Net earnings of $91.0 million, or $0.41 per common share
Strong quarterly deposit growth of $398.8 million, offset by $250.6 million of intentional run-off from brokered deposits, for net deposit growth of $148.2 million
Operational excellence initiatives helping drive lower expenses, 3Q efficiency ratio improved to 57.06%

PORTLAND, Ore., Oct. 17, 2018 (GLOBE NEWSWIRE) -- Umpqua Holdings Corporation (NASDAQ: UMPQ) (the “Company”) reported net earnings available to common shareholders of $91.0 million for the third quarter of 2018, compared to $66.0 million for the second quarter of 2018 and $63.8 million for the third quarter of 2017.  Earnings per diluted common share were $0.41 for the third quarter of 2018, compared to $0.30 for the second quarter of 2018 and $0.29 for the third quarter of 2017.

“Our financial performance improved significantly during the third quarter, driven by stronger net interest income and lower core expenses,” said Cort O'Haver, president and CEO of Umpqua Holdings Corporation.  “The benefits from our operational excellence initiatives are starting to take hold, with an 8% reduction in non-interest expense and a 57% quarterly efficiency ratio.  Net interest income was also stronger, benefiting from a very strong core deposit quarter, along with continued growth in the loan and lease portfolio.  As we continue to build on the foundation of Umpqua Next Gen, our focus remains on completing the operational excellence initiatives and continuing to advance our human digital strategy, which will drive enhanced profitability and long-term shareholder value.”

Notable items that impacted the third quarter 2018 financial results included:

  • $3.5 million in restructuring charges related to operational excellence initiatives, all in professional fees.  This compares to $8.2 million in the prior quarter, including $4.1 million in severance-related expense and $4.1 million in professional fees.
  • $7.0 million increase in interest income on taxable investment securities related to a further refinement of accounting methodology on the interest method for residential mortgage-backed securities and collateralized mortgage obligations.  In the second quarter of 2018, the Company took an out of period adjustment related to an initial change in accounting methodology, resulting in a decrease in interest income on taxable investment securities of $7.2 million.  Excluding the impacts from these adjustments, interest income on taxable investment securities would have increased by $1.7 million over the prior quarter level.
  • $0.2 million positive adjustment related to the fair value change of the MSR asset, compared to a $5.4 million negative adjustment in the prior quarter and a $9.2 million negative adjustment in the same period of the prior year.
  • $0.2 million gain related to the fair value change of the debt capital market swap derivatives, compared to a gain of $0.3 million in the prior quarter and a loss of $0.2 million in the same period of the prior year.
  • $1.0 million of exit or disposal costs, compared to $2.6 million in the prior quarter and $1.6 million in the same period of the prior year.
  • $0.5 million unrealized holding loss on equity securities, compared to a loss of $1.4 million in the prior quarter and no gain or loss recorded in the same period of the prior year.

Third Quarter 2018 Highlights (compared to prior quarter):

  • Net interest income increased by $16.5 million.  Excluding the impact of the changes in accounting methodology to the interest method for residential mortgage-backed securities and collateralized mortgage obligations (see notable items above), net interest income increased by $2.3 million.  This increase was primarily attributable to a higher average balance of loans and leases;
  • Provision for loan and lease losses decreased by $1.6 million, driven primarily by improvement in the loan and lease portfolio, while net charge-offs increased by three basis points to 0.25% of average loans and leases (annualized);
  • Non-interest income increased by $0.7 million, reflecting higher gains on portfolio loan sales and a lower unrealized holding loss on equity securities, partially offset by lower residential mortgage banking revenue;
  • Non-interest expense decreased by $16.3 million, driven primarily by lower restructuring charges (see notable items above), lower mortgage banking-related expense, lower salaries and benefits related to operational excellence initiatives and lower exit or disposal costs;
  • Non-performing assets to total assets was 0.37%;
  • Estimated total risk-based capital ratio of 13.7% and estimated Tier 1 common to risk weighted assets ratio of 10.8%; and
  • Increased the quarterly cash dividend by 5% to $0.21 per common share.

Balance Sheet
Total consolidated assets were $26.6 billion as of September 30, 2018, compared to $26.5 billion as of June 30, 2018 and $25.6 billion as of September 30, 2017.  Including secured off-balance sheet lines of credit, total available liquidity was $10.8 billion as of September 30, 2018, representing 40% of total assets and 51% of total deposits.

Gross loans and leases were $19.9 billion as of September 30, 2018, an increase of $214.5 million from $19.6 billion as of June 30, 2018.  This increase reflects balanced growth within the commercial term, construction & development, multifamily, and residential mortgage loan portfolios.  This growth was partially offset by a decline in consumer loans attributable to the Company's decision to wind down its indirect auto loan business, along with $41.7 million of portfolio residential mortgage loans sold.

Total deposits were $20.9 billion as of September 30, 2018, an increase of $148.2 million from $20.7 billion as of June 30, 2018.  This increase was attributable to higher balances of non-interest bearing demand, savings and money market deposits, partially offset by lower time deposits related primarily to the intentional run-off of wholesale brokered deposits.

Net Interest Income
Net interest income was $241.4 million for the third quarter of 2018, up $16.5 million from the prior quarter.  Excluding the impact of the changes in accounting methodology to the interest method for residential mortgage-backed securities and collateralized mortgage obligations (see notable items above), net interest income would have increased by $2.3 million, which was attributable to higher average balances of loans and leases and interest bearing cash.

The Company’s net interest margin was 4.09% for the third quarter of 2018, up 20 basis points from 3.89% for the second quarter of 2018.  Excluding the impact of the changes in accounting methodology to the interest method for residential mortgage-backed securities and collateralized mortgage obligations (see notable items above), net interest margin would have decreased by 5 basis points on a linked quarter basis.  This decrease was primarily attributable to lower accretion related to acquired loans, which decreased to $4.9 million for the third quarter of 2018, compared to $7.9 million in the prior quarter.  Excluding the impacts from the accounting change and the lower level of accretion, net interest margin increased by one basis point from the prior quarter level.

Credit Quality
The allowance for loan and lease losses was $144.0 million, or 0.73% of loans and leases, as of September 30, 2018, compared to $144.6 million, or 0.74% of loans and leases, as of June 30, 2018.  The provision for loan and lease losses was $11.7 million for the third quarter of 2018, a decrease of $1.6 million from the prior quarter level, driven primarily by an improvement in the loan and lease portfolio.  Net charge-offs increased by three basis points to 0.25% of average loans and leases (annualized).  As of September 30, 2018, non-performing assets were 0.37% of total assets, compared to 0.34% as of June 30, 2018 and 0.30% as of September 30, 2017.

Non-interest Income
Non-interest income was $72.4 million for the third quarter of 2018, up $0.7 million from the prior quarter, reflecting a higher fair value of the MSR asset (see notable items above), higher gains on portfolio loan sales and a lower unrealized holding loss on equity securities, partially offset by lower net revenue from the origination and sale of residential mortgages.

Net revenue from the origination and sale of residential mortgages was $21.0 million for the third quarter of 2018, down $7.2 million from the prior quarter.  This decrease reflects a 10% linked quarter decrease in for-sale mortgage origination volume, and a 58 basis point decrease in the home lending gain on sale margin to 2.77% for the third quarter of 2018.  The decrease in the home lending gain on sale margin was primarily related to a decline in the mortgage rate lock pipeline.  Of the current quarter’s mortgage production, 82% related to purchase activity, compared to 81% for the prior quarter and 74% for the same period of the prior year.

Non-interest Expense
Non-interest expense was $179.3 million for the third quarter of 2018, down $16.3 million from the prior quarter level.  This decrease was driven primarily by lower salaries and benefits expense, resulting from the Company's organizational simplification and design phase of the operational excellence initiatives, along with a $4.7 million decline in restructuring charges, and a $1.8 million decrease in mortgage banking-related expense, consistent with the decrease in mortgage originations.  Exit or disposal costs decreased by $1.6 million from the prior quarter level.

Capital
As of September 30, 2018, the Company’s tangible book value per common share1 was $9.95, compared to $9.84 in the prior quarter and $9.66 in the same period of the prior year.  During the third quarter of 2018, the Company increased its quarterly cash dividend by 5% to $0.21 per common share.

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.

The Company’s estimated total risk-based capital ratio was 13.7% and its estimated Tier 1 common to risk weighted assets ratio was 10.8% as of September 30, 2018.  The Company remains above current “well-capitalized” regulatory minimums. The regulatory capital ratios as of September 30, 2018 are estimates, pending completion and filing of the Company’s regulatory reports.

Presentation of Prior Period Financials
Certain prior period amounts in the financial statements presented in this earnings release have been re-stated from prior earnings releases, due to prior period adjustments as disclosed in the notes to the financial statements for the June 30, 2018 Form 10-Q.  Additional explanation will be included in Note 1 to the financial statements for the quarter ended September 30, 2018 as part of the Form 10-Q.

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.

Management believes tangible common equity and the tangible common equity ratio are useful 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, 2018 Jun 30, 2018 Mar 31, 2018 Dec 31, 2017 Sep 30, 2017
Total shareholders' equity $4,003,893  $3,981,087  $3,969,767  $3,969,367  $3,946,461 
Subtract:          
Goodwill 1,787,651  1,787,651  1,787,651  1,787,651  1,787,651 
Other intangible assets, net 25,506  27,047  28,589  30,130  31,819 
Tangible common shareholders' equity $2,190,736  $2,166,389  $2,153,527  $2,151,586  $2,126,991 
Total assets $26,615,067  $26,480,601  $25,816,402  $25,680,447  $25,632,339 
Subtract:          
Goodwill 1,787,651  1,787,651  1,787,651  1,787,651  1,787,651 
Other intangible assets, net 25,506  27,047  28,589  30,130  31,819 
Tangible assets $24,801,910  $24,665,903  $24,000,162  $23,862,666  $23,812,869 
Common shares outstanding at period end 220,238  220,205  220,461  220,149  220,225 
           
Total shareholders' equity to total assets ratio 15.04% 15.03% 15.38% 15.46% 15.40%
Tangible common equity ratio 8.83% 8.78% 8.97% 9.02% 8.93%
Book value per common share $18.18  $18.08  $18.01  $18.03  $17.92 
Tangible book value per common share $9.95  $9.84  $9.77  $9.77  $9.66 
                     

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 enterprise software and innovation company headquartered in Silicon Valley.  Umpqua Holdings Corporation is headquartered in Portland, Oregon. For more information, visit umpquabank.com.

Earnings Conference Call Information
The Company will host its third quarter 2018 earnings conference call on Thursday, October 18, 2018, at 10:00 a.m. PT (1:00 p.m. ET).  During the call, the Company will provide an update on recent activities and discuss its third quarter 2018 financial results.  There will be a live question-and-answer session following the presentation.  To join the call, please dial (888) 220-8474 ten minutes prior to the start time and enter conference ID: 3108656.  A re-broadcast will be available approximately two hours after the call by dialing (888) 203-1112 and entering conference ID 3108656.  The earnings conference call will also be available as an audiocast, which can be accessed on the Company’s investor relations page at umpquabank.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 corporate initiatives and related profitability and cost savings.  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; the effect of interest rate increases on the cost of deposits; 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 ability to effectively manage problem credits; our ability to successfully implement efficiency and operational excellence initiatives on time and in amounts projected; 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, 2018 Jun 30, 2018 Mar 31, 2018 Dec 31, 2017 Sep 30, 2017 Seq. Quarter Year over Year
Interest income:              
Loans and leases $246,410  $242,123  $229,488  $225,538  $226,068  2% 9%
Interest and dividends on investments:              
Taxable 24,435  8,499  15,699  14,857  13,979  188% 75%
Exempt from federal income tax 2,048  2,057  2,128  2,121  2,125  0% (4)%
Dividends 549  433  468  386  357  27% 54%
Temporary investments and interest bearing deposits 2,800  2,080  1,164  1,565  934  35% 200%
Total interest income 276,242  255,192  248,947  244,467  243,463  8% 13%
Interest expense:              
Deposits 25,692  21,259  15,610  13,241  12,052  21% 113%
Securities sold under agreement to repurchase and federal funds purchased 103  155  63  43  81  (34)% 27%
Term debt 3,439  3,478  3,361  3,496  3,491  (1)% (1)%
Junior subordinated debentures 5,640  5,400  4,932  4,734  4,628  4% 22%
Total interest expense 34,874  30,292  23,966  21,514  20,252  15% 72%
Net interest income 241,368  224,900  224,981  222,953  223,211  7% 8%
Provision for loan and lease losses 11,711  13,319  13,656  12,928  11,997  (12)% (2)%
Non-interest income:              
Service charges on deposits 15,574  15,520  14,995  15,413  15,849  0% (2)%
Brokerage revenue 3,947  4,161  4,194  4,226  3,832  (5)% 3%
Residential mortgage banking revenue, net 31,484  33,163  38,438  42,118  33,430  (5)% (6)%
Gain (loss) on sale of investment securities, net   14      (6) (100)% (100)%
Unrealized holding losses on equity securities (462) (1,432)       (68)% nm 
Gain on loan sales, net 2,772  1,348  1,230  3,688  9,260  106% (70)%
Loss on junior subordinated debentures carried at fair value       (10,010) (1,590) 0% (100)%
BOLI income 2,051  2,060  2,070  2,015  2,041  0% 0%
Other income 17,022  16,817  17,640  13,000  13,877  1% 23%
Total non-interest income 72,388  71,651  78,567  70,450  76,693  1% (6)%
Non-interest expense:              
Salaries and employee benefits 103,575  113,340  106,551  114,414  108,732  (9)% (5)%
Occupancy and equipment, net 36,530  37,584  38,661  37,269  37,648  (3)% (3)%
Intangible amortization 1,541  1,542  1,541  1,689  1,689  0% (9)%
FDIC assessments 4,303  4,692  4,480  2,075  4,405  (8)% (2)%
Gain on other real estate owned, net (128) (92) (38) (83) (99) 39% 29%
Merger related expenses         6,664  0% (100)%
Other expenses 33,471  38,506  34,918  37,422  29,315  (13)% 14%
Total non-interest expense 179,292  195,572  186,113  192,786  188,354  (8)% (5)%
Income before provision for income taxes 122,753  87,660  103,779  87,689  99,553  40% 23%
Provision for income taxes 31,772  21,661  24,807  12,438  35,746  47% (11)%
Net income 90,981  65,999  78,972  75,251  63,807  38% 43%
Dividends and undistributed earnings allocated to participating securities 5  4  6  15  14  25% (64)%
Net earnings available to common shareholders $90,976  $65,995  $78,966  $75,236  $63,793  38% 43%
               
Weighted average basic shares outstanding 220,224  220,283  220,370  220,194  220,215  0% 0%
Weighted average diluted shares outstanding 220,620  220,647  220,825  220,873  220,755  0% 0%
Earnings per common share – basic $0.41  $0.30  $0.36  $0.34  $0.29  37% 41%
Earnings per common share – diluted $0.41  $0.30  $0.36  $0.34  $0.29  37% 41%
               
nm = not meaningful              


Umpqua Holdings Corporation
Consolidated Statements of Income
(Unaudited)
  Nine Months Ended % Change
(In thousands, except per share data) Sep 30, 2018 Sep 30, 2017 Year over Year
Interest income      
Loans and leases $718,021  $645,780  11%
Interest and dividends on investments:      
Taxable 48,633  43,130  13%
Exempt from federal income tax 6,233  6,604  (6)%
Dividends 1,450  1,105  31%
Temporary investments and interest bearing deposits 6,044  2,815  115%
Total interest income 780,381  699,434  12%
Interest expense      
Deposits 62,561  32,341  93%
Securities sold under agreement to repurchase and federal funds purchased 321  432  (26)%
Term debt 10,278  10,663  (4)%
Junior subordinated debentures 15,972  13,266  20%
Total interest expense 89,132  56,702  57%
Net interest income 691,249  642,732  8%
Provision for loan and lease losses 38,686  34,326  13%
Non-interest income      
Service charges on deposits 46,089  46,056  0%
Brokerage revenue 12,302  11,857  4%
Residential mortgage banking revenue, net 103,085  94,158  9%
Gain on sale of investment securities, net 14  27  (48)%
Unrealized holding losses on equity securities (1,894)   nm 
Gain on loan sales, net 5,350  14,324  (63)%
Loss on junior subordinated debentures carried at fair value   (4,717) (100)%
BOLI income 6,181  6,199  0%
Other income 51,479  40,133  28%
Total non-interest income 222,606  208,037  7%
Non-interest expense      
Salaries and employee benefits 323,466  323,766  0%
Occupancy and equipment, net 112,775  113,276  0%
Intangible amortization 4,624  5,067  (9)%
FDIC assessments 13,475  12,939  4%
Gain on other real estate owned, net (258) (474) (46)%
Merger related expenses   9,324  (100)%
Other expenses 106,895  91,191  17%
Total non-interest expense 560,977  555,089  1%
Income before provision for income taxes 314,192  261,354  20%
Provision for income taxes 78,240  94,292  (17)%
Net income 235,952  167,062  41%
Dividends and undistributed earnings allocated to participating securities 15  40  (63)%
Net earnings available to common shareholders $235,937  $167,022  41%
       
Weighted average basic shares outstanding 220,292  220,270  0%
Weighted average diluted shares outstanding 220,751  220,793  0%
Earnings per common share – basic $1.07  $0.76  41%
Earnings per common share – diluted $1.07  $0.76  41%
       
nm = not meaningful      


Umpqua Holdings Corporation
Consolidated Balance Sheets
(Unaudited)
            % Change
(In thousands, except per share data) Sep 30, 2018 Jun 30, 2018 Mar 31, 2018 Dec 31, 2017 Sep 30, 2017 Seq. Quarter Year over Year
Assets:              
Cash and due from banks $308,938  $314,513  $304,681  $330,856  $304,760  (2)% 1%
Interest bearing cash and temporary investments 570,321  488,499  264,508  303,424  540,806  17% 5%
Investment securities:              
Equity and other, at fair value 62,454  64,297  63,295  12,255  11,919  (3)% 424%
Available for sale, at fair value 2,864,394  2,854,398  2,947,414  3,065,769  3,047,358  0% (6)%
Held to maturity, at amortized cost 3,672  3,586  3,667  3,803  3,905  2% (6)%
Loans held for sale, at fair value 289,537  432,642  299,739  259,518  417,470  (33)% (31)%
Loans and leases 19,854,033  19,639,494  19,255,348  19,019,192  18,614,438  1% 7%
Allowance for loan and lease losses (144,026) (144,556) (141,933) (140,608) (139,503) 0% 3%
Loans and leases, net 19,710,007  19,494,938  19,113,415  18,878,584  18,474,935  1% 7%
Restricted equity securities 40,269  42,320  43,501  43,508  45,509  (5)% (12)%
Premises and equipment, net 237,456  245,954  259,354  269,182  276,316  (3)% (14)%
Goodwill 1,787,651  1,787,651  1,787,651  1,787,651  1,787,651  0% 0%
Other intangible assets, net 25,506  27,047  28,589  30,130  31,819  (6)% (20)%
Residential mortgage servicing rights, at fair value 175,038  166,217  164,760  153,151  141,225  5% 24%
Other real estate owned 11,774  12,101  13,055  11,734  4,160  (3)% 183%
Bank owned life insurance 311,922  309,844  307,745  306,864  305,572  1% 2%
Other assets 216,128  236,594  215,028  224,018  238,934  (9)% (10)%
Total assets $26,615,067  $26,480,601  $25,816,402  $25,680,447  $25,632,339  1% 4%
Liabilities:              
Deposits $20,892,774  $20,744,526  $20,106,856  $19,948,300  $19,851,910  1% 5%
Securities sold under agreements to repurchase 286,975  273,666  291,984  294,299  321,542  5% (11)%
Term debt 751,764  801,739  801,868  802,357  852,306  (6)% (12)%
Junior subordinated debentures, at fair value 282,846  280,669  278,410  277,155  266,875  1% 6%
Junior subordinated debentures, at amortized cost 88,781  88,838  88,895  100,609  100,690  0% (12)%
Deferred tax liability, net 22,413  27,255  24,151  21,930  26,898  (18)% (17)%
Other liabilities 285,621  282,821  254,471  266,430  265,657  1% 8%
Total liabilities 22,611,174  22,499,514  21,846,635  21,711,080  21,685,878  0% 4%
Shareholders' equity:              
Common stock 3,510,949  3,509,146  3,515,506  3,517,258  3,516,558  0% 0%
Retained earnings 568,619  524,031  502,215  477,101  437,427  9% 30%
Accumulated other comprehensive loss (75,675) (52,090) (47,954) (24,992) (7,524) 45% 906%
Total shareholders' equity 4,003,893  3,981,087  3,969,767  3,969,367  3,946,461  1% 1%
Total liabilities and shareholders' equity $26,615,067  $26,480,601  $25,816,402  $25,680,447  $25,632,339  1% 4%
               
Common shares outstanding at period end 220,238  220,205  220,461  220,149  220,225  0% 0%
Book value per common share $18.18  $18.08  $18.01  $18.03  $17.92  1% 1%
Tangible book value per common share $9.95  $9.84  $9.77  $9.77  $9.66  1% 3%
Tangible equity - common $2,190,736  $2,166,389  $2,153,527  $2,151,586  $2,126,991  1% 3%
Tangible common equity to tangible assets 8.83% 8.78% 8.97% 9.02% 8.93% 0.05  (0.10)


Umpqua Holdings Corporation
Loan and Lease Portfolio
(Unaudited)
(Dollars in thousands) Sep 30, 2018 Jun 30, 2018 Mar 31, 2018 Dec 31, 2017 Sep 30, 2017 % Change
  Amount Amount Amount Amount Amount Seq. Quarter Year over Year
Loans and leases:              
Commercial real estate:              
Non-owner occupied term, net $3,527,357  $3,518,982  $3,519,366  $3,483,197  $3,466,977  0% 2%
Owner occupied term, net 2,474,845  2,473,734  2,464,705  2,476,654  2,456,216  0% 1%
Multifamily, net 3,225,538  3,185,923  3,103,794  3,060,616  2,965,722  1% 9%
Construction & development, net 646,684  568,562  522,670  540,696  521,656  14% 24%
Residential development, net 198,518  183,114  179,954  165,941  186,399  8% 7%
Commercial:              
Term, net 2,149,376  2,106,658  2,025,052  1,944,925  1,819,395  2% 18%
Lines of credit & other, net 1,133,508  1,152,853  1,147,123  1,166,275  1,134,857  (2)% 0%
Leases & equipment finance, net 1,282,128  1,265,843  1,228,709  1,167,503  1,137,733  1% 13%
Residential real estate:              
Mortgage, net 3,468,569  3,405,775  3,275,088  3,182,888  3,084,709  2% 12%
Home equity loans & lines, net 1,143,351  1,132,329  1,103,048  1,097,877  1,073,144  1% 7%
  Consumer & other, net 604,159  645,721  685,839  732,620  767,630  (6)% (21)%
Total, net of deferred fees and costs $19,854,033  $19,639,494  $19,255,348  $19,019,192  $18,614,438  1% 7%
               
Loan and leases mix:              
Commercial real estate:              
  Non-owner occupied term, net 18% 18% 18% 18% 19%    
  Owner occupied term, net 13% 13% 13% 13% 13%    
  Multifamily, net 16% 16% 16% 16% 16%    
Construction & development, net 3% 3% 3% 3% 3%    
Residential development, net 1% 1% 1% 1% 1%    
Commercial:              
Term, net 11% 11% 11% 10% 10%    
Lines of credit & other, net 6% 6% 6% 6% 6%    
Leases & equipment finance, net 6% 6% 6% 6% 6%    
Residential real estate:              
Mortgage, net 17% 17% 17% 17% 17%    
Home equity loans & lines, net 6% 6% 6% 6% 6%    
  Consumer & other, net 3% 3% 3% 4% 3%    
Total 100% 100% 100% 100% 100%    



Umpqua Holdings Corporation
Deposits by Type/Core Deposits
(Unaudited)
(Dollars in thousands) Sep 30, 2018 Jun 30, 2018 Mar 31, 2018 Dec 31, 2017 Sep 30, 2017 % Change
  Amount Amount Amount Amount Amount Seq. Quarter Year over Year
Deposits:              
Demand, non-interest bearing $6,859,411  $6,819,325  $6,699,399  $6,505,628  $6,571,471  1% 4%
Demand, interest bearing 2,320,560  2,321,691  2,354,873  2,384,133  2,394,240  0% (3)%
Money market 6,325,808  6,161,907  6,546,704  7,037,891  6,700,261  3% (6)%
Savings 1,499,872  1,465,154  1,482,560  1,446,860  1,444,801  2% 4%
Time 3,887,123  3,976,449  3,023,320  2,573,788  2,741,137  (2)% 42%
Total $20,892,774  $20,744,526  $20,106,856  $19,948,300  $19,851,910  1% 5%
               
Total core deposits (1) $18,012,992  $17,743,888  $18,007,169  $18,263,802  $18,005,730  2% 0%
               
Deposit mix:              
Demand, non-interest bearing 33% 33% 33% 33% 33%    
Demand, interest bearing 11% 11% 12% 12% 12%    
Money market 30% 30% 33% 35% 34%    
Savings 7% 7% 7% 7% 7%    
Time 19% 19% 15% 13% 14%    
Total 100% 100% 100% 100% 100%    
               
Number of open accounts:              
Demand, non-interest bearing 404,913  402,771  399,721  397,427  394,755     
Demand, interest bearing 77,546  77,918  78,181  78,853  79,899     
Money market 55,895  55,393  54,752  55,175  55,659     
Savings 162,387  162,414  162,841  162,453  162,556     
Time 52,482  51,073  48,529  46,861  47,129     
Total 753,223  749,569  744,024  740,769  739,998     
               
Average balance per account:              
Demand, non-interest bearing $16.9  $16.9  $16.8  $16.4  $16.6     
Demand, interest bearing 29.9  29.8  30.1  30.2  30.0     
Money market 113.2  111.2  119.6  127.6  120.4     
Savings 9.2  9.0  9.1  8.9  8.9     
Time 74.1  77.9  62.3  54.9  58.2     
Total $27.7  $27.7  $27.0  $26.9  $26.8     

(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, 2018 Jun 30, 2018 Mar 31, 2018 Dec 31, 2017 Sep 30, 2017 Seq. Quarter Year over Year
Non-performing assets:              
Loans and leases on non-accrual status $54,059  $43,392  $45,702  $51,355  $44,478  25% 22%
Loans and leases past due 90+ days and accruing (1) 33,812  34,535  25,456  30,963  29,058  (2)% 16%
Total non-performing loans and leases 87,871  77,927  71,158  82,318  73,536  13% 19%
Other real estate owned 11,774  12,101  13,055  11,734  4,160  (3)% 183%
Total non-performing assets $99,645  $90,028  $84,213  $94,052  $77,696  11% 28%
               
Performing restructured loans and leases $14,531  $27,167  $31,677  $32,168  $45,830  (47)% (68)%
Loans and leases past due 31-89 days $33,825  $44,734  $38,569  $43,853  $32,164  (24)% 5%
Loans and leases past due 31-89 days to total loans and leases 0.17% 0.23% 0.20% 0.23% 0.17%    
Non-performing loans and leases to total loans and leases (1) 0.44% 0.40% 0.37% 0.43% 0.40%    
Non-performing assets to total assets(1) 0.37% 0.34% 0.33% 0.37% 0.30%    

(1)  Excludes non-performing mortgage loans guaranteed by Ginnie Mae, which Umpqua has the unilateral right to repurchase but has not done so, totaling $8.0 million, $9.2 million, $6.3 million, $12.4 million, and $12.3 million at September 30, 2018, June 30, 2018, March 31, 2018,  December 31, 2017, and September 30, 2017, respectively.

Umpqua Holdings Corporation
Credit Quality – Allowance for Loan and Lease Losses
 (Unaudited)
  Quarter Ended % Change
(Dollars in thousands) Sep 30, 2018 Jun 30, 2018 Mar 31, 2018 Dec 31, 2017 Sep 30, 2017 Seq. Quarter Year over Year
Allowance for loan and lease losses:              
Balance beginning of period $144,556  $141,933  $140,608  $139,503  $136,867     
Provision for loan and lease losses 11,711  13,319  13,656  12,928  11,997  (12)% (2)%
Charge-offs (15,896) (14,815) (15,812) (15,751) (13,222) 7% 20%
Recoveries 3,655  4,119  3,481  3,928  3,861  (11)% (5)%
Net charge-offs (12,241) (10,696) (12,331) (11,823) (9,361) 14% 31%
Total allowance for loan and lease losses 144,026  144,556  141,933  140,608  139,503  0% 3%
Reserve for unfunded commitments 4,294  4,130  4,129  3,963  3,932  4% 9%
Total allowance for credit losses $148,320  $148,686  $146,062  $144,571  $143,435  0% 3%
               
Net charge-offs to average loans and leases (annualized) 0.25% 0.22% 0.26% 0.25% 0.20%    
Recoveries to gross charge-offs 22.99% 27.80% 22.01% 24.94% 29.20%    
Allowance for loan and lease losses to loans and leases 0.73% 0.74% 0.74% 0.74% 0.75%    
Allowance for credit losses to loans and leases 0.75% 0.76% 0.76% 0.76% 0.77%    


Umpqua Holdings Corporation
Credit Quality – Allowance for Loan and Lease Losses
(Unaudited)
  Nine Months Ended % Change
(Dollars in thousands) Sep 30, 2018 Sep 30, 2017 Year over Year
Allowance for loan and lease losses:    
Balance beginning of period $140,608  $133,984   
Provision for loan and lease losses 38,686  34,326  13%
Charge-offs (46,523) (40,168) 16%
Recoveries 11,255  11,361  (1)%
Net charge-offs (35,268) (28,807) 22%
Total allowance for loan and lease losses 144,026  139,503  3%
Reserve for unfunded commitments 4,294  3,932  9%
Total allowance for credit losses $148,320  $143,435  3%
       
Net charge-offs to average loans and leases (annualized) 0.24% 0.21%  
Recoveries to gross charge-offs 24.19% 28.28%  



Umpqua Holdings Corporation
Selected Ratios
(Unaudited)
  Quarter Ended % Change
  Sep 30, 2018 Jun 30, 2018 Mar 31, 2018 Dec 31, 2017 Sep 30, 2017 Seq. Quarter Year over  Year
Average Rates:              
Yield on loans held for sale 5.27% 4.86% 4.21% 3.99% 3.89% 0.41  1.38 
Yield on loans and leases 4.89% 4.91% 4.80% 4.72% 4.78% (0.02) 0.11 
Yield on taxable investments 3.72% 1.31% 2.31% 2.17% 2.00% 2.41  1.72 
Yield on tax-exempt investments (1) 3.61% 3.64% 3.68% 4.49% 4.59% (0.03) (0.98)
Yield on interest bearing cash and temporary investments 1.99% 1.82% 1.55% 1.22% 1.47% 0.17  0.52 
Total yield on earning assets (1) 4.67% 4.41% 4.43% 4.31% 4.36% 0.26  0.31 
               
Cost of interest bearing deposits 0.73% 0.62% 0.47% 0.40% 0.36% 0.11  0.37 
Cost of securities sold under agreements              
to repurchase and fed funds purchased 0.15% 0.22% 0.08% 0.06% 0.10% (0.07) 0.05 
Cost of term debt 1.73% 1.74% 1.70% 1.67% 1.63% (0.01) 0.10 
Cost of junior subordinated debentures 6.06% 5.89% 5.36% 5.11% 5.02% 0.17  1.04 
Total cost of interest bearing liabilities 0.90% 0.80% 0.65% 0.58% 0.55% 0.10  0.35 
               
Net interest spread (1) 3.77% 3.61% 3.78% 3.73% 3.81% 0.16  (0.04)
Net interest margin (1) 4.09% 3.89% 4.00% 3.93% 4.00% 0.20  0.09 
               
Performance Ratios:              
Return on average assets 1.36% 1.02% 1.25% 1.17% 1.00% 0.34  0.36 
Return on average tangible assets 1.46% 1.09% 1.35% 1.26% 1.08% 0.37  0.38 
Return on average common equity 9.00% 6.64% 8.06% 7.54% 6.41% 2.36  2.59 
Return on average tangible common equity 16.42% 12.18% 14.84% 13.93% 11.90% 4.24  4.52 
Efficiency ratio – Consolidated 57.06% 65.84% 61.21% 65.46% 62.58% (8.78) (5.52)
Efficiency ratio – Bank 54.70% 63.04% 59.24% 61.61% 60.60% (8.34) (5.90)

(1) Tax exempt interest has been adjusted to a taxable equivalent basis using a 21% tax rate for 2018 and a 35% tax rate for 2017.

Umpqua Holdings Corporation
Selected Ratios
(Unaudited)
  Nine Months Ended % Change
  Sep 30, 2018 Sep 30, 2017 Year over Year
Average Rates:      
Yield on loans held for sale 4.81% 3.67% 1.14 
Yield on loans and leases 4.87% 4.72% 0.15 
Yield on taxable investments 2.44% 2.06% 0.38 
Yield on tax-exempt investments (1) 3.65% 4.66% (1.01)
Yield on interest bearing cash and temporary investments 1.83% 0.96% 0.87 
Total yield on earning assets (1) 4.51% 4.29% 0.22 
       
Cost of interest bearing deposits 0.61% 0.33% 0.28 
Cost of securities sold under agreements      
to repurchase and fed funds purchased 0.15% 0.16% (0.01)
Cost of term debt 1.72% 1.67% 0.05 
Cost of junior subordinated debentures 5.77% 4.87% 0.90 
Total cost of interest bearing liabilities 0.79% 0.52% 0.27 
       
Net interest spread (1) 3.72% 3.77% (0.05)
Net interest margin (1) 4.00% 3.94% 0.06 
       
Performance Ratios:      
Return on average assets 1.21% 0.90% 0.31 
Return on average tangible assets 1.30% 0.97% 0.33 
Return on average common equity 7.90% 5.70% 2.20 
Return on average tangible common equity 14.49% 10.65% 3.84 
Efficiency ratio – Consolidated 61.29% 64.98% (3.69)
Efficiency ratio – Bank 58.91% 62.78% (3.87)

                               
(1) Tax exempt interest has been adjusted to a taxable equivalent basis using a 21% tax rate for 2018 and a 35% tax rate for 2017.


Umpqua Holdings Corporation
Average Balances
(Unaudited)
  Quarter Ended % Change
(Dollars in thousands) Sep 30, 2018 Jun 30, 2018 Mar 31, 2018 Dec 31, 2017 Sep 30, 2017 Seq. Quarter Year over Year
Temporary investments and interest bearing cash $558,597  $458,133  $303,670  $509,187  $253,015  22% 121%
Investment securities, taxable 2,687,635  2,723,406  2,793,449  2,804,530  2,867,292  (1)% (6)%
Investment securities, tax-exempt 278,937  279,158  286,603  286,345  281,139  0% (1)%
Loans held for sale 320,494  326,427  267,231  370,564  420,282  (2)% (24)%
Loans and leases 19,709,113  19,387,537  19,089,713  18,703,202  18,471,446  2% 7%
Total interest earning assets 23,554,776  23,174,661  22,740,666  22,673,828  22,293,174  2% 6%
Goodwill and other intangible assets, net 1,814,000  1,815,529  1,817,068  1,818,730  1,820,394  0% 0%
Total assets 26,461,526  26,076,142  25,625,869  25,599,516  25,245,613  1% 5%
               
Non-interest bearing demand deposits 6,865,676  6,645,689  6,450,364  6,611,493  6,354,591  3% 8%
Interest bearing deposits 13,897,141  13,745,089  13,492,965  13,281,502  13,155,462  1% 6%
Total deposits 20,762,817  20,390,778  19,943,329  19,892,995  19,510,053  2% 6%
Interest bearing liabilities 15,331,529  15,199,900  14,971,759  14,790,883  14,705,842  1% 4%
               
Shareholders’ equity - common 4,011,856  3,988,825  3,974,788  3,960,987  3,946,559  1% 2%
Tangible common equity (1) 2,197,856  2,173,296  2,157,720  2,142,257  2,126,165  1% 3%


Umpqua Holdings Corporation
Average Balances
(Unaudited)
  Nine Months Ended% Change
(Dollars in thousands) Sep 30, 2018 Sep 30, 2017 Year over Year
Temporary investments and interest bearing cash $441,067  $392,399  12%
Investment securities, taxable 2,734,443  2,866,842  (5)%
Investment securities, tax-exempt 281,538  286,693  (2)%
Loans held for sale 304,912  388,263  (21)%
Loans and leases 19,397,476  17,989,577  8%
Total interest earning assets 23,159,436  21,923,774  6%
Goodwill and other intangible assets, net 1,815,521  1,822,063  0%
Total assets 26,055,479  24,897,096  5%
       
Non-interest bearing demand deposits 6,655,431  6,065,119  10%
Interest bearing deposits 13,713,213  13,104,218  5%
Total deposits 20,368,644  19,169,337  6%
Interest bearing liabilities 15,169,048  14,675,845  3%
       
Shareholders’ equity - common 3,991,773  3,918,978  2%
Tangible common equity (1) 2,176,252  2,096,915  4%

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

Umpqua Holdings Corporation
Average Rates and Balances
(unaudited)
(dollars in thousands)Quarter Ended
 September 30, 2018 June 30, 2018 September 30, 2017
 Average Balance Interest Income or Expense Average Yields or Rates Average Balance Interest Income or Expense Average Yields or Rates Average Balance Interest Income or Expense Average Yields or Rates
INTEREST-EARNING ASSETS:                 
Loans held for sale$320,494  $4,220  5.27% $326,427  $3,967  4.86% $420,282  $4,090  3.89%
Loans and leases (1)19,709,113  242,190  4.89% 19,387,537  238,156  4.91% 18,471,446  221,978  4.78%
Taxable securities2,687,635  24,984  3.72% 2,723,406  8,932  1.31% 2,867,292  14,336  2.00%
Non-taxable securities (2)278,937  2,519  3.61% 279,158  2,539  3.64% 281,139  3,223  4.59%
Temporary investments and interest-bearing cash558,597  2,800  1.99% 458,133  2,080  1.82% 253,015  934  1.47%
Total interest-earning assets23,554,776  $276,713  4.67% 23,174,661  255,674  4.41% 22,293,174  $244,561  4.36%
Allowance for loan and lease losses(145,873)     (144,598)     (138,924)    
Other assets3,052,623      3,046,079      3,091,363     
Total assets$26,461,526      $26,076,142      $25,245,613     
INTEREST-BEARING LIABILITIES:                 
Interest-bearing demand deposits$2,369,092  $2,241  0.38% $2,322,359  $1,565  0.27% $2,358,102  $1,066  0.18%
Money market deposits6,150,199  6,820  0.44% 6,332,372  5,896  0.37% 6,625,514  3,323  0.20%
Savings deposits1,483,687  452  0.12% 1,456,625  252  0.07% 1,441,931  172  0.05%
Time deposits3,894,163  16,179  1.65% 3,633,733  13,546  1.50% 2,729,915  7,491  1.09%
Total interest-bearing deposits13,897,141  25,692  0.73% 13,745,089  21,259  0.62% 13,155,462  12,052  0.36%
Repurchase agreements and federal funds purchased278,131  103  0.15% 285,338  155  0.22% 332,246  81  0.10%
Term debt787,074  3,439  1.73% 801,768  3,478  1.74% 852,250  3,491  1.63%
Junior subordinated debentures369,183  5,640  6.06% 367,705  5,400  5.89% 365,884  4,628  5.02%
Total interest-bearing liabilities15,331,529  $34,874  0.90% 15,199,900  $30,292  0.80% 14,705,842  $20,252  0.55%
Non-interest-bearing deposits6,865,676      6,645,689      6,354,591     
Other liabilities252,465      241,728      238,621     
Total liabilities22,449,670      22,087,317      21,299,054     
Common equity4,011,856      3,988,825      3,946,559     
Total liabilities and shareholders' equity$26,461,526      $26,076,142      $25,245,613     
NET INTEREST INCOME  $241,839      $225,382      $224,309   
NET INTEREST SPREAD    3.77%     3.61%     3.81%
AVERAGE YIELD ON EARNING ASSETS (1), (2)    4.67%     4.41%     4.36%
INTEREST EXPENSE TO EARNING ASSETS    0.58%     0.52%     0.36%
NET INTEREST INCOME TO EARNING ASSETS OR NET INTEREST MARGIN (1), (2)    4.09%     3.89%     4.00%

(1) Non-accrual loans and leases are included in the average balance.   
(2) Tax-exempt income has been adjusted to a tax equivalent basis at a 21% tax rate for 2018 and a 35% tax rate for 2017. The amount of such adjustment was an addition to recorded income of approximately $471,000 for the three months ended September 30, 2018 as compared to $482,000 for June 30, 2018 and $1.1 million for September 30, 2017.

Umpqua Holdings Corporation   
Average Rates and Balances
(unaudited)
(dollars in thousands)Nine Months Ended
 September 30, 2018 September 30, 2017
 Average Balance Interest Income or Expense Average Yields or Rates Average Balance Interest Income or Expense Average Yields or Rates
INTEREST-EARNING ASSETS:           
Loans held for sale$304,912  $11,002  4.81% $388,263  $10,678  3.67%
Loans and leases (1)19,397,476  707,019  4.87% 17,989,577  635,102  4.72%
Taxable securities2,734,443  50,083  2.44% 2,866,842  44,235  2.06%
Non-taxable securities (2)281,538  7,697  3.65% 286,693  10,029  4.66%
Temporary investments and interest-bearing cash441,067  6,044  1.83% 392,399  2,815  0.96%
Total interest-earning assets23,159,436  $781,845  4.51% 21,923,774  $702,859  4.29%
Allowance for loan and lease losses(144,306)     (137,538)    
Other assets3,040,349      3,110,860     
Total assets$26,055,479      $24,897,096     
INTEREST-BEARING LIABILITIES:           
Interest-bearing demand deposits$2,338,396  $5,016  0.29% $2,312,201  $2,509  0.15%
Money market deposits6,460,770  18,429  0.38% 6,725,754  8,967  0.18%
Savings deposits1,467,866  866  0.08% 1,402,942  446  0.04%
Time deposits3,446,181  38,250  1.48% 2,663,321  20,419  1.03%
Total interest-bearing deposits13,713,213  62,561  0.61% 13,104,218  32,341  0.33%
Repurchase agreements and federal funds purchased288,751  321  0.15% 354,955  432  0.16%
Term debt796,991  10,278  1.72% 852,285  10,663  1.67%
Junior subordinated debentures370,093  15,972  5.77% 364,387  13,266  4.87%
Total interest-bearing liabilities15,169,048  $89,132  0.79% 14,675,845  $56,702  0.52%
Non-interest-bearing deposits6,655,431      6,065,119     
Other liabilities239,227      237,154     
Total liabilities22,063,706      20,978,118     
Common equity3,991,773      3,918,978     
Total liabilities and shareholders' equity$26,055,479      $24,897,096     
NET INTEREST INCOME  $692,713      $646,157   
NET INTEREST SPREAD    3.72%     3.77%
AVERAGE YIELD ON EARNING ASSETS (1), (2)    4.51%     4.29%
INTEREST EXPENSE TO EARNING ASSETS    0.51%     0.35%
NET INTEREST INCOME TO EARNING ASSETS OR NET INTEREST MARGIN (1), (2)    4.00%     3.94%

(1) Non-accrual loans and leases are included in the average balance.   
(2) Tax-exempt income has been adjusted to a tax equivalent basis at a 21% tax rate for 2018 and a 35% tax rate for 2017. The amount of such adjustment was an addition to recorded income of approximately $1.5 million for the nine months ended September 30, 2018 as compared to $3.4 million for the same period in 2017.

Umpqua Holdings Corporation
Residential Mortgage Banking Activity
(unaudited)
  Quarter Ended % Change
(Dollars in thousands) Sep 30, 2018 Jun 30, 2018 Mar 31, 2018 Dec 31, 2017 Sep 30, 2017 Seq. Quarter Year over Year
Residential mortgage servicing rights:              
Residential mortgage loans serviced for others $15,810,455  $15,508,182  $15,442,915  $15,336,597  $15,007,942  2% 5%
MSR asset, at fair value 175,038  166,217  164,760  153,151  141,225  5% 24%
MSR as % of serviced portfolio 1.11% 1.07% 1.07% 1.00% 0.94% 0.04  0.17 
Residential mortgage banking revenue:              
Origination and sale $20,983  $28,159  $22,837  $29,864  $32,784  (25)% (36)%
Servicing 10,302  10,407  10,522  10,287  9,879  (1)% 4%
Change in fair value of MSR asset 199  (5,403) 5,079  1,967  (9,233) (104)% (102)%
Total $31,484  $33,163  $38,438  $42,118  $33,430  (5)% (6)%
               
Closed loan volume:              
Closed loan volume - portfolio $323,941  $294,581  $237,783  $265,718  $336,362  10% (4)%
Closed loan volume - for-sale 756,924  839,489  687,226  850,453  891,063  (10)% (15)%
Closed loan volume - total $1,080,865  $1,134,070  $925,009  $1,116,171  $1,227,425  (5)% (12)%
               
Gain on sale margin:              
Based on for-sale volume 2.77% 3.35% 3.32% 3.51% 3.68% (0.58) (0.91)
               
  Nine Months Ended % Change        
(Dollars in thousands) Sep 30, 2018 Sep 30, 2017 Year over Year        
Residential mortgage banking revenue:              
Origination and sale $71,979  $89,816  (20)%        
Servicing 31,231  29,576  6%        
Change in fair value of MSR asset (125) (25,234) (100)%        
Total $103,085  $94,158  9%        
               
Closed loan volume:              
Closed loan volume - portfolio $856,305  $893,718  (4)%        
Closed loan volume - for-sale 2,283,639  2,563,978  (11)%        
Closed loan volume - total $3,139,944  $3,457,696  (9)%        
               
Gain on sale margin:              
Based on for-sale volume 3.15% 3.50% (0.35)        
                  

Contacts:

Ron FarnsworthBradley Howes
EVP/Chief Financial OfficerSVP/Director of Investor Relations
Umpqua Holdings CorporationUmpqua Holdings Corporation
503-727-4108503-727-4226
ronfarnsworth@umpquabank.combradhowes@umpquabank.com