• Umpqua Holdings Corporation
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  • Umpqua Reports Third Quarter 2016 Results
    Company Release - 10/19/2016 16:15

    Net earnings of $61.8 million, or $0.28 per common share

    Operating earnings1 of $69.6 million, or $0.32 per common share

    Heightened focus on core deposit gathering; record quarterly deposit growth of $660 million, or 14% annualized

    Continued progress in re-balancing loan portfolio and increasing asset sensitivity

    PORTLAND, Ore.--(BUSINESS WIRE)-- Umpqua Holdings Corporation (NASDAQ: UMPQ) (the “Company”) reported net earnings available to common shareholders of $61.8 million for the third quarter of 2016, compared to $54.3 million for the second quarter of 2016 and $57.5 million for the third quarter of 2015. Earnings per diluted common share were $0.28 for the third quarter of 2016, compared to $0.25 for the second quarter of 2016 and $0.26 for the third quarter of 2015.

    “Results for the third quarter of 2016 were driven by strong mortgage banking revenues, record deposit growth and continued disciplined expense management,” said Ray Davis, president and CEO of Umpqua Holdings Corporation. “We continue to take advantage of growth opportunities within our markets without sacrificing our credit culture and underwriting standards, enabling us to diversify the long-term portfolio mix and increase asset sensitivity, which we believe will best position Umpqua for any economic cycle or rate environment.”

    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)

    Sep 30,

    2016

         

    Jun 30,

    2016

         

    Mar 31,

    2016

         

    Dec 31,

    2015

         

    Sep 30,

    2015

    Net earnings available to common shareholders $ 61,778       $ 54,255       $ 47,540       $ 62,923       $ 57,523
    Adjustments:
    Loss from change in fair value of MSR asset 7,826 13,940 20,625 469 10,103
    Gain on investment securities, net (162 ) (696 ) (2,567 ) (220 )
    Net loss on junior subordinated debentures carried at fair value 1,590 1,572 1,572 1,589 1,590
    (Gain) loss from change in fair value of swap derivatives (182 ) 1,493 1,793 (715 ) 1,181
    Merger related expenses 2,011 6,634 3,450 3,712 5,991
    Goodwill impairment 142
    Exit or disposal costs 1,728         1,434         347                  
    Total pre-tax adjustments 12,973 24,911 27,233 2,488 18,645
    Income tax effect (1) (5,188 )       (9,965 )       (10,836 )       (995 )       (7,458 )
    Net adjustments 7,785         14,946         16,397         1,493         11,187  
    Operating earnings $ 69,563         $ 69,201         $ 63,937         $ 64,416         $ 68,710  
     

    Earnings per diluted share:

    Earnings available to common shareholders $ 0.28 $ 0.25 $ 0.22 $ 0.28 $ 0.26
    Operating earnings $ 0.32 $ 0.31 $ 0.29 $ 0.29 $ 0.31
     
    (1) Income tax effect of operating earnings adjustments at 40% for tax-deductible items.
     

    Financial Highlights (compared to prior quarter):

    • Delivered solid financial performance:
      • Net interest income increased by $694,000, driven primarily by higher average interest-earning assets and one additional day in the quarter, partially offset by a decline in net interest margin and a lower level of interest income arising from the accretion of the credit discount recorded on loans acquired from Sterling;
      • Provision for loan and lease losses increased by $2.5 million, driven primarily by continued strong growth in the leasing and equipment finance portfolio and slightly higher net charge-offs;
      • Non-interest income increased by $6.1 million, driven primarily by a $10.4 million increase in mortgage banking revenue. This was partially offset by $4.4 million in lower gains related to portfolio loan sales. Excluding the impact of non-operating items1, total non-interest income decreased by $1.6 million;
      • Non-interest expense decreased by $7.3 million, driven primarily by a decline in merger-related expenses. Excluding the impact of non-operating items1, total noninterest expense decreased by $3.0 million, driven primarily by lower salaries and benefits expense;
    • Strong balance sheet and stable credit quality:
      • Net loan and lease growth of $36.8 million, or 1% annualized. Lower net loan growth for the quarter was driven primarily by higher levels of refinance and early pay-offs, predominately within the non-owner occupied commercial real estate and multifamily loan portfolios. The Company also sold $103.5 million of longer-term fixed rate portfolio residential mortgage loans. Gross loan and lease growth (prior to the impact of these sales) was $140.3 million, or 3% annualized;
      • Record deposit growth of $660.3 million, or 14% annualized, reflecting initiatives across the organization to focus on core deposit gathering;
      • Loan to deposit ratio decreased to 92% from 95%;
      • Non-performing assets decreased to $62.3 million, or 0.25% of total assets, from $64.6 million, or 0.27% of total assets;
    • Prudently managed capital:
      • Book value increased to $17.80 per share from $17.70 per share, and tangible book value1 increased to $9.51 from $9.41 per share;
      • Estimated total risk-based capital ratio of 14.4% and estimated Tier 1 common to risk weighted assets ratio of 11.1%;
      • Declared quarterly cash dividend of $0.16 per common share; and
      • Repurchased 325,000 shares of common stock for $5.0 million.

    Balance Sheet

    Total consolidated assets were $24.7 billion as of September 30, 2016, compared to $24.1 billion as of June 30, 2016 and $23.2 billion as of September 30, 2015. Including secured off-balance sheet lines of credit at the Company, total available liquidity was $9.3 billion as of September 30, 2016, representing 38% of total assets and 49% of total deposits.

    Gross loans and leases were $17.4 billion as of September 30, 2016, an increase of $36.8 million, or 1% annualized, from $17.4 billion as of June 30, 2016. During the third quarter of 2016, the Company sold $103.5 million of portfolio residential mortgage loans. Excluding the impact of the loan sales, gross loan growth was $140.3 million, or 3% annualized. The Company experienced growth in both its commercial (including leasing & equipment finance) and consumer loan portfolios. This growth was partially offset by declines in the non-owner occupied commercial real estate and multifamily loan portfolios, primarily due to heightened refinance and early pay-off activity during the quarter.

    Total deposits were $18.9 billion as of September 30, 2016, an increase of $660.3 million, or 14% annualized, from $18.3 billion as of June 30, 2016. This increase was primarily attributable to growth in non-interest bearing demand, money market and savings accounts.

    Net Interest Income

    Net interest income increased by $694,000 from the prior quarter, driven primarily by higher average interest-earning assets and one additional day in the quarter. This was partially offset by a lower average yield earned on interest-earning assets and a $1.0 million linked quarter decline 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 3.95% for the third quarter of 2016, down from 4.07% for the second quarter of 2016. This decrease reflects higher average interest bearing cash, lower average yields on loans and leases resulting from the continued low interest-rate environment and the Company's ongoing efforts to manage the target long-term loan portfolio mix, as well as an increase in premium amortization on the mortgage-backed securities portfolio and a lower 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 third quarter of 2016, the Company reported $9.1 million of accretion related to the Sterling credit discount in interest income, compared to $10.1 million in the prior quarter. As of September 30, 2016, the purchased non-credit impaired loans had approximately $50.3 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 $34.5 million of remaining total discount.

    The allowance for loan and lease losses was $133.7 million, or 0.77% of loans and leases, as of September 30, 2016. To provide better comparability to prior periods, on a pro-forma basis this ratio would have been approximately 1.3% at both September 30, 2016 and June 30, 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 $13.1 million for the third quarter of 2016, a $2.5 million increase from the prior quarter level. This increase was driven primarily by strong growth in the leasing and equipment finance portfolio, along with slightly higher net charge-offs. Charge-offs, net of recoveries, increased to $10.4 million for the third quarter of 2016, compared to $9.8 million in the prior quarter. Non-performing assets decreased to $62.3 million, or 0.25% of total assets, as of September 30, 2016, compared to $64.6 million, or 0.27% of total assets, as of June 30, 2016. This decrease was driven primarily by an $8.1 million decline in other real estate owned, partially offset by a $5.8 million increase in non-performing loans.

    Non-interest Income

    Total reported non-interest income was $80.7 million for the third quarter of 2016, up $6.1 million from the prior quarter, driven primarily by a lower negative fair value adjustment on the MSR asset. The current quarter non-interest income included a negative adjustment of $7.8 million, compared to a negative adjustment of $13.9 million in the prior quarter, attributable to the change in long-term interest rates during the quarter, and its impact on the prepayment speed assumption for the MSR asset.

    On an operating basis1, non-interest income decreased by $1.6 million from the prior quarter, reflecting a $4.4 million linked quarter decline in gains related to portfolio loan sales. This was partially offset by higher revenue from the origination and sale of residential mortgages and servicing income. Home lending gain on sale margin increased to 4.08%, compared to 4.02% in the prior quarter and for sale mortgage originations increased by 7% from the prior quarter level. Of the current quarter’s mortgage production, 68% related to purchase activity, as compared to 70% for the prior quarter and 70% for the same period in the prior year.

    Revenue related to the servicing of residential mortgage loans was $9.4 million for the third quarter of 2016, an increase of 9% from the prior quarter, reflecting growth in the residential mortgage loans serviced for others portfolio.

    Non-interest Expense

    Non-interest expense was $181.2 million for the third quarter of 2016, which included $2.0 million of merger-related expenses and $1.7 million of exit or disposal costs. This compares to $188.5 million, including $6.6 million of merger-related expenses and $1.4 million of exit or disposal costs for the second quarter of 2016. On an operating basis1, non-interest expense decreased by $3.0 million from the prior quarter, driven primarily by lower compensation and other expense.

    Capital

    As of September 30, 2016, the Company’s book value per share increased to $17.80, from $17.70 in the prior quarter, and its tangible book value per common share1 increased to $9.51, from $9.41 in the prior quarter. During the third quarter of 2016, the Company repurchased 325,000 shares of common stock for $5.0 million. For the nine months ended September 30, 2016, the Company had repurchased 560,000 shares for $8.4 million.

    The Company’s estimated total risk-based capital ratio was 14.4% and its estimated Tier 1 common to risk weighted assets ratio was 11.1% as of September 30, 2016. The Company remains above current “well-capitalized” regulatory minimums. The regulatory capital ratios as of September 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 swap derivatives, net gains or losses on 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)

    Sep 30,

    2016

       

    Jun 30,

    2016

       

    Mar 31,

    2016

       

    Dec 31,

    2015

       

    Sep 30,

    2015

    Seq.

    Quarter

       

    Year

    over

    Year

    Net earnings available to common shareholders $ 61,778     $ 54,255     $ 47,540   $ 62,923     $ 57,523

    14%

        7%
    Adjustments:
    Loss from change in fair value of MSR asset 7,826 13,940 20,625 469 10,103

    (44)%

    (23)%
    Gain on investment securities, net (162 )

    (696

    )

    (2,567 ) (220 ) (100)% (100)%
    Net loss on junior subordinated debentures carried at fair value 1,590 1,572 1,572 1,589 1,590 1% 0%
    (Gain) loss from change in fair value of swap derivatives (182 ) 1,493 1,793 (715 ) 1,181

    (112)%

    (115)%
    Merger related expenses 2,011 6,634 3,450 3,712 5,991 (70)% (66)%
    Goodwill impairment 142 nm nm
    Exit or disposal costs 1,728       1,434       347             21% nm
    Total pre-tax adjustments 12,973 24,911 27,233 2,488 18,645 (48)% (30)%
    Income tax effect (1) (5,188 )     (9,965 )    

    (10,836

    )

      (995 )     (7,458 ) (48)% (30)%
    Net adjustments 7,785       14,946       16,397     1,493       11,187   (48)% (30)%
    Operating earnings $ 69,563       $ 69,201       $ 63,937     $ 64,416       $ 68,710   1% 1%
     

    Earnings per diluted share:

    Earnings available to common shareholders $ 0.28 $ 0.25 $ 0.22 $ 0.28 $ 0.26 12% 8%
    Operating earnings $ 0.32 $ 0.31 $ 0.29 $ 0.29 $ 0.31 3% 3%
     
    Nine months ended% Change

    Sep 30,

    2016

       

    Sep 30,

    2015

    Year

    over

    Year

     
    Net earnings available to common shareholders $ 163,573 $ 159,259 3%
    Adjustments:
    Loss from change in fair value of MSR asset 42,391 20,254 109%
    Gain on investment securities, net (858 ) (355 ) 142%
    Net loss on junior subordinated debentures carried at fair value 4,734 4,717 0%
    Loss from change in fair value of swap derivatives 3,104 554 460%
    Merger related expenses 12,095 41,870 (71)%
    Goodwill impairment 142 nm
    Exit or disposal costs 3,509         nm
    Total pre-tax adjustments 65,117 67,040 (3)%
    Income tax effect (1) (25,990 )     (26,816 ) (3)%
    Net adjustments 39,127       40,224   (3)%
    Operating earnings $ 202,700       $ 199,483   2%
     

    Earnings per diluted share:

    Earnings available to common shareholders $ 0.74 $ 0.72 3%
    Operating earnings $ 0.92 $ 0.90 2%
     
    (1) Income tax effect of 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)

    Sep 30,

    2016

       

    Jun 30,

    2016

       

    Mar 31,

    2016

       

    Dec 31,

    2015

       

    Sep 30,

    2015

    Non-interest income (GAAP) $ 80,710     $ 74,659     $ 45,951     $ 69,345     $ 61,372
    Adjustments:
    Loss from change in fair value of MSR asset 7,826 13,940 20,625 469 10,103
    (Gain) loss from change in fair value of swap derivatives (182 ) 1,493 1,793 (715 ) 1,181
    Net loss on junior subordinated debentures carried at fair value 1,590 1,572 1,572 1,589 1,590
    Gain on investment securities, net       (162 )     (696 )     (2,567 )     (220 )
    Non-interest income (operating basis) $ 89,944       $ 91,502       $ 69,245       $ 68,121       $ 74,026  
     
    Quarter ended

    Sep 30,

    2016

       

    Jun 30,

    2016

       

    Mar 31,

    2016

       

    Dec 31,

    2015

       

    Sep 30,

    2015

    Non-interest expense (GAAP) $ 181,187 $ 188,511 183,989 $ 185,911 $ 183,194
    Adjustments:
    Merger related expenses (2,011 ) (6,634 ) (3,450 ) (3,712 ) (5,991 )
    Goodwill impairment (142 )
    Exit or disposal costs (1,728 )     (1,434 )     (347 )            
    Non-interest expense (operating basis) $ 177,448       $ 180,443       $ 180,050       $ 182,199       $ 177,203  
     
    Nine months ended
    (Dollars in thousands)

    Sep 30,

    2016

       

    Sep 30,

    2015

    Non-interest income (GAAP) $ 201,320 $ 206,379
    Adjustments:
    Loss from change in fair value of MSR asset 42,391 20,254
    Loss from change in fair value of swap derivatives 3,104 554
    Net loss on junior subordinated debentures carried at fair value 4,734 4,717
    Gain on investment securities, net (858 )     (355 )
    Non-interest income (operating basis) $ 250,691       $ 231,549  

     

     
    Nine months ended

    Sep 30,

    2016

       

    Sep 30,

    2015

    Non-interest expense (GAAP) $ 553,687 $ 577,731
    Adjustments:
    Merger related expenses (12,095 ) (41,870 )
    Goodwill impairment (142 )
    Exit or disposal costs (3,509 )      
    Non-interest expense (operating basis) $ 537,941       $ 535,861  
     

    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)       Sep 30, 2016     Jun 30, 2016     Mar 31, 2016     Dec 31, 2015     Sep 30, 2015
    Total shareholders' equity $ 3,920,208     $ 3,902,158     $ 3,878,630     $ 3,849,334     $ 3,835,552
    Subtract:
    Goodwill 1,787,651 1,787,651 1,787,651 1,787,793 1,788,640
    Other intangible assets, net 38,753       40,620       42,948       45,508       48,314  
    Tangible common shareholders' equity $ 2,093,804       $ 2,073,887       $ 2,048,031       $ 2,016,033       $ 1,998,598  
    Total assets $ 24,744,214 $ 24,132,507 $ 23,935,686 $ 23,406,381 $ 23,181,006
    Subtract:
    Goodwill 1,787,651 1,787,651 1,787,651 1,787,793 1,788,640
    Other intangible assets, net 38,753       40,620       42,948       45,508       48,314  
    Tangible assets $ 22,917,810       $ 22,304,236       $ 22,105,087       $ 21,573,080       $ 21,344,052  
    Common shares outstanding at period end 220,207 220,482 220,171 220,171 220,217
     
    Common equity ratio 15.84 % 16.17 % 16.20 % 16.45 % 16.55 %
    Tangible common equity ratio 9.14 % 9.30 % 9.26 % 9.35 % 9.36 %
    Book value per common share $ 17.80 $ 17.70 $ 17.62 $ 17.48 $ 17.42
    Tangible book value per common share $ 9.51 $ 9.41 $ 9.30 $ 9.16 $ 9.08
     

    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 third quarter 2016 earnings conference call on Thursday, October 20, 2016, at 10:00 a.m. PDT (1:00 p.m. EDT). During the call, the Company will provide an update on recent activities and discuss its third quarter 2016 financial results. There will be a live question-and-answer session following the presentation. To join the call, please dial 800-732-8711 ten minutes prior to the start time and enter conference ID: 6636871. A re-broadcast will be available approximately two hours after the call by dialing 888-203-1112 and entering conference ID 6636871. 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.

    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, credit quality, asset sensitivity, and trends in the loan portfolio mix.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; and changes in laws or regulations.

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

    Sep 30,

    2016

       

    Jun 30,

    2016

       

    Mar 31,

    2016

       

    Dec 31,

    2015

       

    Sep 30,

    2015

    Seq.

    Quarter

       

    Year

    over

    Year

    Interest income:        
    Loans and leases $ 212,037 $ 210,290 $ 217,928 $ 219,440 $ 218,975 1% (3)%
    Interest and dividends on investments:
    Taxable 10,779 11,963 13,055 12,654 11,882 (10)% (9)%
    Exempt from federal income tax 2,181 2,183 2,235 2,363 2,393 0% (9)%
    Dividends 332 365 366 326 112 (9)% 196%
    Temporary investments & interest bearing deposits 1,090       652       480       422       440   67% 148%
    Total interest income 226,419 225,453 234,064 235,205 233,802 0% (3)%
    Interest expense:
    Deposits 8,999 8,540 8,413 7,905 7,450 5% 21%
    Repurchase agreements 32 32 36 39 43 0% (26)%
    Term debt 3,558 3,848 4,186 3,885 3,629 (8)% (2)%
    Junior subordinated debentures 3,938       3,835       3,727       3,542       3,465   3% 14%
    Total interest expense 16,527 16,255 16,362 15,371 14,587 2% 13%
    Net interest income 209,892 209,198 217,702 219,834 219,215 0% (4)%
    Provision for loan and lease losses 13,091 10,589 4,823 4,545 8,153 24% 61%
    Non-interest income:
    Service charges on deposits 15,762 15,667 14,516 15,039 15,616 1% 1%
    Brokerage revenue 4,129 4,580 4,094 4,061 5,003 (10)% (17)%
    Residential mortgage banking revenue, net 47,206 36,783 15,426 32,440 24,041 28% 96%
    Gain on investment securities, net 162 696 2,567 220 (100)% (100)%
    Gain on loan sales 1,285 5,640 2,371 1,729 5,212 (77)% (75)%
    Loss on junior subordinated debentures carried at fair value (1,590 ) (1,572 ) (1,572 ) (1,589 ) (1,590 ) 1% 0%
    BOLI income 2,116 2,152 2,139 1,841 2,165 (2)% (2)%
    Other income 11,802       11,247       8,281       13,257       10,705   5% 10%
    Total non-interest income 80,710 74,659 45,951 69,345 61,372 8% 32%
    Non-interest expense:
    Salaries and employee benefits 105,341 107,545 106,538 106,203 106,482 (2)% (1)%
    Occupancy and equipment, net 38,181 37,850 38,295 38,722 37,235 1% 3%
    Intangible amortization 1,867 2,328 2,560 2,806 2,806 (20)% (33)%
    FDIC assessments 4,109 3,693 3,721 3,742 3,369 11% 22%
    (Gain) loss on other real estate owned, net (14 ) (1,457 ) 1,389 (242 ) (158 ) (99)% (91)%
    Merger related expenses 2,011 6,634 3,450 3,712 5,991 (70)% (66)%
    Goodwill impairment 142 nm nm
    Other expense 29,692       31,918       27,894       30,968       27,469   (7)% 8%
    Total non-interest expense 181,187 188,511 183,989 185,911 183,194 (4)% (1)%
    Income before provision for income taxes 96,324 84,757 74,841 98,723 89,240 14% 8%
    Provision for income taxes 34,515       30,470       27,272       35,704       31,633   13% 9%
    Net income 61,809 54,287 47,569 63,019 57,607 14% 7%
    Dividends and undistributed earnings allocated to participating securities 31       32       29       96       84   (3)% (63)%
    Net earnings available to common shareholders $ 61,778       $ 54,255       $ 47,540       $ 62,923       $ 57,523   14% 7%
     
    Weighted average basic shares outstanding 220,291 220,421 220,227 220,202 220,297 0% 0%
    Weighted average diluted shares outstanding 220,751 220,907 221,052 220,930 220,904 0% 0%
    Earnings per common share – basic $ 0.28 $ 0.25 $ 0.22 $ 0.29 $ 0.26 12% 8%
    Earnings per common share – diluted $ 0.28 $ 0.25 $ 0.22 $ 0.28 $ 0.26 12% 8%
    nm = not meaningful
     
     
     
    Umpqua Holdings Corporation
    Consolidated Statements of Income
    (Unaudited)
               
    Nine months ended% Change
    (In thousands, except per share data)Sep 30, 2016           Sep 30, 2015

    Year

    over

    Year

    Interest income          
    Loans and leases $ 640,255 $ 649,993 (1)%
    Interest and dividends on investments:
    Taxable 35,797 35,188 2%
    Exempt from federal income tax 6,599 7,284 (9)%
    Dividends 1,063 382 178%
    Temporary investments & interest bearing deposits 2,222             1,814   22%
    Total interest income 685,936 694,661 (1)%
    Interest expense
    Deposits 25,952 21,934 18%
    Repurchase agreements 100 134 (25)%
    Term debt 11,592 10,585 10%
    Junior subordinated debentures 11,500             10,208   13%
    Total interest expense 49,144 42,861 15%
    Net interest income 636,792 651,800 (2)%
    Provision for loan and lease losses 28,503 32,044 (11)%
    Non-interest income
    Service charges on deposits 45,945 44,701 3%
    Brokerage revenue 12,803 14,420 (11)%
    Residential mortgage banking revenue, net 99,415 92,282 8%
    Gain on investment securities, net 858 355 142%
    Gain on loan sales 9,296 20,651 (55)%
    Loss on junior subordinated debentures carried at fair value (4,734 ) (4,717 ) 0%
    BOLI Income 6,407 6,510 (2)%
    Other income 31,330             32,177   (3)%
    Total non-interest income 201,320 206,379 (2)%
    Non-interest expense
    Salaries and employee benefits 319,424 324,733 (2)%
    Occupancy and equipment, net 114,326 104,253 10%
    Intangible amortization 6,755 8,419 (20)%
    FDIC assessments 11,523 9,738 18%
    (Gain) loss on other real estate owned, net (82 ) 2,136 (104)%
    Merger related expenses 12,095 41,870 (71)%
    Goodwill impairment 142 nm
    Other expense 89,504             86,582   3%
    Total non-interest expense 553,687 577,731 (4)%
    Income before provision for income taxes 255,922 248,404 3%
    Provision for income taxes 92,257             88,884   4%
    Net income 163,665 159,520 3%

    Dividends and undistributed earnings allocated to participating securities

    92             261   (65)%
    Net earnings available to common shareholders $ 163,573             $ 159,259   3%
     
    Weighted average basic shares outstanding 220,313 220,370 0%
    Weighted average diluted shares outstanding 220,936 221,062 0%
    Earnings per common share – basic $ 0.74 $ 0.72 3%
    Earnings per common share – diluted $ 0.74 $ 0.72 3%
    nm = not meaningful
     
     
     
    Umpqua Holdings Corporation

    Consolidated Balance Sheets

    (Unaudited)
                           
    % Change
    (In thousands, except per share data)

    Sep 30,

    2016

       

    Jun 30,

    2016

       

    Mar 31,

    2016

       

    Dec 31,

    2015

       

    Sep 30,

    2015

    Seq.

    Quarter

       

    Year

    over

    Year

    Assets:    
    Cash and due from banks $ 364,013 $ 369,535 $ 299,871 $ 277,645 $ 283,773 (1)% 28%
    Interest bearing cash and temporary investments 1,102,428 535,828 613,049 496,080 673,843 106% 64%
    Investment securities:
    Trading, at fair value 10,866 10,188 9,791 9,586 9,509 7% 14%
    Available for sale, at fair value 2,520,037 2,482,072 2,542,535 2,522,539 2,482,478 2% 2%
    Held to maturity, at amortized cost 4,302 4,382 4,525 4,609 4,699 (2)% (8)%
    Loans held for sale 565,624 552,681 659,264 363,275 398,015 2% 42%
    Loans and leases 17,392,051 17,355,240 16,955,583 16,866,536 16,406,636 0% 6%
    Allowance for loan and lease losses (133,692 )     (131,042 )     (130,243 )     (130,322 )     (130,133 ) 2% 3%
    Loans and leases, net 17,258,359 17,224,198 16,825,340 16,736,214 16,276,503 0% 6%
    Restricted equity securities 47,537 47,542 47,545 46,949 46,904 0% 1%
    Premises and equipment, net 306,287 312,647 322,822 328,734 330,306 (2)% (7)%
    Goodwill 1,787,651 1,787,651 1,787,651 1,787,793 1,788,640 0% 0%
    Other intangible assets, net 38,753 40,620 42,948 45,508 48,314 (5)% (20)%
    Residential mortgage servicing rights, at fair value 114,446 112,095 117,172 131,817 124,814 2% (8)%
    Other real estate owned 8,309 16,437 20,411 22,307 23,892 (49)% (65)%
    Bank owned life insurance 297,561 295,444 293,703 291,892 297,321 1% 0%
    Deferred tax assets, net 27,587 63,038 108,865 138,082 149,320 (56)% (82)%
    Other assets 290,454       278,149       240,194       203,351       242,675   4% 20%
    Total assets $ 24,744,214       $ 24,132,507       $ 23,935,686       $ 23,406,381       $ 23,181,006   3% 7%
    Liabilities:
    Deposits $ 18,918,780 $ 18,258,474 $ 18,162,974 $ 17,707,189 $ 17,467,024 4% 8%
    Securities sold under agreements to repurchase 309,463 360,234 325,203 304,560 323,722 (14)% (4)%
    Term debt 902,678 902,999 903,382 888,769 889,358 0% 1%
    Junior subordinated debentures, at fair value 260,114 258,660 256,917 255,457 253,665 1% 3%
    Junior subordinated debentures, at amortized cost 101,012 101,093 101,173 101,254 101,334 0% 0%
    Other liabilities 331,959       348,889       307,407       299,818       310,351   (5)% 7%
    Total liabilities 20,824,006 20,230,349 20,057,056 19,557,047 19,345,454 3% 8%
    Shareholders' equity:
    Common stock 3,514,858 3,517,240 3,518,792 3,520,591 3,517,751 0% 0%
    Retained earnings 388,678 362,258 343,421 331,301 303,729 7% 28%
    Accumulated other comprehensive income (loss) 16,672       22,660       16,417       (2,558 )     14,072   (26)% 18%

    Total shareholders' equity

    3,920,208       3,902,158       3,878,630       3,849,334       3,835,552   0% 2%
    Total liabilities and shareholders' equity $ 24,744,214       $ 24,132,507       $ 23,935,686       $ 23,406,381       $ 23,181,006   3% 7%
     
    Common shares outstanding at period end 220,207 220,482 220,171 220,171 220,217 0% 0%
    Book value per common share $ 17.80 $ 17.70 $ 17.62 $ 17.48 $ 17.42 1% 2%
    Tangible book value per common share $ 9.51 $ 9.41 $ 9.30 $ 9.16 $ 9.08 1% 5%
    Tangible equity - common $ 2,093,804 $ 2,073,887 $ 2,048,031 $ 2,016,033 $ 1,998,598 1% 5%
    Tangible common equity to tangible assets 9.14 % 9.30 % 9.26 % 9.35 % 9.36 % (0.16) (0.22)
    nm = not meaningful
     
     
     
    Umpqua Holdings Corporation
    Loan & Lease Portfolio
    (Unaudited)
                               
    (Dollars in thousands)Sep 30, 2016     Jun 30, 2016     Mar 31, 2016     Dec 31, 2015     Sep 30, 2015% Change
    Amount     Amount     Amount     Amount     Amount

    Seq.

    Quarter

       

    Year

    over

    Year

    Loans & leases:

    Commercial real estate:
    Non-owner occupied term, net $ 3,280,660 $ 3,377,464 $ 3,202,488 $ 3,226,836 $ 3,155,102 (3)% 4%
    Owner occupied term, net 2,573,942 2,581,786 2,714,766 2,582,874 2,651,505 0% (3)%
    Multifamily, net 2,968,019 3,004,890 2,959,975 3,151,516 3,003,904 (1)% (1)%
    Commercial construction, net 388,934 367,879 338,801 271,119 273,102 6% 42%
    Residential development, net 127,447 111,941 121,025 99,459 94,380 14% 35%
    Commercial:
    Term, net 1,480,173 1,440,704 1,412,816 1,408,676 1,372,927 3% 8%
    Lines of credit & other, net 1,142,946 1,116,876 1,036,389 1,036,733 1,009,322 2% 13%
    Leases & equipment finance, net 927,857 884,506 791,798 729,161 679,033 5% 37%
    Residential real estate:
    Mortgage, net 2,868,337 2,882,076 2,879,600 2,909,306 2,758,931 0% 4%
    Home equity lines & loans, net 1,008,219 989,814 943,254 923,667 910,287 2% 11%
    Consumer & other, net 625,517       597,304       554,671       527,189       498,143   5% 26%
    Total, net of deferred fees and costs $ 17,392,051       $ 17,355,240       $ 16,955,583       $ 16,866,536       $ 16,406,636   0% 6%
     

    Loan & leases mix:

    Commercial real estate:
    Non-owner occupied term, net 19 % 19 % 19 % 19 % 19 %
    Owner occupied term, net 15 % 15 % 16 % 15 % 16 %
    Multifamily, net 17 % 17 % 17 % 19 % 18 %
    Commercial construction, net 2 % 2 % 2 % 2 % 2 %
    Residential development, net 1 % 1 % 1 % 1 % 1 %
    Commercial:
    Term, net 8 % 8 % 8 % 9 % 8 %
    Lines of credit & other, net 7 % 6 % 6 % 6 % 6 %
    Leases & equipment finance, net 5 % 6 % 5 % 4 % 4 %
    Residential real estate:
    Mortgage, net 16 % 17 % 17 % 17 % 17 %
    Home equity lines & loans, net 6 % 6 % 6 % 5 % 6 %
    Consumer & other, net 4 %     3 %     3 %     3 %     3 %
    Total 100 %     100 %     100 %     100 %     100 %
     
     
     
    Umpqua Holdings Corporation
    Deposits by Type/Core Deposits
    (Unaudited)
                               
    (Dollars in thousands)Sep 30, 2016     Jun 30, 2016     Mar 31, 2016     Dec 31, 2015     Sep 30, 2015% Change
    Amount     Amount     Amount     Amount     Amount

    Seq.

    Quarter

       

    Year

    over

    Year

    Deposits:

    Demand, non-interest bearing $ 5,993,793 $ 5,475,986 $ 5,460,310 $ 5,318,591 $ 5,207,129 9 % 15 %
    Demand, interest bearing 2,218,782 2,186,164 2,178,446 2,157,376 2,098,223 1 % 6 %
    Money market 6,841,700 6,782,232 6,814,160 6,599,516 6,514,174 1 % 5 %
    Savings 1,303,816 1,254,675 1,213,049 1,136,809 1,102,611 4 % 18 %
    Time 2,560,689       2,559,417       2,497,009       2,494,897       2,544,887   0 % 1 %
    Total $ 18,918,780       $ 18,258,474       $ 18,162,974       $ 17,707,189       $ 17,467,024   4 % 8 %
     
    Total core deposits (1) $ 17,257,663 $ 16,598,065 $ 16,559,943 $ 16,102,743 $ 15,940,229 4 % 8 %
     

    Deposit mix:

    Demand, non-interest bearing 31 % 30 % 30 % 30 % 30 %
    Demand, interest bearing 12 % 12 % 12 % 12 % 12 %
    Money market 36 % 37 % 37 % 37 % 37 %
    Savings 7 % 7 % 7 % 6 % 6 %
    Time 14 %     14 %     14 %     15 %     15 %
    Total 100 %     100 %     100 %     100 %     100 %
     

    Number of open accounts:

    Demand, non-interest bearing 382,687 379,996 375,913 371,745 370,128
    Demand, interest bearing 83,501 84,434 85,731 86,745 88,171
    Money market 56,128 56,492 56,927 57,194 57,622
    Savings 158,760 157,849 156,846 154,176 153,534
    Time 47,689       47,850       47,794       47,672       48,168  

    Total

    728,765       726,621       723,211       717,532       717,623  
     

    Average balance per account:

    Demand, non-interest bearing $ 15.7 $ 14.4 $ 14.5 $ 14.3 $ 14.1
    Demand, interest bearing 26.6 25.9 25.4 24.9 23.8
    Money market 121.9 120.1 119.7 115.4 113.1
    Savings 8.2 7.9 7.7 7.4 7.2
    Time 53.7 53.5 52.2 52.3 52.8
    Total $ 26.0 $ 25.1 $ 25.1 $ 24.7 $ 24.3
     
    (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)

    Sep 30,
    2016

       

    Jun 30,
    2016

       

    Mar 31,
    2016

       

    Dec 31,
    2015

       

    Sep 30,
    2015

    Seq.
    Quarter

       

    Year over
    Year

    Non-performing assets:

                       
    Loans and leases on non-accrual status $ 27,791 $

    25,136

    $

    30,045

    $ 29,215 $ 30,989 11% (10)%
    Loans and leases past due 90+ days & accruing (1)   26,189         23,076         22,144         15,169         9,967   13% 163%
    Total non-performing loans and leases 53,980

    48,212

    52,189

    44,384 40,956 12% 32%
    Other real estate owned   8,309        

    16,437

           

    20,411

            22,307         23,892   (49)% (65)%
    Total non-performing assets $ 62,289       $

    64,649

         

    $

    72,600

          $ 66,691       $ 64,848   (4)% (4)%
     
    Performing restructured loans and leases $ 36,645

    $

    40,848

    $

    31,409

    $

    31,355

    $ 35,706 (10)% 3%
     
    Loans and leases past due 31-89 days $ 39,708

    $

    29,640

    $

    29,054

    $

    28,423

    $ 28,919 34% 37%
     
    Loans and leases past due 31-89 days to total loans and leases 0.23 % 0.17 % 0.17 %

    0.17

    %

    0.18

    %

     
    Non-performing loans and leases to total loans and leases (1) 0.31 %

    0.28

    %

    0.31

    %

    0.26 % 0.25 %
     
    Non-performing assets to total assets (1) 0.25 %

    0.27

    %

    0.30

    %

    0.28 % 0.28 %
    (1)     Excludes non-performing mortgage loans guaranteed by Ginnie Mae, which Umpqua has the unilateral right to repurchase but has not done so, totaling $7.3 million, $11.3 million, $14.2 million, $19.2 million, and $18.7 million at September 30, 2016, June 30, 2016, March 31, 2016, December 31, 2015, and September 30, 2015, respectively.
     
     
     
    Umpqua Holdings Corporation
    Credit Quality – Allowance for Loan and Lease Losses
    (Unaudited)
        Quarter Ended     % Change
    (Dollars in thousands)

    Sep 30,

    2016

       

    Jun 30,

    2016

       

    Mar 31,

    2016

       

    Dec 31,

    2015

       

    Sep 30,

    2015

    Seq.

    Quarter

       

    Year over

    Year

    Allowance for loan and lease losses:

                       
    Balance beginning of period $ 131,042 $ 130,243 $ 130,322 $ 130,133 $ 127,071
    Provision for loan and lease losses 13,091 10,589 4,823 4,545 8,153 24% 61%
    Charge-offs (13,088 ) (12,682 ) (7,850 ) (7,108 ) (8,476 ) 3% 54%
    Recoveries 2,647       2,892       2,948       2,752       3,385   (8)% (22)%
    Net charge-offs (10,441 )     (9,790 )     (4,902 )     (4,356 )     (5,091 ) 7% 105%
    Total allowance for loan and lease losses 133,692 131,042 130,243 130,322 130,133 2% 3%
    Reserve for unfunded commitments 3,536       3,531       3,482       3,574       3,081   0% 15%
    Total allowance for credit losses $ 137,228       $ 134,573       $ 133,725       $ 133,896       $ 133,214   2% 3%
     
    Net charge-offs to average loans and leases (annualized) 0.24 % 0.23 % 0.12 % 0.10 % 0.13 %
    Recoveries to gross charge-offs 20.22 % 22.80 % 37.55 % 38.72 % 39.94 %
    Allowance for loan and lease losses to loans and leases 0.77 % 0.76 % 0.77 % 0.77 % 0.79 %
    Allowance for credit losses to loans and leases 0.79 % 0.78 % 0.79 % 0.79 % 0.81 %
     
     
         
    Umpqua Holdings Corporation
    Credit Quality – Allowance for Loan and Lease Losses
    (Unaudited)
    Nine months ended           % Change
    (Dollars in thousands)Sep 30, 2016           Sep 30, 2015Year over Year

    Allowance for loan and lease losses:

             
    Balance beginning of period $ 130,322 $ 116,167
    Provision for loan and lease losses 28,503 32,044 (11)%
    Charge-offs (33,620 ) (28,463 ) 18%
    Recoveries 8,487     10,385   (18)%
    Net charge-offs (25,133 )   (18,078 ) 39%
    Total allowance for loan and lease losses 133,692 130,133 3%
    Reserve for unfunded commitments 3,536     3,081   15%
    Total allowance for credit losses $ 137,228     $ 133,214   3%
     
    Net charge-offs to average loans and leases (annualized) 0.20 % 0.15 %
    Recoveries to gross charge-offs 25.24 % 36.49 %
     
     
     
    Umpqua Holdings Corporation
    Selected Ratios
    (Unaudited)
                       
    Quarter Ended% Change

    Sep 30,

    2016

       

    Jun 30,

    2016

       

    Mar 31,

    2016

       

    Dec 31,

    2015

       

    Sep 30,

    2015

    Seq.

    Quarter

       

    Year

    over

    Year

    Average Rates:

           
    Yield on loans and leases 4.75 % 4.81 % 5.07 % 5.21 % 5.30 % (0.06 ) (0.55 )
    Yield on loans held for sale 3.79 % 3.80 % 4.06 % 3.83 % 4.10 % (0.01 ) (0.31 )
    Yield on taxable investments 1.96 % 2.14 % 2.32 % 2.26 % 2.11 % (0.18 ) (0.15 )
    Yield on tax-exempt investments (1) 4.68 % 4.73 % 4.73 % 4.76 % 4.73 % (0.05 ) (0.05 )
    Yield on interest bearing cash and temporary investments 0.50 % 0.51 % 0.54 % 0.28 % 0.25 % (0.01 ) 0.25
    Total yield on earning assets (1) 4.26 % 4.39 % 4.66 % 4.69 % 4.73 % (0.13 ) (0.47 )
     
    Cost of interest bearing deposits 0.28 % 0.27 % 0.27 % 0.26 % 0.24 % 0.01 0.04

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

    0.04 % 0.04 % 0.05 % 0.05 % 0.05 % (0.01 )
    Cost of term debt 1.57 % 1.72 % 1.88 % 1.73 % 1.62 % (0.15 ) (0.05 )
    Cost of junior subordinated debentures 4.36 % 4.30 % 4.20 % 3.96 % 3.89 % 0.06 0.47
    Total cost of interest bearing liabilities 0.46 % 0.46 % 0.47 % 0.44 % 0.42 % 0.04
     
    Net interest spread (1) 3.80 % 3.93 % 4.19 % 4.25 % 4.31 % (0.13 ) (0.51 )
    Net interest margin (1) 3.95 % 4.07 % 4.34 % 4.39 % 4.43 % (0.12 ) (0.48 )
     

    As reported (GAAP):

    Return on average assets 1.01 % 0.91 % 0.82 % 1.08 % 0.99 % 0.10 0.02
    Return on average tangible assets 1.09 % 0.99 % 0.89 % 1.17 % 1.08 % 0.10 0.01
    Return on average common equity 6.28 % 5.61 % 4.93 % 6.49 % 5.97 % 0.67 0.31
    Return on average tangible common equity 11.79 % 10.59 % 9.34 % 12.41 % 11.51 % 1.20 0.28
    Efficiency ratio – Consolidated 62.11 % 66.15 % 69.48 % 64.02 % 65.00 % (4.04 ) (2.89 )
    Efficiency ratio – Bank 60.45 % 64.44 % 67.29 % 62.40 % 63.08 % (3.99 ) (2.63 )
     

    Operating basis (non-GAAP): (2)

    Return on average assets 1.13 % 1.16 % 1.10 % 1.10 % 1.19 % (0.03 ) (0.06 )
    Return on average tangible assets 1.22 % 1.26 % 1.19 % 1.20 % 1.29 % (0.04 ) (0.07 )
    Return on average common equity 7.08 % 7.16 % 6.63 % 6.64 % 7.13 % (0.08 ) (0.05 )
    Return on average tangible common equity 13.28 % 13.51 % 12.57 % 12.70 % 13.74 % (0.23 ) (0.46 )
    Efficiency ratio – Consolidated 58.96 % 59.78 % 62.49 % 63.00 % 60.17 % (0.82 ) (1.21 )
    Efficiency ratio – Bank 57.66 % 58.48 % 60.89 % 61.72 % 58.84 % (0.82 ) (1.18 )
     
    (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)
                   
    Nine months ended% Change
    Sep 30, 2016           Sep 30, 2015

    Year over

    Year

    Average Rates:

             
    Yield on loans and leases 4.88 % 5.44 % (0.56 )
    Yield on loans held for sale 3.86 % 3.68 % 0.18
    Yield on taxable investments 2.14 % 2.09 % 0.05
    Yield on tax-exempt investments (1) 4.71 % 4.72 % (0.01 )
    Yield on interest bearing cash and temporary investments 0.51 % 0.25 % 0.26
    Total yield on earning assets (1) 4.43 % 4.76 % (0.33 )
     
    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 1.72 % 1.51 % 0.21
    Cost of junior subordinated debentures 4.29 % 3.88 % 0.41
    Total cost of interest bearing liabilities 0.46 % 0.41 % 0.05
     
    Net interest spread (1) 3.97 % 4.35 % (0.38 )
    Net interest margin (1) 4.12 % 4.47 % (0.35 )
     

    As reported (GAAP):

    Return on average assets 0.91 % 0.93 % (0.02 )
    Return on average tangible assets 0.99 % 1.02 % (0.03 )
    Return on average common equity 5.61 % 5.59 % 0.02
    Return on average tangible common equity 10.59 % 10.81 % (0.22 )
    Efficiency ratio – Consolidated 65.79 % 67.02 % (1.23 )
    Efficiency ratio – Bank 63.96 % 65.30 % (1.34 )
     

    Operating basis (non-GAAP): (2)

    Return on average assets 1.13 % 1.17 % (0.04 )
    Return on average tangible assets 1.23 % 1.27 % (0.04 )
    Return on average common equity 6.95 % 7.00 % (0.05 )
    Return on average tangible common equity 13.12 % 13.54 % (0.42 )
    Efficiency ratio – Consolidated 60.38 % 60.48 % (0.10 )
    Efficiency ratio – Bank 58.98 % 59.12 % (0.14 )
     
    (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)

    Sep 30,

    2016

       

    Jun 30,

    2016

       

    Mar 31,

    2016

       

    Dec 31,

    2015

       

    Sep 30,

    2015

    Seq.

    Quarter

       

    Year

    over

    Year

    Temporary investments & interest bearing cash $ 874,410     $ 514,881     $ 356,674     $ 608,250     $ 693,114 70% 26%
    Investment securities, taxable 2,265,883 2,304,998 2,311,589 2,293,429 2,276,698 (2)% 0%
    Investment securities, tax-exempt 283,818 280,841 287,085 302,443 307,960 1% (8)%
    Loans held for sale 481,740 403,964 297,732 334,404 357,905 19% 35%
    Loans and leases 17,400,657       17,234,220       17,008,084       16,514,770       16,155,395   1% 8%
    Total interest earning assets 21,306,508 20,738,904 20,261,164 20,053,296 19,791,072 3% 8%
    Goodwill & other intangible assets, net 1,827,405 1,829,407 1,832,046 1,835,821 1,838,740 0% (1)%
    Total assets 24,422,986 23,896,315 23,415,439 23,196,052 22,946,464 2% 6%
     
    Non-interest bearing demand deposits 5,766,022 5,466,098 5,289,810 5,285,992 5,108,430 5% 13%
    Interest bearing deposits 12,836,987       12,644,442       12,411,005       12,249,333       12,225,691   2% 5%
    Total deposits 18,603,009 18,110,540 17,700,815 17,535,325 17,334,121 3% 7%
    Interest bearing liabilities 14,446,687 14,249,349 13,976,678 13,812,645 13,798,350 1% 5%
     
    Shareholders’ equity - common 3,911,323 3,889,593 3,878,540 3,847,587 3,822,201 1% 2%
    Tangible common equity (1) 2,083,918 2,060,186 2,046,494 2,011,766 1,983,461 1% 5%
     
     
                             
    Umpqua Holdings Corporation

    Average Balances

    (Unaudited)
    Nine months ended% Change
    (Dollars in thousands)Sep 30, 2016           Sep 30, 2015

    Year over

    Year

    Temporary investments & interest bearing cash $ 583,056 $ 957,210 (39)%
    Investment securities, taxable 2,294,054 2,269,474 1%
    Investment securities, tax-exempt 283,914 313,462 (9)%
    Loans held for sale 394,797 333,135 19%
    Loans and leases 17,215,000             15,743,801   9%
    Total interest earning assets 20,770,821 19,617,082 6%
    Goodwill & other intangible assets, net 1,829,611 1,840,874 (1)%
    Total assets 23,913,446 22,807,640 5%
     
    Non-interest bearing demand deposits 5,508,255 4,924,356 12%
    Interest bearing deposits 12,631,564             12,230,574   3%
    Total deposits 18,139,819 17,154,930 6%
    Interest bearing liabilities 14,225,049 13,840,189 3%
     
    Shareholders’ equity - common 3,893,218 3,811,380 2%
    Tangible common equity (1) 2,063,607 1,970,506 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)

    Sep 30,

    2016

       

    Jun 30,

    2016

       

    Mar 31,

    2016

       

    Dec 31,

    2015

       

    Sep 30,

    2015

    Seq.

    Quarter

       

    Year

    over

    Year

    Residential mortgage servicing rights:

                 
    Residential mortgage loans serviced for others $ 13,880,660 $ 13,564,242 $ 13,304,468 $ 13,047,266 $ 12,693,451 2% 9%
    MSR asset, at fair value 114,446 112,095 117,172 131,817 124,814 2% (8)%
    MSR as % of serviced portfolio 0.82 % 0.83 %

    0.88

    %

    1.01 % 0.98 %

    Residential mortgage banking revenue:

    Origination and sale $ 45,631 $ 42,083 $ 28,409 $ 25,363 $ 26,904 8% 70%
    Servicing 9,401 8,640 7,642 7,546 7,240 9% 30%
    Change in fair value of MSR asset (7,826 )     (13,940 )    

    (20,625

    )

      (469 )     (10,103 ) (44)% (23)%
    Total $ 47,206       $ 36,783       $ 15,426     $ 32,440       $ 24,041   28% 96%
     

    Closed loan volume:

    Closed loan volume - portfolio $ 305,648 $ 365,926 $ 332,918 $ 352,465 $ 446,088 (16)% (31)%
    Closed loan volume - for-sale 1,118,526       1,046,349       764,076     794,820       843,720   7% 33%
    Closed loan volume - total $ 1,424,174       $ 1,412,275       $ 1,096,994     $ 1,147,285       $ 1,289,808   1% 10%
     

    Gain on sale margin:

    Based on for-sale volume 4.08 % 4.02 %

    3.72

    %

    3.19 % 3.19 % 0.06 0.89
     
     
    Nine months ended% Change

    Sep 30,

    2016

       

    Sep 30,

    2015

    Year over

    Year

    Residential mortgage banking revenue:

    Origination and sale $ 116,123 $ 92,069 26%
    Servicing 25,683 20,467 25%
    Change in fair value of MSR asset (42,391 )     (20,254 ) 109%
    Total $ 99,415       $ 92,282   8%
     

    Closed loan volume:

    Closed loan volume - portfolio $ 1,004,492 $ 1,203,949

    (17)%

    Closed loan volume - for-sale 2,928,951       2,703,100   8%
    Closed loan volume - total $ 3,933,443       $ 3,907,049   1%
     

    Gain on sale margin:

    Based on for-sale volume 3.96 % 3.41 % 0.55
     
    nm = not meaningful
     

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

    Source: Umpqua Holdings Corporation