Umpqua Reports Fourth Quarter and Full-Year 2014 Results

Full-year 2014 operating earnings1 of $1.08 per share, up 15% from $0.94 in 2013
Fourth quarter 2014 operating earnings1 of $59.4 million, or $0.27 per share
Credit quality, capital and liquidity all remained strong
Sterling integration remains on track

PORTLAND, Ore.--()--Umpqua Holdings Corporation (NASDAQ: UMPQ) (the “Company”) reported net earnings available to common shareholders of $52.4 million for the fourth quarter of 2014, as compared to $58.8 million for the third quarter of 2014 and $25.1 million for the fourth quarter of 2013. Earnings per diluted common share were $0.24 for the fourth quarter of 2014, as compared to $0.27 for the third quarter of 2014 and $0.22 for the fourth quarter of 2013.

Operating earnings, which represent earnings available to common shareholders before gains or losses on junior subordinated debentures carried at fair value, net of tax, and merger related expenses, net of tax, were $59.4 million for the fourth quarter of 2014, as compared to $65.1 million for the third quarter of 2014 and $27.9 million for the fourth quarter of 2013. Operating earnings per diluted common share were $0.27 for the fourth quarter of 2014, as compared to $0.30 for the third quarter of 2014 and $0.25 for the fourth quarter of 2013.

For the twelve months ended December 31, 2014, the Company reported net earnings available to common shareholders of $147.0 million, or $0.78 per diluted common share, as compared to $97.6 million, or $0.87 per diluted common share, for the year ended December 31, 2013. For the twelve months ended December 31, 2014, operating earnings1 were $202.4 million, or $1.08 per diluted common share, as compared to $105.7 million, or $0.94 per diluted common share, for the year ended December 31, 2013.

“2014 was a highly productive year for Umpqua in which the company delivered increased operating earnings and continued the organic growth of our loan and deposit portfolios, while maintaining strong credit quality, capital and liquidity levels to support future growth,” said Ray Davis, president and CEO of Umpqua Holdings Corporation. “Most significantly, we closed on the largest acquisition in the company's history, and expect to complete the integration in the coming months. With the strength of Umpqua’s unique brand and value proposition, I look forward to capitalizing on the momentum we've built as we head into 2015.”

Highlights:

  • Full-year 2014 operating earnings1 of $202.4 million:
    • Operating results reflect the acquisition of Sterling Financial beginning on April 19, 2014;
    • Return on average assets (operating basis)1 improved to 1.06%, from 0.92% in the prior year;
    • Return on average tangible common equity (operating basis)1 improved to 12.62%, from 10.60% in the prior year;
    • Efficiency ratio (operating basis)1 improved to 62.45%, from 66.74% in the prior year;
  • Fourth quarter 2014 operating earnings1 of $59.4 million:
    • Net interest income was up slightly from the prior quarter, while net interest margin decreased by 6 basis points from the prior quarter to 4.69%;
    • Provision for loan and lease losses decreased by $9.1 million from the prior quarter, driven by an improvement in the credit quality of the loan and lease portfolio;
    • Mortgage banking revenue decreased by $9.5 million from the prior quarter, driven by a higher mix of portfolio versus for sale mortgage production, along with lower gain on sale margins, and a larger loss from the change in the fair value of the MSR asset, consistent with the decline in mortgage interest rates;
    • Other income decreased by $2.7 million from the prior quarter, driven by a lower level of portfolio loan sales;
    • Non-interest expense (excluding merger-related expense) increased by $6.8 million from the prior quarter, driven by a $1.9 million increase in marketing expense to support new brand and growth campaigns, and a $3.3 million increase in net loss on other real estate owned;
  • Credit quality, capital and liquidity all remained strong:
    • Net charge-offs to average loans and leases (annualized) decreased to 0.12%, from 0.14% in the prior quarter;
    • Tangible book value per common share1 increased to $8.80, as compared to $8.78 for the prior quarter and $8.49 for the same period in the prior year;
    • Declared a dividend of $0.15 per common share; and
    • Interest bearing cash increased to $1.3 billion, from $1.2 billion in the prior quarter.

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.

Balance Sheet

Total consolidated assets were $22.6 billion as of December 31, 2014, as compared to $22.5 billion as of September 30, 2014 and $11.6 billion as of December 31, 2013. Including secured off-balance sheet lines of credit, total available liquidity to the Company was $7.7 billion as of December 31, 2014, representing 34% of total assets and 46% of total deposits.

Gross loans and leases were $15.3 billion as of December 31, 2014, an increase of $68.5 million from September 30, 2014. During the quarter, the Company experienced a larger than expected level of early pay-offs within the loan portfolio, primarily the result of borrowers selling their business or refinances away to competitors at terms or prices the Company was unwilling to match. During the fourth quarter of 2014, the Company had loan sales of $65.4 million, including $47.3 million in portfolio residential mortgage loans and $16.7 million of government guaranteed loans.

Total deposits were $16.9 billion as of December 31, 2014, an increase of $164.5 million from September 30, 2014. This increase was driven primarily by an increase in interest-bearing demand and money market accounts, partially offset by a decrease in time deposits.

Net Interest Income

Net interest income was $228.0 million for the fourth quarter of 2014, up $2.3 million from the prior quarter and $117.9 million from the same period in the prior year. The increase from prior year was primarily driven by the acquisition of Sterling, along with continued organic loan growth. Net interest income for the fourth quarter of 2014 included $21.6 million in interest income arising from the accretion of the credit discount recorded on the loans acquired from Sterling.

The Company’s net interest margin was 4.69% for the fourth quarter of 2014, down from 4.75% for the third quarter of 2014, but up from 4.29% for the fourth quarter of 2013. The decrease from the prior quarter was primarily driven by a higher balance of interest-bearing cash and a lower yield on interest-earning assets. The increase from the prior year was primarily driven by the acquisition of Sterling, a higher yield on interest-earning assets, and a lower cost of funds.

Credit Quality

Under purchase accounting rules, 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 non-covered 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 losses, or its related allowance coverage ratios, but should be considered when comparing the current quarter ratios to similar ratios in periods prior to the acquisition of Sterling.

Loans acquired with 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 fourth quarter of 2014, the Company reported $21.6 million of accretion from the Sterling credit discount in interest income. As of December 31, 2014, the purchased non-credit impaired loans had approximately $122.4 million of remaining credit discount that will accrete into interest income over the life of the loans, and the purchased credit impairment loan pools had approximately $66.5 million of remaining total discount.

The allowance for non-covered loan losses was $108.9 million, or 0.72% of non-covered loans and leases, as of December 31, 2014. To provide better comparability to prior periods, this pro-forma ratio would have been approximately 2% after grossing up the allowance for loan losses and the non-covered loans and leases by the amount of the remaining credit mark remaining as of quarter-end. This compares to a ratio of approximately 2.1% as of September 30, 2014.

The provision for loan losses was $5.2 million for the fourth quarter of 2014, down from $14.3 million for the third quarter of 2014. The decrease from the prior quarter was driven by an increase in loan pay-offs during the quarter, as well as upgrades within the non-covered loan and lease portfolio, and an improvement in the performance of the Sterling acquired loan portfolio. For the fourth quarter of 2014, net charge-offs to average loans and leases (annualized) decreased to 0.12%, from 0.14% in the prior quarter.

Non-covered, non-performing assets were $95.5 million, or 0.42% of total assets, as of December 31, 2014, as compared to $81.6 million, or 0.36% of total assets, as of September 30, 2014. Non-covered loans past due 31 to 89 days were $24.7 million, or 0.16% of non-covered loans and leases, as of December 31, 2014, as compared to $34.0 million, or 0.23% of non-covered loans and leases, as of September 30, 2014. Non-covered restructured loans on accrual status were $54.8 million as of December 31, 2014, as compared to $63.5 million as of September 30, 2014.

Non-Interest Income

Total non-interest income was $49.8 million for the fourth quarter of 2014, down $12.1 million from the prior quarter but up $23.0 million from the same period in the prior year. The decrease from the prior quarter was primarily driven by lower mortgage banking revenue and a $2.7 million decline in other income, primarily from a lower level of portfolio loan sales. The increase from the prior year was primarily driven by the acquisition of Sterling.

Residential mortgage banking revenue, which includes revenue from the origination and sale of residential mortgage loans, revenue from the servicing of residential mortgage loans and changes to the fair value of the residential mortgage servicing rights (“MSR”) asset, was down $9.5 million from the prior quarter, but up slightly from the same period in the prior year. Revenue from the origination and sale of residential mortgages decreased by $5.7 million from the prior quarter, driven by a higher mix of portfolio versus for sale mortgage production, along with lower gain on sale margins. Loss related to the change in fair value of the MSR was $8.2 million for the fourth quarter of 2014, a $3.9 million increase from a loss of $4.3 million in the prior quarter. The larger loss was driven by higher prepayment speeds associated with the decline in mortgage interest rates.

The Company’s gain on sale margin, as a percentage of residential mortgage for sale production, was 2.95% for the fourth quarter of 2014, down from 3.46% in the prior quarter. Of the current quarter’s mortgage production, 63% related to purchase activity, as compared to 71% for the prior quarter and 70% for the same period in the prior year.

As of December 31, 2014, the Company serviced $11.6 billion of residential mortgage loans for others, and its related MSR asset was valued at $117.3 million, or 1.01% of the total serviced portfolio principal balance. This compares to $11.3 billion of residential mortgage loans serviced for others as of September 30, 2014, with a related MSR asset of $118.7 million, or 1.05% of the total serviced portfolio principal balance. As of December 31, 2013, the Company serviced $4.4 billion of residential mortgage loans serviced for others, and its related MSR asset was valued at $47.8 million, or 1.09% of the total serviced portfolio principal balance.

Non-interest Expense

Non-interest expense was $190.9 million for the fourth quarter of 2014, which included $10.2 million of merger-related expenses. This compares to $182.6 million, including $8.6 million of merger-related expenses, for the third quarter of 2014 and $95.4 million, including $1.6 million of merger-related expenses, for the fourth quarter of 2013.

Excluding merger-related expenses, non-interest expense increased by $6.8 million from the prior quarter. This increase was primarily driven by a $3.3 million increase in loss on a real estate owned property and a $1.9 million increase in marketing expense to support new brand and growth campaigns.

The fourth quarter of 2014 non-interest expense run-rate does not reflect the full benefit of the anticipated Sterling merger cost synergies. Integration efforts continue to proceed as planned, with the previously announced 2014 store consolidations completed, and system conversions scheduled through early 2015. Cost synergies also remain on track to the previously announced target of $87 million (annualized), which is expected to be realized following system conversions.

Income taxes

The Company recorded a provision for income taxes of $29.2 million for the fourth quarter of 2014, representing an effective tax rate of 35.7% for the quarter, bringing the full-year effective tax rate for 2014 to 35.5%.

Capital

As of December 31, 2014, the Company’s tangible book value per common share1 was $8.80 and its ratio of tangible common equity to tangible assets1 was 9.33%, as compared to $8.78 and 9.24%, respectively, in the prior quarter.

The Company made no open market nor privately negotiated purchases of common stock under the Company’s previously announced share repurchase plan during the fourth quarter of 2014. The Company may repurchase up to 12.0 million of additional shares under this plan.

The Company’s estimated total risk-based capital ratio was 14.9% and its estimated Tier 1 common to risk weighted assets ratio was 11.3% as of December 31, 2014, as compared to 14.9% and 11.2%, respectively, as of September 30. 2014. The Company remains well above current “well-capitalized” regulatory minimums. The regulatory capital ratios as of December 31, 2014 are estimates, pending completion and filing of the Company’s regulatory reports.

On July 2, 2013, federal banking regulators approved the final proposed rules that revise the regulatory capital rules to incorporate certain revisions by the Basel Committee on Banking Supervision to the Basel capital framework (“Basel III”). Under Basel III, the Company's combined trust preferred issuances must be phased out of Tier 1 and into Tier 2 capital (75% in 2015 and 100% in 2016). As of December 31, 2014, the total par value of trust preferred securities was $461.2 million. In addition, the Company is required under Basel III to exclude the entire deferred tax asset related to net operating losses (“NOLs”) from Tier 1 capital. As of December 31, 2014, the Company’s total net deferred tax asset was $229.5 million, and the portion related to NOLs was $196.3 million.

Non-GAAP Financial Measures

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

The Company 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. Also, the Company incurs significant expenses related to the completion and integration of mergers and acquisitions. 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. 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 impact of gains or losses on junior subordinated debentures measured at fair value, net of tax, merger-related expenses, net of tax, and other charges related to business combinations such as goodwill impairment charges or bargain purchase gains, net of tax. The Company defines operating earnings as earnings available to common shareholders before gains or losses on junior subordinated debentures carried at fair value, net of tax, bargain purchase gains on acquisitions, net of tax, merger related expenses, net of tax, and goodwill impairment, and we calculate 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 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
(Dollars in thousands, except per share data) Dec 31, 2014     Sep 30, 2014     Jun 30, 2014     Mar 31, 2014     Dec 31, 2013 Seq. Quarter    

Year over

Year

Net earnings available to common shareholders $ 52,400     $ 58,847     $ 17,138     $ 18,651     $ 25,058

(11

)

%

    109 %
Adjustments:
Net loss on junior subordinated debentures carried at fair value, net of tax (1) 953 955 821 325 332 0 % 187 %
Merger related expenses, net of tax (1) 6,038       5,274       35,926         5,073       2,502   14 % 141 %
Operating earnings $ 59,391       $ 65,076       $ 53,885         $ 24,049       $ 27,892  

(9

)

%

113 %
 

Earnings per diluted share:

Earnings available to common shareholders $ 0.24 $ 0.27 $ 0.09 $ 0.17 $ 0.22

(11

)

%

9 %
Operating earnings $ 0.27 $ 0.30 $ 0.27 $ 0.21 $ 0.25

(10

)

%

8 %
 
 
 
Twelve Months Ended % Change
Dec 31, 2014     Dec 31, 2013 Year over Year
Net earnings available to common shareholders $ 147,036 $ 97,573 51 %
Adjustments:
Net loss on junior subordinated debentures carried at fair value, net of tax (1) 3,054 1,318 132 %
Merger related expenses, net of tax (1) 52,311       6,820   nm
Operating earnings $ 202,401       $ 105,711   91 %
 

Earnings per diluted share:

Earnings available to common shareholders $ 0.78 $ 0.87

(10

)

%

Operating earnings $ 1.08 $ 0.94 15 %
 
(1) Income tax effect of pro forma operating earnings adjustments at 40% for tax-deductible items.
nm = not meaningful.
 

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).

                         
(Dollars in thousands, except per share data) Dec 31, 2014     Sep 30, 2014     Jun 30, 2014     Mar 31, 2014     Dec 31, 2013
Total shareholders' equity $ 3,780,997 $ 3,752,508 $ 3,729,060 $ 1,734,476 $ 1,727,426
Subtract:
Goodwill and other intangible assets, net 1,842,958       1,845,242       1,842,670       775,488       776,683  
Tangible common shareholders' equity $ 1,938,039       $ 1,907,266       $ 1,886,390       $ 958,988       $ 950,743  
Total assets $ 22,613,274 $ 22,488,059 $ 22,042,229 $ 11,838,726 $ 11,636,112
Subtract:
Goodwill and other intangible assets, net 1,842,958       1,845,242       1,842,670       775,488       776,683  
Tangible assets $ 20,770,316       $ 20,642,817       $ 20,199,559       $ 11,063,238       $ 10,859,429  
Common shares outstanding at period end 220,161,120 217,261,722 217,190,721 112,319,525 111,973,203
Tangible common equity ratio 9.33 % 9.24 % 9.34 % 8.67 % 8.75 %
Tangible book value per common share $ 8.80 $ 8.78 $ 8.69 $ 8.54 $ 8.49
 

About Umpqua Holdings Corporation

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

Earnings Conference Call Information

The Company will host its fourth quarter 2014 earnings conference call on Thursday, January 29, 2015, at 10:00 a.m. PST (1:00 p.m. EST). During the call, the Company will provide an update on recent activities and discuss its fourth quarter and full-year 2014 financial results. There will be a live question-and-answer session following the presentation. To join the call, please dial (888) 554-1432 ten minutes prior to the start time and enter conference ID: 5266505. A re-broadcast will be available approximately two hours after the call by dialing (888) 203-1112 and entering conference ID 5266505. 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 growth and efficiency potential from the acquisition of Sterling Financial Corporation; the integration of the merger with Sterling Financial Corporation; timing and amount of merger-related synergies and timing of systems conversions; credit discount accretion related to the merger; and projected effective tax rate. Specific risks that could cause results to differ from forward-looking statements are set forth in our filings with the SEC and include, without limitation, changes in the discounted cash flow model used to determine the fair value of subordinated debentures; prolonged low interest rate environment; unanticipated weakness in loan demand or loan pricing; deterioration in the economy; material reductions in revenue or material increases in expenses; lack of strategic growth opportunities or our failure to execute on those opportunities; our inability to effectively manage problem credits; certain loan assets becoming ineligible for loss sharing; unanticipated increases in the cost of deposits; the consequences of a phase-out of junior subordinated debentures from Tier 1 capital; Umpqua’s ability to achieve the synergies and earnings accretion contemplated by the Sterling merger; Umpqua’s ability to promptly and effectively integrate the businesses of Sterling and Umpqua and timely complete system conversions; the diversion of management time on issues related to merger integration; 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) Dec 31, 2014   Sep 30, 2014   Jun 30, 2014   Mar 31, 2014   Dec 31, 2013 Seq. Quarter  

Year over

Year

Interest income:    
Loans and leases $ 226,853 $ 223,972 $ 208,992 $ 103,986 $ 106,362 1 % 113 %
Interest and dividends on investments:
Taxable 11,629 12,136 12,728 9,291 9,517

(4

)

%

22 %
Exempt from federal income tax 2,746 2,790 2,697 2,112 2,173

(2

)

%

26 %
Dividends 66 81 128 50 87

(19

)

%

(24

)

%

Temporary investments & interest bearing deposits 857     544     422     441     399   58 % 115 %
Total interest income 242,151 239,523 224,967 115,880 118,538 1 % 104 %
Interest expense:
Deposits 7,119 6,773 6,075 3,848 4,168 5 % 71 %
Repurchase agreements and fed funds purchased 48 54 203 41 42

(11

)

%

14 %
Term debt 3,570 3,586 3,364 2,273 2,332 0 % 53 %
Junior subordinated debentures 3,399     3,394     3,066     1,880     1,922   0 % 77 %
Total interest expense 14,136 13,807 12,708 8,042 8,464 2 % 67 %
Net interest income 228,015 225,716 212,259 107,838 110,074 1 % 107 %
Provision for loan and lease losses 5,241 14,333 14,696 5,971 2,471

(63

)

%

112 %
Non-interest income:
Service charges 15,472 16,090 15,371 7,767 8,108

(4

)

%

91 %
Brokerage fees 4,960 4,882 4,566 3,725 3,584 2 % 38 %
Residential mortgage banking revenue, net 16,489 25,996 24,341 10,439 15,957

(37

)

%

3 %
Net gain on investment securities 1,026 902 976 191 14 % 437 %
Loss on junior subordinated debentures carried at fair value (1,589 ) (1,590 ) (1,369 ) (542 ) (554 ) 0 % 187 %
Change in FDIC indemnification asset (1,982 ) (2,728 ) (5,601 ) (4,840 ) (5,708 )

(27

)

%

(65

)

%

BOLI income 1,971 2,161 1,967 736 621

(9

)

%

217 %
Other income 13,485     16,211     4,278     5,722     4,586  

(17

)

%

194 %
Total non-interest income 49,832 61,924 44,529 23,007 26,785

(20

)

%

86 %
Non-interest expense:
Salaries and employee benefits 104,039 102,564 95,560 53,218 52,720 1 % 97 %
Net occupancy and equipment 32,987 33,029 28,746 16,501 16,254 0 % 103 %
Intangible amortization 3,102 3,103 2,808 1,194 1,186 0 % 162 %
FDIC assessments 3,522 3,038 2,575 1,863 1,922 16 % 83 %
Net loss (gain) on other real estate owned 3,609 313 258 (64 ) 1,397 nm 158 %
Merger related expenses 10,171 8,632 57,531 5,983 1,639 18 % 521 %
Other expense 33,426     31,879     26,653     17,823     20,246   5 % 65 %
Total non-interest expense 190,856 182,558 214,131 96,518 95,364 5 % 100 %
Income before provision for income taxes 81,750 90,749 27,961 28,356 39,024

(10

)

%

109 %
Provision for income taxes 29,204     31,760     10,740     9,592     13,754  

(8

)

%

112 %
Net income 52,546 58,989 17,221 18,764 25,270

(11

)

%

108 %
Dividends and undistributed earnings allocated to participating securities 146     142     83     113     212   3 %

(31

)

%

Net earnings available to common shareholders $ 52,400     $ 58,847     $ 17,138     $ 18,651     $ 25,058  

(11

)

%

109 %
 
Weighted average basic shares outstanding 218,963 217,245 196,312 112,170 111,949 1 % 96 %
Weighted average diluted shares outstanding 219,974 218,941 197,638 112,367 112,214 0 % 96 %
Earnings per common share – basic $ 0.24 $ 0.27 $ 0.09 $ 0.17 $ 0.22

(11

)

%

9 %
Earnings per common share – diluted $ 0.24 $ 0.27 $ 0.09 $ 0.17 $ 0.22

(11

)

%

9 %
nm = not meaningful
 
 
Umpqua Holdings Corporation
Consolidated Statements of Income
(Unaudited)
               
Twelve Months Ended % Change
(In thousands, except per share data) Dec 31, 2014     Dec 31, 2013 Year over Year
Interest income  
Loans and leases $ 763,803 $ 398,214 92 %
Interest and dividends on investments:
Taxable 45,784 34,146 34 %
Exempt from federal income tax 10,345 8,898 16 %
Dividends 325 252 29 %
Temporary investments & interest bearing deposits 2,264     1,336   69 %
Total interest income 822,521 442,846 86 %
Interest expense
Deposits 23,815 20,755 15 %
Repurchase agreements and fed funds purchased 346 141 145 %
Term debt 12,793 9,248 38 %
Junior subordinated debentures 11,739     7,737   52 %
Total interest expense 48,693 37,881 29 %
Net interest income 773,828 404,965 91 %
Provision for loan and lease losses 40,241 10,716 276 %
Non-interest income
Service charges 54,700 30,952 77 %
Brokerage fees 18,133 14,736 23 %
Residential mortgage banking revenue, net 77,265 78,885

(2

)

%

Net gain on investment securities 2,904 209 nm
Loss on junior subordinated debentures carried at fair value (5,090 ) (2,197 ) 132 %
Change in FDIC indemnification asset (15,151 ) (25,549 )

(41

)

%

BOLI income 6,835 3,035 125 %
Other income 39,696     21,370   86 %
Total non-interest income 179,292 121,441 48 %
Non-interest expense
Salaries and employee benefits 355,379 209,991 69 %
Net occupancy and equipment 111,263 62,067 79 %
Intangible amortization 10,207 4,781 113 %
FDIC assessments 10,998 6,954 58 %
Net loss on other real estate owned 4,116 1,248 230 %
Merger related expenses 82,317 8,836 nm
Other expense 109,783     70,784   55 %
Total non-interest expense 684,063 364,661 88 %
Income before provision for income taxes 228,816 151,029 52 %
Provision for income taxes 81,296     52,668   54 %
Net income 147,520 98,361 50 %
Dividends and undistributed earnings
allocated to participating securities 484     788  

(39

)

%

Net earnings available to common shareholders $ 147,036     $ 97,573   51 %
 
Weighted average basic shares outstanding 186,550 111,938 67 %
Weighted average diluted shares outstanding 187,544 112,176 67 %
Earnings per common share – basic $ 0.79 $ 0.87

(9

)

%

Earnings per common share – diluted $ 0.78 $ 0.87

(10

)

%

nm = not meaningful
 
 
Umpqua Holdings Corporation

Consolidated Balance Sheets

(Unaudited)
                       
% Change
(In thousands, except per share data) Dec 31, 2014     Sep 30, 2014     Jun 30, 2014     Mar 31, 2014     Dec 31, 2013   Seq. Quarter    

Year over

Year

Assets:    
Cash and due from banks $ 282,455 $ 266,624 $ 347,152 $ 196,963 $ 178,685 6 % 58 %
Interest bearing deposits 1,322,214 1,176,599 492,739 887,620 611,224 12 % 116 %
Temporary investments 502 487 529 525 514 3 %

(2

)

%

Investment securities:
Trading, at fair value 9,999 9,727 9,420 4,498 5,958 3 % 68 %
Available for sale, at fair value 2,298,555 2,400,061 2,588,969 1,701,730 1,790,978

(4

)

%

28 %
Held to maturity, at amortized cost 5,211 5,356 5,519 5,465 5,563

(3

)

%

(6

)

%

Loans held for sale 286,802 265,800 328,968 73,106 104,664 8 % 174 %
Loans and leases 15,327,732 15,259,201 15,136,455 7,763,691 7,728,166 0 % 98 %
Allowance for loan and lease losses (116,167 )   (115,635 )   (106,495 )   (97,029 )   (95,085 ) 0 % 22 %
 
Loans and leases, net 15,211,565 15,143,566 15,029,960 7,666,662 7,633,081 0 % 99 %
Restricted equity securities 119,334 120,759 122,194 29,948 30,685

(1

)

%

289 %
Premises and equipment, net 317,834 314,364 310,407 180,199 177,680 1 % 79 %
Goodwill 1,786,225 1,785,407 1,779,732 764,304 764,305 0 % 134 %
Other intangible assets, net 56,733 59,835 62,938 11,184 12,378

(5

)

%

358 %
Residential mortgage servicing rights, at fair value 117,259 118,725 114,192 49,220 47,765

(1

)

%

145 %
Other real estate owned 37,942 34,456 27,982 23,780 23,935 10 % 59 %
FDIC indemnification asset 4,417 7,811 11,293 18,362 23,174

(43

)

%

(81

)

%

Bank owned life insurance 294,296 293,511 292,714 97,589 96,938 0 % 204 %
Deferred tax assets, net 229,520 250,910 259,993 11,393 16,627

(9

)

%

nm
Other assets 232,411     234,061     257,528     116,178     111,958  

(1

)

%

108 %
Total assets $ 22,613,274     $ 22,488,059     $ 22,042,229     $ 11,838,726     $ 11,636,112   1 % 94 %
Liabilities:
Deposits $ 16,892,099 $ 16,727,610 $ 16,323,000 $ 9,273,583 $ 9,117,660 1 % 85 %
Securities sold under agreements to repurchase 313,321 339,367 315,025 262,483 224,882

(8

)

%

39 %
Term debt 1,006,395 1,057,140 1,057,915 250,964 251,494

(5

)

%

300 %
Junior subordinated debentures, at fair value 249,294 247,528 246,077 87,800 87,274 1 % 186 %
Junior subordinated debentures, at amortized cost 101,576 101,657 101,737 101,818 101,899 0 % 0 %
Other liabilities 269,592     262,249     269,415     127,602     125,477   3 % 115 %
Total liabilities 18,832,277 18,735,551 18,313,169 10,104,250 9,908,686 1 % 90 %
Shareholders' equity:
Common stock 3,519,316 3,515,621 3,512,507 1,514,969 1,514,485 0 % 132 %
Retained earnings 249,613 230,302 204,109 219,686 217,917 8 % 15 %
Accumulated other comprehensive income (loss) 12,068     6,585     12,444     (179 )   (4,976 ) 83 % nm
Total shareholders' equity 3,780,997     3,752,508     3,729,060     1,734,476     1,727,426   1 % 119 %
Total liabilities and shareholders' equity $ 22,613,274     $ 22,488,059     $ 22,042,229     $ 11,838,726     $ 11,636,112   1 % 94 %
 
Common shares outstanding at period end 220,161,120 217,261,722 217,190,721 112,319,525 111,973,203 1 % 97 %
Book value per common share $ 17.17 $ 17.27 $ 17.17 $ 15.44 $ 15.43

(1

)

%

11 %
Tangible book value per common share $ 8.80 $ 8.78 $ 8.69 $ 8.54 $ 8.49 0 % 4 %
Tangible equity - common $ 1,938,039 $ 1,907,266 $ 1,886,390 $ 958,988 $ 950,743 2 % 104 %
Tangible common equity to tangible assets 9.33 % 9.24 % 9.34 % 8.67 % 8.75 % 1 % 7 %

nm = not meaningful

 
 
Umpqua Holdings Corporation
Loan & Lease Portfolio
(Unaudited)
                       
(Dollars in thousands) Dec 31, 2014     Sep 30, 2014     Jun 30, 2014     Mar 31, 2014     Dec 31, 2013   % Change
Amount     Amount     Amount     Amount     Amount   Seq. Quarter  

Year over

Year

Loans & leases:

Commercial real estate:
Non-owner occupied term, net $ 3,290,610 $ 3,423,453 $ 3,517,328 $ 2,511,770 $ 2,535,162

(4

)

%

30 %
Owner occupied term, net 2,633,864 2,682,870 2,714,319 1,331,969 1,309,400

(2

)

%

101 %
Multifamily, net 2,638,618 2,565,711 2,506,864 428,489 441,208 3 % 498 %
Commercial construction, net 258,722 247,816 264,150 232,708 248,686 4 % 4 %
Residential development, net 81,846 76,849 94,857 96,723 95,699 7 %

(14

)

%

Commercial:
Term, net 1,102,987 1,119,658 1,114,315 745,813 786,564

(1

)

%

40 %
Lines of credit & other, net 1,322,722 1,344,741 1,330,771 1,015,251 994,058

(2

)

%

33 %
Leases & equipment finance, net 523,114 492,221 463,784 388,418 361,591 6 % 45 %
Residential real estate:
Mortgage, net 2,233,735 2,102,333 1,976,934 672,845 619,517 6 % 261 %
Home equity lines & loans, net 852,478 836,054 817,391 287,491 283,906 2 % 200 %
Consumer & other, net 389,036     367,495     335,742     52,214     52,375   6 % 643 %
Total, net of deferred fees and costs $ 15,327,732     $ 15,259,201     $ 15,136,455     $ 7,763,691     $ 7,728,166   0 % 98 %
 
Non-covered loans total $ 15,063,221 $ 14,975,811 $ 14,830,345 $ 7,411,108 $ 7,354,403
Covered loans total 264,511   283,390   306,110   352,583   373,763  
Total loans, net $ 15,327,732   $ 15,259,201   $ 15,136,455   $ 7,763,691   $ 7,728,166  
 
 

Loan & leases mix:

Commercial real estate:
Non-owner occupied term, net 20 % 22 % 23 % 31 % 32 %
Owner occupied term, net 17 % 18 % 18 % 17 % 17 %
Multifamily, net 17 % 17 % 17 % 6 % 6 %
Commercial construction, net 2 % 2 % 2 % 3 % 3 %
Residential development, net 1 % 1 % 1 % 1 % 1 %
Commercial:
Term, net 7 % 7 % 7 % 10 % 10 %
Lines of credit & other, net 9 % 9 % 9 % 13 % 13 %
Leases & equipment finance, net 3 % 3 % 3 % 5 % 5 %
Residential real estate:
Mortgage, net 15 % 14 % 13 % 9 % 8 %
Home equity lines & loans, net 6 % 5 % 5 % 4 % 4 %
Consumer & other, net 3 %   2 %   2 %   1 %   1 %
Total 100 %   100 %   100 %   100 %   100 %
 
 
Umpqua Holdings Corporation
Deposits by Type/Core Deposits
(Unaudited)
                       
(Dollars in thousands) Dec 31, 2014   Sep 30, 2014   Jun 30, 2014   Mar 31, 2014   Dec 31, 2013 % Change
Amount   Amount   Amount   Amount   Amount Seq. Quarter  

Year over

Year

Deposits:

Demand, non-interest bearing $ 4,744,804 $ 4,741,897 $ 4,363,710 $ 2,465,606 $ 2,436,477 0 % 95 %
Demand, interest bearing 2,054,994 1,942,792 1,869,626 1,182,634 1,233,070 6 % 67 %
Money market 6,113,138 5,998,339 5,973,197 3,526,368 3,349,946 2 % 82 %
Savings 971,185 952,122 912,073 578,238 560,699 2 % 73 %
Time 3,007,978   3,092,460     3,204,394     1,520,737     1,537,468  

(3

)

%

96 %
Total $ 16,892,099     $ 16,727,610     $ 16,323,000     $ 9,273,583     $ 9,117,660   1 % 85 %
 
Total core deposits (1) $ 14,808,765 $ 14,653,183 $ 14,171,946 $ 8,205,636 $ 8,052,280 1 % 84 %
 

Deposit mix:

Demand, non-interest bearing 28 % 28 % 26 % 27 % 26 %
Demand, interest bearing 12 % 12 % 11 % 13 % 14 %
Money market 36 % 36 % 37 % 38 % 37 %
Savings 6 % 6 % 6 % 6 % 6 %
Time 18 %   18 %   20 %   16 %   17 %
Total 100 %   100 %   100 %   100 %   100 %
 

Number of open accounts:

Demand, non-interest bearing 367,854 366,279 363,378 190,298 187,088
Demand, interest bearing 86,135 87,223 88,162 46,291 48,643
Money market 63,095 63,979 65,216 34,913 35,303
Savings 150,548 150,527 149,877 84,686 84,144
Time 53,530     54,565     56,285     22,755     23,688  
Total 721,162     722,573     722,918     378,943     378,866  
 

Average balance per account:

Demand, non-interest bearing $ 12.9 $ 12.9 $ 12.3 $ 13.0 $ 13.0
Demand, interest bearing 23.9 22.3 21.2 25.5 25.3
Money market 96.9 93.8 91.6 101.0 94.9
Savings 6.5 6.3 6.1 6.8 6.7
Time 56.2 56.7 56.9 66.8 64.9
Total $ 23.4 $ 23.2 $ 22.7 $ 24.5 $ 24.1

(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) Dec 31, 2014   Sep 30, 2014   Jun 30, 2014   Mar 31, 2014   Dec 31, 2013 Seq. Quarter  

Year over

Year

Non-covered, non-performing assets:

Non-covered loans and leases on non-accrual status $ 52,041 $ 42,397 $ 48,358 $ 37,884 $ 31,891 23 % 63 %
Non-covered loans and leases past due 90+ days & accruing 7,512     7,416     4,919     2,269     3,430   1 % 119 %
Total non-performing loans and leases 59,553 49,813 53,277 40,153 35,321 20 % 69 %
Non-covered other real estate owned 35,989     31,753     26,172     22,034     21,833   13 % 65 %
Total $ 95,542     $ 81,566     $ 79,449     $ 62,187     $ 57,154   17 % 67 %
 
Non-covered performing restructured loans and leases $ 54,836 $ 63,507 $ 67,464 $ 67,897 $ 68,791

(14

)

%

(20

)

%

Non-covered loans and leases past due 31-89 days $ 24,659 $ 34,025 $ 28,913 $ 29,416 $ 15,290

(28

)

%

61 %
Non-covered loans and leases past due 31-89 days to non-covered loans and leases 0.16 % 0.23 % 0.19 % 0.40 % 0.21 %
Non-covered, non-performing loans and leases to non-covered loans and leases 0.40 % 0.33 % 0.36 % 0.54 % 0.48 %
Non-covered, non-performing assets to total assets 0.42 % 0.36 % 0.36 % 0.53 % 0.49 %
 

Covered non-performing assets:

Covered loans and leases on non-accrual status $     $     $     $     $   nm nm
Total non-performing loans and leases nm nm
Covered other real estate owned 1,953     2,703     1,810     1,746     2,102  

(28

)

%

(7

)

%

Total $ 1,953     $ 2,703     $ 1,810     $ 1,746     $ 2,102  

(28

)

%

(7

)

%

 
Covered non-performing loans and leases to covered loans and leases % % % % %
Covered non-performing assets to total assets 0.01 % 0.01 % 0.01 % 0.01 % 0.02 %
 

Total non-performing assets:

Loans and leases on non-accrual status $ 52,041 $ 42,397 $ 48,358 $ 37,884 $ 31,891 23 % 63 %
Loans and leases past due 90+ days & accruing 7,512     7,416     4,919     2,269     3,430   1 % 119 %
Total non-performing loans and leases 59,553 49,813 53,277 40,153 35,321 20 % 69 %
Other real estate owned 37,942     34,456     27,982     23,780     23,935   10 % 59 %
Total $ 97,495     $ 84,269     $ 81,259     $ 63,933     $ 59,256   16 % 65 %
 
Non-performing loans and leases to loans and leases 0.39 % 0.33 % 0.35 % 0.52 % 0.46 %
Non-performing assets to total assets 0.43 % 0.37 % 0.37 % 0.54 % 0.51 %
nm = not meaningful
       
 
Umpqua Holdings Corporation
Credit Quality – Allowance for Loan and Lease Losses
(Unaudited)
                 
Quarter Ended % Change
(Dollars in thousands) Dec 31, 2014   Sep 30, 2014   Jun 30, 2014   Mar 31, 2014   Dec 31, 2013 Seq. Quarter   Year over Year

Allowance for non-covered credit losses:

Balance beginning of period $ 107,807 $ 97,995 $ 86,709 $ 85,314 $ 84,694
Provision for non-covered loan and lease losses 4,844 14,431 15,399 5,400 3,840

(66

)

%

26 %
Charge-offs (7,886 ) (6,743 ) (5,814 ) (5,565 ) (11,349 ) 17 %

(31

)

%

Recoveries 4,140     2,124     1,701     1,560     8,129   95 %

(49

)

%

Net charge-offs (3,746 )   (4,619 )   (4,113 )   (4,005 )   (3,220 )

(19

)

%

16 %
Total allowance for non-covered loan and lease losses 108,905 107,807 97,995 86,709 85,314 1 % 28 %
Reserve for unfunded commitments 3,539     4,388     4,845     1,417     1,436  

(19

)

%

146 %
Total allowance for non-covered credit losses $ 112,444     $ 112,195     $ 102,840     $ 88,126     $ 86,750   0 % 30 %
 
Net charge-offs to average non-covered loans and leases (annualized) 0.10 % 0.12 % 0.12 % 0.22 % 0.18 %
Recoveries to gross charge-offs 52.50 % 31.50 % 29.26 % 28.03 % 71.63 %
Allowance for non-covered loan and lease losses to non-covered loans and leases 0.72 % 0.72 % 0.66 % 1.17 % 1.16 %
Allowance for non-covered credit losses to non-covered loans and leases 0.75 % 0.75 % 0.69 % 1.19 % 1.18 %
 

Allowance for covered credit losses:

Balance beginning of period $ 7,828 $ 8,500 $ 10,320 $ 9,771 $ 11,918
Provision for (recapture of)covered loan and lease losses 397 (98 ) (703 ) 571 (1,369 ) nm nm
Charge-offs (1,202 ) (781 ) (1,518 ) (669 ) (1,387 ) 54 %

(13

)

%

Recoveries 239     207     401     647     609   15 %

(61

)

%

Net charge-offs (963 )   (574 )   (1,117 )   (22 )   (778 ) 68 % 24 %
Total allowance for covered loan and lease losses $ 7,262     $ 7,828     $ 8,500     $ 10,320     $ 9,771  

(7

)

%

(26

)

%

 
Net charge-offs to average covered loans and leases (annualized) 1.43 % 0.80 % 1.41 % 0.03 % 0.83 %
Recoveries to gross charge-offs 19.88 % 26.50 % 26.42 % 96.71 % 43.91 %
Allowance for covered loan and lease losses to covered loans and leases 2.75 % 2.76 % 2.78 % 2.93 % 2.61 %
 
nm = not meaningful
 
 
Umpqua Holdings Corporation
Credit Quality – Allowance for Loan and Lease Losses
(Unaudited)
        Quarter Ended       % Change
Dec 31, 2014   Sep 30, 2014   Jun 30, 2014   Mar 31, 2014   Dec 31, 2013 Seq. Quarter   Year over Year

Allowance for loan and lease losses:

         
Balance beginning of period $ 115,635 $ 106,495 $ 97,029 $ 95,085 $ 96,612
Provision for loan and lease losses 5,241 14,333 14,696 5,971 2,471

(63

)

%

112 %
Charge-offs (9,088 ) (7,524 ) (7,332 ) (6,234 ) (12,736 ) 21 %

(29

)

%

Recoveries 4,379     2,331     2,102     2,207     8,738   88 %

(50

)

%

Net charge-offs (4,709 )   (5,193 )   (5,230 )   (4,027 )   (3,998 )

(9

)

%

18 %
Total allowance for loan and lease losses 116,167 115,635 106,495 97,029 95,085 0 % 22 %
Reserve for unfunded commitments 3,539     4,388     4,845     1,417     1,436  

(19

)

%

146 %
Total allowance for credit losses $ 119,706     $ 120,023     $ 111,340     $ 98,446     $ 96,521   0 % 24 %
 
Net charge-offs to average loans and leases (annualized) 0.12 % 0.14 % 0.15 % 0.21 % 0.21 %
Recoveries to gross charge-offs 48.18 % 30.98 % 28.67 % 35.40 % 68.61 %
Allowance for loan and lease losses to loans and leases 0.76 % 0.76 % 0.70 % 1.25 % 1.23 %
Allowance for credit losses to loans and leases 0.78 % 0.79 % 0.74 % 1.27 % 1.25 %
       
 
Umpqua Holdings Corporation
Credit Quality – Allowance for Loan and Lease Losses
(Unaudited)
 
Twelve months ended       % Change
(Dollars in thousands) Dec 31, 2014   Dec 31, 2013 Year over Year

Allowance for non-covered credit losses:

 
Balance beginning of period $ 85,314 $ 85,391
Provision for non-covered loan and lease losses 40,074 16,829 138 %
Charge-offs (26,008 ) (30,995 )

(16)

%

Recoveries 9,525     14,089  

(32)

%

Net charge-offs (16,483 )   (16,906 )

(3)

%

Total allowance for non-covered loan and lease losses 108,905 85,314 28 %
Reserve for unfunded commitments 3,539     1,436   146 %
Total allowance for non-covered credit losses $ 112,444     $ 86,750   30 %
 
Net charge-offs to average non-covered loans and leases 0.13 % 0.24 %
Recoveries to gross charge-offs 36.62 % 45.46 %
Allowance for non-covered loan losses to covered loans and leases 0.72 % 1.16 %
Allowance for non-covered credit losses to covered loans and leases 0.75 % 1.18 %
 

Allowance for covered credit losses:

Balance beginning of period $ 9,771 $ 18,275
Provision for (recapture of) covered loan and lease losses 167 (6,113 )

(103)

%

Charge-offs (4,170 ) (4,503 )

(7)

%

Recoveries 1,494     2,112  

(29)

%

Net charge-offs (2,676 )   (2,391 ) 12 %
Total allowance for covered loan and lease losses $ 7,262     $ 9,771  

(26)

%

 
Net charge-offs to average covered loans and leases 0.88 % 0.57 %
Recoveries to gross charge-offs 35.83 % 46.90 %
Allowance for covered loan losses to covered loans and leases 2.75 % 2.61 %
 
 
Umpqua Holdings Corporation
Credit Quality – Allowance for Loan and Lease Losses
(Unaudited)
 
        Twelve months ended       % Change
(Dollars in thousands) Dec 31, 2014   Dec 31, 2013 Year over Year
Balance beginning of period $ 95,085   $ 103,666
Provision for loan and lease losses 40,241 10,716 276 %
Charge-offs (30,178 ) (35,498 )

(15)

%

Recoveries 11,019     16,201  

(32)

%

Net charge-offs (19,159 )   (19,297 )

(1)

%

Total allowance for loan and lease losses 116,167 95,085 22 %
Reserve for unfunded commitments 3,539     1,436   146 %
Total allowance for credit losses $ 119,706     $ 96,521   24 %
 
Net charge-offs to average loans and leases (annualized) 0.15 % 0.26 %
Recoveries to gross charge-offs 36.51 % 45.64 %
Allowance for loan losses to loans and leases 0.76 % 1.23 %
Allowance for credit losses to loans and leases 0.78 % 1.25 %
 
 
Umpqua Holdings Corporation
Selected Ratios
(Unaudited)
             
Quarter Ended % Change
Dec 31, 2014   Sep 30, 2014   Jun 30, 2014   Mar 31, 2014   Dec 31, 2013 Seq. Quarter  

Year over

Year

Average Rates:

   
Yield on loans and leases 5.79 % 5.74 % 6.04 % 5.40 % 5.43 % 0.05 0.36
Yield on taxable investments 2.16 % 2.12 % 2.29 % 2.39 % 2.31 % 0.04 (0.15 )
Yield on tax-exempt investments (1) 5.09 % 5.12 % 5.19 % 5.54 % 5.56 % (0.03 ) (0.47 )
Yield on temporary investments & interest bearing cash 0.25 % 0.25 % 0.25 % 0.25 % 0.25 %
Total yield on earning assets (1) 4.98 % 5.04 % 5.30 % 4.60 % 4.61 % (0.06 ) 0.37
 
Cost of interest bearing deposits 0.23 % 0.22 % 0.22 % 0.23 % 0.25 % 0.01 (0.02 )
Cost of securities sold under agreements
to repurchase and fed funds purchased 0.06 % 0.07 % 0.25 % 0.07 % 0.07 % (0.01 ) (0.01 )
Cost of term debt 1.41 % 1.35 % 1.45 % 3.67 % 3.68 % 0.06 (2.27 )
Cost of junior subordinated debentures 3.86 % 3.87 % 3.87 % 4.03 % 4.04 % (0.01 ) (0.18 )
Total cost of interest bearing liabilities 0.41 % 0.40 % 0.41 % 0.44 % 0.46 % 0.01 (0.05 )
 
Net interest spread (1) 4.57 % 4.64 % 4.90 % 4.16 % 4.15 % (0.07 ) 0.42
Net interest margin – Consolidated (1) 4.69 % 4.75 % 5.01 % 4.28 % 4.29 % (0.06 ) 0.40
Net interest margin – Bank (1) 4.75 % 4.82 % 5.07 % 4.35 % 4.35 % (0.07 ) 0.40
 

As reported (GAAP):

Return on average assets 0.92 % 1.05 % 0.34 % 0.65 % 0.86 % (0.13 ) 0.06
Return on average tangible assets 1.00 % 1.15 % 0.37 % 0.70 % 0.92 % (0.15 ) 0.08
Return on average common equity 5.59 % 6.29 % 2.05 % 4.35 % 5.73 % (0.70 ) (0.14 )
Return on average tangible common equity 11.08 % 12.48 % 4.06 % 7.86 % 10.38 % (1.40 ) 0.70
Efficiency ratio – Consolidated 68.34 % 63.15 % 82.94 % 73.15 % 69.12 % 5.19 (0.78 )
Efficiency ratio – Bank 66.34 % 61.68 % 81.37 % 71.18 % 67.30 % 4.66 (0.96 )
 

Operating basis (non-GAAP): (2)

Return on average assets 1.04 % 1.16 % 1.08 % 0.84 % 0.95 % (0.12 ) 0.09
Return on average tangible assets 1.13 % 1.27 % 1.18 % 0.90 % 1.02 % (0.14 ) 0.11
Return on average common equity 6.33 % 6.95 % 6.45 % 5.61 % 6.38 % (0.62 ) (0.05 )
Return on average tangible common equity 12.55 % 13.80 % 12.76 % 10.13 % 11.56 % (1.25 ) 0.99
Efficiency ratio – Consolidated 64.33 % 59.83 % 60.33 % 68.34 % 67.66 % 4.50 (3.33 )
Efficiency ratio – Bank 62.71 % 58.70 % 59.15 % 66.60 % 66.10 % 4.01 (3.39 )

(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 gain (loss) on junior subordinated debentures carried at fair value, net of tax, bargain purchase gain on acquisitions, net of tax, goodwill impairment, and merger related expenses, net of tax.

 
 
Umpqua Holdings Corporation
Selected Ratios
(Unaudited)
             
Twelve Months Ended % Change
Dec 31, 2014   Dec 31, 2013 Year over Year

Average Rates:

 
Yield on loans and leases 5.78 % 5.31 % 0.47
Yield on taxable investments 2.22 % 1.76 % 0.46
Yield on tax-exempt investments (1) 5.20 % 5.46 % (0.26 )
Yield on temporary investments & interest bearing cash 0.25 % 0.26 % (0.01 )
Total yield on earning assets (1) 5.02 % 4.38 % 0.64
 
Cost of interest bearing deposits 0.23 % 0.31 % (0.08 )
Cost of securities sold under agreements
to repurchase and fed funds purchased 0.11 % 0.08 % 0.03
Cost of term debt 1.57 % 3.66 % (2.09 )
Cost of junior subordinated debentures 3.89 % 4.09 % (0.20 )
Total cost of interest bearing liabilities 0.41 % 0.51 % (0.10 )
 
Net interest spread (1) 4.61 % 3.87 % 0.74
Net interest margin – Consolidated (1) 4.73 % 4.01 % 0.72
Net interest margin – Bank (1) 4.79 % 4.08 % 0.71
 

As reported (GAAP):

Return on average assets 0.77 % 0.85 % (0.08 )
Return on average tangible assets 0.83 % 0.91 % (0.08 )
Return on average common equity 4.69 % 5.64 % (0.95 )
Return on average tangible common equity 9.16 % 9.78 % (0.62 )
Efficiency ratio – Consolidated 71.37 % 68.68 % 2.69
Efficiency ratio – Bank 69.64 % 66.54 % 3.10
 

Operating basis (non-GAAP): (2)

Return on average assets 1.06 % 0.92 % 0.14
Return on average tangible assets 1.15 % 0.98 % 0.17
Return on average common equity 6.45 % 6.11 % 0.34
Return on average tangible common equity 12.62 % 10.60 % 2.02
Efficiency ratio – Consolidated 62.45 % 66.74 % (4.29 )
Efficiency ratio – Bank 61.07 % 64.86 % (3.79 )

(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 gain (loss) on junior subordinated debentures carried at fair value, net of tax, bargain purchase gain on acquisitions, net of tax, goodwill impairment, and merger related expenses, net of tax.

 
 
Umpqua Holdings Corporation

Average Balances

(Unaudited)
               
Quarter Ended % Change
(Dollars in thousands) Dec 31, 2014   Sep 30, 2014   Jun 30, 2014   Mar 31, 2014   Dec 31, 2013 Seq. Quarter  

Year over

Year

Temporary investments & interest bearing cash $ 1,368,726   $ 849,399   $ 672,587   $ 705,974   $ 625,405 61 % 119 %
Investment securities, taxable 2,169,504 2,307,732 2,242,414 1,562,849 1,664,716

(6

)

%

30 %
Investment securities, tax-exempt 326,858 330,902 315,488 231,520 236,552

(1

)

%

38 %
Loans held for sale 255,830 274,834 211,694 77,234 89,553

(7

)

%

186 %
Loans and leases 15,300,425     15,200,893     13,673,887     7,732,539     7,676,770   1 % 99 %
Total interest earning assets 19,421,343 18,963,760 17,116,070 10,310,116 10,292,996 2 % 89 %
Goodwill & other intangible assets, net 1,844,084 1,841,668 1,656,687 776,006 777,188 0 % 137 %
Total assets 22,625,461 22,220,999 20,036,742 11,638,357 11,624,424 2 % 95 %
 
Non-interest bearing demand deposits 4,836,517 4,558,672 3,963,233 2,414,001 2,452,554 6 % 97 %
Interest bearing deposits 12,153,481     11,948,731     10,948,991   6,696,029     6,661,933   2 % 82 %
Total deposits 16,989,998 16,507,403 14,912,224 9,110,030 9,114,487 3 % 86 %
Interest bearing liabilities 13,833,126 13,681,205 12,521,219 7,376,780 7,326,763 1 % 89 %
 
Shareholders’ equity - common 3,721,003 3,712,813 3,350,836 1,738,680 1,734,583 0 % 115 %
Tangible common equity (1) 1,876,919 1,871,145 1,694,149 962,674 957,395 0 % 96 %
 
 
Umpqua Holdings Corporation

Average Balances

(Unaudited)
        Twelve Months Ended     % Change
(Dollars in thousands) Dec 31, 2014       Dec 31, 2013     Year over Year
Temporary investments & interest bearing cash $ 900,851 $ 519,000 74 %
Investment securities, taxable 2,072,936 1,952,611 6 %
Investment securities, tax-exempt 301,535 247,010 22 %
Loans held for sale 205,580 138,383 49 %
Loans and leases 13,003,762   7,367,602   76 %
Total interest earning assets 16,484,664 10,224,606 61 %
Goodwill & other intangible assets, net 1,533,403 731,525 110 %
Total assets 19,169,098 11,507,688 67 %
 
Non-interest bearing demand deposits 3,951,429 2,284,996 73 %
Interest bearing deposits 10,455,902   6,772,677   54 %
Total deposits 14,407,331 9,057,673 59 %
Interest bearing liabilities 11,875,802 7,392,348 61 %
 
Shareholders’ equity - common 3,137,858 1,729,083 81 %
Tangible common equity (1) 1,604,455 997,558 61 %

(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) Dec 31, 2014   Sep 30, 2014   Jun 30, 2014   Mar 31, 2014   Dec 31, 2013 Seq. Quarter  

Year over

Year

Residential mortgage servicing rights:

       
Residential mortgage loans serviced for others $ 11,590,310 $ 11,300,947 $ 10,838,313 $ 4,496,662 $ 4,362,499 3 % 166 %
MSR asset, at fair value 117,259 118,725 114,192 49,220 47,765

(1

)

%

145 %
MSR as % of serviced portfolio 1.01 % 1.05 % 1.05 % 1.09 % 1.09 %

Residential mortgage banking revenue:

Origination and sale $ 18,378 $ 24,097 $ 22,142 $ 8,421 $ 9,915

(24

)

%

85 %
Servicing 6,306 6,178 5,359 2,970 2,911 2 % 117 %
Change in fair value of MSR asset (8,195 )   (4,279 )   (3,160   )   (952 )   3,131   92 % nm
Total $ 16,489     $ 25,996     $ 24,341       $ 10,439     $ 15,957  

(37

)

%

3 %
 

Closed loan volume:

Closed loan volume - total $ 941,912 $ 988,031 $ 894,955 $ 293,175 $ 359,569

(5

)

%

162 %
Closed loan volume - for sale $ 622,133 $ 695,877 $ 623,727 $ 204,356 $ 271,541

(11

)

%

129 %
 

Gain on sale margin:

Based on total volume 1.95 % 2.44 % 2.47 % 2.87 % 2.76 %

(0.49

)

 

(0.81

)

 

Based on for sale volume 2.95 % 3.46 % 3.55 % 4.12 % 3.65 %

(0.51

)

 

(0.70

)

 

 
 
 
Twelve Months Ended % Change
Dec 31, 2014   Dec 31, 2013 Year over Year

Residential mortgage banking revenue:

Origination and sale $ 73,038 $ 66,117 10 %
Servicing 20,813 10,395 100 %
Change in fair value of MSR asset (16,586 )   2,373  

(799

)

%

Total $ 77,265     $ 78,885  

(2

)

%

 

Closed loan volume:

Closed loan volume - total $ 3,118,073 $ 1,930,877 61 %
Closed loan volume - for sale 2,146,828 1,599,683 34 %
 

Gain on sale margin:

Based on total volume 2.34 % 3.42 %

(1.08

)

 

Based on for sale volume 3.40 % 4.13 %

(0.73

)

 

 
nm = not meaningful

Contacts

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

Release Summary

Umpqua Holdings Corporation reported net earnings available to common shareholders of $52.4 million for the fourth quarter of 2014, as compared to $25.1 million for the fourth quarter of 2013.

Contacts

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