119.7 115.4 113.1 109.6
    Savings 7.9 7.7 7.4 7.2 6.9
    Time 53.5 52.2 52.3 52.8 53.9
    Total $ 25.1 $ 25.1 $ 24.7 $ 24.3 $ 23.9
     

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

     

    Umpqua Holdings Corporation

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

    Jun 30,
    2016

     

    Mar 31,
    2016

     

    Dec 31,
    2015

     

    Sep 30,
    2015

     

    Jun 30,
    2015

    Seq.
    Quarter

     

    Year over
    Year

    Non-performing assets:

    Loans and leases on non-accrual status $ 25,136 $ 30,045 $ 29,215 $ 30,989 $ 33,572 (16 )% (25 )%
    Loans and leases past due 90+ days & accruing (1) 23,076     22,144     15,169     9,967     13,529   4 % 71 %
    Total non-performing loans and leases 48,212 52,189 44,384 40,956 47,101 (8 )% 2 %

    Other real estate owned

    16,437     20,411     22,307     23,892     23,038   (19 )% (29 )%
    Total non-performing assets $ 64,649     $ 72,600     $ 66,691     $ 64,848     $ 70,139   (11 )% (8 )%
     

    Performing restructured loans and leases

    $ 40,848 $ 31,409 $ 31,355 $ 35,706 $ 37,023 30 % 10 %
    Loans and leases past due 31-89 days $ 29,640 $ 29,054 $ 28,423 $ 28,919 $ 25,553 2 % 16 %
    Loans and leases past due 31-89 days to total loans and leases 0.17 % 0.17 % 0.17 % 0.18 % 0.16 %
    Non-performing loans and leases to total loans and leases (1) 0.28 % 0.31 % 0.26 % 0.25 % 0.29 %
    Non-performing assets to total assets (1) 0.27 % 0.30 % 0.28 % 0.28 % 0.31 %
     

    (1) Excludes non-performing mortgage loans guaranteed by Ginnie Mae, which Umpqua has the unilateral right to repurchase but has not done so, totaling $11.3 million, $14.2 million, $19.2 million, $18.7 million, and $14.6 million at June 30, 2016, March 31, 2016, December 31, 2015, September 30, 2015, and June 30, 2015, respectively.

     
    Umpqua Holdings Corporation
    Credit Quality – Allowance for Loan and Lease Losses
    (Unaudited)
      Quarter Ended   % Change
    (Dollars in thousands)

    Jun 30,
    2016

     

    Mar 31,
    2016

     

    Dec 31,
    2015

     

    Sep 30,
    2015

     

    Jun 30,
    2015

    Seq.
    Quarter

     

    Year over
    Year

    Allowance for loan and lease losses:

             
    Balance beginning of period $ 130,243 $ 130,322 $ 130,133 $ 127,071 $ 120,104
    Provision for loan and lease losses 10,589 4,823 4,545 8,153 11,254 120 % (6 )%
    Charge-offs (12,682 ) (7,850 ) (7,108 ) (8,476 ) (7,442 ) 62 % 70 %

    Recoveries

    2,892     2,948     2,752     3,385     3,155   (2 )% (8 )%

    Net charge-offs

    (9,790 )   (4,902 )   (4,356 )   (5,091 )   (4,287 ) 100 % 128 %
    Total allowance for loan and lease losses 131,042 130,243 130,322 130,133 127,071 1 % 3 %

    Reserve for unfunded commitments

    3,531     3,482     3,574     3,081     2,864   1 % 23 %
    Total allowance for credit losses $ 134,573     $ 133,725     $ 133,896     $ 133,214     $ 129,935   1 % 4 %
     
    Net charge-offs to average loans and leases (annualized) 0.23 % 0.12 % 0.10 % 0.13 % 0.11 %
    Recoveries to gross charge-offs 22.80 % 37.55 % 38.72 % 39.94 % 42.39 %
    Allowance for loan and lease losses to loans and leases 0.76 % 0.77 % 0.77 % 0.79 % 0.79 %
    Allowance for credit losses to loans and leases 0.78 % 0.79 % 0.79 % 0.81 % 0.81 %
     
     
    Umpqua Holdings Corporation
    Credit Quality – Allowance for Loan and Lease Losses
    (Unaudited)
      Six Months Ended   % Change
    (Dollars in thousands)

    Jun 30,
    2016

     

    Jun 30,
    2015

    Year over
    Year

    Allowance for loan and lease losses:

     
    Balance beginning of period $ 130,322 $ 116,167
    Provision for loan and lease losses 15,412 23,891 (35 )%
    Charge-offs (20,532 ) (19,987 ) 3 %
    Recoveries 5,840     7,000   (17 )%

    Net charge-offs

    (14,692 )   (12,987 ) 13 %
    Total allowance for loan and lease losses 131,042 127,071 3 %
    Reserve for unfunded commitments 3,531     2,864   23 %
    Total allowance for credit losses $ 134,573     $ 129,935   4 %
     
    Net charge-offs to average loans and leases (annualized) 0.17 % 0.17 %
    Recoveries to gross charge-offs 28.44 % 35.02 %
     
     
    Umpqua Holdings Corporation
    Selected Ratios
    (Unaudited)
             
    Quarter Ended% Change

    Jun 30,
    2016

     

    Mar 31,
    2016

     

    Dec 31,
    2015

     

    Sep 30,
    2015

     

    Jun 30,
    2015

    Seq.
    Quarter

     

    Year over
    Year

    Average Rates:

       
    Yield on loans and leases 4.82 % 5.08 % 5.19 % 5.29 % 5.46 % (0.26 ) (0.64 )
    Yield on loans held for sale 3.82 % 4.08 % 3.80 % 4.07 % 3.24 % (0.26 ) 0.58
    Yield on taxable investments 2.14 % 2.32 % 2.26 % 2.11 % 2.03 % (0.18 ) 0.11
    Yield on tax-exempt investments (1) 4.73 % 4.73 % 4.76 % 4.73 % 4.67 % 0.06
    Yield on interest bearing cash and temporary investments 0.51 % 0.54 % 0.28 % 0.25 % 0.26 % (0.03 ) 0.25
    Total yield on earning assets (1) 4.39 % 4.67 % 4.68 % 4.71 % 4.77 % (0.28 ) (0.38 )
     

    Cost of interest bearing deposits

    0.27 % 0.27 % 0.26 % 0.24 % 0.24 % 0.03
    Cost of securities sold under agreements
    to repurchase and fed funds purchased 0.04 % 0.05 % 0.05 % 0.05 % 0.05 % (0.01 ) (0.01 )
    Cost of term debt 1.72 % 1.88 % 1.73 % 1.62 % 1.51 % (0.16 ) 0.21
    Cost of junior subordinated debentures 4.30 % 4.20 % 3.96 % 3.89 % 3.88 % 0.10 0.42
    Total cost of interest bearing liabilities 0.46 % 0.47 % 0.44 % 0.42 % 0.41 % (0.01 ) 0.05
     
    Net interest spread (1) 3.93 % 4.20 % 4.24 % 4.29 % 4.36 % (0.27 ) (0.43 )
    Net interest margin (1) 4.08 % 4.34 % 4.37 % 4.42 % 4.48 % (0.26 ) (0.40 )
     

    As reported (GAAP):

    Return on average assets 0.91 % 0.82 % 1.08 % 0.99 % 0.96 % 0.09 (0.05 )
    Return on average tangible assets 0.99 % 0.89 % 1.17 % 1.08 % 1.05 % 0.10 (0.06 )
    Return on average common equity 5.61 % 4.93 % 6.49 % 5.97 % 5.76 % 0.68 (0.15 )
    Return on average tangible common equity 10.59 % 9.34 % 12.41 % 11.51 % 11.16 % 1.25 (0.57 )
    Efficiency ratio – Consolidated 66.15 % 69.48 % 64.02 % 65.00 % 67.35 % (3.33 ) (1.20 )
    Efficiency ratio – Bank 64.44 % 67.29 % 62.40 % 63.08 % 65.74 % (2.85 ) (1.30 )
     

    Operating basis (non-GAAP): (2)

    Return on average assets 1.16 % 1.10 % 1.10 % 1.19 % 1.20 % 0.06 (0.04 )
    Return on average tangible assets 1.26 % 1.19 % 1.20 % 1.29 % 1.30 % 0.07 (0.04 )
    Return on average common equity 7.16 % 6.63 % 6.64 % 7.13 % 7.17 % 0.53 (0.01 )
    Return on average tangible common equity 13.51 % 12.57 % 12.70 % 13.74 % 13.89 % 0.94 (0.38 )
    Efficiency ratio – Consolidated 59.78 % 62.49 % 63.00 % 60.17 % 59.96 % (2.71 ) (0.18 )
    Efficiency ratio – Bank 58.48 % 60.89 % 61.72 % 58.84 % 58.68 % (2.41 ) (0.20 )
     

    (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
    Selected Ratios
    (Unaudited)
       
    Six Months Ended% Change

    Jun 30,
    2016

     

    Jun 30,
    2015

    Year over
    Year

    Average Rates:

     
    Yield on loans and leases 4.95 % 5.52 % (0.57 )
    Yield on loans held for sale 3.93 % 3.48 % 0.45
    Yield on taxable investments 2.23 % 2.08 % 0.15
    Yield on tax-exempt investments (1) 4.73 % 4.71 % 0.02
    Yield on interest bearing cash and temporary investments 0.52 % 0.25 % 0.27
    Total yield on earning assets (1) 4.53 % 4.79 % (0.26 )
     
    Cost of interest bearing deposits 0.27 % 0.24 % 0.03
    Cost of securities sold under agreements
    to repurchase and fed funds purchased 0.04 % 0.06 % (0.02 )
    Cost of term debt 1.80 % 1.46 % 0.34
    Cost of junior subordinated debentures 4.25 % 3.87 % 0.38
    Total cost of interest bearing liabilities 0.46 % 0.41 % 0.05
     
    Net interest spread (1) 4.07 % 4.38 % (0.31 )
    Net interest margin (1) 4.21 % 4.49 % (0.28 )
     

    As reported (GAAP):

    Return on average assets 0.87 % 0.90 % (0.03 )
    Return on average tangible assets 0.94 % 0.98 % (0.04 )
    Return on average common equity 5.27 % 5.39 % (0.12 )
    Return on average tangible common equity 9.97 % 10.45 % (0.48 )
    Efficiency ratio – Consolidated 67.75 % 68.01 % (0.26 )
    Efficiency ratio – Bank 65.81 % 66.38 % (0.57 )
     

    Operating basis (non-GAAP): (2)

    Return on average assets 1.13 % 1.16 % (0.03 )
    Return on average tangible assets 1.23 % 1.26 % (0.03 )
    Return on average common equity 6.89 % 6.93 % (0.04 )
    Return on average tangible common equity 13.04 % 13.43 % (0.39 )
    Efficiency ratio – Consolidated 61.11 % 60.52 % 0.59
    Efficiency ratio – Bank 59.66 % 59.25 % 0.41
     

    (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)

    Jun 30,
    2016

     

    Mar 31,
    2016

     

    Dec 31,
    2015

     

    Sep 30,
    2015

     

    Jun 30,
    2015

    Seq.
    Quarter

     

    Year over
    Year

    Temporary investments & interest bearing cash $ 514,881   $ 356,674   $ 608,250   $ 693,114   $ 861,775 44 % (40 )%
    Investment securities, taxable 2,304,998 2,311,589 2,293,429 2,276,698 2,303,879 0 % 0 %
    Investment securities, tax-exempt 280,841 287,085 302,443 307,960 313,899 (2 )% (11 )%
    Loans held for sale 403,964 297,732 334,428 357,905 368,111 36 % 10 %
    Loans and leases 17,234,220   17,007,929   16,514,740   16,155,395   15,730,269   1 % 10 %
    Total interest earning assets 20,738,904 20,261,009 20,053,290 19,791,072 19,577,933 2 % 6 %
    Goodwill & other intangible assets, net 1,829,407 1,832,046 1,835,821 1,838,740 1,841,535 0 % (1 )%

    Total assets

    23,896,315 23,415,252 23,196,213 22,946,464 22,781,479 2 % 5 %
     
    Non-interest bearing demand deposits 5,466,098 5,289,810 5,285,992 5,108,430 4,852,455 3 % 13 %

    Interest bearing deposits

    12,644,442     12,411,005     12,249,333   12,225,691   12,274,814   2 % 3 %
    Total deposits 18,110,540 17,700,815 17,535,325 17,334,121 17,127,269 2 % 6 %
    Interest bearing liabilities 14,249,349 13,976,678 13,812,644 13,798,350 13,880,480 2 % 3 %
     
    Shareholders’ equity - common 3,889,593 3,878,540 3,847,587 3,822,201 3,807,703 0 % 2 %
    Tangible common equity (1) 2,060,186 2,046,494 2,011,766 1,983,461 1,966,168 1 % 5 %
     
       
    Umpqua Holdings Corporation

    Average Balances

    (Unaudited)
    Six Months Ended% Change
    (Dollars in thousands)

    Jun 30,
    2016

    Jun 30,
    2015

    Year over
    Year

    Temporary investments & interest bearing cash $ 435,777 $ 1,091,447 (60 )%
    Investment securities, taxable 2,308,294 2,265,801 2 %
    Investment securities, tax-exempt 283,963 316,258 (10 )%
    Loans held for sale 350,848 320,545 9 %
    Loans and leases 17,121,152   15,534,593   10 %
    Total interest earning assets 20,500,034 19,528,644 5 %
    Goodwill & other intangible assets, net 1,830,726 1,841,960 (1 )%
    Total assets 23,655,877 22,737,077 4 %
     
    Non-interest bearing demand deposits 5,377,954 4,830,793 11 %
    Interest bearing deposits 12,527,723   12,233,057   2 %
    Total deposits 17,905,677 17,063,850 5 %
    Interest bearing liabilities 14,113,013 13,861,456 2 %
     
    Shareholders’ equity - common 3,884,067 3,805,879 2 %
    Tangible common equity (1) 2,053,341 1,963,919 5 %
     

    (1) Average tangible common equity is a non-GAAP financial measure. Average tangible common equity is calculated as average common shareholders’ equity less average goodwill and other intangible assets, net (excluding MSRs).

     
    Umpqua Holdings Corporation

    Residential Mortgage Banking Activity

    (unaudited)
         
    Quarter Ended% Change
    (Dollars in thousands)

    Jun 30,
    2016

     

    Mar 31,
    2016

     

    Dec 31,
    2015

     

    Sep 30,
    2015

     

    Jun 30,
    2015

    Seq.
    Quarter

     

    Year over
    Year

    Residential mortgage servicing rights:

           
    Residential mortgage loans serviced for others $ 13,564,242 $ 13,304,468 $ 13,047,266 $ 12,693,451 $ 12,302,866 2 % 10 %
    MSR asset, at fair value 112,095 117,172 131,817 124,814 127,206 (4 )% (12 )%
    MSR as % of serviced portfolio 0.83 % 0.88 % 1.01 % 0.98 % 1.03 %

    Residential mortgage banking revenue:

    Origination and sale $ 42,083 $ 28,409 $ 25,363 $ 26,904 $ 33,667 48 % 25 %
    Servicing 8,640 7,642 7,546 7,240 6,770 13 % 28 %
    Change in fair value of MSR asset (13,940 )   (20,625 )   (469 )   (10,103 )   (423 ) (32 )% nm
    Total $ 36,783     $ 15,426     $ 32,440     $ 24,041     $ 40,014   138 % (8 )%
     

    Closed loan volume:

    Closed loan volume - portfolio $ 365,926 $ 332,918 $ 352,465 $ 446,088 $ 446,712 10 % (18 )%
    Closed loan volume - for-sale 1,046,349     764,076     794,820     843,720     997,225   37 % 5 %
    Closed loan volume - total $ 1,412,275     $ 1,096,994     $ 1,147,285     $ 1,289,808     $ 1,443,937   29 % (2 )%
     

    Gain on sale margin:

    Based on for-sale volume 4.02 % 3.72 % 3.19 % 3.19 % 3.38 % 0.30 0.64
     
    Six Months Ended% Change

    Jun 30,
    2016

     

    Jun 30,
    2015

    Year over
    Year

    Residential mortgage banking revenue:

    Origination and sale $ 70,492 $ 65,165 8 %
    Servicing 16,282 13,227 23 %
    Change in fair value of MSR asset (34,565 )   (10,151 ) 241 %
    Total $ 52,209     $ 68,241   (23 )%
     

    Closed loan volume:

    Closed loan volume - portfolio $ 698,844 $ 757,861 (8 )%
    Closed loan volume - for-sale 1,810,425   1,859,380   (3 )%
    Closed loan volume - total $ 2,509,269   $ 2,617,241   (4 )%
     
     

    Gain on sale margin:

    Based on for-sale volume 3.89 % 3.50 % 0.39
     
    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